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 THE EQUITABLE SITUATION

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SOME LEGAL ASPECTS OF THE EQUITABLE SITUATION ANONYMOUS EVER since the early part of February the newspapers have been filled almost daily with accounts of the struggle which is being waged for the control of the manage ment of the Equitable Life Assurance So ciety. The situation presents some inter esting and, in some respects, novel questions of law, and it has been thought that an examination of these, accompanied with a somewhat clearer review of the history of the controversy and of the questions now at issue than it would be possible to glean from the contradictory and oftentimes con fused articles contained in the daily press, may prove of interest to the readers of The Green Bag. The Equitable Life Assurance Society of the United States was organized in 1859, under the Life Insurance Law of the State of New York. This statute (Laws 1853, Chapter 463), which has been incorporated into the present Insurance Law of that state, took the place, so far as life insurance companies were concerned, of an earlier act (Laws 1849, Chapter 308), which was the first general statute enacted by the New York Legislature regulating the incorpora tion of insurance companies. Previous to the enactment of the law of 1853, there had been numerous life, fire, and marine insur ance companies doing business in New York. The business of life insurance was then com paratively a new thing, and the principles which must be observed in order that it mav be safely and successfully transacted were not fully understood. Small com panies, organized without adequate finan cial backing, or any proper appreciation of the principles of the business, had come to grief with dire results to their policy-holders. These companies were almost all so-called "Mutual Companies," that is, companies which had no capital stock and of which the members were the policy-holders. Only

two of these so-called mutual corporations survive to-day, the New York Life and the Mutual, both of which were organized under special acts of the New York Legislature prior to the enactment of the general laws. The statute of 1849 permitted the organiza tion of both stock and non-stock companies to engage in the business of life insurance, but four years later, on the enactment of the law under which the Equitable was or ganized, the legislature evidently decided that past experience rendered it advisable that companies authorized to do a life insur ance business should be put under stringent regulations and required to possess a certain amount of financial backing. The Act of 1853, therefore, permitted the organization of stock life insurance companies only, and required that upon organization such cor porations should have a paid-in capital of $100,000 before beginning business. This requirement is contained in the New York statutes of to-day, and since 1853 there has, we think, been no attempt to organize any thing but a stock corporation under the laws of New York for the purpose of trans acting the ordinary business of life insur ance. Although some of the stock corpora tions doing a life insurance business under New York laws give to certain classes of policy-holders a right to vote for directors of the company, the Mutual and the New York Life remain the sole representatives of the old type of "Mutual Companies." In 1859 the business of life insurance was almost in its infancy, and $100,000 was re garded as a very large sum to invest in such a venture. In that year Mr. Henry B. Hyde, the founder of the Equitable Life, was employed as cashier by the Mutual Life Insurance Company. His father was one of the most successful insurance solicitors in the employ of that company. Mr. Hyde was a young man of brief business exper