179 Iowa 149 | Iowa | 1916
The contracts, as shown by Exhibit “A,” attached to the petition, recite that “The Hartford Life and Annuity Insurance Company” (the name of which company was afterwards changed to the Hartford Life Insurance Company, as alleged in the petition), in consideration of the representations, agreements, and warranties made in t lie application herefor, and of the admission fee paid, and of the sum of $10, to be paid to said company, to create a safety fund, as hereinafter described, and of $3 per annum, for expenses, to be paid as hereinafter conditioned, and of the further payment, in accordance with the conditions hereof, of all mortuary assessments, does hereby issue this certificate of membership in its safety fund department to Peter C. Frick of Cedar Rapids, Linn County, state of Iowa, with the following agreements: [Here are recited a number of provisions which are not material to the present case.] The contract then recites:
“Upon the death of the inember aforesaid while this certificate is in force, all the conditions hereof having been conformed to by said member, and on the receipt by the president or secretary of said company of satisfactory proofs of such death, an assessment shall be made upon the holders of all certificates in force in said department at the date of such death, according to the table of graduated assessment rates, given hereon, as determined by their respective ages and the number of such certificates in force at the
“This certificate is issued by the company and accepted BY TI-IE ¡MEMBER UPON TIIE FOLLOWING EXPRESS CONDITIONS and agreements: * * * The person to whom this certificate is issued agrees to pay to said company $3 per annum for expenses on the first day of the month after date of issue, and at every anniversary thereafter so long as this certificate shall remain in force, or by monthly or other pro rata installments of the same in advance for periods of less than a year. And also agrees to pay said company, upon each certificate that shall become a claim, an assessment in accordance with the Table of Graduated Assessment Rates, as provided herein, within 30 days from day on which notice bears date. * * *
“The holder of this certificate further agrees and accepts the same upon the express condition that, if either the monthly dues, assessments, or the payment of the $10 toward the safety fund, as hereinbefore required, are not paid to said company on the day due, then this certificate shall be null and void. And that, in case any country, state, or municipality in which the member or his legal representatives may reside shall levy a tax to be paid by said company
Printed on the contract is a contract between the Hartford Life Insurance Company and the trustee of the safety fund, which contract is in no way material to the present, controversy. Printed on the contract of insurance also is a schedule, to which, as already shown, reference is made in the body of the contract, which is entitled, “Table of Graduated Assessment Kates for Death Losses for every $1,000 of a Total Indemnity of $1,000,000.” This table is set out in the abstract, and shows the rate at each age from 15 to 60 years. Age 60 years is the last age recited in that table, and the rate at that age, as shown by that table, is $2.68. Below that table is printed on the contract:
“These rates decrease in proportion as the total indemnity in force increases above One Million Dollars in amount..and are calculated so as to cover the usual expense of collecting.” '
The demurrer to the petition, filed November 7, 1911, Avas on the folloAving grounds: That the court has no jurisdiction of the person of the defendant or of the subject of the action, nor jurisdiction to grant the relief prayed for. The findings of the trial court and the decree are, in substance :
“That the defendant was a corporation organized under the laws of the state of Connecticut; that, on or about the 81 h day of May, 1883, the defendant issued to the plaintiff five contracts of insurance in .the amount of $1,000 each; that, by the terms of each of the said contracts, it ivas provided that, upon the death of a member, an assessment shall be made upon the holders of all certificates in force at the date of such death, according to the table of graduated as sessment rates given upon said contracts, as determined by
The decree then recites the schedule, which shows a total amount due the plaintiff from the defendant, on account of the over-assessments and interest thereon, of $2,095.97. The decree then further finds that the amount of each assessment is determined by the defendant as follows:
“By an accurate calculation, the exact amount which will be produced by the assessment at one rate as published on the back of the certificate at the attained age of each member whose certificate is in force, is ascertained. This sum is then divided into the whole amount of death claims which have accrued in • the quarter; and the quotient is the factor which we call the ratio. The ratio is the number of times the rate which it is necessary for each member to pay in order to make up the full amount of death claims approved, due . allowance being made for lapses. That the total amount paid by the plaintiff upon the five contracts in excess of the $2.68 rate since the month of May, 1899, with interest figured on the excess payments from the time when made to date, is the sum of $2,095.97. That the defendant was not entitled to assess the plaintiff upon the five contracts in said company after he reached the age of 60 years, at a greater rate than $2.68. That the plaintiff is entitled to recover from the defendant all sums paid by him upon the certificates in suit since plaintiff reached the age of 60 years, in excess of the sum of $2.68, multiplied by the ratio actually used by the defendant in determining the amount of each assessment, with interest upon each such excessive sum from the date of each respective payment at 6 per cent per annum, and to a decree perpetually enjoining tbe defendant from assessing the plainiiff upon the certificates or contracts in suit at a rate other
After thus finding the facts, the court, in its decree, provided :
“That the defendant be, and hereby is, perpetually enjoined from assessing this plaintiff, Peter C. Frick, upon his five certificates or contracts, numbered 38,361 — 62—68— 61 and 65, at a rate other than $2.68 multiplied by the ratio used by defendant for the safety fund department, and that the defendant be, and hereby is, perpetually enjoined from assessing this plaintiff, Peter C. Frick, upon his said five certificates or contracts at a rate in excess of $2.68 per $1,000 on a total indemnity of $1,000,000; and it is further ordered, adjudged and decreed that the plaintiff have and recover of the defendant, judgment in the sum of $2,095.97, with interest at 6 per cent per annum from the date of this judgment until paid, together with costs of this action, taxed by the clerk in the amount of $28.60.”
