To the Insurance Commis sioner. 1899 March 30. INSURANCE SINGLE HAZARD-REINSURANCE. The prohibition of St. 1894, c. 522, § 20, against insuring in a single hazard a larger sum than one-tenth of the net assets of the company, is not met by reinsuring such hazard so far as to bring the net amount of the risk within the prescribed limit. Nor does it make any difference that the company taking the risk is one of a syndicate of companies, with the others of which it has contracts whereby each one of them becomes liable for its portion of the risk not exceeding the ten per cent. limit. Such a transaction is in fact reinsurance. St. 1894, c. 522, § 20, as amended by St. 1895, c. 59, § 1, provides that: "No insurance company shall insure in a single hazard a larger sum than one-tenth of its net assets." To this provision there are certain exceptions, one of which is contained in the same section, and another in St. 1898, c. 537. Your letter of March 23 requires the opinion of the AttorneyGeneral upon two questions touching the construction of the foregoing statute, to wit: First."Whether a company, except as provided in the exceptions above noted, violates a statute when it takes an amount in excess of one-tenth of its net assets in a single hazard, if it immediately reinsures such portion of the risk that it does not retain for itself an amount in excess of the limit prescribed by the law." This inquiry is fully answered by Attorney-General Pillsbury in an opinion submitted to your department, dated July 29, 1891 (1 Op. Atty.-Gen. 25), in which he advised the commissioner that the prohibition against insuring in a single hazard a larger sum than one-tenth of the net assets of the company is not met by reinsuring such hazard so far as to bring the net amount of the risk within the prescribed limit. I see no reason to doubt the soundness of that opinion. Second. "Whether a company violates the statute in question when it takes an amount in excess of the ten per cent. limit, if at that time it has a contract with a syndicate of companies, in which each company agrees with each of the others to become liable for an equal part of the amount insured from the moment it is bound by either of the companies." It is stated in your letter, in explanation of this question, that the original company issues its policy for the whole amount of insurance, and that the share of each member of the syndicate in the liability would not exceed the ten per cent. limit. The reasons which lead to the conclusion that the prohibition of the statute is not met by reinsurance govern this inquiry. It is immaterial under what form of contract the company writing the policy arranges with other companies to share its liability. The transaction is in fact reinsurance. The company which writes the contract is alone liable to the insured. He has no contractual relations with the other companies in the syndicate. MASSACHUSETTS REFORMATORY — AUTHORITY OF SUPERINTEND- The authority of the superintendent of the Massachusetts Reformatory to contract with the town of Concord to supply the reformatory with water is limited, under the provisions of Res. 1894, c. 62, to the execution of a single contract. missioners of 1899 I am unable to answer satisfactorily the first inquiry in your To the Comletter of the 23d without further information as to what took Prisons. place at the termination of the contract referred to in St. March 30. 1884, c. 201, § 11. Replying to your second inquiry, I beg to say that in my opinion the authority of the superintendent of the Massachusetts Reformatory to contract with the town of Concord to supply the reformatory with water, under the provisions of Res. 1894, c. 62, was exhausted when he made a contract therefor. Resolves are distinguished from acts by being temporary in their nature. A bill conferring general authority upon the superintendent to contract for water supply would give him authority to make new contracts or to renew existing contracts. It is otherwise with a resolve. There being nothing in the resolve to indicate that the authority is continuing, it must be taken to give authority only for the execution of a single contract, and does not authorize the superintendent to make a new contract at the expiration thereof. BOSTON GAS COMPANIES - CHARTERS SUBJECT TO AMENDMENT, ALTERATION AND REPEAL - CONSOLIDATION TIONAL LAW. An act which should authorize the gas companies of Boston, whose charters are subject to amendment, alteration or repeal, to consolidate, and provide that, unless they did consolidate before a certain date, their charters should be repealed on that date, would be constitutional. It is doubtful whether the Legislature may delegate to the courts the authority to annul the charters, in case the corporations should not consolidate within the prescribed time. I have the honor to acknowledge the receipt of the order of the House of Representatives, adopted April 12, 1899, requesting my opinion upon the following questions, to wit:— First."Whether the provisions of § 11 of the proposed act for the consolidation of certain gas companies in the city of Boston, submitted in the fourteenth annual report of the Board of Gas and Electric Light Commissioners (Pub. Doc. No. 35), are constitutional, and can be enforced in law or equity.” Second."Whether a law requiring any two or more gas companies to consolidate without the consent of such companies can be enforced in law or equity." The corporations