85 Md. 14 | Md. | 1897
delivered the opinion of the Court.
The complainants in this case pray:
1st. That the defendant company, its officers and attorneys, may be restrained from disposing of its assets, and from levying or collecting further assessments.
2nd. That it may be declared insolvent, and adjudged to be dissolved.
3rd. That a receiver may be appointed; and
4th. Such other relief as the case may require.
The grounds upon which they rely, may be briefly summarized as follows:
1st. The alleged insolvency of the corporation.
2nd. Frauds alleged to have been committed in the management of its affairs, particularly as to its dealings with the several complainants ; and
3rd. The whole scheme of the corporation is alleged to have been changed in violation of the rights of the complainants ; and moreover is impracticable.
The respondent’s first objection to the granting of the relief prayed for, is that the bills and answers thereto do not make out a case within the jurisdiction of the Court. This objection, it may be said without quoting at large from the
Let us first examine into the nature of this corporation. The “ Order of the International Benevolent and Fraternal Company of Baltimore City,” was incorporated in June, 1888. The business of this corporation, including its liabilities, was. assumed by “The Order of the International Fraternal Alliance of Baltimore City,” incorporated on the 4th January, 1889. The last mentioned association was formed “ for social or fraternal beneficial purposes or both,’ ’ and to carry this out its charter authorized it to enact a constitution and laws prescribing its government, its methods . of conduct and the various means whereby it could improve and benefit its members, their families and those having “a legal interest therein.” It provided also, that the members of the order “ shall convene in assemblies (or local bodies), and conduct their operations by and according to the ritual of the order,” &c. Upon its organization,
The Court in its opinion in that case, after contrasting its operations with its charter powers, said, they “regarded it as clear, that the company has assumed and is now engaged in the exercise of franchises and privileges not allowed by its certificate of incorporation, and is transacting and conducting an insurance business not by law allowed to be assumed or exercised by it.” But instead of striking down its charter, whereby disaster would be entailed upon many persons, the Court directed that it confine its affairs to the exercise of its powers as a social or fraternal beneficial order, or amend its charter under the provisions of the Code, and “bring itself within the provisions of the insurance laws of the State.”
In accordance with this decision, the “ amended certificate of incorporation,” bearing date the 26th of June, 1893, was obtained. By this charter the name was changed to the “ International Fraternal Alliance of Baltimore City.” Its objects were declared to be for social or fraternal beneficial purposes, or both ; to grant insurance on lives on the mutual assessment or co-operative plan provided for in sec. 127, Art. 23 of the Code; to provide for loans to its members, policy or certificate holders, and to provide a social method of convening its membership in assemblies or lodges, under such parliamentary rules as may be contained in the by-laws and ritual of the order. The capital stock was limited to one hundred shares of the par value of one hundred dollars each, and the management of the company was deposited in a board of ten managers who were named for the first year or until the ensuing or general meeting. Being thus incorporated, by-laws were adopted, establishing a form of government, by which, while the real control of the company was vested in the stockholders, “ a cabi
A corporation of this character is clearly within the terms of the Act of 1894, ch. 295. Its charter authorizes it to be, and it is a fraternal beneficial association operating on the lodge system, and carried on for the sole benefit of its beneficiaries. Moreover, it is an association operating on the lodge system and having ritualistic work, whose business it is, in part, to pay at the expiration of a period of more than five years, a sum not exceeding the maximum amount named in its certificates. As such, it has deposited with the Insurance Commissioner the sum required by sec. 143E. This being so, how far do the provisions of sec. 143O of the Act apply to the case at bar? The section is as follows : “Any such association refusing or neglecting to make report, as provided in section 143H, shall be excluded - from doing business within this State in procuring new members. Said insurance companies must, within sixty days after failure to make such report, or in case any such association shall exceed its powers, or shall conduct its business fraudulently, or shall fail to comply with any of the provisions of sections 143E to section 143R (both in-
These provisions impose the duty upon the Commissioner immediately to commence an action to enjoin the corporation from carrying on any business whenever, ist, it has failed for sixty days to make the report provided in section 143H ; or, 2nd, has failed to comply with other sections; or, 3rd, has exceeded its powers ; or, 4th, is conducting its business fraudulently. The injunction to be sought by him, is to enjoin the corporation “ from carrying on its business.” Then follows the clause providing, “ no injunction against any such association shall be granted by any Court, except on application as set forth in this section.” This clause must be construed in connection with the preceding; and so taking it, can it mean anything else than that the word “ injunction” refers to an injunction of the same nature as that already referred to; that is, an injunction to restrain the company “ from carrying on its business,” and that the cases in which it should not be granted at the instance of other persons are those where the Commissioner is to make the application himself? In other words, we think the Legislature intended by this clause to provide that injunctions to restrain the corporation from carrying on its business in cases where it has failed to comply with the statute, or exceeded its powers or is conducting its business fraudulently, can be granted only when applied for by the Insurance Commissioner; leaving in all other respects the powers of a Court of Equity unimpaired. It is clear the section was not intended to create another method by which corporations may be dissolved and their charters forfeited. The next clause of the
It follows from what we have said that the allegations of the insolvency of the company is the only one of the averments of the bills that can enable the Court, if true, to grant the relief prayed for by the complainants. Is the charge of insolvency sustained ?
The case comes before us on bills and answers; and therefore all well pleaded averments of the answers, whether responsive to the allegations of the bills or in avoidance, must be taken as true. Royston v. Horner et al. 75 Md. 566. It is charged in the bills that the corporation is insolvent, and insisted in argument that Exhibits Y and Z, filed with the Barton bill, are virtual admissions thereof. The respondent denies that it is insolvent. On the contrary, it avers that the calls set out in these exhibits were not made in view of actual or threatened insolvency, and that it has
As to the effect of the exhibits referred to, the first exhibit, Y, has not been inserted in the record; and we are of opinion Exhibit Z fairly construed cannot be regarded as an admission of insolvency. It.appears to be an address to the membership. It is a verbose document, in some of its parts difficult of interpretation. It consists of a series of preambles followed by a statement, in the form of reso
The original bill, filed by Barton and others, prayed only for an injunction to restrain the company, Unverzagt, Wilson and Stieff, from paying, selling or transferring any of the policies therein mentioned. With reference to this; it is only necessary to say, the answers deny all the allegations of fraud and swear away all the equities of the bill.
From what has been said it follows the decree must be affirmed.
Decree affirmed.