Alma record. (Alma, Mich.) 1878-1928, 1903-11-20
AN ILLEGAL
PRACTICE
INSURANCE COMMISSIONER BAR.
ny WARNS THE PUBLIC.
AGAINST PATRoNIzING coMPA,
MES GUILTY OF REBATiNo.
POLICY HOLDERS CAN ENJOiN
COMPANIES FROM PAYING.

Lansing, Mich, Nov. l4.-"My at
tention has been called" said Insur
Snce Commissioner Barry yesterday
ito the fact. as alleged, that some life
insurance companies authorized tc
transact business In this state have
been rebating premiums recently. This
Is about the time Of year that compa
MES desirous OF making a great show
ing OF business written during the year
are wont to indulge In this reprehensi.
BILE practice.
The law provides q penalty both
for the agent and the company found
guilty OF rebating. but for obvious rea-
sons it Is dificult TO secure the evi.
dence necessary to convict. The citl-
zen who is given Q rebate and who
obtains his first years insurance for
less than his neighbor is obliged to
pay for 1t and becomes a party to an
illegal and fraudulent transaction, is
very likely to keep the matter to him
self. while the agent who does the re-
batting is also careful 70 keep the Sc
cret
The ordinary business man who is
rot familiar with the insurance laws
and court decisions of this state fiat.
ters himself that he is getting a bar
gain when he purchases his insurance
at nominal cost compared with the
premium named in the policy.
The fact is that he Is being gold
bricked. Instead OF leaving his fam
lily a valuable legacy. as he supposes,
he is in all probability bequeathing
them store of expensive litigation
and bitter disappointment
Supreme Court Case.
The supreme court Of this state. in
the case Of Heffron We Daily, which
was decided in a unanimous opinion
written by Chief Justice Hooker and
handed down June so, 1903, used very
positive Language in passing upon the
validity Of a life insurance contract
In a case in which the agent rebated
OF the premium and took the
applicants note for the balance.
The supreme court refused 10 en-
force the payment OF this note, and in
reversing the judgment OF the lower
court used this emphatic language:
The contract Of insurance was pro-
hibited by law. and the act of making
L was penal act. The contract was.
therefore, Illegal, and being so. the
for the note failed.
The reason why this contract was
held to be an Illegal contract, and. |
therefore,, void" continued the com. |
missioner. was that the anti-rebate !
aw OF Michigan was violated when Il
vas entered into.
The reason for the enactment OF
he anti-rebate law was a desire 10
reserve the mutually OF policy hold.
rs and prevent discrimination be.
ween them.
THE policy-holder who is a party TO
me OF these Illegal contracts need
ot think that he can rest secure In
he belief that the company will not
axe advantage OF the fraudulent char
cter OF the contract and refuse to
ay tho face OF the policy when 1t ma,
ures. Any policy-holder can enioin
ne company from paying any claim
hereunder The rebating OF a premi.
m puts on the policy cloud. which
man who desires TO leave his fam. :
y adequate protection IN case of his ,
cath should permit to exist for me ,
altry sum which he may be able to I
ave at the outset by accepting q re- 6
ate" :