State ex rel. Attorney General v. Merchant's Exchange Mutual Benevolent Society

72 Mo. 146 | Mo. | 1880

Napton, J.

Two points arise is this case, both of which have been fully discussed at the bar. The first question is, whether this company or corporation defendant is doing and authorized by its constitution to do an insurance business, and the second point is based upon an assumption that though it may be so authorized and so employed it is still not within the statute' laws in regard to insurance companies, but expressly exempted by the legislature from any such obligation to comply with the general law on the subject of insurance. The first question seems to be of easy solution, whether regarded in reference to the definition of insurance adopted by the textbooks or to specific judicial decision.

1. Insurance : a benevolent society held an insubance company. The origin of life insurance, as we are told by all writers on the subject, is traceable to benevolent motives. The object was to secure to the family of a person who was dependent on a salary, or 0ther income which ceased with his life, a support upon the death of the insured, by a small contribution of the annual income, and this, it is apparent, was a laudable and benevolent object. In France, ,we are told, life insurance was in early times prohibited, on the ground that it might operate as an incentive to those who would benefit by the termination of a life to hasten such termination ; but in England it was adopted by the judiciary long before its sanction by parliament upon an assumption, not unusual with those islanders, of a superiority in popular •morals over their continental neighbors. And in this coun*159try it followed the common law of England into such states as adopted that system, but has been so entirely regulated by special legislation here, and probably in all other states, that any reference to its original character becomes unnefcessary.

The definition given by Bunyon, an English writer on the subject, is probably as complete as any to be found in the text-books. He defines life insurance to be “that in which one party agrees to pay a given sum upon the happening of a particular event consequent upon the duration of human life in consideration of the immediate payment of a smaller sum or certain equivalent periodical payments by another.” The supreme court of Massachusetts defined it to be “ a contract by which one party promises to make a certain payment upon the destruction or injury of something in which the other party has an interest, whatever may be the terms of payment of the consideration or the mode of estimating or securing payment of the sum to be assured in case of loss.” This definition of the Massachusetts court was given in a case in which the facts were identical, substantially, with the one we now have under consideration. The only question in that case was, whether the charter of a company called the “ Connecticut Mutual Benefit Company,” was in effect a life insurance corporation. The name of the company was the. “ Connecticut Mutual Benefit Company,” and its constitution recited its object to be “mutual benefit and relief in case of death as hereinafter set forth.” The affairs of the company were intrusted to a board of directors, and its officers were a president, secretary, treasurer, etc. The funds of the company were raised by admission fees of members and assessments as prescribed in the by-laws. The rate of fees was fixed according to certain enumerated classes, and those who paid the largest premiums were entitled to a proportionate increase of dividends.

In the case we have under consideration the title of the corporation is “ Merchants’ Exchange Mutual Benevo- ' *160lent Society of St. Louis,” the words “mutual benefit” being exchanged for “mutual benevolent.” The object stated in the constitution of the society is “ to give financial aid to the widows and children of deceased members, or to such uses and purposes as such member shall by his last will and testament direct.” The election of nine trustees was provided for, and the appointment of the necessary officers of president, secretary and treasurer. The funds were raised by initiation fees, and classes were arranged as in the Connecticut charter. In short, it is impossible to see any material difference in the two schemes. The opinion of the court was that the corporation or association was an insurance company, and came within the meaning of the Massachusetts statute.

