Bush v. New York Life Insurance

This action was brought to obtain an adjudication upon the constitutionality of section 96 of the insurance law, which was added to the insurance law by chapter 326, p. 794, Laws 1906, and re-enacted in Consol. Laws, c. 28 (chapter 33, p. 16, Laws 1909). The defendant demurred to the complaint, which demurrer the court below sustained, and from the judgment sustaining that demurrer the plaintiff appeals. Upon this appeal the defendant has submitted a brief, but its counsel stated on the argument that the defendant concurred with the plaintiff that this law was unconstitutional, but, as the Attorney General was to submit a brief on behalf of the state, he left the discussion as to the constitutionality of the act with the counsel for the plaintiff and the Attorney General.

The complaint alleges that the defendant is a life insurance company organized under the laws of the state of New York; that the plaintiff was an agent of the defendant for procuring new insurance. It would appear that there was an association among the defendant’s agents, called the “Nylic for Agents”; that on the 1st of March, 1900, the plaintiff applied for membership in this association and agreed to be bound by the terms of such membership as set forth in the defendant’s authorized publications; that the defendant duly admitted the plaintiff as a member of the said “Nylic for Agents,” and the plaintiff has continued to be such member, and has enjoyed and is entitled to enjoy all the benefits, advantages, and emoluments, and membership therein; that by the agreements under which this association is formed these memberships are composed of five classes, each to continue for a period of five years; that if, during the first period of five years, each “Nylic” actually produced not less than $50,000 new insurance on other lives than his own, upon which one full year’s premi

There are other allegations of the complaint tending to show that these provisions of section 96 of the insurance law applied to all of the large insurance companies incorporated under the laws of the state of New York, except the Metropolitan Life Insurance Company, and that under this law the Metropolitan Life Insurance Company is given the privilege of issuing unlimited insurance, while the other companies, including the defendant, are limited by the law to a certain amount of new insurance in each year. Section 96 of the insurance law provides that:

“No domestic life insurance corporation, except a corporation more than one-half of the outstanding insurance of which on December thirty-first, nineteen hundred and five, consisted of industrial insurance, shall issue in any year new policies for a larger amount in the aggregate than as follows, to wit: If the total amount of the insurance by said corporation in force on the thirty-first day of December of the preceding year, including only policies upon which the first premiums have actually been received, is in excess of fifty million dollars, the amount of new insurance which may be issued shall be determined by the following percentages of said insurance in force, to wit: If said insurance in force is more than fifty million dollars and less than one hundred million dollars, not more than thirty per centum thereof; if more than one hundred million dollars and less than three hundred million dollars, not more than twenty-five per centum thereof; if more than three hundred million dollars but less than six hundred million dollars, not more than twenty per cent-um thereof; if more than six hundred million dollars but less than one thousand million dollars, not more than fifteen per centum thereof; and if said amount of insurance in force shall be in excess of one thousand million dollars, not more than one hundred and fifty million dollars of new insurance shall be issued.”

The claim is made that in some way the state of New York is prohibited from restricting corporations that it has created as to the amount of new business which they shall engage in, or limiting them as to the business in which they can engagé. I suppose that there could be no question as to the power of the state to grant such power to corporations which it organized as it pleased, or that under the reservation of power by the present Constitution the state had the right to amend or modify the charter of any corporation, or repeal or annul said charter altogether; and the fact that either by the original charter or an amendment to the charter of a corporation such corporation was given greater power than that given to other corporations, or that the powers of one corporation were restricted, so that it had the right to exercise less power than other corporations organized by the state, was not a violation of any constitutional right assured to any of the corporations by either the Constitution of this state or the Constitution of the United States. The plaintiff claims that this section is a violation of section 18 of article 3 of the Constitution of this state. That provides that;

“The Legislature shall not pass a -private or local bill * * * granting to any private corporation, association or individual any exclusive privilege, immunity or franchise whatever.”

It is quite clear that this is neither a private nor local bill, and it .grants to no corporation exclusive privileges, immunity, or franchise. It regulates the method of transacting business of certain corporations which it has organized, and restricts them as to the amount of business that they are authorized to do; but the fact that another corporation is not so restricted is not a grant of an exclusive privilege, immunity, or franchise to the unrestricted corporation. It is quite unnecessary to consider the various' cases in which this clause of the Constitution has been discussed. We have examined them all, and no case which is at all controlling has held that this provision of the Constitution applies to such an act as the one in question. Nor does this act violate in any way section 16 of article 3 of the Constitution, which provides that:

“No private or local bill, which may be passed by the Legislature, shall embrace more than one subject, and that shall be expressed in the title.”

This section 96 of the insurance law is an amendment to a general law providing for incorporations and regulating the business of insurance companies. It is neither a private nor a local bill. I cannot ■see that this bill violates any provision of the federal Constitution. Equal protection of the law does not require a state to grant to each -corporation that it organizes' the same power to transact business or in relation to its business. It certainly would be within the power of the state to annul the charter of every life insurance company that it had organized, if it wished, without infringing any provision of the federal Constitution.

The case of Cotting v. Goddard, 183 U. S. 79 , 22 Sup. Ct. 30 , 46 L. Ed. 92 , which is relied upon by the plaintiff, was one regulating in the state of Kansas the business of public stockyards,. and applied to corporations as well as to private individuals. It was not a law regulating the powers of a corporation organized by the state of Kansas ; and what was said by the court in that case has clearly nothing to do with the question as to the power of the state to regulate the business of corporations organized under its laws.

It is claimed, however, that the question as to the constitutionality of the law is before the court in this case. In the first place, it is nowhere distinctly alleged that the defendant had reached its $150,000,--000 limit. It is simply alleged that the defendant refused to accept the insurance offered by the plaintiff upon the ground that the company had actually issued insurance to the amount of $135,000,000 of new insurance and had issued policies for $30,000,000 of new insurance upon which premiums had not been paid and the policies had not become operative. This is not an allegation that the $150,000,000 limit had been reached. Nor do I think that the fact that the company refused this insurance because of this law or otherwise would result in the plaintiff losing his position in this organization. If the plaintiff has performed the contract on its part, a failure of the defendant to accept insurance offered would not result in the plaintiff losing his position, or interfere with his right to recover the amount which the

The judgment should be affirmed, with costs.

McLAUGHLIN, LAUGHLIN, and SCOTT, JJ., concur. PATTERSON, P. J., concurs in result.