Relfe v. Columbia Life Insurance

76 Mo. 594 | Mo. | 1882

Hough, C. J.

The sole question in this case is, whether claims founded upon death losses which accrued -prior to the dissolution of the Columbia Life Insurance Company, on October 17th, 1877, are entitled to priority of payment over claims founded upon the surrender values of running policies, i. e., policies which were in force and had not matured prior to the date of dissolution, which became debts of the company to the extent of such surrender values, by reason of such dissolution. The circuit court decided that the death losses were not entitled to priority of payment, and the judgment was affirmed pro forma by the court of appeals.

By the act of April 21st, 1877, (Sess. Acts 1877, p. 275,) the surrender values of running policies are recognized to be liabilities of the company, and it is further provided, that whenever it shall appear that the assets of the company do not exceed its liabilities, exclusive of paid capital, its further continuance in business is to be regarded as hazardous to the public, and the Superintendent of Insurance is required to take steps to restrain it from doing further business, and to have its affairs wound up. As the surrender values of running policies are, in contemplation of the statute, liabilities of the company, which it must always have on hand sufficient asáets to meet, when such liabilities become debts of the company, by reason of the dissolution, they stand upon the same footing as all other debts, and in the absence of any statute giving priority of payment to the death claimants, or creating some legal or equitable lien upon the assets of the company, we do not see why such death claimants should be decreed to be entitled to a preference in the distribution of the assets of such dissolved corporation.

Nor is there anything in the nature of the contract of life insurance with a stock company, such as the Columbia Life, which could be held to create an equitable right to priority on the part of the death claimant. The premiums paid by the insured are, according to the theory upon which t'he business of life insurance is conducted, paid primarily for his own benefit, and it is the duty of the-company to set apart and invest a portion of such premiums-as a reserve fund to be applied to the payment of his policy whenever the same shall become a debt of the company. This reserve, taken from the premiums, as was said in the case of New York Life Ins. Co. v. Statham, 98 U. S. 34, belongs, in one sense, to the insured who has paid them (the-premiums), somewhat as a deposit in a savings bank is said to belong to the person who made the deposit. No portion of the premium paid by any one policy-holder, can properly be said to have been paid for the benefit of the death claimant under any other policy; for, if each policyholder should fulfill that expectancy of life upon which the-.amount of his premium is calculated and fixed, the reserve .arising from the premiums paid upon such policy, would be sufficient to meet such policy when due. Nor can the fact that , the death of any one policy-holder operates to enlarge the surrender value of his policy to the face value thereof, give any additional sanctity to the claim or create any superior equity in behalf of the claimant thereunder. "The death loss is but a debt at last, and in reason, and on principle, stands on no better footing than debts due by the company to living policy-holders; and when the assets ■are insufficient to pay all, in full, they must be ratably divided. The views here presented are supported by Wilson’s case, L. R., 9 Eq. Cas. 711, 720, and the People v. Security Life Ins. Co., 78 N. Y. 116; s. c., 34 Am. Rep. 522, the only two cases which the research of counsel has brought to our attention upon the precise point involved in this case.

The. decision in Mayer v. Attorney General, 32 N. J. Eq. 815, which sustained the claim of priority for matured policies, proceeded upon the ground that the company in that case was a mutual company constituted by policy-holders, in distinction from a stock company constituted by stockholders, and it was held that under the charter of that company, the holders of matured claims were the creditors, .and the holders of the running policies, the members of the debtor corporation. No such relation can be created by death, or be otherwise made to exist, between the policyholders of a stock company.- When the corporation is dissolved all the policy-holders are creditors of the company, and are, therefore, entitled to share ratably with death claimants in the assets of the company.

In 1879 the insurance law was amended by the addition of a new section, (§ 6047, R. S.,) giving priority to death losses and matured policy claims, and the following further provision was made m section 6053 : “ In the settlement of the affairs of insurance companies already dissolved and in the hands of the court by its receivers, the court shall, as far as possible, conform to and be governed by the provisions of this law.” This provision, it is contended, requires distribution to be made in the case before us, according to the terms of section 6047, supra. It is a matter of grave doubt whether it was the purpose of the legislature to do more, by this provision, than to require the courts to conform to the law of 1879, so far as the form and manner of proceeding, in such cases, is concerned.. But, if it was the purpose of the act so to distribute the assets of companies already dissolved, as that the great mass of creditors of such dissolved companies, whose right to a ratable proportion of the assets of such companies-had already become fixed and determined by the dissolution of the same, should be deprived of such right, then, we are of opinion that such enactment is without constitutional authority, and is void. It is unnecessary to enter at large upon the discussion of this point, or to cite authorities in support of our view. It is sufficient to say that the; right of the policy-holder grows out of a breach of contract, and the legislature has no power to take it away.

We are all of opinion that the judgment of the court, of appeals should be affirmed.