The errors assigned are: (1) ¿The court erred in overruling appellant’s demurrer to the petition. (2) The court erred in rendering a money judgment in favor of the appellee and against the appellant corporation upon the evidence in this case.
It appears that the evidence introduced by plaintiff was not taken clown, certified, and preserved, as required; so that the second assignment of error may not be considered. Appellant contends that it is entitled to be heard upon the question of the ruling on the demurrer, and appellee insists that no other question can be reviewed. Appellant’s propositions are that the courts of Iowa have no jurisdiction over the person of the appellant, or of the subject-matter of the action. The argument is that the courts of Iowa have no jurisdiction of the defendant, a foreign corporation, to grant the relief of injunction, accounting, or even a money judgment, when such judgment
“Upon its complying with the provisions of this section, and of Section 1808, Chapter 8, of this title, and the paymfent of $25, the auditor shall issue to it ia certificate of authority to do .business in this state.”
Section 1808 of the Code, just referred to, provides:
“Every life insurance company and association organized under the laws of another state or country shall, before receiving a certificate to do business in this state * * * file in the office of the auditor of state an agreement in writing that thereafter service of notice or process of any kind may be made on the auditor of state, and when so made shall be as valid, binding and effective for all purposes as if served upon the company according to the laws of this or any other state.”
The original notice and the return of service thereof in this case show that service on the defendant was obtained in the manner provided in this statute. Further
“All foreign corporations ® * * doing business in this state shall be subject to all the liabilities, restrictions and duties that are or may be imposed upon corporations of like character organized under the general laws of'this state, and shall have no other or greater powers.”
The opinion of the Missouri court in the, case referred to is directly opposed to the opinion of the appellate court of the state of New York, in Pfeffer v. Hartford Life Ins. Co., New York Law Journal, July 28, 1911, page 1851 (360 App. Div. 876) ; and appellee’s contention has been sustained by the Federal Court of Appeals, as will appear later. Furthermore, substantially all the cases cited by the appellant, except the Missouri case, are cases against mutual associations. It is appellant’s contention that, before a money judgment for the excess of assessments, which-plaintiff claims were unlawful and illegal, can be granted, as prayed for, there must be an elaborate accounting between the defendant and the plaintiff, involving a thorough examination of all the defendant’s books, records and accounts, as to the number of deaths occurring during the respective assessment, quarters, the amount of the policies which each member held at the lime of his death, and an exhaustive examination of the amount of insurance then outstanding during each of the quarterly assessment periods must be had, in order to determine whether plaintiff has been fraudulently assessed in excess of the amount contemplated, and this upon a computation made as provided in the table of rates attached to the certificate of membership at each assessment period; that such accounting against a foreign corporation is beyond the power of the court of equity in this state to grant, and would involve an unwarranted and unenforceable interference with the internal affairs of such foreign corporation, whose officers, books and
The defendant adopted the practice of making assessments quarterly. The amount of.each quarterly assessment that could be legally levied is determined by two fac1ors, as shown by the provisions of the contract just quoted: one, (he rate printed on the back of the policy; and the other, the ratio or number of times the rate necessary to make up the assessment, this ratio varying according to the amount of outstanding insurance and the amount of death losses to be paid. According to.the terms of the contract, the defendant and its officers have no discretion whatever in fixing the ratio. It is a mere matter of arithmeti’e. The ratio is determined by a computation involving the whole amount of death claims that shall have accrued in the quarter, and the total amount of insurance in force. That ratio should be used as a multiple of the plaintiff’s rate, taken from the schedule on his policy, which, by the terms of his contract since he reached the age of 60 years, should have been $2.68. What (lie defendant has in fact done has been to assess tbe plaintiff at a rate of $4 instead of $2.68, and the common ratio was multiplied by