I am not satisfied that I could express the views of this court oh the first point in the present case in a more condensed, comprehensive or pointed form than will bo done by simply employing the language of the Massachusetts supreme court: “ The contract made between the Connecticut Mutual Benefit Company,” says Judge Cray, who delivered the opinion of the court, “ and each of the members, by the certificate of membership issued according to its charter, does not differ in any essential particular of form or substance from an ordinary policy of life insurance. The subject insured is the life of a member. The risk insured is death from any cause not excepted in the terms of the contract. The assured pays a sum fixed by the directors, and not exceeding $10, at the inception of the contract, and assessments of $2 each annually, aud of $1 each upon the death of any member of the division to which he belongs, during the continuance of the risk. In case of the death of the assured by a peril insured against, the company absolutely promises to pay to his representatives, in sixty days after receiving satisfactory notice and proof of his death, as many dollars as there are members in the same division, the number of which is limited to five thousand. The payment of this sum is limited to no *161contingency but the insolvency of the corporation. The means of paying it are derived from the assessments collected upon his death from other members, from the money received upon issuing other certificates of membership, which the by-laws declare may, afterpayment of expenses, be ‘ used to cover losses caused by the delinquencies' of members and from the guarantee fund of $100,000 established by the corporation under its charter.’ This is not theiess a contract of mutual insurance upon the life of the insured, because the amount to be paid by the corporation is not a gross sum, but a sum graduated by the number of members holding similar contracts, nor because a portion of the premiums is to be paid upon the uncertain periods of the deaths of such members, nor because, in case of nonpayment of assessments by any member, the contract provides no means of enforcing payment thereof, but merely declares the contract to be at an end, and all moneys previously paid by the assured, and all dividends and credits accruing to him, to be forfeited to the company. The fact offered to be proven by the defendant that the object of the organization was benevolent and not speculative, has no bearing upon the nature and effect of the business conducted and the contract made by the corporation.” Com. v. Wetherbee, 105 Mass. 160.

In the constitution of the present society, it is true that no guarantee fund of $100,000 is provided for, but by reference to artice 15 of the by-laws, it will be seen that a similar fund, though called by a different name, is provided for. That article is as follows : “Article 15. The entrance or initiation fee shall belong to and be invested as a permanent fund, each of the classes being kept separate on the books of the society; provided that the boai’d of trustees are authorized to employ, from time to time, as they in their discretion may deem best, one or more persons to act as solicitors for the purpose of obtaining members to this society, and to pay such solicitor for his services out of the permanent fund, not to exceed the sum of $1 for each *162member so obtained. The interest on the permanent fund, with the amount assessed against each member on the death of a fellow member, together with all gifts or income received by the society, shall be placed to the credit of the contingent fund and used for advances for members in anticipating their dues on the death of a fellow member, defraying the current expenses of the society as may be directed by the board of trustees; but if at any time the contingent fund shall exceed the wants of the society for the purpose named, the trustees shall order the same to be invested in bonds.”

This opinion of the supreme court of Massachusetts, if it be a sound one, would seem to be quite conclusive on the first point discussed in this case, but as the opposite view has been maintained with much confidence in the argument of counsel for the defendant, it may be proper to show, by the decisions of other courts, that it has been generally acquiesced in; indeed, I may say, uniformly adopted where there were no legislative enactments requiring a. contrary construction. The case of Schunk v. Gegenseitiger Wittwen und Waisen Fund, 44 Wis. 870, is merely an assumption on the part of counsel on both- sides, in which the court concurred, that the corporation defendant was a mutual insurance company. The name as translated from the German wa sthe Mutual Widows’ and Orphaus’ Eund. It was a corporation organized and acting by the authority of the Grand Lodge of the United Ancient Order of Druids. The grand lodge consisted of representatives from the several groves, which, together with the association, were under the jurisdiction of the grand lodge, and the court declared that the defendant “was obviously organized to answer the ends or serve the purpose of a mutual life insurance company.” The description given by the court of the character and operations of the company, with unimportant, changes as to details, would apply to the corporation defendant here. “Among the provisions of the constitution and by-laws adopted for its management,” says Cole, J.,. *163“ is one which provides that, on the death of a member in good standing, there shall be paid to his surviving widow or heirs the sum of $800 as life insurance. The funds under the control of defendant are made up chiefly of dues paid by members on admission into the order’ and assessments levied upon and paid by the members on the death of a brother. The managing authority of the defendant is termed a directory, which is chosen by the groves from their members, each grove that has not more than seventy-five members being entitled to one member in the directory and to an additional member for each additional seventy-five or fraction exceeding one-half that- number. This directory conducts the whole management of the defendant; fixes the amount of the assessment to be paid by the members on notice of the death of a brother,issues, through its corresponding secretary, to all the groves a demand of payment of such assessment; and also determines whether the claims of the survivors of the deceased are just. Every member of a grove is obliged to contribute to the fund by paying his initiation fee and assessments, and is entitled to participate in its benefits. The admission fees and assessments are paid by the members to their respective groves, the grove paying over all dues to the directory.” The point decided in the case has no connection with the present question under consideration, but it is an answer to the position taken in this case, and somewhat urged in argument, that there was no contract provided for by the constitution and by-laws of the present society; that the officers were merely collecting agents aud their performance of such voluntary duties could not be enforced. The court held that the groves were a part of the machinery of the corporation for collecting assessments, and were as much agents of the corporation as of the members paying, and their neglect to pay over the money collected could not affect the representatives of the deceased member, but that the corporation was liable, and judgment was accordingly given against it.

