The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1898-10-30
AN INSURANCE OPINION
IMPORTANT BEARING ON MUTUAL
ENDOWMENT COMPANIES.
They Are Contrary to Indiana Law.
Says Attorney General
Ketcham.

For some time past State Auditor Daily
mas been undecided as to his duties in per-
nlttlng certain insurance companies to issue
special policies, such as endowment or other
forms OF policies in which the amount stated
al the contract is to be paid during the life
Vi the polcy holder. Recently the Western
mutual Life Association of Chicago was ac-
cused by the auditor of issuing a policy
somewhat at variance with the laws of the
state, and IS preliminary step to shut
ting 1t out from doing business in Indiana
the auditor asked the advice of Attorney
General Ketcham as to the merits of the
case and for full instructions as to his
proper course in connection with the appli-
cations to do business in this State from
similar companies. Yesterday the opinion
or the attorney general was received bv
Auditor Daily. as follows:
nave your inquiry of the 9th. an
pended to which are certain charges made
against the Western Mutual Life Associa-
'ioh OF chicago, ILL.,, and asking my opinion
DIS 10 your duties in reference thereto. and
an also lnquiring whether, under the proyiso
IA oectlon Z, the issuance of any poIicv nv
ment ~ pai u prom promising to pay a cash pay
Paynleht Is estimated or calculated but not
ansoluteIy liked, is prohibited by the act
~ whether the contracts entered into with
+ +h Ill y. 1ounS and John A. KoSS violated
ralo ProVlslons OF the act of 1897 will not de-
aInoavlts, but upon an inspection OF the in
strumentS or contracts issued to the par
LES oss' II would be entirely unsafe to exer-
t tL my extraordinary remedy of canceling
me rlght of a company to do business in
me oldte on such an eX parte statement
c nno proper p course should be to notify the
~ lAPaiIy OF It's agent of the tendency of
5iS appllcauon, giving it an opportunity to
o of ~ Ihe charges; and if upon an inspection
~ ~ me papers themselves it should appear
lildl the law had been violated your action
ssnould be taken upon that and not upon
"a one statements contained in the affidavit
az ~ WhaC the contract itself contained
Corporations have no powers except such
90 are conferred upon them by statute or
cl1USe tnat are necessarily implied from the
corporate powers granted. In the proyiso
10 oecllon 1t is mentioned:
Ihat nothing contained in this act shall
pc construed to permit any contract prom
Using any fixed cash paymentSto anv living
certncate or policy holder, excepting in the
co Contingency Of physical disability (Acts
so that the power alluded to in the
charges is not conferred upon any corpora
1l s IN this State by this law. Section 10,
OF the act, authorizes foreign corpora tions
10 be admitted to Go business under the
rermS tnereln prescribed. On Page 1923 it is
" If any such corporation. association or
society is authorized by the law under
Wnicn 1t IS incorporated to issue contracts
" insurance not contemplated in this act
II snali, nevertheless, be permitted to trans
act IN TINS State the character of business
a an by this act upon complying in
thereof and filing with the auditor of state
an agreement duly executed by the proper
oillcers, and that such corporation, associa-
tlon or society will not enter into or issue
within this State any contract of Insurance.
poncy or agreement not authorized by this
act
1T appears from the proviso referred to
that such policies as are named in the
charges are not authorized by the act and
nence, under this language, although the
ilinols TO write policies of that character
II is inhibited from writing such policies or
tinues: upon 1a breach of sncb SeeDn oon
by any such corporation, association or So
c cletyI, the auditor Of state, shall forthwith
act business in this State
Il think this provision is mandatory upon
you and, II, upon inspection of the original
papers, after notice has been served upon
the company, you ascertain that the agree
ment which the company must have given
t before being admitted to the State, has
cancel the authority of the company to
transact business in this State.
1t is the obvious purpose of the proviso
In Section to prohibit any fixed cash pay
ment to any living certificate or policy
holders save only in the contingency of
is to be mutual in its character. and cor
porations operating under this law are not
permitted 10 hOld out as inducements the
| payment of any fixed sum at any fixed
period. nor to entice persons whom they deal
| with into the superstition that they can at
| the same time have insurance and make a
| permanent investment, the effect of which
| would be to jeopardZe the interests of those
| who, insuring in a mutual company, have to
| rely upon a fund that is accumulated for
their security, which fund might. by such
processes as are contemplated. be dimn-
ished; and | think that. whether the sum
| to be paid is a fixed stated sum, or a sum
| which is to be calculated and become fixed
| in amount, as is the result of the calcula-
| ton, is as much prohibited as the other.
| That sum which is the result of certain
calculation which, when made. becomes
of this law, be treated as a fixed sum,
whether the calculation is to be made after
a particular time not. and the law ought
not to be evaded by juggling the terms 1
must. therefore. say that it is my opinion
that the issuance of such policy as is con-
templated in the second part of your COM
munication. is. by the act in question.
prohibited"