Case Name: State ex rel. v. Ackerman et al.
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1894-03-13
Citations: 51 Ohio St. 163
Docket Number: 
Parties: State ex rel. v. Ackerman et al.
Judges: 
Reporter: Ohio State Reports, New Service
Volume: 51
Pages: 163–199

Head Matter:
State ex rel. v. Ackerman et al.
Foreign insurance companies — Certificate of authority to do business in this state — Effect of — Authority granted, a franchise — Unlawful exercise of — Quo Warranto — When may be invoked— When individuals act as a corporation — Remedy against.
1. Foreign insurance companies and associations, whether incorporated, or not, before commencing business in this state, are required to obtain a certificate of authority to do so, from the Superintendent of Insurance.
2. That certificate, so long as it remains in force, confers on the company or association receiving it, the right and privilege of carrying on its business in the state.
S. The authority so granted, emanates from the state, and the privilege it confers is a franchise; and any company or association carrying on its business here, without having obtained such authority, is unlawfully exercising a franchise.
4. To come within the purview of that provision of section 6760, of the Revised Statutes, which authorizes an action in Quo Warranto to be brought “against an association of persons who act as a corporation within this state withoutbeing legally incorporated,” it is not necessary that the association, or persons composing it, ■ avow a purpose to act as a corporation, or assume to do so ;■ it is sufficient if the acts are such as appertain to corporations, or are done after the manner of corporations.
5. The defendants, without being legally incorporated, associated themselves together for the purpose of transacting the business of insurance, by articles of agreement, under which they issue policies in an artificial name, the “Guarantee and Accident Ivloyds, New York,” insuring persons for certain amounts on payment of specified rates, “against loss of life, eye or eyes, limb or limbs at or above the wrist or ankle,” by accidents, other than those excepted in the policy, or in the conditions indorsed on it; each member contributed an equal amount to a common fund for the payment of losses and expenses, and each stipulates with the others that no policy shall be issued unless it is executed in behalf of all, but, that his liability shall be several only, and limited to the amount contributed or authorized by him ; the interest of each member in the concern is made transferable by him if he wishes to withdraw, or by his personal representative after his decease, and the assignee takes the place of a member, thus making the association capable of perpetuity like a corporation ; and the defendants are carrying on the business of insurance in that mode, in this state, without having obtained a certificate of authority from the Superintendent of Insurance; Held: That in so conducting their business, the defendants unlawfully exercise a franchise, within the meaning of subdivision 1, of section 6760, of the Revised Statutes, and act as a corporation, within the meaning of subdivision 3, of that sec-’ tion, and under either, may be ousted from transacting the business of insurance within the state.
(Decided March 13, 1894.)
Quo Warranto.
The petition is filed against C. F. Aokerman and ninety-nine other persons, who are transacting the business of guarantee and accident insurance in this state, under the name of the “Guarantee and Accident Lloyds, New York,” to oust them from the carrying on of that business, because they have not complied with the laws of the state, or received any authority from, it to do a business of . that kind.
The character of the organization, and its plan of business, are shown by the following “articles of agreement, ’ ’ executed by the members.
“The undersigned, being desirous of entering into the business of individual Guarantee and Accident Insurance:
“1st. Do each individually agree to deposit with an.advisory committee to be appointed by the undersigned as hereinafter provided, the sum of one thousand dollars.
“2nd. Such sum or sums so subscribed by each individual subscriber shall be held by the advisory committee for the individual account of each subscriber, together with all earnings thereon, as a fund to meet any loss which each such subscriber may sustain upon any policy of insurance subscribed by him beyond the net amount of premiums' earned and received on said policy.
“3rd. Such advisory committee shall consist of five of the subscribers to this agreement, or such further subscribers as may hereafter adopt and execute this agreement, and may be selected and appointed once in each year on the Wednesday succeeding the first Monday in January, at an annual meeting* of the subscribers. An annual meeting shall be called by the advisory committee, by mailing or handing to each subscriber a notice for such meeting at least five days before the time fixed therefor. The advisory committee to act until the Wednesday succeeding the first Monday of January, 1891, shall be composed of
(1). (2).
(3). (4).
(5).
“Such advisory committee and every member of such committee shall continue to act as such until a new member or a new committee shall be appointed.
“All questions shall be determined by a majority of such committee, and three members thereof shall constitute a quorum. Each member attending a meeting shall be paid $5 in gold for each attendance. Such committee shall meet at least once in each month; and oftener if they deem it necessary.
“4th. Such committee shall have the custody and management of the subscription fund above provided for, and the general charge and supervision óf all the business to be done; shall supervise and direct the attorneys in fact who may be appointed by the subscribers, exact and receive accounts from such attorneys in fact, examine, audit, and pass upon the same, receive from said attorneys in fact and receipt for any earnings applicable to the several accounts of either of the undersigned, and make such use, disposition and investment of the fund and earnings as they shall deem most advantageous and secure.
“5th. If any member of such committee shall cease to be an insurer under the terms of this agreement, he shall cease to be a member of such committee, and ' the remaining members thereof shall select from among the other subscribers at the time being some person to fill the vacancy thus occasioned. Any vacancy in the committee shall be filled in the same manner.
“6th. The business management of the insurance to be effected for and on behalf of each of the individual subscribers hereto shall be in charge of Aaron H. ' Rathbone, Frederick W. Satterlee, Cleveland D. Fisher and John G. Dorrance, as attorneys in fact of each subscriber hereto; such business shall be carried on at an office to be known as the office of the Guarantee and Accident Lloyds; each subscriber shall execute and deliver to them a power of attorney, in form and effect to be approved by the advisory committee, and by Messrs. Coudert Brothers, counsellors-at-law, giving to said attorneys the necessary power for the purpose indicated. The powers thus conferred on said attorneys shall be subject to and shall be exercised under the direction, supervision and control of the advisory committee above referred to, and all policies or other instruments binding the subscribers must be signed by at least two of said attorneys. The compensation of said attorneys jointly, shall be a commission of ten per cent, on the amount of the premiums received in each year ; in consideration of which the said attorneys agree to defray all charges of office rent, salaries, stationery, advertising and all other expenses incident to the proper care and prosecution of the business, except agents’ and brokers’ commissions, losses, legal expenses, taxes and the pay of inspectors employed under the direction of the advisory committee. Such attornej^s shall be entitled as further compensation for their services, to twenty-five per cent, of the net profits of each year’s business as found and determined by the advisory committee. Such profits may be determined and paid over quarterly.
