
    Matter of the Election of Directors of The Mutual Fire Insurance Company, of Albany.
    (Supreme Court, Greene Special Term,
    March, 1900.)
    Mutual Fire Insurance Company of Albany — Eight of cash premium policyholders to vote and hold office.
    Under the charter of the Mutual Fire Insurance Company of Albany (Laws of 1836, chap. 239, as amended by Laws of 1848, chap. 47), a holder of a policy, upon which a cash premium has been paid, is a member of the company and has the same right to vote at an election of directors and to hold office in the company as has a policyholder who has given a note for his premium.
    This is a proceeding under section 27 of the General Corporation Law to establish an election of directors in the Mutual Fire Insurance Company, of Albany, which was incorporated pursuant to the provisions of chapter 239 of the Laws of 1836 and amended by chapter 47 of the Laws of 1848. At the annual election, held at the office of the company, January 22, 1900, certain members of the company appeared and cast 1,347 votes for what was called the Rathbone board of directors and other members appeared by proxy and cast 1,982 votes for the opposition or Lyon board of directors. Of these 1,982 votes, 870 were east upon policies of insurance of which the premiums had been paid wholly in cash. These votes the inspectors of election rejected and declared the Rathbone board elected.
    
      Scherer, Downs & Towner, and Lewis E. Carr, for petitioners.
    Hun & Johnston, and Learned Hand, for defendants.
   Chase, J.

Since this matter was finally presented to me a few days since, I have not been able to give it the attention I had hoped to give it or the attention its importance would seem to demand. My engagements now, including this Trial Term, will prevent me from giving the matter much attention for some time to come. Our Appellate Division meets to-day and an immediate decision by me will enable the parties interested to have the matter presented at this term of the appellate court. I have concluded' to express briefly my views orally that the necessary orders can be prepared and signed at once.

The important legal question involved is as to whether a person holding a policy in the company for which a cash premium has been paid, is a member of the company. My conclusion is that both note-giving and cash-paying policyholders are and have been since the statute of 1848, members of the company, entitled to vote for directors and to hold office in the company. Such is my conclusion from reading the statutes and from the decisions of the courts.

The cash-paying policyholders as well as the note-giving policyholders furnish the capital of the company, and the cash-paying policyholders, alike with the note-giving policyholders, are subject to the possibility, remote though it be, of having the entire capital made up of cash and notes and the personal liability exhausted and a loss under their policy being uncollectible by reason of bad management. This remote possibility may be emphasized by assuming a maximum number of cash-paying policyholders and a minimum number of note-giving policyholders.

Assuming, as I do, that every policyholder has a right to vote, I come to what occurred on the 22d day of January, 1900, at the annual election.

I find the petitioners herein had at the meeting proxies on 2,007 votes, made up of 1,112 votes on note-giving policies and 895 votes on cash-paid policies. These proxies were obtained without fraud or deception and they, with the votes, were all delivered to the inspectors and retained by them. The old board of directors, or at least the active members thereof, had known from ten or Tmlf past ten of that morning that a contest was to be had.

It is quite certain from the papers that they relied and intended to rely upon the claim that cash-paying policyholders had no right to vote. The persons voting for the old board of directors cast their votes and saw them counted on their note-giving policies only, without a word of protest. After the votes in favor of the petitioners were actually presented, there was sufficient time for the persons now claiming that they had sufficient votes on cash-paid policies, to have overcome the petitioners’ votes, to have presented them and demanded of the inspectors that they be counted, but they voluntarily refrained from so doing. They evidently preferred to stand on their legal claim.

The certificate of the inspectors shows the number of votes east as claimed by them. It also' contains a statement that 895 votes were presented for the petitioners upon policies on which a cash premium had been paid and that the attorney of the company protested against their being counted on the ground that such policyholders were not entitled to vote and that they were rejected. There is no suggestion in the certificate of the inspectors that any other voles had been' presented. The persons now specially interested had an opportunity to present their votes on cash-paid policies, but voluntarily refrained to so do and rest their election on the legal claim as to who were members of the company. I think the inspectors should have counted the votes on cash-paid policies and declared the petitioners elected.

It now appears that John H. Farrell and Edward P. Williams were not eligible for election. The other eleven persons I declare elected. As to two places in the board, there was no election. An order may be prepared accordingly. In view of the importance of the matter, I will direct that the order so made be entered and that a, stay be granted on condition that if an appeal be taken and the matter be actually heard at this term of the Appellate Division the stay to be continued until the decision of the Appellate Division or the further order of this court. If the matter is not heard at this term of the Appellate Division, the stay to be vacated.

Ordered accordingly.  