People ex rel. Secretary of State v. State Ins. Co.

• Citation: 19 Mich. 392
• Court: Supreme Court of Michigan
• Decision Date: 28 October 1869
• Parties: The People ex rel. the Secretary of State v. the State Insurance Company

19 Mich. 392

The People ex rel. the Secretary of State v. the State Insurance Company

Supreme Court of Michigan

October 28, 1869

Heard October 27, 1869

Mandamus:

Oliver L. Spaulding, Secretary of State, makes application for a writ of mandamus, to compel the State Insurance Company to submit their affairs to an examination, as provided by § 26 of the act relative to the organization and powers of fire and marine insurance companies transacting business within the State, approved April 3, 1869. Laws of 1869, p. 230.

Writ issued as prayed.

Dwight May, Attorney-general, for the relator.

A Pond, for defendants.

OPINION

Cooley Ch. J.

The present is an application on behalf of the Secretary of State to compel the defendants to submit to such an examination of their books and affairs as is contemplated by Section twenty-six of "an act relative to the organization and powers of fire and marine insurance Companies transacting business within this State." Laws of 1869, Vol. 1, p. 230. The defendants resist the application on the grounds:

1. That mandamus is not a proper remedy for such a case, but that the State, if they refuse to comply with any provision of their charter or with any statutory regulation, must proceed by quo warranto or by indictment.

2. That the application is premature, inasmuch as the defendants were in existence as a corporation under a prior law when the act above mentioned was passed, and by the thirty-fifth section of that act were allowed until the first day of January, 1870, to conform to its provisions. They cannot therefore, it is argued, be compelled to do or submit to anything under that act until the time thus allowed them has fully elapsed.

3. That although the Legislature, under its complete power to amend laws of incorporation, may legislate such corporations out of existence, unless they will comply with new provisions, yet it has no power to compel the defendants against their will to continue in existence under, or to accept the provisions of a new law, and if it had, the title of the act in question does not indicate that such was the intention.

To determine upon the validity of these objections, it is important to examine a little the purpose of the act of 1869, that we may be enabled to discover what it was precisely which the Legislature undertook to accomplish by it. The general purpose of the act may be stated to be, to regulate the business of fire and marine insurance within the State, whether carried on by corporations existing in virtue of organizations under its laws, or by foreign corporations, associations or partnerships. To accomplish this general purpose it provides for the organization of corporations within the State, points out their powers and duties, and the powers and duties of their officers, and makes a great many regulations designed for the protection of policy holders, against the imprudent or dishonest action of officers or agents. While it leaves unimpaired the corporate entities previously created in the State for the transaction of this business, it limits a time within which they shall make their organization conform to the new act; the design being that at the end of that time all corporations existing under the laws of the State for the purpose specified, shall possess uniformity in their leading features, and stand upon the same footing as regards powers, capacities, duties, obligations and liabilities, except so far as the act itself creates differences, dependent upon the differences in the kinds of business to be transacted by them, whether fire or marine, mutual or otherwise. It also, for the like purpose of protections to policy holders, establishes various regulations in regard to foreign insurance companies, associations or partnerships, a compliance with which is the condition upon which they are to be suffered to transact business within the State.

Among the most important provisions which the act makes towards the accomplishment of its general purpose, is that for the inspection of the books and affairs of any company doing business within the State, and incorporated under its laws. For this purpose Section twenty-six provides that the Secretary of State may appoint one or more persons not officers of any fire insurance company doing business within this State, to make the necessary examination; and the statute makes it the duty of the officers or agents of any such company to cause their books to be opened for the inspection of the person or persons so appointed, and otherwise to facilitate such examination so far as it may be in their power to do. Further provisions are then made for winding up the affairs of the company by legal proceedings, if it shall prove of doubtful solvency, and for its entire dissolution.

Now, it is obvious, that to make the protection to the policy holders which was contemplated by the section here referred to efficacious, the...