“7th. Such attorneys shall at times, when so re-' quired, furnish to the advisory committee full statements of all insurance, expenses and premiums, whether due or collected, and every mem ber of the committee shall at all times have access to all the books and papers of the attorneys. The attorneys shall keep separate accounts for each of the subscribers to this agreement, and each subscriber shall at all times have access to his individual account.
“8th. The advisory committee shall cause to be made up on the 31st day of December in each year all the accounts of the several subscribers hereto. If there should be any balance to the credit of the several subscribers over and above the amount of each subscription, the advisory committee shall determine how much, if any thereof, it is advisable to pay to each subscriber; and no part thereof shall be paid to or withdrawn by any subscriber hereto, so long as he shall remain a party to this agreement, except upon the order or direction of the advisory committee. Each subscriber shall, however, be entitled to receive from such advisory committee at the end of each calendar year a certificate showing the amount to his credit at the end of such year. If the account of any subscriber hereto shall show upon such annual statement that the amount to his credit is insufficient to cover the current liabili-' ties against him, the advisory committee shall have the power and authority to call upon such subscriber for the payment of such an amount as will, in the judgment of such committee, be sufficient to meet the deficiency, and such amount when paid shall be credited to each individual •subscriber in like manner with his original deposit, and if not paid within three months from the date of such call, such subscriber shall thereupon cease to be a party to this agreement, except in re gard'to transactions already entered into on his behalf.
“9th. In case any of the subscribers hereto should desire to withdraw from' this agreement, and shall give thirty days’ notice in writing of such desire to the advisory committee, and in case any of such subscribers shall become insolvent or embarrassed in business, or in case of any other reason it should be deemed advisable in the opinion of a majority of the advisory committee that any subscriber should withdraw from this agreement, the attorneys aforesaid "shall, upon written notification by the advisory committee, cease to act as the attorneys for such subscriber, except in regard to transactions already entered into on his behalf, and such subscriber shall thereupon cease to be a party to this agreement,' except in regard to such previous transactions. In ease of the withdrawal of ^ny subscriber for either of the reasons above stipulated, and in case of the death of any subscriber, his account shall not be closed until three months after the expiration of all risks in which he may have been concerned as such subscriber, and all sums to his credit, either in the hands of the advisory committee, or of the attorneys, shall be irrevocably pledged to the payment of any losses for which he may be or become liable, and of any amount which may be due or unpaid by him growing out of the insurance business herein contemplated; and neither such subscriber nor his assigns or legal representatives shall have the right to withdraw any part of such sum to his credit until all such losses or other debts are fully satisfied and discharged. At the expiration of all such risks and upon payment and satisfaction of such other in debtedness, the balance remaining to the credit of such subscriber shall be paid over to him. or his legal representatives or assigns.
“10th. In case, however, any subscriber who duly withdraws from this agreement, or the legal representatives of any deceased subscriber, should procure a new subscriber satisfactory to the advisory committee, then, upon such new subscriber assuming, in writing, all the liabilities and indebtedness of the former subscriber under this agreement, or arising from any business contemplated therein, and duly executing this agreement, the former subscriber, or his legal representatives, shall be released and discharged from all responsibility as a party hereto.
’ “11th. At the annual meeting of the subscribers already provided for, any and all questions arising under this agreement, or in reference to the business herein contemplated, may be called up and disposed of. Special meetings may be called by a majority of the advisory committee, or by any ten subscribers, in the manner provided for annual meetings. The subscriber may waive a five days’ notice, and accept in writing a shorter notice. Matters brought before any meeting shall be determined by the vote of a majority of those represented at such meeting, either in person or by proxy. At any meeting, annual or special, a quorum shall consist of the representatives of a majority of the subscribers. No change, however, can be made in the terms of this agreement except by the vote of three fourths of all the subscribers hereto, at a meeting specially called for the purpose by notice stating the exact terms of the change proposed.
“12th. All claims for losses shall be disposed of by the attorneys under the supervision of the advisory committee, and shall be paid out of the •funds in their hands, and when these are insufficient, then out of the funds in the hands of the advisory committee. Any suit brought upon any claim arising out of the business contemplated by this agreement, and any questions arising as to any legal liability upon any such claims, shall be referred to Messrs. Coudert Brothers, as counsel, under the supervision of the advisory committee, and such committee, with the advise and concurrence of said counsel, shall have power to settle, compromise or contest any such suit or claim as to them shall seem expedient, and are authorized, upon the advice and concurrence Of said counsel, to stipulate for and on behalf of each several subscriber hereto, that such subscriber will abide by the event of any such suit, whether at the time of such stipulation such subscriber be or not a party to this agreement.
‘£ 13th. In the policies issued under the present arrangement, neither of the subscribers shall be made jointly liable with the others, nor with either of the others, but each subscriber shall only be made severally and separately liable to the amount authorized by him individually in the power of attorney, given by him to the attorneys above mentioned. Nor shall any joint liability be created on behalf of the subscribers hereto, in any matter arising- out of the business to be' carried on under this agreement, but only a several liability on behalf of each individual subscriber. No policy, however, shall be issued on behalf of any individual subscriber hereto, unless each of the individual subscribers insures for a like amount on said policy.
