The daily morning journal and courier. [volume] (New Haven, Conn.) 1894-1907, 1897-01-12
IT MUST STAND TRIAL
THE CASE OF THE STATE rs. THE
EINA INSURANCE co.

perlor court TINS morning handed down
a decision in the case of the state
against the Aetna Life Insurance COM
pany Of Hartford, overruling the de-
PENDANTS demurrer.
Suit was brought by Insurance Com
missioner +. A. Belts, on behalf of the
state, charging the company with vio-
lating the insurance laws relating to
transfers of stock. The point made
was that the company has transferred
its assets in violation of the statutes.
The company filed long demurrer, al
leging that no transfer had been MADE;
pleading the statutes of limitations;
declaring that the matter was OUTSIDE
the jurisdiction of the insurance COM
missioner, and nineteen other points OF
protest.
The effect of Judge Wheeler's decis-
ion will be to make the company stand
trial.
Following is the decision:
FULL TEXT OF THE DECISION.
Frederick A. Belts, Insurance Commas
sioner vs. Aetna Life Insurance COM
pany; Hartford County, superior
Court, January 8, 1897.
Memorandum of Decision Upon Demur-
rer.
The demurrer admits the truth OF the
we'll pleaded facts Of the complaint;
the defendant makes these admissions
for the purpose of testing the legal SUI
fciency of the complaint.
No claim is made that the defendant
rs financially unsound; indeed, its SOL
vency is admitted. The sole question
for decision is, Does the complaint SET
Forth a legal cause of action?
Let us examine the complaint.
From the date Of it's organization
down to August 10, 1861, the defendant
transacted a purely stock life insur-
ance business; at this time it establish
ed a mutual department and began TO
issue policies upon the mutual plan,
and from this time to the date of this
action it has conducted it's business up
on the mutual and stock plans. Under
the stock plan the policyholder had no
interest in the profits on policies issued
under this plan; under the mutual plan
the policyholder had all the interest in
all the profits on policies issued under
this plan. In its vote adopting the
mutual plan Of insurance the directors
or the .QGI0IudIL NOlCb liiese 49, 49,
nolicyholders should pay proper rate,
hot exceeding 6 per cent. annually ior
The Use of the capital, a reasonable sum
for expenses and reinsurance, the Dali
ance to be divided among the policy
holders.
In addition to these sums the mutual
policyholders were wrongtully charseo
by the defendant during three years d
special commission upon the mutual
premiums Of 1h per cent, aggregatlng
Sal, .S6, which sum was transferred
to the stock department, where II mas
since remained, benefiting the STOCK
holders of the company at the expense
Of the mutual policyholders.
Up to October 20, 1870 all the prohts
upon the surrendered policies or paid
I'D insurance in the mutual department
remained in that department, where
thew belonged. Thereafter and to the
date Of this action large numbers OF
mutual policies have been surrendered,
and the profits thereon accumulated IN
che mutual department have been
transferred to the stock department,
and it has assumed all obligations
arising upon such paid up insurance.
The difference between the cost to
the stock department of this paid-up
insurance and the amount it received
from the mutual department was nee
essarily large, since all the cost of OBJ
tanning and maintaining the original
policies had been paid by the mutual
department.
The profit jim life insurance is largely
made from the surrendered policies or
paid-up insurance ord it was so in the
mutual department of the defendant
That department lost largely from
these transfers, and its policyholders
lost largely because the assets of this
department were depleted, and the
profits or dividends to its policyholders
as consequence were lessened and
must hereafter be greatly reduced.
These transfers Of the mutual assets
have Increased the assets of the stock
department upwards of S6,000,000, and
increased its profits at least $1,000000,
and, as the plaintiff AYERS, largely in
excess of this amount.
The increase in the defendants capt.
tai stock from $150,000, of which S105,O00
was paid in cash, to it's present capital
of $3.50 has been largely made from
these transfers and $105, 900 represents
the total cash paid in by stockholders.
It has paid in dividends $2,545,250, made
up largely from such transfers.
On March 4, 1896, the insurance COM
missioner examined into the condition
of the defendant and claims to have
ascertained these facts, and thereupon
issued certain orders to the defendant,
calling upon it to stop such transfers;
to re-transfer said $141, 441.36 with in
terest, to the mutual department; to
transfer said profits and the accumula-
lions thereon to the said department,
and to discontinue the payment of div
idends to it's stockholders until this or
der was complied with. The defendant
failed to comply with this order, and
this action was brought to enforce
these orders.
l. Grounds of demurrer l, 2, 3, 6, z,
IA, 15 Is and 10 cover the same subject
matter, viz: That the insurance COM
missioner cannot maintain this action
because ID the acts complained of are
not in violation of defendants charter
or the statute law of the state, nor IL
legal or improper; (2) the matters al
legged are matters Of contract between
the defendant and it's policyholders,
which can only be determined in a
court in an action by a policyholder;
(3) the commissioner cannot enforce
orders concerning the rights of nOlicy-