Argument for Petitioner.

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Gray (Mass.), 280; Redmond v. Dickerson, 1 Stockt. (N. J.) 507; Murray v. Clarendon, Law Rep. 9 Eq. 17; Nesbitt v. Berridge, 8 Law Times, N. S., 76; Story, Eq. Plead. (7th ed.), § 452.

Nor does a demurrer admit matters of inference or argument, or the alleged construction of an instrument when the instrument itself is set forth in the record, in cases where the construction assumed is repugnant to the language of the instrument. Peckham v. Drake, 9 Mees. & W. 78; Humble v. Hunter, 12 Law Rep. Q. B. 315; McArdle v. The Irish Iodine Company, 15 Irish C. L. 146; Sprigg v. Bank of Mount Pleasant, 14 Pet. 201; United States v. Ames, 99 U. S. 45; Finney v. Guy, 189 U. S. 343.

As to recitals, statements of what the papers which are made exhibits purport to show, and conclusions of law, the rule is well settled that only matters of fact well pleaded are admitted by a demurrer, while conclusions of law are not. United States v. Ames, 99 U. S. 35, 45; Interstate Land Co. v. Maxwell Land Grant Co., 139 U. S. 569, 578; Chicot County v. Sherwood, 148 U. S. 536.

The authorities cited also sustain the propositions that opinions of the pleader as to the propriety of defendant's conduct or as to what is or is not the probable consequence of such conduct are not admitted by a demurrer and are of no probative value; also that general allegations of fraudulent or negligent conduct, or wrongful intent are to be disregarded upon demurrer, unless facts are alleged sufficient to substantiate the allegations.

Whether it be a charge of omission or commission the facts are not alleged, and a mere charge of negligence whether of omission or commission is charging a legal conclusion which is not admitted by the demurrer. Knowles v. New York, 176 N. Y. 430; Talcott v. Buffalo, 125 N. Y. 280; Thomas v. N. Y. & G. L. R. Co., 139 N. Y. 163, 182; O'Brien v. Fitzgerald, 6 App. Div. 509, 513; Franklin Fire Ins. Co. v. Jenkins, 3 Wend. 130; Van Schaick v. Winne, 16 Barb. 89; Kranz v. Lewis, 115

213 U.S.

Argument for Petitioner.

App. Div. 106; 88 N. Y. 579; People v. Equitable Life Ass. Soc., 124 N. Y. App. Div. 732.

Allegations of fraud, unsupported by facts fairly tending to sustain the charge, are insufficient. Schiefer v. Freygarg, 125 N. Y. App. Div. 498.

This society, being a corporation of the State of New York, organized under the laws of New York, the decisions of the highest court of that State, construing its charter and determining the rights of policyholders under the charter and under the laws of the State, will be followed by this court as authoritative and indeed conclusive where no question arising under the statutes or Constitution of the United States is involved. Rev. Stat., § 721; Elmendorf v. Taylor, 10 Wheat. 153, 159; United States v. Morrison, 4 Pet. 124, 137; Green v. Neal, 6 Pet. 291; Wicomico Co. v. Bancroft, 203 U. S. 112, 118.

A charter granted by special act to a corporation is simply a particular kind of statute. Therefore, the Federal courts hold themselves bound to follow the interpretation placed upon a corporation charter contained in an act of the legislature by the highest court of the State which enacted it. Smith v. Kernochan, 7 How. 198; Stone v. Wisconsin, 94 U. S. 181; Cleveland, P. & A. R. Co. v. Franklin Canal Co., 5 Fed. Cas. No. 2,890; Venner v. Atchison, T. & S. F. R. Co., 28 Fed. Rep. 581, 582, 586; New Orleans W. W. Co. v. Southern Brew. Co., 36 Fed. Rep. 833, 834, 836; Stone v. Wisconsin, 94 U. S. 181, 183; Waterworks Co. v. Refinery Co., 35 La. Ann. 1111.

The same principle applies to the construction of "Articles of Incorporation" drawn up under a general statute authorizing the incorporation of certain classes of corporations.

The corporate rights and liabilities growing out of such articles are to be determined by the courts of the State under whose laws the corporation is organized. Polk v. Mutual Reserve (C. C. S. D., N. Y.); Merrimac Mining Co. v. Levy, 54 Pa. St. 227 et seq.; Clark v. Turner, 73 Georgia, 1; First National Bank v. Converse, 200 U. S. 425.

The United States courts have invariably followed the state

Argument for Petitioner.

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decisions on all questions concerning corporations, where no Federal question was involved. See 11 Cyc. 903-907. See also Secombe v. Railroad Company, 23 Wall. 108; Hancock v. Louisville Railroad Co., 145 U. S. 409; Park Bank v. Remsen, 158 U.S. 337; Sioux City Railroad Co. v. N. A. Trust Co., 173 U. S. 99; Williams v. Gaylord, 186 U. S. 157; Schofield v. Goodrich Bros., 39 C. C. A. 76; S. C., 98 Fed. Rep. 271.

