Swan v. Mutual Reserve Fund Life Ass'n

Follett, J. (dissenting) :

This action, an equitable one, was begun May 8, 1893, to compel the defendant specifically to perform a contract of insurance.

The defendant admits that February 15, 1881, it executed and delivered to the plaintiff an insurance policy,which contains, among others, the folloAving provisions:

“ The net earnings of the Association, together with the sum received from each assessment as a Reserve, shall constitute a fund which shall be deposited Avith the Real Estate Trust Company of New York, and be securely invested in United States Bonds, Mortgages, or other interest-bearing securities, liy said Real Estate Trust Company, as trustee, for the exclusive benefit of the members of the Association, and the interest on the same, as it accrues, shall be paid by the said trustee to the Treasurer of the Association.

“When the said Fund has reached the sum of $100,000, should an assessment fail to produce a sufficient sum to pay a certificate in full, the deficiency shall be paid by the said trustee from the said Reserve Fund upon an order signed by the President and Treasurer of the Association. When the Reserve Fund shall amount to $200,000, the interest earned On the same shall be paid as a dividend to those who *262have been members for a period of five years in proportion to the rate fixed by the graduated assessment ,at each age of entry.

“ When the Reserve Fund shall amount to $1,000,000 (the limit),.. all future sums set aside for the reserve on each assessment shall be equitably divided among the members.”

The foregoing extract from the policy contains three express, promises, every one of which the defendant admits it has violated, and it also admits that the plaintiff has performed the contract on his part. Among other relief asked for is that the defendant be compelled specifically to perform its contract. It. 'is asserted that an action for such relief cannot be maintained by reason of the’ provisions of chapter 400 of the Laws of' 1890 : ■

Section 1. No order, judgment or decree, providing for an accounting, or enjoining, restraining or interfering with the prosecution of the business of any life or casualty insurance company, association or society of this state, or appointing a temporary or permanent receiver thereof, shall be made or granted otherwise than upon the application of • the attorney-general, on his own motion, or after his approval of a request in writing of the superintendent of the insurance department, except in an action by a judgment creditor, or in proceedings supplementary to execution.”

This statute was repealed by chapter 690 of the Laws of 1892 — the Insurance Law — and section 56 of that act substituted, which provides:

“ § 56. No order, judgment or decree, providing for an accounting, or enjoining, restraining or interfering with the prosecution of. the business of any domestic insurance corporation, or appointing a temporary or permanent receiver thereof, shall be made or granted otherwise than upon the application of the attorney-general, on his own motion, or after his approval of a request in writing therefor of the superintendent of insurance, except in an action by a. judgment creditor, or in proceedings supplementary to execution.”

The accounting mentioned in the statute of 1890, and in section -56 of the Insurance Law, refers to a general accounting of the affairs of a corporation in an action brought in the interests of the public, preliminary to winding it up, or to restrain it from prosecuting its- business in violation of the statutes. The term “ interfering with the prosecution of the business ” does not mean such an inter*263ference aswill compel the corporation, to perforin its contracts, but it refers to regulating the conduct of its business so as to prevent it from violating its charter. It will not do to hold that a policyholder can obtain redress for a violation of his contract only through an action brought by the Attorney-General. The judgment demanded in this action will not restrain or interfere in the sense of the statute, with the defendant’s prosecution of its business, but will simply compel it to perform its contract with the plaintiff.

If this statute is to be given as broad a construction as is contended for by the defendant, it would substantially deprive all policyholders of any. remedy against the corporation, no matter to what extent their contracts might be violated. As to all policyholders whose policies antedate the statute, as the plaintiff’s does, such a construction would be violative of the provision of section 10 of article 1 of the Constitution of the United States, which prohibits the enactment of laws impairing the obligation of contracts. Notwithstanding this constitutional limitation, a State may pass'a statute changing remedies theretofore existing, but it cannot enact a law which will deprive a party of all remedy against the violators of contracts. But'I apprehend that this statute was not intended to deprive persons with whom insurance corporations have made contracts from maintaining actions simply to enforce the performance of their contracts, even though the action may incidentally require an accounting.

The opinion of the learned Special Term, overruling the demurrer, and reported in 17 Miscellaneous Reports, 722, seems to me conclusive on the questions presented by this record, and the judgment should be affirmed, with costs, on that opinion.