“14th. All receipts or earning’s of the business contemplated by this agreement shall be kept by the attorneys in fact in a separate bank account, in-their name as such attorneys', and not in any way mingled with their own funds. They shall render accounts to the advisory committee at least once in each month, or oftener if required, and shall make returns and payments of balances to such advisory committee at least once in every three months, and oftener if required by the said committee.
“15th. All funds in the hands of the advisory committee shall be kept separately, and a separate bank account shall be kept by the committee for all uninvested funds, which bank account shall be in the names of such committee.
“Each of the undersigned, in consideration of the premises and of the execution of this agreement by the others, does hereby severally agree for himself, individually, to and with the others, and with each of them, that he and his representatives and assigns will faithfully abide by and carry out his obligations and covenants hereunder.
“In testimony whereof, each of the subscribers has hereto set his hand and seal, on the day and year set opposite his name. ’ ’
Each member of the association also executed a power of attorney in the form following, viz.:
"Knoio all men by these presents, That I do hereby constitute Aaron H. Rathbone, Frederick W. Satterlee, Cleveland D. Fisher and John D. Dorrance, my attorneys in fact, for - me and in my name, place and stead to insure individuals, firms or corporations against all lawful risks, injuries, losses and liabilities, excepting marine losses, losses by fire, and death from natural causes, upon such conditions as they may deem to my interest; for such, purpose to make and issue all binding contracts and policies of insurance; to subscribe such policies in my name, with the amount insured by me thereon, which shall in no case exceed the sum of five hundred (500) dollars on any one risk, unless such excess shall have been provided for by reinsurance; to change or. modify the terms of «any policy so issued; to annul or cancel the same; in their discretion to reinsure any and all such risks so taken and insured in such manner as shall be deemed by them most advantageous to my interests; provided always, that no such insurance or policy or reinsurance shall be made in my name or for my account, unless a like insurance policy or re-insurance on the same risk be made at the same time and on the same terms, for and in the name of each and every other person for whom they shall at the time be acting as attorneys under power similar to this, severally and not jointly, for an equal amount, as provided in the articles of agreement entered into by me with various other persons on the-day of-, 189 — , of which agreement copy has been furnished to said attorneys.
“This power is given, and the exercise of all faculties thereunder is subject to the control and direction of the advisory committee acting under the provisions of the articles of agreement herein-above referred to, and the said attorneys are instructed and directed to turn over to such advisory committee all premiums, notes, moneys or things of value belonging.to me which, shall come into their possession in the premises at least once in every three months, and as much oftener as they may be thereto required, by the said advisory committee.
“To demand, collect, sue for, receive and receipt for all premiums which may at any time become due to me.
“Also to receive notices and proofs of loss and interest, and all other notices and proofs under any policy issued by virtue hereof, and in all respects to manage and do in and about such insurance and all notices or claims thereunder, as they shall deem best for my interests.
“Also, to adjust and pay out of any moneys in their hands belonging to me any loss, claim or demand that may arise from or under any policy issued in my name under this power. And in case of suit being brought against me on any such loss, claim or demand, to appear for me and in my name to defend or compromise such suit. Also, with the advice and concurrence of the advisory committee, to stipulate in my name that I will abide by the event of any suit which may be brought against any other party to the articles of agreement already mentioned, upon any policy which shall have been likewise subscribed in my name by virtue hereof.
“Also to do and perform for me and in my name every other act and thing, in relation to any policy made by virtue hereof, as fully as I could personally do.
“Provided always, that my said attorneys shall in no case make any policy of insurance by virtue of these presents, by which I shall be made to insure jointly with any other person, or which shall in any way make me liable for the acts of any other person or insurer, or which shall bind or affect me otherwise than by a several and individ ual liability to the amounts insured, or subscribed by me individually or in my name.
“In testimony whereof, I have hereunto set my hand and seal in the city of New York, on the-day of-, 189 — .
“Sealed and delivered in presence of
U___(_ ??
The form of policy used by the association, and issued to those whom it insures, is as follows:
Classification A.
No................ $................
GUARANTEE AND ACCIDENT LLOYDS New York.
Age................ Weekly Indemnity $...............
In Consideration of...............dollars paid, and of the warranties and agreements contained in the application for insurance, which application is made a part of this contract, each of the subscribers hereto, as a separate underwriter, does for himself and not one for the other, hereby Insure (subject to the condition's hereon)........................... of................................................................................................. by occupation a................................................................ from 12 o’clock noon of the...........day of....... 189..., to 12 o’clock noon of the...........day of. 189..., and for such further period of time as may be covered by duly authorized renewal receipts (subject to the conditions and provisions expressed therein).
Against Loss of Life, Eye or Eyes, Loss (separation) of Limb or Limbs, at or above the wrist or ankle, provided such loss occurs within ninety days of the happening of the 'accident causing the same, also against loss of time while immediately, continuously and wholly disabled and prevented from transacting’ any and every kind of business pertaining to the occupation above stated, not to exceed sixty-five consecutive weeks, (except when so disabled for life), provided the loss for which any claim is made is not caused or contributed to by any form of disease, but is caused exclusively by bodily injuries leaving external and visible marks of contusion or wounds upon the body, effected by external, violent and accidental means during the continuance of this insurance, in the following sums, to-wit:
1. For loss of life as aforesaid.................$5,000 00
2. For loss of both hands as aforesaid 5,000 00
3. For loss of both feet as aforesaid... 5,000 00
4. For loss of one hand and one foot as aforesaid............................................................ 5,000 00
5. For loss of both eyes as aforesaid. 5,000 00
6. For permanent total disability for life as aforesaid............................................ 3,000 00
7. ' For loss of the right foot as aforesaid......................................................................... 2,500 00
8. For loss of the left foot as aforesaid.............................•........................................... 2,500 00
9. For loss of the right hand as aforesaid......................................................................... 2,500 00
10. For loss of the left hand as aforesaid ........................................................................ 1,500 00
11. For loss of one eye as aforesaid ......................:.................................................. 650 00
12. For loss of time per week, as aforesaid (in lieu of all other benefits) 25 00
13. The loss in subdivision I is payable to if surviving, if not, to the legal representatives of the assured. Other loss to the assured.