As stated, appellant’s cases, or most of them, involve mutual companies. In the instant case, under the contract, there is no discretion lodged in the defendant company as to the amount of the assessment that may be levied against plaintiff. This is a matter of contract. The judgment and decree entered in this case will in no way interfere with the interna] management of the defendant corporation, nor does it force any officer to do anything involving his official discretion. Nor does the determination of plaintiff’s rights in the instant case involve the determination of the rights of every other policy holder of, the corporation, as in a mutual concern. In a mutual company, a member’s rights are determined not only by the contract, but by the charter, constitution, and by-kvws of the association. Some of the cases say that a policy holder in a mutual company stands in a two-fold relation toward the company: he is a policy holder and a member, and is both insurer and insured. Condon v. Mutual Reserve, 44 L. R. A. 149, 152. We shall not attempt to review the cases cited by defendant. In the cases cited by appellant, or most of them, there were involved questions as to whether the corporation could be required to produce its books and accounts, and list of mortality expenses, salaries, previous assessments, and all matters incident thereto since the plaintiff became a member of the association. In others, there were questions as to the appointment of a receiver, the taking of an accounting for the benefit of plaintiff and of others similarly situated. Others were brought by the plaintiff in his own behalf and for all others similarly situated, and it was held that, under such circumstances, the granting of the relief prayed for involved an interference with the internal affairs of the foreign corporation. In Taylor v. Mutual Res. F. L. Assn., (Va.) 45 L. R. A. 621, at 626, the court discusses
“It is plain that the accounting asked for by the bill requires inquiry into the entire operation of the company, and the handling of its funds.”
Further on in the opinion, however, the court says:
“Tf this were a suit asking only for the interpretation and the enforcement of a policy of insurance, the complainants might well have recourse to this court, because it is only just and fair that a citizen of Ohio who takes a policy in a foreign corporation after the company had agreed that service of process in Ohio might be made upon it, have ready resort to the courts of Ohio for redress.”
Tt seems to us that is what the plaintiff in the case at bar is seeking to do; that is, have his rights interpreted and his rights under that contract preserved. Appellee cites the following cases, as sustaining his contention that the district court of Linn County, Iowa, had jurisdiction of tlie subject matter of the action: Pfeffer v. Hartford Life, Insurance Co., New York Law Journal, July 28, 1911, page 1851 (160 App. Div. 876); Harrison v. Hartford Life Insurance Co., New York Law Journal, June 8, 1909 (137 App. Div. 918, 122 N. Y. Supp. 1130, 201 N. Y. 545, 95 N. E. 1130); Castagnino v. Mutual Reserve Fund Life Assn., 157 Fed. 29; Eberhard v. Northwestern Mut. Life Ins. Co., 210 Fed. 520; Strauss v. Mutual Reserve Fund Life Assn., (N. C.) 54 L. R. A. 605; Ebert v. Same, (Minn.) 83 N. W. 506; Benjamin v. Same, (Cal.) 79 Pac. 517; State ex rel. Minn. Mut. v. Denton, 229 Mo. 187 (129 8. W. 709) ; 19 Cyc. 1238; Babcock v. Farwell, (Ill.) 91 N. E. 683; Edwards v. Schillinger, (Ill.) 91 N. E. 1048; Westminster Nat. Bank v. New England Electrical Works, (N. H.) 3 L. R. A. (N. S.) 551;
“The plaintiffs have brought an action alleging that the defendant has illegally levied assessments upon them in excess of the amount fixed, by contract. The suit is brought in equity and the plaintiffs seek an accounting and injunction. The defendant is a foreign corporation ami demurs on the ground that this court has no jurisdiction in such an action against a foreign corporation. A similar action has been brought heretofore by other parties in this court against the same defendant (Harrison v. Hartford Life Insurance Co.) and this court has not only assumed jurisdiction, but its judgment granting the relief has been affirmed by both the Appellate Division (137 App. Div. 018) and the Court of Appeals (201 N. Y. 545). Aside from any authority which that judgment may have as a precedent, I find no reason why the courts should not take jurisdiction of this form of action and give at least the relief of an accounting. The assessments do not rest in this case within the discretion of the defendant’s directors, but their amount is fixed by contract. No order of this court will interfere with any internal management of the corporation or force any officer to do anything involving his official discretion. There is but little authority in this state as to the exact limits of the jurisdiction which the courts of
This ruling was affirmed In* the Appellate Division without opinion (160 App. Div. 876).
