The Birmingham age-herald., 1906-07-07
SPECIAL CONTRACT
 PRACTICE ILLEGAL Massey Wilson Rules on lnsur-
 ance Matter SOURCE OF MUCH TROUBLE Companies Must Write Special Con- tracts Altogether or None at All
 to Comply With the
SOURCE OF MUCH TROUBLE

Montgomery, July ...(Special)-The at- torney general of the state has ruled that the special contracts written by some of the insurance companies doing business in Alabama, are in violation of the state law against discrimination, except in the case where nothing else but these contracts are issued. In other words a company gether or not at all to keep out of trouble with the law
 The special contracts are those which agree with man to write him for so much insurance and charge such prem ium, but to give him further so much on each policy of ordinary contract secured by his influence or in his community. It will be seen at glance that the opinion of the attorney general is against the special contract for if t1e company writ ing 1t writes no other there Is no money to come in for the policyholder who IS to profit by it. Hence, the contract is useless as business getter, for which it is used.
 State Insurance Commissioner E. R. Me- David says that this special contract busl- ness has been the cause of much trouble to him. The companies which do not write 1t are constantly kicking at those who do, claiming that the state is allow ing an unfair plan to be used. He has had the matter up for some time. A few weeks ago local agents from many of the companies in the state called on him and urged that he stop it if possible. This ruling of the attorney general is the result of the agitation.
 The Opinion.
 The opinion of MT. Wilson, in full, fol- lows:
 Montgomery. Ala, July 6. 1906. Hon. k. R. McDavid, Insurance Commits
 sioner, Capitol.
 Dear Sir-Pursuant tc your request, l have examined the following statutes:
 l" No life, nor any other insurance com pany, nor any agent thereof, shall make any contract of insurance nor agreement as to policy-contract, other than is plain ly expressed in the policy issued thereon; nor shall any such company or agent pay or allow, or offer to pay or allow as in ducement to insurance, any rebate of premiums payable on the policy nor shall any particular policyholder of the same class be allowed any advantage in the dividends or other benefits to accrue thereon or any valuable consideration or inducement whatever. not specified in the policy contract of insurance
 You wish me to advise you whether or not the contracts commonly called Advisory Board Contracts which are used by some of the insurance companies doing business in this state, are in viola ton of the foregoing statute.
 If the contract is purely and simply a contract to secure the services of the other party to 1t, and is not part of any policy or insurance, and it Is not used as an inducement to the other party to the contract to take policy of insur- ance, the contract is not in violation of the statute above quoted. At least one of the sample copies of the contracts you submitted to me, Is in form unob- jectionable for the reasons just stated. If. however. the real purpose of the ar- engagement is to induce or permit the holder of the contract to take insurance and the benefits he receives under con tract are in fact applied toward the pay ment of his individual insurance. the statute would be violated notwIthstand- ing the contract Is in form within the statute The purpose of the statute is to guarantee insurance of the same class and equal expectations of life equality in the cost of insurance If in practice the transaction amounts to benefit. rebate or discrimination in favor of an individual policyholder of class, not enjoyed by all others of the same class, and is not carried out as a bona fide contract of employment. then it is violation of law. If you have facts tending to show that any company which has an advisory board in this state under such con tract as. in form is not offensive to the law. is in practice carrying into execution the arranRement in such manner as to