The Scranton tribune. [volume] (Scranton, Pa.) 1891-1910, 1897-10-26
REBATE LIFE POLICIES.
Opinion by Prominent Attorneys to the
Effect That They Are Not Worth
Paper They Are Written On.

Concerning the invalidty of Re
bate" life insurance policies the follow
ing opinion has been rendered by At
torneys Foley and Powell of 206 Broad
way, New York.
An opinion is asked as to the effect on
policy of life insurance of making a re-
bate of premium, in violation of Chapter
2S2 of the Laws of 1889, of the state of
New York, as amended by Chapter 4Ol
of the Laws of 1890
The statute referred to SO far as mater
ial to our inquiry, is as follows: Sec. !.
Life insurance companies doing business
in this state shall not make any dlscrlm-
ination in favor IF individuals of the
same class, and of the same expectation
of life, either in the amount of premium
charged or any return of premium, div
idends or other advantages, and no agent
of any such insurance company shall
make any contract for insurance, or
agreement as to such contract of insur-
ance other than that which is plainly eN-
pressed in the policy issued nor shall any
such company or agent pay or allow, or
offer to pay or allow, as an inducement
to any person to insure, any rebate Of
premium, or any special favor or adVan-
tagc whatever i'm the dividends to accrue
thereon, or any inducements whatever
not specified in the policy
Sec. 3 enacts, "That any person violat-
ing the provisions of this act shall be
deemed guilty of a msdomeanor"
A mere inspection of this statute shows
that it prohibits, (a) the making of any
discrimination in favor of one insurer
over another as to the amount of pre-
MUM charged on the face of the policy,
or as a return of premiums or dividends,
or any other advantages.
nf n ~
surance with any person, 'other than
that which is plainly expressed in the
policy issued"
(c) 1t forbids every company and agent
from paying or allowing, or Offering to
pay or allow, any rebate of premium
or special favor or advantage whatever
in the dividends to accrue on the policy,
or any inducements whatever not speci-
fled in the policy.
Under every system of Jurisprudence
worthy of the name, contracts of three
classes are declared to be illegal and
void, viz:
l. Contracts that are against good NOR
ais, Contra bonos mores."
?. Contracts that are against public
policy.
3. Contracts that are prohibited by
statute, or that are entered into in viola
ton of the terms of a statute.
Such contracts are not simply voidablc,
that is, such as one of the parties may
elect to abide by and enforce or to con-
slider void and repudiate; but they are
absolutely void, and cannot be enforced
by either party if the other contests his
right to enforce them. Thus, if rebate
policy is void, the company could not
compel the policy holder to pay the
premium, nor could he or his legal repre-
sentatives compel the company to pay
hA he Vsft1, I.fV
of law will not lend its aid to either par
ty to enforce such contracts, but will
leave them just where it finds them.
Finally, this statute that we are cons!d-
cring has been before the Supreme court
| of this state for adjudication as to its
constitutionality in the case of The Peo-
pie VS. Formosa, 40 St. Rep. SCI, in which
the defendant, an agent for Il life insur-
ance company, was indicted, tried and
| convicted of n misdemcanor for allowing
a rebate of premium on a policy written
by him.
In sustaining the validity of the stat
utcs, the court, in the course of an able
and vigorous opinion, says: mo in
justice is done by this act to any insur-
ance company or agent thereof who de-
sires to do a legitimate and proper busi-
ness 1t does prohibit them from making
unjust determinations amongst indiyid-
| uals of the same class and of the same
expectation of life insured by them. 1t
seems to he a wholesome and proper act,
and not in violation of any provision of
the constitution"
In view Of this decision, can there be
any doubt as to what this same court
| VIII do II ever n civil action is brought
| before it to enforce ii rebate" policy,
or any contract arising out Of such a
! policy! 1t would be an anomaly in law
a Gb
crime and punish him as a criminal for
making certain kind of contract. and
| Yet declare the' 'Same contract lawful i'm
a civil action brought to enforce it.
our conclusion, based upon elementary
| principles of law and decided cases. and
! upon the nature and purpose of the stat
| ute Itself, is that policy Of life insur-
! ance upon which a rebate Of premium is
! made, promised or allowed, directly or
! indirectly, or which does not state 1Inon
| its face the true contract entered into
| between the parties i'm respect to prem.
| iums, is absolutely void, and that IT is
not enforceable in any court of justice.
Since the above opinion was written
| the Court of Common Pleas Of Toledo
! Ohio, has decided in accordance there
| with in the case of the Agents of a
| leading life insurance company VS.
| Craig. This suit was to enforce pav-
| ment or note of $4,000, originally
| made by Craig in payment of the first
| premium on a life policy issued to
| him. On the back of the note was n
credit Of $500. The evidence showed
that no payment of that amount had
actually been made, but that the
| credit represented a rebate of the prem
| ium.
The Court held in effect that the
| credit on the note was evidence of an
| Illegal act, therefore enforcement OF
| the payment Of the note was denied
| the plaintiff; Furthermore, that the is
| suance of the insurance contract being
based on an illegal transaction, the
| policy was avoided thereby, and no
claim under the policy could be held
against the Company.
Policies issued by a New York Life
Insurance company are subject to the
laws Of the state Of New York. The
laws of Pennsylvania relating to re-
bate on life insurance premiums are
practically the same as the laws of
the state of New York.
IarndOXicnI.