The case of Harrison v. Hartford Life Insurance Co. was another case in New York, a case similar to the case at bar. In this case, the New York Court assumed jurisdiction and took the accounting just as plaintiff asks for in this instant case, and entered judgment against the defendant and decree enjoining it from further violations of the contract. That judgment and decree were affirmed by the Appellate Division and the Court of Appeals. (See Harrison v. Hartford Life Ins. Co., New York Law Journal, June 8, 1909 [137 App. Div. 918; 201 N. Y. 545; 95 N. E. 1130].)
The case of Castagnino v. Mutual Reserve Fund Life Association, 157 Fed. 29, was a case involving the same
“If the cases cited by the court below were decided rightly, the demurrer was properly sustained. * * The present case therefore turns upon the strength of the rule promulgated in those cases. The leading ones, the Ciarle from the District of Columbia, the Condon from Maryland, the Taylor from Virginia, and the Howard from North Carolina, were all decided about the same time, in 1899, following the decision in the Ciarle case. * * * The leading cases referred to were all attempts, by suits in equity, to enjoin the collection of illegal assessments, and to recover them back, and relief was denied on the ground that the court of a state other than the state of the insurance company could not exercise jurisdiction to inquire into the internal management and administration of a mutual life insurance company, because that was beyond its reach, and it could not make its order effective in the way of punishing or correcting either the officers of the corporation or the corporation itself, if it should find there had been a dereliction of duty.
“'Later than these are the cases of Strauss, Ebert and Benjamin (citing references). The Strauss and Ebert cases were suits to recover damages for the wrongful cancellation of certain policies of this company. The Benjamin case was a suit to recover back illegal assessments which were made and collected. The cases were not different essentially from that at bar. Tn each the court was required to construe the constitution, by-laws, and policy,
The Strauss case, 54 L. R. A. 605, the Ebert case, 83 N. W. 506, and the Benjamin case, 79 Pac. 517, are all of interest in this controversy at bar, for the reason that each of those cases holds that the exaction of an illegal assessment by the insurance association was a violation of the contract, and that is the principle which is the basis of the present suit, to wit: that the exaction of illegal assessments by the Hartford Life Insurance Company was a viola tion of its contract with Mr. Frick.
“It does not appear that the defendant will refuse to perform any decree which the court may make, or that the means which the court possesses of enforcing its decrees
“When the statutes of- the domestic state impose on foreign corporations coming within the state, and having-usual places of business therein, the general statutes relating to domestic corporations, the same remedies which are available to domestic citizens against domestic corporations are available against them, and they, may be sued in the domestic state in like manner as domestic corporations may” (citing National Bank of Commerce v. Huntington, 129 Mass. 444).
With reference to' this statute, this court, in 1he case of Nelson v. Nederland Life Ins. Co., 110 Iowa 600, 604, said:
In the case of American Fidelity Co. v. Bleakley, 157 Iowa 442, the court said (see page 446) :
“The state has the undoubted right to say whether foreign corporations shall be permitted to do business here at all, and if such permission is granted, it may be upon such terms as the state shall prescribe. And, where it is the manifest intention to limit or restrict the powers given to such corporation by its charter, courts have no authority to override such legislation on the ground of comity between the states. Within its power, the state, through its legislature, is supreme, and the court’s duty is ended when it determines what the statutory law is.”
Section 1635 of the Code provides:
, “In proceeding's by or against a corporation * * * the court may, upon motion * * * upon cause shown for that purpose, compel the officers or agents of the corporation to produce the books and records of the corporation.”
Code Section 4654 provides:
“The district * * * court may * ' * * by rule, require the production of any papers or books which are material to the just determination of any cause pending before it.”
Section 4656, Code, provides:
“On failure to obey the rule or show sufficient cause therefor, the same consequences shall ensue as if the party had failed to appear and testify when subpoenaed by the [other] party.”
Code Sections 4667 and 4668 provide that, on a failure
Without prolonging the opinion by a further analysis of the cases, it is our conclusion that the district court had jurisdiction of the person and of the subject-matter, and had jurisdiction to render the judgment and enter the decree. gome other questions are argued, but we think they are not raised by the demurrer.
The judgment of the district court is therefore — ■ Affirmed.