The defendant is organized under the laws of New York. Every person who has joined it as a policyholder has entered into his contract upon the basis of the laws of New York, as limited only by the Constitution and statutes of the United States. Every person becoming a policyholder since the decisions in the Uhlman Case, 109 N. Y. 421, and in the Greeff Case, 160 N. Y. 19, has had a right to rely upon and is bound by those decisions as part of the law of the State and, therefore, part of his contract. Every such person has presumably entered into his contract in the faith that it was the right and the duty of the society's officers "to retain out of its surplus an amount sufficient to insure the security of its policyholders, in the future as well as at present, and to cover any contingencies that might arise or be fairly anticipated" (160 N. Y. 34), and subject to the ruling that the relations of a policyholder to the company are not those of cestui que trust and trustee, but simply that of creditor and debtor. 109 N. Y. 421.

So far as the bill in this suit is based upon any alleged failure to comply with its charter or contract obligations as to the distribution of its entire net surplus, the bill is clearly demurrable under the rulings of the Court of Appeals of New York in Greeff v. Equitable Life Ass. So., 160 N. Y. 19.

So far as the bill is based upon the theory of a trust relationship between the policyholders and the society, it is at variance with the settled law of New York as laid down by a long and unbroken line of decisions, culminating in the Uhlman decision.

The relation between the parties arises solely from the contract by the terms of which their rights must be governed.

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Argument for Petitioner.

The insurance company is not a trustee for the insured, even in case of a tontine policy, much less in the case of an ordinary life policy, such as that held by complainant. If the terms of the contract are violated by the petitioner the remedy of the policyholder is by an action at law to recover damages for breach of contract. Uhlman v. N. Y. Life Ins. Co., 109 N. Y. 421; Everson v. Equitable Life, 68 Fed. Rep. 258; aff'd, U. S. Cir. Ct. App., 71 Fed. Rep. 570; Hunton v. Equitable Life, 45 Fed. Rep. 661; St. John v. American Mutual Life Ins. Co., 13 N. Y. 31; Cohen v. Mutual Life Ins. Co., 50 N. Y. 610; People v. Security Life Ins. Co., 78 N. Y. 114; Taylor v. Charter Oak Life Ins. Co., 9 Daly, 489; aff'd, 8 Abb. N. C. 331; Bewley v. Equitable Life, 61 How. Pr. 344; Buford v. Equitable Life, 98 N. Y. Supp. 152; Pierce v. Equitable Life, 145 Massachusetts, 56; Greeff v. Equitable Life, 160 N. Y. 19..

The bill cannot be sustained as a bill for fraud because, so far as any fraud affecting complainant's rights is concerned, he has an adequate remedy at law. Insurance Co. v. Bailey, 13 Wall. 616, 623; Buzard v. Houston, 119 U. S. 347, 352; London Guarantee Co., Ltd., v. Doyle, 130 Fed. Rep. 719; United States v. Bitter Root Co., 200 U. S. 451.

Nor does the fact that the bill also seeks discovery and an accounting, make a case for jurisdiction in equity.

Discovery and accounting are no longer sufficient ground for equitable jurisdiction in aid of relief of a legal character. Rev. Stats., § 724; Stafford v. Ensign Mfg. Co., 120 Fed. Rep. 480; see also cases supra.

So far as the bill is based upon mismanagement and waste of corporate assets by the directors and officers, the only cause of action set forth in the bill is one which should be brought in the name of and for the benefit of the society as a corporation and not in the name of or for the benefit of policyholders who are merely contract creditors and who have not obtained any lien on the assets by way of judgment or otherwise and who have no claim as cestuis que trustent, as is perfectly well settled by all the cases. Graham v. Railroad Co., 102 U. S. 148.

Argument for Respondent.

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Furthermore, it is manifestly impossible to decree an accounting in this suit based upon waste of the society's assets. If this bill is to be sustained either as a bill to recover assets wasted by the officers of the society, or as a bill for a receiver and to wind up the society, there is a clear defect of parties defendant and those officers should be joined. Minnesota v. Northern Securities, 184 U. S. 199, 235; Christian v. Atlantic & N. C. R. R. Co., 133 U. S. 233, 241; Gregory v. Stetson, 133 U.S. 579, 586.

It is the duty of the courts, and particularly of courts of equity, to protect insurance companies from merely harassing and annoying litigations which can be of no substantial benefit to the policyholders.

A court of equity has the right and is bound to consider the relative advantages and disadvantages of granting equitable relief. Trustees of Columbia College v. Thacher, 87 N. Y. 317.

It withholds the remedies if the result would be unjust, but freely grants them to prevent injustice where the other courts are helpless. McClure v. Leaycraft, 183 N. Y. 36, 41; New York v. Pine, 185 U. S. 93; Penryhn Slate Co. v. Granville El. L. & P. Co., 181 N. Y. 80; Knoth v. Manhattan Ry. Co., 187 N. Y. 243.

Mr. John R. Dos Passos, with whom Mr. Joseph De F. Junkin, Mr. George Gordon Battle and Mr. H. Snowden Marshall were on the brief, for respondent:

A trust relation arose, ab origine, between the respondent and petitioner, as to the corpus of the property in the possession of the society; and the policy of insurance is in effect a deed of trust, when read in connection with the acts under which the society is incorporated, and its charter and rules. See act of June 24, 1853, chap. 555, Laws of New York, under which petitioner was incorporated; Insurance Laws, § 71. No other relation but that of trust can be evolved from the documents above cited.

An analysis of the relations which the society, its stock