179 Ky. 465 | Ky. Ct. App. | 1918
Opinion op the Court by
Reversing.
This action was instituted, in the Franklin circuit court, by the Insurance Commissioner, against the Equity Life Insurance Company, to enjoin it from-further transaction of business, and to secure the appointment of a receiver to take possession of the property and effects of the company and to wind up and settle its affairs. The grounds, relied upon for seeking the relief asked, were, that it was a domestic insurance com- ' pany; was insolvent; had exceeded its powers; failed to comply with the law; and that its, further, proceedings were hazardous to the public and its policyholders. • The injunction was granted and a receiver appointed, as prayed for. The receiver was directed to take into his possession all moneys, books, and papers and property and assets of thé company, generally; to collect all debts due the company; to ascertain its indebtedness, its policyholders, and the amount of each policy, and to fully report to the court all of its assets and liabilities. The report required was filed in court on April 13th, 1916, and showed that the company commenced to do business in October, 1909, and continued until the 7th day of December, 1914, the time of the granting of the injunction and the appointing of a-receiver, and that the company owed debts for services rendered it, rent and other items, in the sum of $6,208.65, and death claims in
The articles of incorporation represent, that the incorporators have “constituted themselves and their associates a corporation, for the purpose of transacting a life insurance business, on the co-operative or assessment plan, pursuant to the provisions of chapter 32, of Kentucky Statutes, and especially pursuant to article IY, subdivision 3, thereof.” Article II declares that “the class of insurance which it is proposed to write is known as the co-operative or assessment plan.”
Article III provides as follows: '
“The business plan or principle on which the corporation proposes to operate is the creation of a fund or funds derived from stated annual premiums, special assessments, as occasion may require, and interest and accretions thereon, collected or to be collected from the policyholders thereof, said fund to be used to make and maintain insurance on the lives of individuals, who have by payment of stipulated premiums become policyholders in the corporation. The corporation shall create a reserve fund in. such a manner as may be prescribed by the by-laws of the corporation, which reserve fund shall be set apart as an emergency fund and used as prescribed in section 662, subdivision 3, and article IV, of Kentucky Statutes.”
Section 664, Kentucky Statutes, defines certain characters of insurance, which shall be considered as life insurance upon the co-operative or assessment plan, and is as follows:
“Any corporation, association or society which issues any certificate, policy or other evidence of interest to, or makes any promise or agreement with its members, whereby, upon the decease of a member, any money or other benefit, charity, relief or aid is to be paid, provided pr rendered by such corporation, association or society, to the legal representative of such member, or to the beneficiary designated by such member,- which money, benefit, charity, relief or aid is derived from the voluntary donation or from admission fees, dues and assessments, or any of them, collected or to be collected from the members thereof, or members of a class therein, and interests and accretions thereon, or rebates from amounts payable to the beneficiaries or heirs, and wherein the paying, providing or rendering of such money or other benefit, charity, relief or aid is conditional upon the same being realized in the manner aforesaid, and wherein the money- or other benefit, charity, relief or aid so realized is applied to the uses and purposes of such corporation, association or society, and the expenses of the management and prosecution of its business, shall be deemed to be engaged in the business of life insurance upon the co-operative or assessment plan, and shall be subject only to the provisions of this subdivision. ...”
Section 665, Kentucky Statutes, defines in similar language what casualty insurance upon the co-operative or assessment plan is.
“This policy is issued in consideration of the applications therefor, and of the applicant’s statements made in their medical examinations, and of a full compliance with all the terms, conditions and provisions endorsed on the back of this policy, all of which are made-a part hereof, and of the payment, in advance, of fifty-five dollars for one year’s insurance, but will be renewed upon the further payment of a like amount.at the home office of the company on or before the 9th day of December in every year thereafter, during the continuance of this contract.”