affected by the proposed act are the Boston Gas Light Company, the Brookline Gas Light Company, the Bay State Gas Company, the Roxbury Gas Light Company, the South Boston Gas Light Company, the Dorchester Gas Light Company, the Jamaica Plain Gas Light Company and the Massachusetts Pipe Line Gas Company. All these corporations, excepting the Boston Gas Light Company, were incorporated subsequent to the year 1831, and are subject to the provisions of Pub. Sts., c. 105, § 3, which provides that: "Every act of incorporation passed after the eleventh day of March in the year eighteen hundred and thirty-one shall be subject to amendment, alteration or repeal at the pleasure of the General Court." The Boston Gas Light Company was incorporated by St. 1822, c. 41; and there is no provision. in the charter which, in terms, makes it subject to amendment or repeal at the pleasure of the Legislature, nor any provision limiting the duration of the charter. But, by St. 1809, c. 65, which was “An act defining the general powers and duties of manufacturing corporations," it was provided (§ 7) that "the legislature may from time to time, upon due notice to any corporation, make further provisions, and regulations for the management of the business of the corporation, and for the government thereof, or wholly to repeal any act, or part thereof, establishing any corporation, as shall be deemed expedient." This act was in force when the Boston Gas Light Company was incorporated, and, in my opinion, is to be taken as limiting the rights conferred by its charter. The charters of all the corporations affected by the proposed act are subject, therefore, to amendment, alteration or repeal at the pleasure of the Legislature. It is this power of control over its corporations which is invoked in the proposed act. The act provides in § 1 that the corporations named may unite and consolidate into one company, in the manner and upon the terms and conditions thereinafter set forth. By § 2 it is provided that the terms and conditions shall be agreed upon by the directors of each and all the corporations, subject to the approval of a majority of the stockholders of the respective corporations and of the Board of Gas and Electric Light Commissioners. The agreement so to be executed shall determine the amount of the capital stock, bonds and coupon notes to be issued by the new corporation, and shall provide for the conveyance of all the real and personal estate of the constituent corporations to the new corporation; and also the proportion in which the shares, bonds and coupon notes of the new corporation shall be distributed among the shareholders and creditors of the constituent corporations. The act further provides for the organization of the new corporation within thirty days after the execution and approval of the agreement provided for in § 2, and that upon the completion of such organization the corporate existence of the respective constituent corporations shall continue only for the purpose of winding up its business; and that the new corporation shall have all the franchises and rights, and be subject to all the duties and restrictions of each of the constituent corporations, and of all general laws applicable to gas companies. Thus far the act appears to be permissive. Section 11, however, being the section referred to in the resolution of your honorable body, provides as follows: "If at the expiration of —— months from the passage of this act, any of the companies named in section one shall have failed or neglected to execute and complete the agreement mentioned in section two in the manner therein described, the board of gas and electric light commissioners shall proceed to determine the terms and conditions upon which such companies shall be included in the consolidation provided by this act, and, for the purpose of determining said terms and conditions, may notify such companies to appear before said board, to be heard relative thereto. If such companies or any of them shall thereafter accept the terms and conditions determined by the board as aforesaid, the companies so accepting shall thereafter be subject to the provisions of this act in all respects as if the terms and conditions had been agreed to in the manner provided in section two. If such companies or any of them shall within —— days after notice thereof fail to accept the terms and conditions so determined, the supreme judicial court shall, upon petition of said board, declare the charter of the companies so failing to be revoked and annulled, and may issue such further orders and decrees relative to the property and business of said companies as said board may deem necessary and advisable." There can be no doubt that, if the legislative body has the right to repeal the charter of a corporation, it may provide that the repeal of the charter shall be conditional upon the happening of some future event. St. 1893, c. 474, is an example of such legislation. By that statute it was provided that the charter of the Bay State Gas Company should be revoked and annulled on the first day of December following the passage of the act, unless the corporation should, prior to said first day of December, procure the cancellation and discharge of a certain obligation issued by the company and outstanding at the date of the passage of the act. A similar statute, enacted by the Legislature of Connecticut, has been sustained by the Supreme Court of that State. Lothrop |