Court Opinion

ID: 5470813
Source: CourtListenerOpinion
Date Created: 2022-01-09 20:37:36.621863+00
Date Added: 2024-06-11T08:33:18.240223
License: Public Domain

Lawrence, J.
I did not understand the counsel for the relator as contending, on the argument, that the expulsion of the Belief Fire Insurance Company from the board of fire underwriters was invalid, for the reason that a fair opportunity was not afforded to the company of being heard, but that he contended that the by-law under which the respondents ai ted, was one which, under their charter, they had no power to pass, and was unreasonable and contrary to public policy. I shall not, therefore, inquire in disposing of this motion, whether the relator had due and proper notice of the proceedings taken for its expulsion from the board, and shall *242confine myself simply to a statement of the conclusions at which I have arrived in regard to the points discussed by counsel.
First. It seems to me, that under the provisions of the second and fifth sections of the charter, it was quite competent for the respondents to pass the by-law in question. The second section of the chárter prescribes that “ the purposes of this corporation shall be to inculcate just and equitable principles, in the business of insurance; to establish and maintain uniformity among its members, in policies or contracts of insurance, and to acquire, preserve and disseminate valuable information relative to the business in which they are engaged.”
The fifth section confers upon the respondents power “ to make all needful by-laws not contrary to the provisions of this act or the Constitution and laws of this state, or of the United States.”
The power conferred by these sections is not to be construed as an arbitrary or an unlimited power. The by-laws must be such as are reasonable and adapted to the purposes of the corporation (People agt. Medical Society, 24 Barb., 571; 2 Kent Com., 296; Angell & Ames on Corp., secs. 347, 348, et seq.).
As the power bestowed upon the respondents is to “ establish and maintain uniformity” amongst members “ in policies or contracts of insurance,” a by-law which compels or binds their members to uniformity in their rates of insurance, seems to me to come directly within the power conferred. I cannot convince myself that the power is to be limited to securing uniformity in the conditions, covenants and general provisions of the policies. The object of the incorporation of the respondents seems to have been to secure harmonious co-operation between all the members of the corporation, and uniformity in the rates or premiums of insurance, is quite as necessary apparently for that end, as uniformity in the conditions, covenants and general provisions of the policies. Agreement between the corporators, as to the rates to be *243charged for certain, kinds of risks, is quite as essential to promote the objects in view, as an agreement upon the phraseology to be used in their respective policies. Again, the power conferred is to establish and maintain uniformity in the contracts of insurance. How can the court decide that the rate at which a risk is taken, is any less a part of the contract, than a condition in the policy that camphene or any other inflammable article shall not be used upon the premises insured, except under certain contingencies
Second. If I am right in the construction which I have given to the second and fifth sections of the respondents’ charter, the by-law upon which the respondents rely, cannot be attacked as being in contravention of public policy. If the legislature have conferred the power to pass the by-law, it is not in conflict, but in harmony with public policy. So, also, as to the objection that the by-law is in restraint of trade.
Third. The question involved in this case, was not involved in the case decided by judge Yak Brunt, to which reference was made upon the argument. The opinion in that case denied the power of the respondents to compel all the members of the corporation to deal only with a particular class of citizens, i. e., members of the Board of Fire Insurance Brokers, and the learned judge held, that the by-law then under consideration, was not at all necessary to maintain uniformity in the policies or contracts of insurance, and that it did not tend to inculcate just and equitable principles in the business of insurance. He does not decide the question as to whether the respondents cannot enforce a by-law, designed to secure uniformity in the rates to be charged on risks to be incurred or assumed by the members of the corporation.
Fourth. If the by-law under which the respondents acted, was reasonable and within their corporate powers, the relator was guilty of a violation of the duty owed by it to the respondents, and consequently liable to expulsion (People agt. Coml. Assci., 18 Abb., 278, and cases cited; People agt. Medical Society, 32 N. Y., 194, and cases cited).
*244Fifth. The conclusions above stated render it unnecessary for me to consider the points argued as to the power of the respondents to compel members to subscribe to the charter and by-laws, and as to the effect of such subscription.
Sixth. On the whole I am of the opinion that the relator has not shown that clear legal right, to reinstatement as a member of the respondents,, which must appear in order to authorize the awarding of a peremptory mandamus to compel such reinstatement (People agt. Sups. Chenango, 1 Kernan, 563).
The motion is, therefore, denied, with costs of motion.
(Affirmed, 7 Hun, 248.)