Vernon County censor. [volume] (Viroqua, Wis.) 1865-1955, 1905-03-01
New Statute Wanted
to Compel Division
of Surplus
SupremeCo Gives
Decision Against
Commissioner
Madison, Feb. %.

Madison, Feb. ".
Insurance Commissioner Zeno NJ
Host will make a fight in the legisla
ture to amend the law governing the
operations of mutual life insurance
companies so that they will be re
quired to make distributions of their
surplus funds among the policy hold
ers not less frequently than once in
five years. This was his announce
ment yesterday after hearing of the
unanimous decision of the supreme
court reversing the decision of the cir.
cult court and granting a permanent
injunction restraining him from revOk
ing the license of the Equitable Life
crate in Wisconsin.
BY this decision the policy holders
in Wisconsin, holding policies in the
various mutual life insurance compan'
les, lose some $12,00O,O00 in deferred
dividends or surplus funds, to which
Commissioner Host has commended
they were entitled. Wisconsin policy
holders in the Equitable alone are de
prived of 100000. The amount OF
surplus held by all these companies in
the United States is $4,000.
May Mean Another 100000 Dinner.
Insurance Commissioner Host, Sen.
ator Roehr and others hold the affect
of this decision is to permit the officers
of insurance companies do distribute
as much or as little of the surplus
which accumulates as they may see fit,
and that the policyholder will have no
way to compel distribution. In other
words, the "Equitabla officers can pro
coed with their Naturalization OF
stockholders by diviung the S80,O0O,,
900 surplus, and the young Mr.. Hyde
can celebrate the Naturalization by
giving another 100000 dinner at
Sherry's."
Clear Victory for Equitable.
The decision of the court was unanf,
nous and it gives the Equitable a
clear bill. The word may" in the
statute relating to the distribution Of
dividends and surplus is interpreted
to mean may" and not to mean
must or shall" The opinion was
written by Chief Justice Cassoday and
covers 20 typewriter pages. 1t in
cludes many quotations from New
York and Illinois decisions on the
points involved, and ends with revers-
ing the decision Of the lower court
and remanding the cause with the di-
rection that the relief prayed for in the
complaint be granted. The relief
asked was permanent injunction to,
restrain Commissioner Host from re
voklng the license of the company.
viii Co to Legislature.
Insurance Commissioner Host in
tends now to appeal to the legislature
for law that shall provide for the
distribution of surplus at stated per
iods. Senator North already has biz
in changing the word may" to
shall" This may be amended so as
be more explicit and passed. He said
yesterday:
Host Surprised.
THE decision of the supreme court,
reversing the decision of Judge Dun.
wlddie, is certainly a surprise to me
Before rendering a decision in July.
1903 that section 1852, wis consin stat
utes, is mandatory, | gave careful
thought to the intent of the legisla-
ture in enacting said section, the con.
ditions that existed at the time of its
enactment, the rights of policyholders
in mutual organizations, and after de-
liberating upon these different points
and perusing exhaustive briefs for and
against mandatory construction OF
said section, | became convinced that
unquestionably il was the intent and
purpose of the lawmakers, that dis,
tribution of surplus be made at one or
the periods fixed in the statute, and the
only discretionary power conferred
upon the company was the exercise or
aQ option to select either a two, three,
four or FIVE year period, instead OF
making distribution annually.
IF section 1852 is not mandatory
and does not compel distribution OF
surplus at one of the periods stated
therein, then what is the meaning of
the statute, and why was it placed on
the statute books? If the words
every life insurance corporation doing
business in this state upon the Srin-
ciple of mutual insurance, or the men,
bers of which are entitled to share in
the surplus funds thereof, may make
distribution of such surplus as they
may have accumulated annually, OF
once in two, three, four or five years
means that mutual insurance COM
uanies may defer distribution ten, IF
teen and twenty years. then what is to
prevent these companies from deferr-
ing distribution 40, so or 70 years2
Before 1863 companies changed
from the five year period Of distribn.
ton to shorter periods. because with
such shorter periods OF distribution
there was more perfect equity done all
policy holders. II was logical then,
that the longer the distribution was
deferred, the fewer would be the NUN
Der who would have returned to tSeE.
their share Of the overpaymentS and
profit. and the greater the number who
would be paving more than cost. It is