Petition of Charlton Bros. Transportation Co. v. Eastern Mutual Casualty Co.

²⁵⁵ Forsythe, J., delivered the opinion of the Court. The appellant, Charlton Brothers Transportation Company, Inc., entered two appeals from decrees of the Circuit Court of Baltimore City. The first is from a decree, sustaining without leave to amend, a demurrer to a petition filed by the appellant in a receivership proceeding then pending of the Insurance Commissioner of Maryland v. The Eastern Mutual Casualty Company, a body corporate. The second appeal is from a decree sustaining without leave to amend a demurrer to an original bill, in the nature of a bill of review, filed by the appellant against the Insurance Commissioner, and the Receiver.

Both the petition, and the bill, are identical, and present the same question. In each, the court was asked to review, and to rescind, its previous order passed in obedience to a mandate of this court in the recent case of Joyce, Receiver v. Abrams, et al., reported in 178 Md. 535 , 16 A. 2d 296 . The first question presented in both of the appeals is, whether the assessment by the court against policy holders of the Eastern Mutual Casualty Company, Inc., is valid. That question definitely has been decided by the decision of this court in Joyce v. Abrams, supra, and in view of the very clear and definite expression in that opinion, written by Judge Johnson, it is not necessary to further discuss the question of the validity of assessments.

The appellant contends in these cases that the Eastern Mutual Casualty Company is not, in contemplation of law, a mutual company; and that that question was not determined by the decision in Joyce v. Abrams, supra. Since that point was not then passed upon it now is the particular question presented by these appeals. The appellant was the holder of a policy of the Eastern Mutual Casualty Company. The company was incorporated under the laws of Maryland in 1934, Article 48A, of the Annotated Code (1924) of the Public General Laws. ²⁵⁶ The particular provision of that law is as follows: “Corporations may be formed under the provisions of Article 23 of the Code of Public General Laws for insurance purposes * * * either as mutual or stock companies, or as mutual and stock companies combined, as shall be determined and declared in the certificate of incorporation of any such company.” Section 13.

That provision, since the Act of 1939, providing for mutual and stock companies is no longer in force. The charter, or articles of incorporation, of the Eastern Mutual Casualty Company (Exhibit No. 5 with the bill), expressly provides in Article 6 that: “The corporation shall” be organized as a mutual and stock company combined, pursuant to the provisions of Article 48A of the Annotated Code of Public General Laws of Maryland.” The capital stock consists of 1,000 shares of the value of §100 per share, and “the holders of said stock shall be entitled to receive, when and as declared by the board of directors, out of the surplus remaining after providing for all reserves and the liabilities, quarterly dividends at the rate of, but not exceeding six dollars per annum, payable quarterly.” By the provisions of Article 3 of the charter, the incorporators declared that the purpose of the corporation was, “to conduct a general mutual insurance business &c.” Also under the sixth article it is provided that, “each holder of a policy of insurance issued by the corporation shall be a member of the corporation while such policy is in force and no longer, and every such member shall be entitled to one vote, or to such number of votes based upon the insurance in force, the number of policies held or the amount of premium paid, as may be provided in the by-laws of the corporation.” Also, in Article 6 it is provided that in the event of liquidation of the corporation each stockholder shall receive §100 per share, and any surplus “shall be divided pro rata among the holders of policies of insurance issued by the corporation and outstanding at the date of the ²⁵⁷ commencement of liquidaton, the proportion of each such policy holder to be calculated to the amount of premium earned and paid on each outstanding policy to date of liquidation.” Under Article 9 of the by-laws, under the heading “Voting Rights and Management,” it is provided that policies are issued by the company “to insured and accepted by insured with the full knowledge by the latter of the fact that the company is a combined stock