14. The assured shall have the privilege, of traveling* in any of the civilized portions of the globe, by confining himself to the usual routes and the ordinary means of conveyance.
15. The loss of one or both eyes,-feet or hands, or failure duly to pay any premium, will immediately terminate this insurance.
16. Each of the subscribers hereto shall be and is individually liable for one-hundreth part of the amount insured hereunder.
17. Affirmative proofs of loss and proof of insurable interest under subdivisions, 1, 2, 3, 4, 5, 7, 8, 9, 10 and 11 shall be furnished to the attorneys of the subscribers within four months of the happening* of the accident causing* the same, and under subdivisions 6 and 12 within one month after termination of total disability, and no proceeding* in law or equity shall be broug*ht to recover payment under this policy unless such suit or proceeding shall be commenced within six months of the filing* of such affirmative proofs .and against only one of the underwriters at one time. A final decision in any suit so brought shall be decisive of such claim against each of the underwriters, and each underwriter hereto waives any limitation as to costs, and agrees to abide by the event of any' such suit, and authorizes the attorneys to pay the' assured out of any funds in their hands, the amount due under this policy. Each of the underwriters hereby authorizes the attorneys to receive and admit service of process for him in any suit brought as aforesaid.
18. If the assured shall be fatally or non-fatally injured, while temporarily or otherwise exposed to a hazard pertaining to an occupation or employment classed by the subscribers as more hazardous than that here given,-the liability hereunder shall be only for such amount as is provided for the class in which such more hazardous occupation or exposure is rated, in the manual of the guarantee and Accident Lloyds.
19. All losses under this policy are payable at the home office in New. York, ninety days after receipt of proofs of loss satisfactory to the attorneys of the subscribers.
Each of the present subscribers as a separate underwriter binds himself severally and not jointly with any other for the true performance of the premises for the amount expressed to be insured by him.
In witness whereof the subscribers, as separate underwriters, do severally subscribe their names at the City of New York, this........... day of................, 189...” (Here follow the names of the members): Signed “by-, Attorneys.”
CONDITIONS.
NOT WAIVABLE- BY AGENTS.
The conditions under which this policy is issued and accepted by the assured are as follows:
This insurance shall not be held to extend to or cover disappearances, nor to any injuries received while engaged temporarily or otherwise in any act or thing pertaining’ to blasting, wrecking or to the manufacture, transportation or handling of gunpowder, or any explosive substance or article in any way, shape or manner, except the use of fire-arms by sportsmen, nor while riding on a railroad train in any place or places except those provided for the transportation of passengers, or while walking or being upon any bridge or road bed of any railway.
The assured suffering a loss for which a special sum is stated herein shall not be entitled to any other indemnity for the same injury, and the total amount of indemnity hereunder in any' one year (twelvemonths) shall not exceed the sttm named herein as death indemnity.
In the event of an accident or injury for which or from which, directly or indirectly, any claim may be made under. this policy, notice shall be given in writing signed by the assured, his attending physician, or beneficiary, mailed within ten days of the happening of such accident, and addressed to the manager of the accident department of the Guarantee and Accident Lloyds at New York, stating the full particulars as to when ' and where and how it occurred, and the occupation of the assured at the time, his policy number and his address.
A representative of the subscribers shall be allowed to examine the person or body of the assured in reference to any injury or cause of death, when and as often g,s may be reasonably required in their behalf.
The subscribers or their attorneys shall have a right to terminate this policy and insurance, by mailing to the assured at his address as furnished, a notice of such termination, and a check or draft on New York for all unearned premiums standing on the books of the Lloyds, to his credit.
This insurance shall not be held to extend to or cover injuries received, whether fatal or non-fatal, that are caused wholly or in part-, directly, or. in directly, by or in consequence of disease; fighting, scuffling, lifting or over-exertion, unnecessary sary exposure to danger (voluntary or otherwise); war, riot, or in consequence of violating the law, by inhalation or otherwise (voluntary or involuntary) of any form of gas or gases; injuries intentionally inflicted; injuries received while under the influence of intoxicating drinks, or narcotics, or in consequence thereof; sunstroke, freezing, suicide (felonious or otherwise, sane or insane); contact with any poisonous substance.
In the event that a claim shall be made under this policy for loss, of one hand or one foot, and the assured shall have more than one other policy of accident insurance covering such loss, the liability hereunder shall be only for such proportionate part of the amount of such loss of hand or foot named herein as one policy bears to the total number of policies held by the assured.
By the acceptance of this policy the assured absolutely agrees and consents that in any action, proceeding or investigation in which this Lloyds is interested, any physician who has been or may be at any time consulted by him professionally, may testify under oath, before any court, tribunal or officer, concerning any ailment, disease, injury or affliction, bodily or mental, constitutional or otherwise, that he is or has been or may be suffering from.
Should the assured engage in an occupation more hazardous than that named herein, it shall operate immediately to reduce the indemnity named herein to that provided for such more hazardous occupation according to the manual of the Guarantee and Accident Lloyds then in use, with the same effect as if the policy had been can- celled and a new one issued accordingly; the pre- . miums however remaining the same.
Dividend Bond Notice.
This policy participates in the benefits of the dividend bond class, when the premiums are paid annually in advance.
Notice.
