New York Board of Fire Underwriters v. Whipple

The action is brought, pursuant to chapter 846 of the Laws of 1867, to recover a certain assessment levied upon the premiums received by the defendants for insurance issued in the city of New York. The defendants demur to the complaint upon three grounds: First, that it does not state facts sufficient to constitute a cause of action, and that there is a defect of parties defendant, for two reasons more particularly stated in the demurrer. As to the second and third grounds of demurrer, neither of them is well taken, for it does not appear upon the face of the complaint that the objection therein urged exists.

As to the first ground of demurrer, the questions raised upon it, with one exception, have been disposed of by the case of this plaintiff against the Metropolitan Lloyds of New York City, reported in 11 Misc. 646 , 33 N. Y. Supp. 547 . This decision was affirmed by the general term without opinion. 87 Hun, 619 , 33 N. Y. Supp. 1131 . That case differs from this in only one respect, which is entirely unimportant. In the complaint in that case the statute under which the plaintiff was organized, and by which the liability sued upon was created, was not pleaded. Here it is pleaded. But the distinction is of no importance for the purposes of this demurrer. So far as the questions presented were passed upon by the court in that case, it is authoritative, and must be held to sustain the complaint here. In that case, however, at the special term, the court declined, for reasons which were sufficient, to pass upon the con

The act in question is chapter 846 of the Laws of 1867, entitled “An act to incorporate the New York Board of Fire Underwriters/7 By the first section a large number of officers of different fire insurance companies and associations, “and all other persons, presidents or other officers for the time being of any incorporated company or association, and any agent doing the business of fire insurance in the city of New York, who may become associated with them, are hereby created a body corporate by the name of 'The New York Board of Fire Underwriters/ ” The remaining sections prescribe the purposes for which the corporation is organized; specify its officers, and, generally, the manner of performance of its business, and the powers which it shall have. The seventh, eighth, ninth, and tenth sections give power to the corporation to create a “fire patrol,” as it is called, and regulate the powers to be given to that patrol, and prescribe the manner in which the money to pay the expenses of that patrol shall be raised and collected. These sections will be more fully referred to later.

The first objection to the constitutionality of the act is that, being a private and local act, it contains more than one subject, and the subject is not sufficiently expressed in the title. That this act is a private and local act must be conceded. People v. Supervisors of Chautauqua Co., 43 N. Y. 10 . The fact that certain provisions of the act may be public in their nature does not make the whole act public, so that it ceases to be within the article of the constitution mentioned above. The title of the act has been quoted above. It is certainly germane, so far as it goes, to the object for which the act was passed; and we think, within rules which are now well settled, it complies with the requirements of the constitution. The rule now, as settled, is that, where the title of a local or private act expresses a general purpose or object, all matters fairly and reasonably connected with it, and all measures which will or may facilitate its accomplishment are proper to be incorporated in the act, and are germane to its title. People v. Briggs, 50 N. Y. 553 ; In re Knaust, 101 N. Y. 189 , 4 N. E. 338 ; Sweet v. City of Syracuse, 129 N. Y. 316 , 330, 27 N. E. 1081 , and 29 N. E. 289 . The objection referred to, we think, is clearly not well taken.

But a-further objection is suggested which requires more examination. It is claimed that the provisions of this act are such as, in effect, to authorize the corporation created by it to levy a tax upon the premiums received by persons engaged in the business of insurance in the city of New York, whether they are members of the corporation or not, and that this is substantially tak

“Under the police power, the government regulates the conduct of its citizens, one towards another, and the manner in which each shall use his own property, when such regulation becomes necessary for the public good.”

And he says that under that power it has been customary, from time immemorial, in England and in this country, to régulate ferries, common carriers, hackmen, bakers, millers, innkeepers, and people exercising business of that nature. It is said that property becomes clothed with a public interest when used in a manner to make it of public consequence, and affect the community at large. Many cases and instances are cited in the prevailing opinion in that case in which the legislatures, in various states, have regulated the conduct of business of different kinds, all of which have been sustained upon the ground that the business was one which affected public interest, and therefore was amenable to control by the public authorities. The question of the power of the state to regulate business has been presented in many cases in this state, and the case of Munn v. Illinois, supra, has been followed, as laying down the true rule under which the exercise of police power could be sustained. People v. Budd, 117 N. Y. 1 , 22 N. E. 670 , 682, and cases cited; People v. King, 110 N. Y. 415 , 18 N. E. 245 . The question of the extent of the police power is considered fully by Judge Cooley in his learned work on Constitutional Limitations, and he comes to the conclusion that any property or business which is effected with the public interest is amenable to the police power of the state, and that any business is said to be effected with the public interest where either the following of it was not as of right, but was permitted by the state as a privilege or franchise, or where exclusive privileges are granted in consideration of some special return to be made to the public. Cooley, Const. Lim. § 746. It is not necessary to pursue the examination of this branch of the subject further, because we are satisfied that the conclusions of Judge Cooley are fully sustained by principle and authority. Although at one time the business of insurance in this state was one which might be followed by anybody, and with regard to which no restrictions were imposed, yet that for many years has ceased to be the case. Not only is that business now regulated by many laws, but the pursuing of it is forbidden, except by certain persons, who are licensed and authorized for that purpose, and who thereby receive from the state a privilege to pursue it apart from other persons. Insurance Law, §§ 9, 34, 54. It has been the policy of the state, for many years, to regulate and control this business, in view of its great extent, the great interests involved in it, and the serious damage to the great body of citizens which might result if the business was entirely without control. The right to thus control it can hardly be questioned at this day. For that rea- 0 son people exercising the business of insurance in this state are clearly within the control of the police power, because, as is said in the cases above cited, they have a virtual monopoly of the business, by the grant of the state. The act in question authorizes

Judgment affirmed, with costs, with leave to the appellants to withdraw the demurrer in 20 days, and answer, on payment of the costs in this court and of the costs in the court below. All concur.