Richmond v. Conservative Life Insurance Co.

166 Wis. 334 | Wis. | 1917

Wins now, C. J.

\At tbe time of tbe transaction in question sec. 1955o, Stats. 1898, provided as follows:

“No life insurance company doing business in tbis state shall make or permit any distinction or discrimination in favor of individuals between insurants of the same class and equal expectation of life in the amount or payment of premiums or rates charged for life or endowment policies, or in. the dividends or other benefits payable thereon or in any other of the terms and conditions of the contract it makes; nor shall any such company or any agent thereof make any contract or agreement as to such contract other than as plainly expressed in the policy issued pursuant thereto, nor pay or allow, or offer to pay or allow, as an inducement to insurance, any rebate of premium payable on the policy, or any special favor or advantage in the dividends or other benefits-to accrue thereon, or any valuable consideration or inducement whatever not specified in the policy.”

The section further provided for revocation of the license of any insurance company violating any of its provisions.

The questions in the present case are (1) whether the so-called local adviser’s contract was not in fact a discriminating rebate on the premium, or at least a special inducement not'specified in the policy of insurance issued at the same time, and (2) if so, can it be enforced.

We are well satisfied that the first question must be answered in the affirmative notwithstanding the contrary conclusion reached by the trial court. Here are the facts-stripped down to essentials: An insurance agent comes to a lawyer with a blank application for an insurance policy in one hand and a blank application for appointment as local adviser in the other. By this latter application (if accepted by the company) certain payments, depending on the policies-in force in the state, will be made to the lawyer annually on the premium day of the policy in consideration that he will, “on written request,” furnish information as to the character and habits of applicants for insurance or for reinstatement and also such information as may tend to protect it against false or fraudulent claims. The number of local advisers in the state is not to exceed 300. This application has some’ very singular features. The applicant is required not to solicit or write applications for insurance; he is not required to take out a policy of insurance himself, but the appointment may be terminated at any moment by the company, except that so long as $5,000 of insurance placed by the applicant’s efforts or assistance remains in force the compensation shall be continued. This seems confusing at first, but a little study renders it plain. The applicant is not to interfere with the business of regular agents by soliciting insurance; he cannot, therefore, place or assist in placing insurance on any one but himself; consequently, while not in terms required to insure himself, the applicant must keep the insurance on his own life in force in order to be sure that his so-called compensation does not cease, for this is the only insurance which by the contract he is allowed to place or assist in placing.

This application is placed before the plaintiff with the application for insurance unquestionably as an inducement to take out the insurance; both applications are signed at the same time, forwarded to the company together, accepted together, and the policy and appointment returned together and delivered together to the insured. Here comes a significant bit of silent testimony in the wording of the receipt given to the agent by the insured. By this receipt the insured acknowledged that he had received “a 20-payment life advance dividend local adv. policy of insurance.” How if the appointment as local adviser is an independent contract of service having nothing to do with the insurance policy, why should the insurance policy be described as an “advance dividend local adv. policy ?” We know of no good reason that can be given. This phrase, written by the insurer and signed by the insured, seems to make it very sure that both parties regarded the local adviser contract and the insurance policy to be simply parts of one general arrangement by whose terms the plaintiff’s life was insured and certain sums were to be paid him every year for certain vagne and indefinite services by giving him a credit on the premium, so long as he kept the insurance on his own life in force but no longer. This is the kind of an insurance contract which the insurance company made with the plaintiff, and which it proposed to make with a class of favored individuals not exceeding 300 in number in the state.

Perhaps, if it appeared that the services to be rendered were solid and substantial services thoroughly proven, this sort of an arrangement might not be obnoxious to the law, but we are convinced that they were not so. The requirements as to the furnishing of information are of the most vague and shadowy character. Under the terms of the contract it is to be furnished on written request, but the insured is unable to produce a single written request; he makes simply the most general and indefinite statements as to the character of his services, and only in one instance does he name a definite item of service, namely, assisting in securing a local agent at Arcadia, and this was a service entirely outside of the duties required of him by the contract.

The law denounces not only discrimination or distinction between insurants .of the same class, but the giving of any rebate on premiums or of any special favor or advantage in the dividends or other benefits to accrue on the policy or any valuable consideration or inducement not specified therein.

It seems to us that it is absurd to claim that, the substitution of occasional and easy consultative services in place of a substantial part of the cash premium does not constitute discrimination between insurants of the same class, and equally absurd to claim that it is not to all intents and purposes a rebate of a part of the premium and an inducement not specified in the policy. To hold this arrangement valid would, as it seems to us, be offering a reward for skilful legal camouflage. The intent of the statute was to place all insurants of the same class and equal expectation of life on exactly equal footing. That intent should not be defeated by transparent evasions like the present. State Life Ins. Co. v. Strong, 127 Mich. 346, 86 N. W. 825; Urwan v. Northwestern Nat. L. Ins. Co. 125 Wis. 349, 103 N. W. 1102. The circumstances showing the intent in the present case are much stronger than they were in the case of McNaughton v. Des Moines L. Ins. Co. 140 Wis. 214, 122 N. W. 764, a case much relied on by the respondent.

Proceeding to the second question, namely, whether this local adviser contract can be enforced, there seems but one answer possible, namely, in the negative. If our conclusion as to the facts is correct, the law forbade the making of the contract at all, and shall the law enforce the performance of a contract which the law itself forbids ? The law may well, as in the Laun Case (Laun v. Pacific Mut. L. Ins. Co. 131 Wis. 555, 111 N. W. 660), hold valid the contract of insurance, which on its face is perfectly legal and if enforced violates no law, but it by no means follows that the accompanying contract which violates a statute and contravenes the public policy of the state will be enforced so far as it still remains executory. The rule is to the contrary. Menominee River B. Co. v. Augustus Spies L. & C. Co. 147 Wis. 559, 132 N. W. 1118; Kilbourn City v. Southern Wis. P. Co. 149 Wis. 168, 135 N. W. 499; Smathers v. Bankers L. Ins. Co. 151 N. C. 98, 65 S. E. 746.

By. the Court. — Judgment reversed, and action remanded with directions to dismiss the complaint.

EoseNbeeey, J., took no part.