*164In Erdmann v. The Mutual Ins. Co. of the Order of Hermann’s Sons of Wisconsin, 44 Wis. 376, the title of the company sufficiently indicates its character, but the machinery for collection and contribution and distribution seems to have been essentially the same as in the case just referred to. In Dietrich v. Madison Relief Association, 45 Wis. 79, we have another corporation of the same class and managed in the same way. No question was made as to its being a mutual life insurance company. In a recent case in Kentucky (13 Bush 489) the same doctrine is recognized without question. So in Masons’ Benevolent Society v. Winthrop, 85 Ill. 537, there was no question raised as to the corporation being an insurance company, but a statement of the case shows no essential difference between it and the benevolent society which is defendant here. The covenant which was sued on consisted of a promise or agreement by the society to pay to the wife of the deceased member, on satisfactory proof of his death, a certain sum of money depending on the class of which he was a member. The court says : “ The organization is a kind of mutual benefit association, managed*by a directory, and the expenses and losses of the society are paid by assessments made upon the members for such purposes.” The court declares the certificate of membership “ in the nature of a policy of insurance on the life of the member.” • In the Illinois Masons’ Benevolent Society v. Baldwin, 86 Ill. 479, the corporation was treated by the court without question, so far as it appears, as an insurance company.

A decision of the court of appeals of New York, affirming one of the supreme court, has been refei'red to, though not on the subject of insurance, but to show how little impox’tance is attached by the judiciary of that state to names or ostensible objects of association, when their organizatiorx and real effect is in conflict with a law and the constitution of the state. In the case of the Governors of the Alms House, etc., v. The American Art Union, 3 Selden 228, the corporation was professedly devoted to the *165encouragement and promotion of the fine arts, aud the works of art purchased were distributed every year among the members by lot. The constitution of the state had this provision: “No lottery shall hereafter be authorized in this state, and the legislature shall pass laws to prevent the sale of lottery tickets within this state, except,” etc. There was also a statute which provided that “ no person should set up or propose any money, goods or chattels or things in action to be raffled for or to be distributed by lot or chance to any person who shall have paid or contracted to pay any valuable consideration for the chance of obtaining any such money, goods or things in action.” Notwithstanding the ingenious argument of Mr. O’Oonor, that the term lottery used in the constitution was not designed to apply to games of chance where no skill onthepart’of the player is required, nor to any schemes where the object was not to raise public revenue, the court, with only a single dissenting voice among the eight judges, did not hesitate to declare the scheme within the constitutional prohibition as well as that of the statute.

The case of the Commercial League Association of America v. The People, 90 Ill. 166, has been referred to as conflicting with these decisions, but it cannot be so considered. That company was conceded to be an insurance company, but it was held exempt from the general statutes regulating insurance because of a special exemption in a special statute. We have no such statute here, hut we have statutes which are claimed to have the same effect, and this leads us to a consideration of the second point.

2. Benevolent Societies, when subject to the Insurance Laws. Assuming defendant to be a mutual insurance company, it is claimed that our legislation in regard to eorporations which are termed benevolent associations, and especially article 10, contains provisions which expressly exempt the defendant from the provisions of the general law in l’egard to insurance. This point is not without difficulties arising from the very peculiar history of our recent legislation.