In case of injury notice must be given immediately to
W. D. Chase,'
Guarantee ancl Accident Lloyds. ’ ’
In addition to the foregoing facts, the petition alleges that:
“Prior to the third day of May, 1891, the defendants, acting in pursuance of the articles of agreement and power of attorney aforesaid, and under the name of the “Guarantee and Accident Lloyds,” carried on the business of guarantee and accident insurance in states of the United States other than Ohio; and on said third day of May, 1891, they made application to the Hon. W. H. Kinder, Superintendent of Insurance of the state of Ohio, for a license or certificate of authority to carry on in said state, the business of guarantee and accident insurance, in accordance with the articles of agreement above set forth. The license and authority to do such insurance business was refused by the said superintendent of insurance; whereupon the defendants in this suit, acting as relators, instituted proceedings in mandamus in this court, ask ing the court to compel the Superintendant of Insurance of the state of Ohio to issue such license and authority.
“Upon the final hearing of said action in mandamus, this court denied the application and refused the writ of mandamus prayed for, and rendered judgment against the relators for costs; but notwithstanding the refusal of the superintendent of insurance to issue to the defendants a license or certificate of authority as requested, andf notwithstanding the decision of this court sustaining the superintendent in so refusing, the defendants, acting under and in pursuance of the articles of agreement and powers of attorney aforesaid, and while so associated, have been and are transacting the business of guarantee and accident insurance in the state of Ohio, without having complied with the requirements of the laws of the state of Ohio regulating insurance, and without having been licensed or authorized to do such business by the Superintendent of Insurance of Ohio. A sample copy of the policies which are being issued by the defendants,while thus associated as the Guarantee and Accident Lloyds, is attached to and made part hereof, marked “Exhibit A.”
“The defendants are citizens of the state of New York, and the articles of agreement and powers of attorney aforesaid were entered into in that state; and said agreements constituted and constitute the defendants an association, under the name of the Guarantee and Accident Lloyds, with a principal office and place of business in the city of New York, under which style and name, and from which point the said association has been and is operating in the transaction of the business of guarantee and accident insurance.
“In thus transacting the business of insurance in the state of Ohio, without having complied with the laws of Ohio regulating insurance, and without license or authority from the Superintendent of Insurance of Ohio to do so, the defendants have been and are usurping-and unlawfully exercising a franchise of public concern, which has been reserved by the state for its control.
“Plaintiff prays for the advice of the court in the premises and that the défendants be compelled to answer to the state of Ohio by what warrant they claim to have, use, and enjoy the liberties, privileges and franchises aforesaid, and that they be ousted from using and exercising the same. ”
The defendants have interposed a general demurrer, and upon that the parties have submitted the case for final determination.
Peck & Shaffer, and Franklin T. Cahill, for the demurrer.
Is the right to make insurance contracts a natural right common to all citizens, which may perhaps, be regulated under the police power of the state; or, is it a privilege, a franchise, which no citizen has a right to exercise unless the privilege be granted to him by the state?
The petition in this case is based upon the theory that it is a franchise, and if this be not true, the petition must fail. Quo toarranto never lies against an individual for violation of a police regulation. What is a franchise? 2 Blackst. Com., 37; California v. Pacific R. R. Co., 127 U. S., 40; Anderson’s Law Dictionary; Bouvier’s Law Dictionary, 611.
Quo wurraniolvAS always been the proper remedy where an individual usurps a, franchise, and section 6760, Revised Statutes of Ohio, makes it the proper remedy in this state. But there is no ease that we can discover, in the history of the law, where the court has allowed it to be resorted to, to enforce a law which is but a restriction of common law rights.
The Revised Statutes, sections 6760 and 6761, specifically set forth the purposes for which this sort of an action may be resorted to, and all of them relate to the usurpation of franchises or offices; none to the punishment of crimes or misdemeanors.
The right to be a corporation is a franchise, and all the powers the corporation is vested with are but part of its franchise, and were it to enter into insurance contracts, without having the right so to do, it would be usurping a privilege not granted to it, and would be subject to an action in quo iocwranto. But this does not apply to an individual. High’s Extraordinary Legal Remedies, sections 592-3, 600, and cases cited; 2 Spelling on Extraordinary Relief, sec. 1773.
The statutes of Ohio do not extend the jurisdiction of quo warranto to violations of any of the police regulations of the state by individuals; and indeed we know of no state where such is the ease. Every police regulation imposes a penalty for violation; the insurance laws of Ohio do likewise in sections 288 and 289, Revised Statutes of Ohio.
The defendants make contracts as individuals, and are sued in this case as individuals. If in making these contracts they violate any existing statute, regulating the right to make insurance contracts, they violate a law which can exist only by virtue of the police power of the state, and which is in restraint of the natural and common rights of all citizens. They do not usurp a privilege, a franchise; they violate a restriction.
To make contracts of insurance is but one of those natural rights which every citizen is at liberty to exercise at will. The liberty to enter into contract or agreement is one. of the most important natural rights that are secured to the citizens of this and of the several states.
Any person is at liberty to pursue any lawful calling, and to do so in his own way, not encroaching upon the rights of others. This general right can not be taken away. Cooley Const. Lim. 6 Ed., 744; People v. Gilson, 109 N. Y., 389; In re Jacobs, 98 N. Y., 98; Goodcharis v. Wiegemann, 113 Pa. St., 431; State v. Goodwell, 33 W. Va., 179.
Individual insurance is but a private contract. Every contract of guarantee, of endorsement, every bond, is but a species of insurance. Lucena v. Crawford, 2 B. & P., 300; 1 May on Ins., sec. 27; Marshall on Insurance, 1.
The natural right of individuals to make insurance contracts has never been questioned anywhere, though states have claimed, and do claim the right, by virtue of the police power, to regulate them. Marshall on Insurance, published in 1802, 39 and 40.
The right of the Lloyds to do business has been questioned in Michigan, Georgia and Missouri, but in all of these states the question was raised by the arrest and prosecution of the agent. In Michigan and Georgia our position was sustained. Frost v. State of Georgia, Southeastern Reporter, Oct. 17, 1893, page 14.
New York and many other states do not question our right.
