The Montgomery advertiser. [volume] (Montgomery, Ala.) 1885-1982, 1907-04-26


vitality affecting what are called stock
companies"
The Attorney General holds that II
any stock inducement Is offered by
any company the offer must not De
confined to any class of insurants. but
must be printed in the policy and be
open to every insurant of the COM
pany. The opinion of the Attorney
General follows:
Montgomery. Ala, April 2B. 1907.
Hon. Frank N. Julian, Insurance Com
missioner, Capitol
Dear Sir:-Some days ago you ad-
dressed a Communication to me enclos-
ing a letter from Messrs. Dean and
Dean, general counsel for the state
Mutual Life Insurance Company. Rome,
Ca, under date of April ., 1907, in
which the plan of this company for
the sale of stock in an agency COM
pany In connection with the sale OF
life insurance is explained; and you
desire to know whether the proposed
plan is in violation OF Section 2607 OF
the Code.
Prior to the receipt of your letter.
Hon. A. c. Sexton, Deputy Insurance
Commissioner, addressed a communica-
ton to me of date of April 3, 1907.
requesting me to advise him regarding
the plan of the Rome company and
also regarding the plans OF the South
ern States Life Insurance Company, an
Alabama corporation, philadelphia Life
Insurance Company of Philadelphia,
the Citizens Life Insurance Company
OF Louisville, KY, and the Meridian
Life and Trust Company of lndianap-
oils, Ind.
In connection with his letter. Mr..
Sexton handed me a number OF letters
received from insurance commissioners
of the several States responding to a
II
know their views on similar questions,
and / have also received from your
department quite a number of letters,
PAMPHLETS, briefs and miscellaneous
publications dealing with this question,
and briefs for and against the legality
Of the plans have also been presented
to me for my consideration.
ut appears from an examination of
the plans of the several companies
above referred to wherein life insur-
ance is offered in connection with stock,
that the State Mutual Life Insurance
Company proposes to sell stock In an
agency company in connection with
life insurance; that the Southern states
Life Insurance Company proposes to
sell. through an agency company. the
stock of the Southern Security Com
pany, the last named company practt
cally owning the insurance company;
that the Philadelphia Life Insurance
Company and the Citizens Life 1nsur-
ance Company both offer their own
stock for sale in connection with Ire
insurance: that the Security Life In
surance Company of America has con-
tracted with Mr.. Ed. L. Williams as
its General Agent, for a number of
States and the latter has transferred
this contract to the Southern Guaranty
Company, a corporation. and the last
company proposes to sell Its stock In
connection with the insurance OF the
Security Life Insurance Company, and
the Meridian Life and Trust Company
and the Citizens Life Insurance Com
many both desire to offer a special Ad-
yisory Board Contract in connection
with life insurance.
This opinion deals only with stock
propositions and the advisory board
contracts will be considered in anoth-
err communication to you. All that Is
said herein is intended to apply to the
plans of the several companies above
named SO far as their plans relate TO
the sale of stock.
Section 2002 of the Code contains
three distinct propositions, which for
convenience 1 have grouped as fol-
lows
''First--No life nor any other insur-
ance company nor any agent thereon
shall make any contract of insurance
other than is plainly expressed in the
policy issued thereon;
"Second--Nor shall any such compa-
ny or agent pay or allow or offer to
pay or allow as inducement to fnsur-
ance any rebate of premiums payable
on the policy.
'"Third-Nor shall any particular
policy holder of the same class be al
lowed any advantage in the dividends
or other benefits to accrue thereon or
any valuable consideration or induce
ment whatever not specified in the
policy contract of insurance.
Two Companies Closely Connected.
with all of the companies referred
to above. where 1t Is proposed to sell
stock of an independent corporation in
connection with life insurance, the two
companies sustain close and intimate
contractual relations to each other and
there can be no escape from the con-
clusion that the sale of the stock must
be considered as an agreement as to
policy contract within the meaning of
subdivision 1 of section POOP; and
therefore, that the agreement regard
ing the stock must be plainly expressed
In the policy of insurance ana offered
to everybody alike.
TT has been argued with great vigor