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THE GREEN BAG

holders the right to elect twenty-eight out of fifty-four directors. I have already re ferred to this amended charter. It would, perhaps, have been better for the stock holders not to have conceded in theory, what they seek to deny in fact, the right to regain control that came to the policy holders on the discovery of the fraud. For conceding this right to exist, it is for the policyholders themselves, or a court at their instance, to declare the fullness of the remedy which they will accept, or to which they are entitled. An equity court will recognize the fact that the scattered body of policy holders cannot possibly elect twenty-eight directors who will actually represent them in the control of the society against the twenty-four selected by the single majority holder of the stock. It will also recognize the fact that the charter is still subject to amendment by the stockholders so as to destroy this right, and the fact that the socalled trust declared for the benefit of the policyholders by the present majority stock holder is in law temporary and revocable, if not invalid.

"It is unnecessary to comment upon this sale (to Mr. Ryan) and the transfer to the trustees, except to suggest that a present reform in the management of the society is not a remedy for the abuses inherent in it and clearly ineradicable under its present organism, that the rights of the policy holders against Mr. Hyde they necessarily retain against Mr. Ryan, and any transfers, to trustees, or otherwise, and any reforms made to defeat those rights, must, to be effectual, be both complete and permanent. Such is not the character of the concessions made by Mr. Ryan to public clamor. Under any other form of trust, an attempted trans fer, without the consent of the cestui que trust, would render the trust voidable. But if. this trust is good at all, the right to transfer it would seem to be given. Yet this should hardly be held to make it pos sible for a guilty trustee to save the trust by a transfer such as is shown in this case. By such a device, the cestui que trust would indeed be powerless." 1

1 Quoted from Brief of writer as amicus curia and counsel for Intervening Policyholder, Brown v. Equitable Life Assurance Society, supra. This was an action commenced prior to the amendment of the charter, by a policyholder suing on behalf of himself and all others against the society, and seeking to declare a trust in the society itself in favor of its policyholders, and, by reason of the fraud and mismanagement of the society, to have a receiver appointed to manage its business for the benefit of the policy holders. The complaint contains the following prayer: — "Seventh — That the defendant society, its directors, officers and agents, pending this suit and forever thereafter, be enjoined from further retaining or controlling or expending in any way the said funds received from the policyholders and annuitants, and the accretions thereof, and constituting the insurance funds and so-called surplus of the society, or with the funds and in vestments representing the original capital of the society, or from doing any other act or thing in connection with the same, except to transfer the same to a receiver or receivers to be appointed by this court."

The eighth prayer is for a receiver, to admin ister the assets under the direction of the court. The court below sustained the defendant's de murrer to this complaint. Upon appeal, a brief was received and filed by the writer as counsel for an intervening policyholder, embodying the views expressed above, and maintaining that the complaint stated a good cause of action for a decree, in effect under paragraph seventh of the complaint, with a proviso, however, permitting the mutualization of the society by amendment of the charter as suggested above. The Circuit Court of Appeals reversed the judgment below, but the opinion deals only with the allegations of fraud, which are said to make out a cause of action, and is silent as to the remedy. The complainant now seeks the mutualization of the Society, and an effort will be made to review the interlocutory judgment in the United States Supreme Court. If a decree is finally obtained in the complainant's favor, it is not unlikely that it will follow the lines suggested above, and to that extent establish the principle suggested and con tended for above. It is difficult to see any other remedy that does not involve the dissolution of the Society.

New York, N.Y., June, 1907.