THE EQUITABLE LIFE ASSURANCE SOCIETY Sec. 95 also authorizes by appropriate pro ceedings the entire mutualization of the society.1 In the case of the Equitable Life Assur ance Society, there is a further or cumula tive equitable right involved, which it would seem can only be remedied in the same way. The original charter expressly limited the stock to seven per cent dividends and provided for the periodical distribution of the surplus to be credited among the policy holders. Such has been the construction of the charter by its officers, and such have been the representations made to the policy holders from the time of its organization. This construction was, however, denied by certain minority stockholders prior to the purchase by Mr. Ryan,2 and since the pur chase by him the present management have taken no steps to settle the question, cer tainly not in favor of the policyholders, and are to-day defending an action in which policyholders are seeking to enforce their claim.* Their silence in this respect is how ever a minor matter. They have adopted and filed a new revised charter entirely omit ting those provisions of tfie old charter upon which the rights of the policyholders as mem bers and owners rested.* This revised charter was of course adopted and filed without the consent of the policyholders, and also without their knowledge. Its advertised purpose was to give the policyholders the barren right to elect twenty-eight out of the fifty-four directors, thus recognizing their member ship in one respect while apparently seeking to defeat it in the more essential respect of ownership as declared in the original charter. 1 Ibid., sec. 31. • Lord v. Equitable Life Assurance Soc., 47 Misc., 187.
- Brown v. Equitable Life Assurance Society,
151 Fed. While the Society is not defending on the expressed ground that the policyholders do not own its assets, it does not either in brief or argument admit this claim, which was repeatedly admitted in former cases by counsel representing the former management. 4 See note at end of article in Green Bag, July, 1906.
403
These facts would seem to give the policy holders a further and important ground on which to attack the present charter, and the only way they can attack it would seem to be by the same action in which they attack the still dominant voting power, an action in which the only complete remedy would be a decree restraining the society's present officers from a further exercise of control over the assets, with a proviso permitting the amendment of the charter so as to ex pressly declare the ownership of the assets and surplus by the policyholders, and so as to give them the right to vote in the elec tion of all the directors, or else a proviso permitting the entire mutualization of the society under section 95* of the amended in surance law. Mutualization would, of course, involve the necessary determination of all the rights of the present stockholders and present policyholders. Such an action would, in its essential nature, be an action to cancel the trust and to reform the contract embraced in the charter. It is urged that to thus destroy the trust control, on the ground of its abuse by the majority stockholder, is unfair to the min ority stockholder, who may have been entirely innocent. Conceding our premises, the conclusive answer to this plea is, that the stock control in its character as a trust is indivisible, and must stand or fall by the legality of the whole in its inception, and by the fraud or honesty of the whole in its operation. The minority stockholder loses nothing of his own property, or right to vote. He loses only the power to deny this right to the other members of the society — the exclusive trust which has been betrayed. It is also urged against this remedy as applicable to the Equitable Life Assurance Society, that the purchaser of this stock control has already created a voting trust for the declared benefit of the policyholders, and that the stockholders have surrendered their exclusive control by already amend ing the charter so as to give to the policy