The above was contained in the face of the policy. The undertaking by the company was, in the event of the death of either appellant or his wife, to pay to the survivor, a funeral benefit of $250.00, and to the survivor, if the wife, 38.00, per month, during her natural life, and if the husband, the sum of $28.00 each month during his natural life, and in the event of the death of both, if the premiums upon the policy had been paid up to the death of both, to pay any minor children, which they might have, the monthly benefit being paid to the surviving husband or wife, whichever was the last to die, until the children should become twenty-one years of age or married. If the husband or wife should become permanently disabled during the continuance of the contract, to pay to him or her the monthly benefit above mentioned; if the husband, $28.00, and.if the wife, $38.00, per month during the period of the disability, and if both should become disabled, to pay to them during the continuance of the disability the sum of $28.00 per month. But all of the payments under the policy should not exceed $5,000.00.
The by-daws were made a part of the policy contract and printed upon the back of the policy. The eighth bylaw provided, that one-half of each premium after the first, should be appropriated, as a mortuary fund, and not used for any purpose, except the payment of death claims. The ninth by-law provided, that at the end. of each fiscal year, after all current expenses, commissions, etc., were paid, and one-half of the premiums collected appropriated to the mortuary fund, if any money was on hand, it should be appropriated to a reserve fund and
The tenth by-law was as follows:
“In case an emergency shall arise from an epidemic, or other causes, and our mortuary and reserve funds shall both become exhausted, leaving any unpaid death claims, then the company reserves the right to call on her policyholders for a special donation, sufficient only to relieve such unpaid death claims. But under no circumstances shall any such donation be called for until our mortuary and reserve funds have both been completely exhausted. In such case sixty days’ notice will be given to all policyholders of the amount called for and of the time it shall be due.”
This by-law was followed immediately by the eleventh one, which was as follows:
“In accepting a policy in this company, you assume no liability whatever, further, than the payment of the first year’s premium, and no property or other value of the policyholder shall be held liable for the payment of the premiums, except where notes have been given for the same.”
Another by-law provided, that a lapsed policy might be renewed within a year from the date of its lapse by furnishing satisfactory proof of good health and the payment of all back premiums, with their accrued interest.
(1). It is insisted, that the policy contract sued upon is void, because, the Equity Life Insurance Company was not organized as required by law, as a co-operative or assessment life insurance company, and hence did not have thé power to make or enter into a contract, such as' the policy was, which was granted to appellant. The failure to organize, as required by law, as an assessment life insurance company, is said to consist in the fact, that only two of the persons claiming to be incorporators signed and acknowledged the articles of incorporation, as required by section 619, Kentucky Statutes; a sworn statement was not made by three of the incorporators to the effect, that, at least two hundred eligible persons had, in good faith, made application, in writing,' for membership in the company and was not filed with the Insurance Commissioner; that the papers were not re-' ferred to the attorney general for his examination, andj
(2). It is, also urged, that the Equity Life Insurance Company was not a mutual company, and for that reason, there being no mutuality of obligation between the policyholders, that one policyholder could not be assessed for the payment of a loss under another policy. It seems to be the policy of the law, in this state, that insurance companies shall indicate by their names and in their policies whether they are stock or mutual companies, as it is required by section 618, Kentucky Statutes, that an insurance company, which does business upon the mutual principle must include the word, “mutual,” in its name, and by section 686, Kentucky Statutes, it is provided, that every insurance company doing business upon the mutual plan must include the word, “mutual,” in its title, and that such title shall appear upon the first page of every policy and renewal receipt, and if it is a cash stock company, that it shall express in its policies, that it is a stock company nor shall any company transact the business of insurance on both the stock and mutual plans. Section 686, supra, however, seems to apply to insurance companies, other than life insurance companies. The word, “mutual,” does not appear in the title of the Equity Life Insurance Company, and no mutual principle appears anywhere in the policy sued on, unless the tenth by-law should be considered as a mutual undertaking by all the policyholders to be ultimately bound for the losses sustained under all other policies. To co-operate means for one or more persons to act jointly or concurrently toward a common end, but, as applied to a co-operative or assessment insurance company, doec not include a co
The judgment is therefore reversed and the cause remanded for proceedings consistent with this opinion.