Burlington weekly free press. [volume] (Burlington, Vt.) 1866-1928, 1879-06-13


ing OF the policy holders ~ be made, 10 which
should make our report.
The Charter and Bylaws OF the eompany Provide
that special meeting OF the pocy-holders may he
called by the directors. We have therefore re-
quested the directors to call meeting 10 which We
may formally make report, and they inform US that
they Will call q meeting 10 be held at Burlington,
June 10 lsp. u was our purpose TO have the report
printed and distributed ~ I'll policy-hoders soon
funds with which TO do IT, and We therefore are
obliged 10 resort 10 the newspapers 10 publish this
report, W order TO bring II within reach OF the
policy hnlders VI the earliest practicable moment.
Respectfully shhm!ted,
HIRAM ATKINS, Committee.
r. +. PARKER
Judge Prouts opinion and the accountants state
menr Will appear tomorrow.
OPINION OF JUDGE PRoUT.
RUTLAND, Vt, April Il, 1879.
Dear SRI have examined as well - can the
questions you suggested at our Interview the other
day. They relate 10 the authority Of the Directors
OF the Champaign Mutual Fire Insurance Company
10 assess the notes of its pocy-holders to pay
losses. These Directors have neglected to give
the company. This section Of the charter provides
that any Director Of the company, before he enter
upon the duties OF his ofice shall give bonds, with
sureies in O specified SUN, conditioned as therein
provided; and Article OF the company's bylaws,
relating TO the powers OF the officers OF the Com
pany. provides that in Of neglect give the
ONCE shall be deemed vacant. Neither provision
In terms makes the giving OF the bond q qualified
ton for the Office, but in effect prohibits the Direc
have complied with 1t. There has been action OF
the corporation, or Of The courts, declaring the Office
vacant, or oustlng any Of Ihe Directors FROM their
ONCE, which declaration Or Judgment Of custer,
think necessary 10 create vacancy.
But, independent OF this, We have, you
know, numerous decisions, growing out Of
principles OF policy, and for the protection OF
the public, that lead to the same conclusion.
Generally the question has arisen between the
corporation and third persons, not members
OF the company, and IN that respect unlike the pres
ent case. Upon the principle OF those decisions the
company could not defend against 0 contract liab-
ty In consequence Of rregularily Of this nature
or failure 10 comply with some provisions OF It's
charter. And can Il member who has not objected
or questioned the right Of the Directors TO act
Probably not. They are officers and agents de tacto
In possession OF the franchise and property of the
company, and many cases hold the acts and con-
tracts OF such officers valid until they oused by
direct proceeding instituted for that purpose. The
following cases and authorities are In point;
Vernon Society vs. Hill, Con 26
Field on Corporations, Sec lso.
Angel Ames, Secs 1851.
Abbots Digest Laws Of Corporations
Goodwin vs.. Perkins, 80 VT 5ss
Del iiud. Can. co, vs.. Penn. Coal Co. 81
VA Can. II r. Go, ". Vi Cen. II. II. 90,
3iNt >.
Then again W. have q class OF cases relating to
charters or acts Incorporating companies that re-
quire perhaps NOT IN the language OF this charter
that certain officers OF the corporation shah give
bonds, etc, and IN which the direct question has
arisen whether the bond required Is necessary TO
complete appointment 10 the ofce. Such provisions
are usually held IN these cases as directory and
not as conditions precedent This principle Is stat
ed and illustrated In Angel Ames, Sec. es5 and
notes. ! am led, therefore to the conclusion that
the assessments in question cannot he avoided upon
me grnnni that the Directors Of the company
neglected TO give bonds, required by its charter
whether the assessments can be avoided by
policy holders IN consequence of misrepresentation
as TO the pecunary condition Of the company, de-
ponds upon the statements found In the report
upon which Ia found the date Of September l. ISIS
and which mention for Identification The re
ceipts for assessments and circular Of NAV 8 con
able, hut the statements of the report are more
doubtful. II contains representation That ''a
losses" up 10 the hrst Of September had been set
tied, when The fact Is otherwise win this repre-
sentation II known and relied upon relieve ,ne,n-
brTs OF the company from the payment OF ASSESS
ments made TO meet the debts Of the corporafiong
The question ~ Affected by these elements Of fact
The representation was made by u special agent
Inc parties whose notes are assessed are IaemGera
Of the company, and were many OF them, when the
representation was made or published aud the gues-
tion arises between the company and parties stand
ing not only IN the relation Of members hui cred
TORS. The company has no means OF satisfying
their claims, except premium notes liable To az
sessnent. Now II has been held and probably
many times 10y the courts, that in suit brought by
a crniitpT " an Incorporated company, or by per
son representing creditor against Stockholders ~
10y an assignee or receiver 10 recover the amount Of
II Is no defence that the stakeholder was induced
to become such by false and fraudulent repre-
sensations. made by the corporation or It's agent
and think The principle applies To the members
Of HD insurance company, and To this case
Oglin vs.. Knox Ins Co, ~ How, $50.
Iliieneld Bank VS. Church, 20 a.. 1877
!lke4 vs.. |. r., . II. L., S2s.
Possibly the question NAY he deierniped by an
other principle, and that Is representations ana Ca
aggerated statements made Wy an agent In rela-
ton to matters open TO investigation usually
held mere expressions OF belief and opinion, and
insufficient 10 avoid a note or contract
but the ease, 80 TO call II, presents another fra-
ture: This report WAS published about September
l. ls.s That Is lis date, so far appears from
the document itself The company, according Ia
one of lis circulars, ceased business December !,
lsi9. Here then was period OF only about three
months that lhp plfipany was Issuing policies, II
they issued any 81 ali, that Can p6sslrly le aie.i-
ed by the representations referred To. Noted and
policies issued before September lst remain I'm
affected and uncOntaminated by the alleged
fraud and upon no ground are yoidable. And as
70 The notes given during this period, unless the
makers Upon ihe 1lsaqyffy " fhp depeii, AssuIl-
ing II 10 De sIch, u once 'resLlnIeA lhe lliIacls
Of Insurance Fheh was the consideration VI the
notes assessed they Will be regarded US having
affirmed both. For myself. therefore, | do not
understand how payment VI the assessments IN
question can he successfully resisted upon the
grounds suggested and herein Indicated.
The company being under clear libillty
to pay losses II was It's duiJ 70 put hself In funds,