Passing now beyond the question as to the form of the remedy: Does the petition allege facts which constitute a violation of the laws of Ohio by the defendants ?
Certainly the insurance laws do not apply to the defendants. It is impossible for defendants, in the very nature of things, to conform to them, and this court has so held.
This leaves us but one question — do the statutes of Ohio prohibit individual insurance contracts ?
We can find nothing in the statutes that attempts such a result, and if they did, such a prohibition would be void. It may be within the power of the state to regulate the making of insurance contracts by individuals, but it cannot prohibit them.
J. K. Richards, Attorney-General, contra.
I. What the ‘Guarantee an d Accident Lloyds ” is. Since it is contended that the defendants make individual contracts of insurance, on the plan of the English “Lloyds,” it may be well to look into the articles of agreement and power of attorney to see what the “Guarantee and Accident Lloyds” is.
It is apparent from the reading of the articles of agreement that the defendants, by that compact, are associated together for the purpose of doing insurance, and hence form an association, for an association is “an organized union of persons for a common purpose,” (Century Dictionary); or, “a union of persons in a company or society for some particular purpose” (Webster’s Dictionary).
By entering into these articles, each subscriber laid aside any power he may have had to make an individual contract of insurance, and became a member of an association of one hundred individuals, with powers strictly limited and defined by the articles, and entrusted their administration to certain individuals, selected by a majority of the association.
The view of the Georgia court as to the kind of association the defendants constitute, is pertinent, for the reason, as we shall see later, that the Ohio law, unlike the Georgia law, applies to unincorporated as well as incorporated companies. The Georgia law applies only to incorporated companies. It is pertinent, also, upon the question of the power of a state to regulate and control the transaction of insurance business within its borders,. by such an association as the “Guarantee and Accident Lloyds;” the Georgia court evidently has no doubt of the power of a state to do just what, as we hope to show, the legislature of Ohio has already done.
The insurance business done by the defendants is not done by individuals, except as they are members of an association; it is transacted through that association and the officers or agents selected by it; the individual subscriber has nothing to say. This is not individual insurance. . It is not such insurance as is .done by the “Lloyds,” as described in the Encyclopaedia Britannica.
II. The Ohio law regulating insurance.
The principle is now well established, that “where the owner of property diverts it to a use in which the public have an interest, he, in effect, . grants to the public an interest in such use, and must, to the extent of that interest, submit to be controlled by the public, for the common good, as long’ as he maintains the use.” Munn v. Illinois, 94 U. S., 113, quoted and approved in State ex rel. v. Gas Company, 34 Ohio St., 572, 582, and Zanesville v. Gas Light Co., 47 Ohio St., 1, 30.
That the business of insurance is one of public interest and concern is apparent from the amount and character of the legislation on the subject, not only in this state, but in all the states, and in all countries. State v. Pioneer Live Stock Co., 38 Ohio St., 347; State ex rel. v. Reinmund, 45 Ohio St., 214, 219; Insurance Co. v. Leslie, 47 Ohio St., 409; sections 3656, 3657, 3658, Revised Statutes; F. & N. Insurance Co. v. Salt, 31 Mich., 346, 354; The American Insurance Co. v. Stoy, 41 Mich., 385, 401; People v. Howard, 50 Mich., 239, 248.
III. The privilege of doing insurance in Ohio is a franchise, for the unlawful exercise of which quo warranto will lie.
What constitutes a franchise is ably discussed by Spelling in his recent work — 2 Extraordinary Relief, sections 1806, 1807,1808; California v. Pacific R. R. Co., 127 U. S., 40; People ex rel. v. Utica Insurance Co., 15 John., 358; Kansas v. Topeka, 30 Kans., 653; Esminger v. People, 47 Ill., 384; Swarth et al. v. People ex rel., 109 Ill., 621; People ex rel. v. "Golden Rule,” Barber et al., 114 Ill., 35; Farmer v. State, 69 Tex., 561; State ex rel. v. Life Insurance Co., 47 Ohio St., 167, 179; Minn. ex rel. v. Fidelity and Casualty Insurance Co., 38 Minn., 538; State ex rel. v. Reinmund, 45 Ohio St., 214, 218; Connecticut Insurance Co. v. Commonwealth, 133 Mass., 161; Western Union Telegraph Co. v. Meyer, 28 Ohio St., 522.
Peck & Shaffer and Franklin T. Cahill, in reply.
It can not he held, we think, that the right of any person to practice his or her profession, under a license issued pursuant to a statute enacted by the legislature under the police power of the state, comes within any legal definition of a franchise. Chicago, etc., R. W. Co. v. People, 73 Ill., 541; Bank of Augusta v. Earl, 13 Peters, 519; City of Bridgeport v. N. Y., etc., R. R. Co., 36 Conn., 255; Swarth v. The People, 109 Ill., 621; State v. Scougal, 51 N. W., 855.
Numerous cases have been decided wherein it has been held that the legislature'can not take away the common right of a citizen to engage in a useful occupation. Among them we cite, In re Jacobs, 98 N. Y., 98; Bertholi v. O'Reilly, 74 N. Y., 510; People v. Marx, 99 N. Y., 377; Millett v. People, 117 Ill., 294.

Opinion:
Williams, J.
The action of Quo Warranto may be maintained under our statute, (1) against a person who unlawfully exercises a franchise, and (2) against an association of persons who act as a corporation within the state without being legally incorporated; and the present action is prosecuted on both of these grounds. The position taken in support of the demurrer, is that the defendants, in transacting the business of insurance in the manner alleged in the,petition, do not exercise a franchise, or act as a corporation, but are pursuing, as individuals, an occupation in which any person may of natural and common rig'ht engage; which right, it is contended, cannot be abridged or controlled by legislation, and hence, the defendants are not subject to the conditions and regulations imposed by the laws of the state on companies and associations doing an insurance business.
