86 Md. 550 | Md. | 1898
delivered the opinion of the Court.
By direction of the Governor the Attorney-General instituted proceedings in the Superior Court of Baltimore City against the appellant, alleging that it had been guilty of abuse and misuse of its corporate powers and privileges.
The authority for this proceeding is given by Art. 23, sect. 255 of the Code, and the succeeding sections, to 262 inclusive, regulate the practice. The grounds relied on in the petition are in substance: (1). That the defendant, as shown by the by-laws, was not organized for “fraternal beneficial purposes,” and that in conducting the operations described in its by-laws, it was guilty of both abuse and misuse of its corporate franchises, and is carrying on operations without due warrant of law. (2). That whilst purporting to be organized for “ fraternal beneficial purposes ” under the provisions of ch. 295 of the laws of 1894, it is organized with a capital of ten thousand dollars, and subject to the control and management of its stockholders, and although purporting to give representation to its certificate or policy-holders, under its by-laws, it subjects them to the will of the stockholders. (3). That the business carried on is substantially in the nature of insurance business, and it has issued a policy known as the “ Golden Cycle Policy,” which would mature in seven years, and the holders of which are subject to certain dues and assessments ; that in addition to the regular dues, the corporation has levied a “note assessment” of six hundred and fifty dollars upon each “ maturing holder ” in or about the last year of the maturing of the policy, and in the event of the notes not being given for such assessment, the policies would lapse: That the levying of such excessive assessments was a practical forfeiture of the policies, and an abuse and misuse of the charter powers. (4). That the defendant, though incorporated with a capital of ten thousand dollars, and hav
The defendant filed an answer which denies that it has violated its charter, and gives a history of its organization. In June, 1888, a corporation was formed under the name of “ The Order of the International Benevolent and Fraternal Company of Baltimore City,” “for social, benevolent, fraternal and beneficial purposes,” with a capital stock of five thousand dollars divided into one thousand shares of five dollars each. In January, 1889, the charter was amended, whereby the stock feature was omitted, and the name changed to “ The Order of the International Fraternal Alliance of Baltimore City,” and in June, 1893, it was further amended by changing the name to “The International Fraternal Alliance of Baltimore City,” and providing for a capital stock of ten thousand dollars, divided into one hundred shares of one hundred dollars each. It is stated in these amended articles that the corporation was formed : “A. For social or fraternal beneficial purposes, or both,” etc. “ B. To grant and issue insurance on the lives of individuals of both sexes, upon the mutual assessment or co-operative plan, as provided in section 127 of Article 23 of the Code of Public General Laws of the State of Maryland, and the other sections of said Article applicable to such mutual,
In the case in 77 Md. 547, against this corporation, this Court had before it the charter of January, 1889, and held that the appellant had no authority under that charter to carry on the insurance business. The lower Court had ordered that its charter be forfeited, but this Court, although fully concurring with the Judge below, that the appellant had exceeded its powers, decided that it should be permitted to continue, and either resort to the appropriate jurisdiction to adjust and wind up its insurance business, or amend its charter under sec. 17 and 38 of Art. 23 of the Code, and bring itself within the provisions of the insurance laws of the State. That case was decided on the 21st day of June, 1893, and five days afterwards the charter was amended by the articles of June, 1893, above referred to. Ch. 295 of the laws of 1894, having been passed, another amendment to the charter was adopted in 1895, as above stated. After the passage of the Act of 1894, some of the members of the appellant filed a bill alleging that it was insolvent, charging fraud in the management of its affairs, and claiming that the whole scheme of the corporation has been changed in violation of the rights of the complainants. Barton v. Fraternal Alliance, 85 Md. 14. In that case, we said “A corporation of this character is clearly within the terms of the Act of 1894 (chapter 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 benefici
Let us then see whether it has violated its charter in any of the particulars alleged in the petition. One of the most serious and important charges is that embodied in paragraph 7, wherein it is alleged that the appellant is unlawfully issuing policies for more than one thousand dollars on any one life. The answer admits that it had issued in all fifty-nine policies for amounts ranging from one thousand two hundred and fifty dollars to five thousand dollars, and that it still had in force thirty-one of them, but it denies that it is a violation of its charter. The charter as amended in 1895 provides for a corporation “for social or fraternal beneficial purposes, or both,” and “ to grant and issue insurance or benefits upon the lives of individuals of both sexes, as provided in section 127, Article 23 of the Code, and as provided in section 143 E,” etc. The language used in stating the purposes of the organization, as to the social or fraternal beneficial feature, is the same as that in the charter of 1889, which was before this Court in 77 Md. It was distinctly held in that case that the appellant was not authorized to issue the policies then being considered, which were those in the “ Golden Cycle Class,” because it was thereby conducting an insurance business, which its charter did not empower it to do, and it would seem to follow as a necessary consequence of that decision that it cannot now, under that branch of its charter, issue policies either of the “ Golden Cycle Class ” or of the other classes in the record—the latter being clearly as much subject to the insurance law of the State as the former. Prior to the passage of ch. 295 of the Acts of 1894, the only
The amendment of 1895 provided for issuing insurance
We do not deem it necessary to discuss at length the question which occupies considerable space in the very able brief of the appellant’s attorneys, whether under our laws there can be a “double incorporation” for such purposes
But it is urged in its behalf that it was innocent of any intentional violation of the law, and therefore its charter should not be forfeited. This Court has previously been called upon to deal leniently with it, and although legal cause was shown for the forfeiture of its charter, yet being of opinion that the public interest did not then demand it, we permitted it to continue its existence. But it would be going very far when we for the second time have found that it was exceeding its charter powers, to again grant it such indulgence. That it has abused and misused its corporate powers by issuing policies in sums in excess of one thousand dollars we have no doubt. It is true that section 263 of Art. 23 authorizes proceedings to restrain a corporation
It is not necessary that we should discuss the other grounds relied on by the State, as we are of opinion that those already referred to are sufficient to require us to affirm the order of the Court below.
Order affirmed with costs.