*166On the 8th of March, 1879, the following statute was passed: “Section 1. That chapter 70 of the General Statutes of Missouri, being article 8 of chapter 37 of Wagner’s Statutes of Missouri, relating to benevolent, religious and educational associations, is hereby amended by adding the following sections thereto, to wit: Section 14. The associations and societies of the character referred to and mentioned in the first section of this act may also include in their corporate powei’s the privilege for (of) providing for the relief and aid of the families, widows, orphans or other dependents of their deceased member's, or for assisting such as may be sick or disabled, from the proceeds of assessments upon the members of such society or association. Section 15. Any such society or association heretofore or hereafter incorporated under the provisions of this act may avail itself of the benefits of the foregoing section by amendment to its constitution or articles of association in the manner prescribed by this act. All such societies or associations are hereby declared exempt from the operation of the General Statutes of this State in regard to insurance companies.” Acts 1879, p. 65.

On the 19th day of May, 1879, another act was passed entitled “An act to provide for the incorporation of benevolent, religious, scientific and educational associations and of miscellaneous associations.” The first section is not materially different from the corresponding section in the revised code of 1865, as found in Wagner’s digest, page 339. The third section isas follows: “Any association formed for benevolent purposes, including any purely charitable society, hospital, asylum, house of refuge, reformatory and eleemosynai’y institution; any association whose object is to promote temperance or other virtue conducive to the well being of the community, and generally, any association formed to provide for some good in the order of benevolence that is useful to the public, may become a body corporate and politic under this act, and incidentally such association may provide means wherewith to assist its *167sick or disabled members, or relieve or aid tbe families, widows, orphans or other dependents of its members who may die, without being thereby subjected to the operation of the General Statutes of this State relating to life insurance ; provided, that nothing herein contained shall be construed to authorize any association formed .hereunder to insure the life of any member thereof for his own benefit or that of any other person.” The concluding section of this act contains the following .clause: “Section 14. All acts and parts of acts inconsistent with this act, are hereby repealed; provided, that nothing in this section shall prejudice the rights of any existing corporation whatever.” Acts 1879, p. 66.

The revisors included both these acts in the Revision —the first as sections 972 and 973; the second as part of section 974; but omitted the repealing clause of the last act. They probably acted upon the opinion that it was not their province but that of the courts to determine upon the compatibility of the two acts, and, therefore, inserted both.

."Whether the act of 8th of March would have exempted the corporation defendant in this case from the operation of thé General Statutes concerning insurance companies, we deem it unnecessary to determine, since the act of the 19th day of May, if it did not operate as a repeal of the former act, undoubtedly so modified it as to exclude the defendant from its operation. The charter of defendant constitutes life insurance the main, indeed, the only business of the company. It is not incidental to some other form of benevolence in which aid is extended to bereaved widows or orphans, but, as has been shown, practically exhibits benevolence in the same way it is promoted by all life insurance companies. In plain terms, the two acts are irreconcilable — the one aiming to relieve those benevolent associations from the burthens imposed on mutual insurance companies, the other designing and iu terms declaring that they are not so exempt. They were obviously *168brought about by different and opposite interests and from different and opposite motives. They were framed diversa intentia. It is unnecessary to cite authorities to show that the last act must govern, though passed by the same legislature and at the same session. What was meant by the pi’oviso to the repealing clause of the act of May 19tb, I confess myself unable to conjecture. It has been suggested that it might apply to a company organized between the 8th day of Mai’ch and the 19th day of May, but it is unnecessary to determine the plausibility of such a coixjecture since the defendant was not in that condition. Previous to the session of 1879, no such provision in x'egard to benevolent associations as were inserted in the act of March 8th was to be found in our statutes. 1 Wag. Stat., Title Corporations, art. 8, p. 389. This act is the sole reliance for any claim of exemption, and being of opinion that the act was repealed or so essentially modified as to prevexit any such effect, a judgment of ouster necessaxdly follows.

The other judges concur.