Insurance, in its early existence, when the nature of the risks assumed were few, and the amount of business small, was done chiefly, if not entirely, by individuals. But in more recent times, it has been extended until it embraces almost every kind of risk, and has g'rown to such proportions that it enters into every department of business, and affects all classes of people and their property; and has, in consequence, everywhere, become the subject of legislative regulation and control. The several states have enacted laws, designed to place the business within their limits on such substantial basis as will afford adequate protection to the citizens, and their property. There can be no doubt of the power of the state to do so; nor, that the power extends to the enactment of such laws as its legislative body may deem wise and proper for the purpose, not in conflict with the fundamental law; and, therefore, within the legitimate exercise of that power, foreign companies may be excluded altogether from doing business in the state, or admitted on their compliance with such terms and conditions as its legislature chooses to impose.' There has .been enacted in this state, an extensive code or system of laws, covering the whole subject of insurance, regulating the incorporation and organization of companies and associations for the transaction of the various kinds of insurance, and prescribing their powers and duties, defining the scope and effect of their policies, and otherwise regulating their business. They are required, as a means of protection of those who deal with them, to deposit adequate securities and invest their capital and earnings in designated modes, in the state, make periodical reports of their financial condition and business affairs, submit to visitations, and examinations of their affairs by a public officer charged with the duty of enforcing the insurance laws, and comply with other specified requirements ; a compliance with all of which by companies and associations organized in the state, is essential to their right to carry on the business. Foreign companies, before doing business in the state, are required to conform to the same regulations, and others peculiarly applicable to them; among which latter, are those which prohibit any "insurance company, association, or partnership, incorporated, organized, or associated under the laws of any other of the United States, or of any foreign government, " from doing an insurance business "in this state, until it procures from the superintendent a certificate of authority to do so, ' ' and forbid any person or corporation to "act as agent in this state for any such company, association, or partnership, directly or indirectly, either in procuring applications for insurance, taking risks, or in any manner transacting the business of insurance, until it procures from the superintendent a license to do so, stating that the company, association, or partnership has complied with all the requirements of," the insurance laws, "applicable to such company, and depositing a certified, copy of such license in the office of the recorder of the county in which the office or place of business of such agent or agents is established." Revised Statutes, section 3656.
The chapter of' the Revised. Statutes'which establishes the department of insurance, and places it under the management of the superintendent, provides, among other things, that officer shall be appointed by the Governor, by and with the advice and consent of the senate. He holds his office for a fixed period, and is paid a stated salary; he is provided with an office in the state house, and is specifically charged with the duty of seeing to the execution and enforcement of. all laws relating to insurance; he is authorized to investigate the business and affairs of all insurance companies, whether foreign, or domestic, and employ skilled and competent persons to assist him; it is made his duty, when he has reason to suspect that the affairs of any company are in an unsound condition, to cause them to be investigated, and its officers and agents are required to submit themselves to examination under oath, and their books and business to his inspection, and in every other way facilitate the investigation; and when satisfied the company is in an unsound condition, his duty is to revoke its authority to do business, and from his decision there is no appeal. State v. Moore, 42 Ohio St., 103. He must keep a record, and preserve in permanent form his proceedings, including a concise statement of the condition of each'company, and make reports to the legislature, of the conduct and condition of each company doing business within the state, with such suggestions as he may deem expedient. In short, his department is a branch of the state government, and his functions are derived from the state, and exercised in the public interest. Every insurance company, before commencing business, is required to pay into the department certain fees and charges for filing its charter, and others for filing its preliminary statement for admission, and for its certificate of authority to do business, and for licenses to its agents; and after the company commences business, it "shall publish, at least once a year, in some newspaper of general circulation, in every county where such company has an agent, a certificate from the superintendent of insurance that such company has, in all respects, complied with the laws of the state relating to insurance. " It is made unlawful for any person, company, or corporation not licensed by the superintendent of insurance, to receive or forward applications for insurance in any foreign company, or in any manner aid in the transaction of its business; and severe penalties are attached to the violation of any of the provisions of the chapter which provides for the appointment of the superintendent, including those already pointed out, all of which are made applicable expressly, "to individuals and parties, and to all companies and associations, whether incorporated or not, now or hereafter engaged in the business of insurance;" and it is further made unlawful for any ' 'company, corporation, or association, whether organized in this state or elsewhere, either directly or indirectly, to engage in the business of insurance, or to enter into any contracts substantially amounting to insurance, or in any manner to aid therein, in this state, without first having complied with all the provisions of this chapter." Revised Statutes, section 289.
These are some of the many statutory provisions showing the extent to which the state has taken control of the business of insurance. They are reasonable and just, and were adopted for the laudable purpose of protecting the public against imposition by unreliable and untrustworthy companies and associations. Compliance with them is made the condition upon which foreign companies and associations are allowed to transact the business of insurance within the state. There is not such, compliance until the company or association has obtained from the superintendent of insurance the necessarjr certificate of authority, and licenses to its agents. Companies and associations that have not received such certificate, are denied the privilege of doing business here. The certificate of authority so granted by the superintendent, so long as it remains in force, confers on the company or association receiving it, the right and privilege of carrying on its business of insurance in the state. The authority emanates from the state, and the privilege granted is a franchise.
The author of a recent and well prépared work, treating of this subject, says: "Where, by statute, the legal exercise of a right, which at common law was private, is made to depend upon compliance with conditions interposed for the security and protection of the public, the necessary inference is that it is no longer private, but has become a matter of public concern, that is, a franchise, the assumption and exercise of which without complying with the conditions prescribed would be a usurpation of a public or sovereign function. In this case, the legislature has done no more than was done by the court in the other instance, when it, from considerations of a public nature, declared, as a principle of the common law, that facts brought to its notice, or of which it then took judicial notice, warranted the application of principles existing independently of the legislative declaration to the effect that the right claimed was matter of public and not exclusively of private concern." Spelling on Extraordinary Relief, sec. 1807. The same author further says:
"There was no class of business, the transaction of which, as a matter of private right, was better recognized, at common law than that of making contracts of insurance upon the lives of individuals. But now, by statute, in almost, if not quite all the states, stringent requirements as to security of the persons dealing with insurers and the making and filing reports with public officers for public information, are provided, and must be strictly observed and complied with before any person, association or corporation may make any contract of life insurance. The effect of such statute is to make that a franchise which previously had been a matter purely of private right." Ibid, section 1808.
