March 22, 1881, New York Times,
SUIT AGAINST AN INSURANCE SOCIETY.
A suit in which part of the relief asked for by the plaintiffs os the appointment of a Receiver of the Equitable Life Assurance Society was tried before Judge Larremore, in the Supreme Court, Special Term, yesterday. The plaintiffs are John H. Bewley and his wife, Marietta Bewley. They are policy-holders of the defendant corporation, and bring their action as such and on behalf of the other policy-holders. They allege that the Equitable Society has acted against its charter, and has violated the statutes affecting it and like corporations. It has, the plaintiffs aver, invested funds in property and undertakings not within the scope of its rightful business, and has therefore gone outside of the purposes for which it was created. Among the improper things which the company is said to have done is the investment of $4,000,000 in the building at No. 120 Broadway, of $450,000 in the premises at Nos. 112 and 114 Broadway, of $1,000,000 in an edifice in Boston, of $1,100,000 in the stock of the Mercantile Trust Company, of $80,000 in erecting safes for the Mercantile Safe Deposit Company in this City, and of $10,000 in safes for the Equitable Safe Deposit Company in Boston. The Equitable Life Assurance Society demurred to the complaint on the ground that the plaintiffs were not entitled to bring the action without the countenance of the Attorney-General, and that the allegations did not constitute a valid cause of action. The trial was upon the demurrer. Mr. William Blakie appeared for the plaintiffs, and Messrs. Alexander & Green for the defendants.
July 22, 1881,
THE COURT DECIDES THAT THEY HAVE NOT THE RIGHTS OF PARTNERS.
A decision is favor of the defendant was rendered by Judge Larremore, in Supreme Court, Special Term, yesterday, in the suit of John H. and Marietta Bewley against the Equitable Life Assurance Society and its Directors as individuals. The complaint in the case sets forth that the Directors of theEquitable Society are Trustees, for the benefit of its policy-holders, of all its property in excess of an annual dividend of 7 percent upon its capital stock of $100,000. The plaintiffs are policy-holders. They assert that the individual Trustees have been unfaithful to their trust, and have misappropriated ands wasted the society's money, and that while so misappropriating and wasting the funds, have benefited themselves. The first instance of alleged wrong-doing on the part of the defendants is stated to be the purchase, for $450,000, of the premises Nos. 112 and 114 Broadway. which are not necessary to the immediate transaction of the business of the society within the meaning of the law respecting the manner and purpose by and for which insurance corporations may acquire real estate. In the same manner, it is alleged, the defendants have improperly expended $4,000,000 upon the land and building at No. 120 Broadway, and $1,000,000 upon the Equitable Building in Boston. It is next stated that insurance corporations are prohibited from investing money in stocks below par, and that this law has been violated by the defendants in the investment of $1,100,000 of the funds of the Equitable Society in the stock of the Mercantile Trust Company, of which a majority of the individual defendants were Directors. Following this comes the charge that the defendants used $30,000 of the Equitable's money to fit up vaults which it leased to the Mercantile Safe Deposit Company for $22,000 a year, and that the later corporation, in which some of the defendants are interested, procures $50,000 annually by subletting the vaults. Wrong-doing of the same character is alleged with respect of the investment of $10,000 in vaults leased to the Equitable Safe Deposit Company of Boston. The plaintiffs ask that the individual defendants be compelled to account for the money they are alleged to have improperly appropriated, and that a Receiver be appointed to take the money and invest it, under the direction of the court, for the benefit of the policy-holders of the Equitable Life Assurance Society.
The defendants demured to the complaint on the grounds that the Superintendent of the Insurance Department, and the children of John H. and Marietta Bewlry had not been joined as parties plaintiff in the suit, and that facts sufficient to form a cause of action were nott stated. In his opinion sustaining the demurrer Judge Larremore says: "The Equitable Life Assurance Society is not a mere association, but a duly incorporated association, represented by stock holders and a Board of Directors. No pretense is amde that it is insolvent, or unable to meet all its obligations, but the plaintiffs insist that it has violated the rights and privledges of its charter by improper and unauthorized investments of its funds, to the prejudice of themselves and all other policy-holders. The question then occurs, What rights have been invaded and violated, and to what extent, if any, relief may be extended." Judge Larremore then cites from two cases in the Court of Appeals. In one of these that court held that contracts of insurance upon lives did not differ from ordianry contracts involving pecuniary obligations, and in the other that policy-holders are not partners in the property of insurance companies any more than depositors in a bank are partners in it." Continuing his opinion, the Judge said: "In view of the authorities above cited it is apparent that no trust was created or now exists between the plaintiffs and the defendant corporation or its Directors. Their alleged claim is thus reduced to that of mere creditors of the defendant corporation, and, as such, what is the basis of action? The contingency upon which the payment of their policy depends has not arrived; the company is solvent and able to meet all its obligations, and no actual loss or damage is averred. * * * It is only as judgment creditors that plaintiffs can obtain relief. This point was decided at the General Term of this court vt Chief-Justice Barnard in Belknap against North American Life Insurance Company, and, for the purposes of this trial, must be regarded as controlling. The distinction between policies of life insurance and other ordinary contracts which the learned counsel for the repondents insists should be made, must be left to the tribunal of review. When this case was before the General Term on an appeal from an order denying a motion for leave to amend the complaint, Judge Barett, in affirming the order appealed from, intimated that even if the complaint was bad plaintiffs might well be remitted to the discretion of the Special Term on the subject of further amendment and costs. I fail to percieve, upon the conclusion reached, what the plaintiffs can gain by a further amendment in the case, and think that the defendants should have judgment in their favor upon the demurrer."
Gen. Francis C. Barlow and William Blaikie appeared for the plaintiffs and Messrs. Alexander & Green for the defendants.