J. MILLARD TAWES, Governor                     2191

Letter from State Law Department on Senate Bill No. 373

April 26, 1963.

Honorable J. Millard Tawes
Governor of Maryland
State House
Annapolis, Maryland

Re: Senate Bill 373
Dear Governor Tawes:

I have reviewed Senate Bill 373 and find that several questions
are raised as to its legal sufficiency.

This bill would amend the insurance laws so as to enable three
directors of any domestic insurance company to at any time dis-
regard the provisions of regular by-laws, acts of legislature or the
company charter and adopt emergency by-laws during a "national
emergency".

Article 44, Maryland Declaration of Rights, states that the pro-
visions of the Constitutions of the United States and of Maryland
apply as well in time of war as in time of peace. Therefore, the same
constitutional standards must be applied even while the nation may
be under attack.

The difficulty with this bill is that the standards it sets up are too
vague and indefinite. For instance, in paragraph (c)(3), three vice-
presidents of the company can take over the powers of the board of
directors "if there are no surviving directors". In a situation where
there is an enemy attack, it is not likely that it would ever be known
which directors are surviving and which are not. It would seem
that the unavailability of such directors would be a more proper
test than their survivorship.

Further, the term "national emergency" is not defined sufficiently
to prevent arbitrary determination by selfish interests as to when
such emergency in fact exists. The extraordinary power in deroga-
tion of the charter, by-laws or statutes governing the management of
a domestic insurance company, given to three directors, may be
under this bill invoked upon the happening of a national emergency.
The statute does not clearly define what such a national emergency
is, nor who is to determine when such a national emergency exists
and when such emergency begins and ends. The definition in the
statute of an emergency as either "caused by an attack on the United
States or by a nuclear, atomic or other disaster" leaves wide latitude
for interpretation and does not place the responsibility of deter-
mination of what "disaster", for instance, constitutes a national
emergency.

Although this bill has a laudatory purpose, it is my belief that it
should receive further study to clarify possible constitutional ob-
jections.

Sincerely,

(s) Thomas B. Finan,

Attorney General.
TBF/imb