It is claimed, however, that the laws of Ohio do not apply to the defendants, because they are not an organized corporation, company or association, or acting as such, but that, in making contracts of insurance, each individual acts for himself. A careful consideration of their plan of business, as shown by the articles of agreement and powers of attorney executed by the defendants, has brought us to a different conclusion. They have associated themselves together in a business undertaking, under a company name, in which, viz: ' 'Guarantee and Accident Lloyds, New York, ' ' all of their policies are issued. Each subscriber to the articles has contributed an equal amount to the capital stock of the concern, which is placed in the control of a board of managers, called an advisory committee, to meet losses arising on the policies. This board of managers is chosen by the subscribers, like the directors of a corporation, and invested with powers quite as plenary. All the subscribers have executed powers of attorney'to the same individuals, investing them with the business management of the insurance, under the supervision of the advisory board. The powers conferred on the attorneys in fact, are analagous to those of the executive officers of a corporation. They execute the policies, keep accounts of the business and expenses, which are open to the inspection of the advisory board, adjust all losses, and prosecute and defend all suits growing out of the business. Each member of the association stipulates with the others that no policy shall be issued unless it is executed in behalf of all, and yet, that his liability shall be several only, and limited to the amount contributed to the fund, or authorized by him; so that, if some of the members become insolvent, and their contribution is exhausted in losses, or otherwise, the policy shall be enforceable against the others, only for an aliquot part equal to the proportion of the solvent to the insolvent members. The liability of a stockholder of a corporation is not more restricted. Then, the interest of each member in the concern is made transferable ; a member who wishes to withdraw being authorized to procure another to take his place, and the representative of a deceased member may transfer the latter's share in like manner, and, in that way, the organization may be made as enduring as it is possible for any corporation to be. The association has the appearance, and some of the characteristics of a corporation formed for the purpose of doing a general insurance business in its line, and its form of policies, and mode of conducting its business are calculated to impress one who does not make a critical examination, with the belief that it is a corporation, conforming to the usages of such companies. The character of the organization under which the defendants are operating, and their method of business, bring them, we think, within the purview of that clause of section 6760, of the Revised Statutes, which authorizes an action in quo loarranto to be brought ' 'against an association of persons who act as-a corporation within this state without being legally incorporated. " To be within the operation of that provision, it is not necessary that the association, or persons composing it, avow a purpose to act as a corporation, or assume to do so; it is- sufficient that the acts are such as appertain to corporations, or are done after the manner of corporations.
Under a statutory provision identical with that of section 6760, quoted above, it was held by the Supreme Court of Illinois, that "An association, or number of persons, who, in conducting the business of insurance, profess to limit their liability to the amount of money contributed by each, and assume to give perpetuity to the business by making membership certificates transferable by the assignment of the member or his-personal representatives, are 'acting as a corporation,' so as to authorize a judgment of ouster in 'quo warranto, under Revised Statutes, Illinois, 1874, c. 112, where they are not legally incorporated. " Greene et al. v. People, 21 N. E. Rep., 605.
The case is much in point; and we fully concur in the doctrine announced by Scholfield, J., in the opinion, where it is said: "The question here is whether, under the facts presented by this record, 'any association or number of persons are acting within this state, as a corporation, without being legally incorporated. ' If they are, the judgment below is authorized by our statute entitled "quo warranto" (chapter 112, Rev. Stat., 1874, p. 787), and must be affirmed; otherwise it must be reversed. We think it clear that, in two respects at least, these respondents are acting as a corporation, and it is not pretended that they are actually incorporated, namely: First, in professedly limiting their liability to the amount of money contributed by each; second, in assuming to give perpetuity to the business by making membership certificates transferable by the assignment of the member or his personal representative. It may be, as contended by counsel, that individuals may insure property against loss by fire. They cannot limit their liability to any given amount of capital they choose to set apart for that purpose, nor can they perpetuate the business without change of capital, beyond their own lives indefinitely. These things can only be done by a corporation. Ang. & A. Corp. (9th ed.), §41; 2 Kent. Comm. (8th ed.), 296, 298; Pars. Partn. (2d Am. ed.), 544; Gow. Partn. (2d Amer. ed.), 17. The fact that these respondents may be legally held individually liable upon any policies they may have issued does not relieve them of the charge of having acted as a corporation. They are, if individually liable, only liable because they have no statutory authority to do what they have assumed to do, because, instead of being a corporation in fact, they have usurped the powers of the corporation. Were we to hold that these respondents can do, without any legislative authority, what they here assume to do, our insurance laws ought to be repealed; for individuals, then, by organizing in this manner, could escape both individual and corporate liability beyond the amount of assets they might choose to place in the hands of their trustee as the basis of their liability. No public officer could' investigate whether the amount is in fact paid in, how it is invested, or how secured, and the public would thus have practically no protection against dishonest companies. These respondents, if they will carry on the business of insurance, must either openly act upon their responsibility as individuals, or they must become incorporated, and' subject themselves to the laws governing such corporations." The judgment below was accordingly affirmed. The grounds held sufficient for ousting the respondents in that case are present in the case before us.
The averments of the petition sufficiently show that the defendants, in transacting the business of insurance in this state, are unlawfully exercising a franchise within the state, and are acting as a corporation therein without being legally incorporated.
Demurrer overruled and judgment of ouster.