New-York tribune., 1905-11-25
COURT SUSTAINS LORD.
appellate DsUisiOn Holds State Can
Amend Insurance Lazes.

| That the State legislature doubtless has authority
! so to amend the insurance laws to permit the
Equitables board of directors to InutuaZe the COM
pany but that the directors at the mutualizs ton
| meeting in question did not have the. States au-
thority is considered to have been an important
point in yesterdays decision by the Appellate Dl-
! vision of the Supreme Court in the suit of Franklin
| B. Lord. With the dissenting voice only of Justice
! Hooker. the Appellate Division handed down de-
csion in favor of Mr.. Lord Ia stockholder, against
the Equitable) against the plan of naturalization as
proposed by the company, and affirmed the inter-
I lochtory judgment entered against the demurrer
| put in Justice Maddox's decision.
i 1t is believed that. should the legislature ult-
! mately pass such an enactment and the directors
take advantage of it, this would seriously affect
the Ryan trusteeship now in force The question
of the legislatures authority is said not actually
to have been involved in Mr. Lords suit. 1t is
pointed out that Ryan ee-directors might
in certain contingencies be asked to vote against
their continuance in office. The decision will
probably be appealed
The justices who heard the Bartlett,
Woodward. Hooker. Rich and Miller. Justices
jerks and Hirschberg were not sitting. The opinion
is written by Justice Woodward and Justices Bart
lett. Rich and Miller assent in the decision, al
though Justice Bartlett includes a memorandum of
his own. The present litigation was the outcome of
the society's attempt in February to adopt an
amended charter that would provide for mutuaiza-
ton.
Mr Lord, the plaintiff, maintained that the
ciety had right to adopt the amended charter
by vote Of its directors, If the vote carried
with it the weight of a majority of the stock. 1t
must be the vote of all the stockholders he con-
tended. Mr.. Lord asserted that his rights as
stockholder had been invaded He was represented
in court by Edward NJ Shepard and others Will
lam B. Hornblower and William n. Cohen repre-
sented the society. Justice Maddox decided in
favor of Mr.. Lord, and the society appealed.
In his opinion Justice Woodward declares that
the question presented appeal is whether the
hOar rd of has I
stockholders the ultimate power of control of the
affairs of the society and to vest such control in
the policyholders. Mr. Lord urges, said Justice
Woodward that there is power in the legis-
lature to authorize such change, and that If such
power does exist, 1t has not been exercised and
that the action Of the directors is without warrant
Of law and void.
Justice woodward concludes that the act under
which the society was organized not limita-
ton of the power of the legislature a repeal
OF the revised statutes they may provide for |
the reservation of power in the Legislature to !
amend or repeal the charters of insurance com |
panies. Justice Woodward holds that the power |
of the legislature over corporations is clear in |
the opinion Of Justice Hatch in the recent of
Hlnckley against the Schwarzchild & Sulzberger |
Company, and declares that this power may be /
exercised as to life insurance companies.
Justice Woodward declares that every policy
holder of the Equitable has a tangible interest
in the surplus and continued solvency of the Equi
table. Should the legislature have and exercise
to cnange the methods or eiectlnS Ill !
rectors. says Justice Woodward. the stockholders
would still have the stock and the right to share in
the choice of directors.
I'VE have no doubt" says Justice Woodward.
that the legislature might if it fit, so amend
the laws of this State to permit the choice of
a majority of the directors of the defendant COM
pany.'
Justice Woodward, after concedng that the ques-
ton of the States power may be disposed Of when
It has attempted to exercise such power, says, in
closing:
In the absence of positive enactments giving the
power Of control to policyholders. the courts
ought not seek for strained construction to give
his power, though 1t be called tualiza ton
So radical a change in the policy of the state in
'eSpect to this most important branch OF its policy
ought TO be clearly manifest in the statutes of the
State before ii is put into operation by the mere
,ote of board of directors, who were not chosen |
With any view the possibility OF such action |
The interlocutory judgment appealed from should |
affirmed, with costs, order OF injunction
houId be sustained with costs. |
1t should be recalled that Mr. Lord began his |
uit previous to Mr.. Hydes stock sale Thomas
:. Ryan. with its subsequent trusteeship