allowed afterward to charge the principal. Patapsco Ins. Co. vs. Smith, 6 Har. & J., 166; Ford vs. Williams, 21 How., 287; Chandler vs. Coe, 54 N. H., 561.

But, without expressing any opinion upon this point, we think the bill must be dismissed for another reason. The bill alleges that "when policies were forwarded to said McGilvery, the plaintiffs charged the premiums to him, and afterward invariably procured from him a note for each premium by itself." We of course understand that the "note" mentioned means McGilvery's negotiable promissory note-commercial paper. And it is well settled in this State and Massachusetts, that a negotiable promissory note taken for an account is prima facie payment thereof. Milliken vs. Whitehouse, 49 Maine, 527; French vs. Price, 24 Pick., 13. The plaintiffs accepted these notes knowing all the facts. That is to say, though they did not know the names of the persons for whose benefit the policies were issued, the very form of the policies implied agency on the part of McGilvery. If the plaintiffs would have had it otherwise, they should not have taken the notes in payment, or should have inserted a clause in their policies for their protection, in relation to the payment of premiums generally, as they have in cases of loss.

The bill does not present a case involving a consideration of the continuation clause.

Demurrer sustained.

Bill dismissed with costs.

APPLETON, C. J., DICKERSON, DANFORTH and LIBBEY, JJ., concurred.

SUPREME COURT OF CONNECTICUT.

DECEMBER TERM, 1877.

JOHN W. STEDMAN, INSURANCE COMMISSIONER,

vs.

AMERICAN MUTUAL LIFE INS. CO.

A law of Connecticut provides that when the assets of any life insurance company is less than three fourths of its liabilities, the commissioner of insurance shall apply for a receiver, etc.

Held, that such an application is not met by setting up the previous reinsurance of the company by and transfer of its assets to another company expressly incorporated for that purpose, the policy-holders not being parties to such transfer, and not having released the original company from its contracts.

PARDEE, J.

In 1847 the respondent was authorized to issue policies of insurance upon lives, upon the mutual system; in 1850, to exercise the powers of a trust company, and in 1854 to act as guardian, trustee, or receiver, without giving bonds, when appointed by any court. In 1873, by legislative permission it transferred all of its assets to the American National Life Insurance Company, which last company then assumed all the liabilities of the first; the transfer of assets included securities of the value of $100,000, theretofore deposited by the respondent, upon requirement of law, with the State treasurer for the protection of its policy-holders.

A public act (Session Laws of 1875, chap. 20, page 12,) provides that if the insurance commissioner shall at any time find that the assets of any life insurance company incorporated by this State are less than three fourths of its liabilities, he shall ask the court to appoint a receiver and annul its charter; that the court shall appoint a receiver if, upon hearing, such deficiency shall be found to exist; and

that the net present value of the policies, or reinsurance reserve, ascertained as now required by law, shall be considered as a liability. Upon this act the insurance commissioner has brought this petition; in it he alleges substantially that on or about September 1, 1877, he found, from examinations and otherwise, that the assets of the respondent corporation were less than three fourths of its liabilities; that this deficiency still continues; that the company has failed to comply with the requirements of law, in this, that it made no such annual report to the insurance commissioner as is required by law, for the year 1875; and no complete report, such as is required by law, for the year 1876; nor any lawful report, or any report in its own name, whatever, during the last three years, to the insurance commissioner; that, on the 19th day of October, 1877, he notified the company to cease to issue new policies, or pay dividends to stockholders or policy-holders, until the deficiency between its assets and liabilities was made good, and the law complied with; and he asks for the appointment of a receiver, a revocation of the charter, and a temporary injunction against the transaction of business.

To this petition the respondent filed a plea, in which it is alleged substantially that before the date of the petition the legislature, with a view of enabling the respondent to reinsure all its policies in the American National Life Insurance Company, and with a design to aid it in effecting such reinsurance, and in the transfer of all its assets to said company, on the 3rd day of July, 1867, passed an act authorizing the board of trustees of the American Mutual Life Insurance Company to loan to the individual members of the board the amount required to pay for the capital stock of the American National Life Insurance Company, which should be subscribed for by such individual members; and that before that time, to wit, in May, 1866, the legislature had incorporated the American National Life Insurance Company with a view to its taking the assets and assuming the liabilities and business of the American Mutual Life Insurance Company, its corporators being the trustees of the latter company; and that in 1871 an act was passed by the General Assembly, changing the name of the American National Life Insurance Company to that of the American National Life and Trust Company, and for the express purpose of authorizing the State treasurer to surrender to the American National Life and Trust Company the securities belonging to the American Mutual Life Insurance Company, to the amount of $100,000, being the amount deposited with the State treasurer by

may

the last named company in accordance with the law, whenever the American National Life and Trust Company had deposited with the treasurer a like amount of securities; so that, in the language of the act, "the liabilities of the American Mutual Life Insurance Company be assumed by the American National Life and Trust Company, as may be provided between said companies; and that afterward, on the 15th of April, 1873, the respondent, in consideration of the assumption of its entire liabilities by the latter company, transferred to that company its entire assets, the transfer to take effect on the first day of January, 1873, and the State treasurer surrendered to that all of the securities of the respondent in his possession; company and that the insurance commissioner on the 18th of April, 1873, as by law required, made an examination of the condition of the American National Life and Trust Company, and found that it had complied with the conditions of the charter, and was duly organized, and that the arrangement with the American Mutual Life Insurance Company and the respondent had been made in strict compliance with the provisions of law, and that the statement of the condition of the company filed in his office was correct; and thereupon, on the 18th day of April, 1873, he issued to the American National Life and Trust Company a license authorizing it to issue policies and transact business, and in further compliance with his duty reported all the above facts to the legislature at its May session, 1874; and that the respondent, after the assumption of all its liabilities by, and the transfer of its assets to, the American National Life and Trust Company, had done no business whatever, and did not intend to do any, and that there had been from that time a complete non-use of all corporate power, privileges and franchises; and that the legislature at its May session, 1875, recognized and confirmed the transfer of its assets to the American National Life and Trust Company, and the fact that it had ceased business, and that the last named company had assumed all its liabilities.

The petitioner replies, substantially, that he ought not to be precluded from maintaining his petition by anything contained in the foregoing plea, for the reason that before the date of the transfer therein mentioned the respondent had issued a large number of policies of insurance upon lives, payment upon which is not to be made until the expiration of those lives respectively; and that many of the insured are still living, and many of the policies are now in force.

The replication is sufficient. During many years the espondent

exercised the franchise conferred upon it, and assumed contract obligations to many policy-holders, some of which were in force when, in 1873, it transferred its assets to the American Life and Trust Company, upon the assumption by the latter of its liabilities. And the record does not disclose that individuals holding policies issued by the respondent were parties to this transfer, or that their rights were in any degree affected by it. The allegations in the petition are that there are existing liabilities; that is, that certain holders of policies have done every act and fullfilled every obligation requisite to the preservation of legal claims upon the respondent; and that these greatly exceed it assets; and it is not an answer to say that another corporation has promised to protect it from these liabilities; the value of the guaranty remains wholly undetermined. There is then a life insurance company in possession of a franchise having liabilities in excess of assets. Herein are the requisite conditions for the operation of the statute, and the court is not excused from obedience to it by the allegation in the plea as to the want of assets. There must be an inquiry as to the truth of the averments in the petition.

We hold the replication to be sufficient, and the plea demurred to insufficient.

In this opinion the other judges concurred.