Case Name: Lange, Commissioner of Insurance, Respondent, vs. Rancher, Appellant
Court: Wisconsin Supreme Court
Jurisdiction: Wisconsin
Decision Date: 1953-01-06
Citations: 262 Wis. 625
Docket Number: 
Parties: Lange, Commissioner of Insurance, Respondent, vs. Rancher, Appellant.
Judges: 
Reporter: Wisconsin Reports
Volume: 262
Pages: 625–636

Head Matter:
Lange, Commissioner of Insurance, Respondent, vs. Rancher, Appellant.
October 6, 1952 —
January 6, 1953.
For the appellant there was a brief by William R. Gold of Milwaukee, and Delmar Karlen of Madison, attorneys, and Frank J. Remington, Glen R. Campbell, Edward J. Coe, and Dale R. Thompson of counsel, all of Madison, and oral argument by Mr. Gold.
For the respondent there was a brief by the Attorney General and Stewart G. Honeck, deputy attorney general, and E. Weston Wood, assistant attorney general, and oral argument by Mr. Wood.

Opinion:
Broadfoot, J.
The first subsection of sec. 210.05, Stats., reads as follows:
"(1) Life fund. There is established a 'life fund' to be administered by the state without liability on the part of the state, beyond the amount of the fund, for the purpose of granting life insurance, with or without total and permanent disability waiver of premium benefits, and annuities to persons who, at the time of the granting of such insurance and annuities, are within the state or residents thereof."
Other subsections of that statute provide for the management of the Fund, and authorize the commissioner of insurance to make rules and regulations necessary to carry out the provisions of the section. It will be noted that the statute authorizes the granting of insurance "to persons who, . . . are within the state or residents thereof." The defendant was, at the time of filing his application, and now is, a resident of the state of Wisconsin. That he is a "person" within the meaning of the statute is too clear for argument.
Plaintiff's entire case is based upon statistics showing the comparative length of life of whites and Negroes. The state proved that the mortality rate of American Negroes is appreciably higher than that of American white persons, and while the difference in the mortality rates of the two races is diminishing, the difference is still substantial. From these statistics the plaintiff draws an inference that the difference in the mortality rate is the result of some inherent difference between the two races.
The plaintiff also proved that for the purpose of life insurance underwriting it is the accepted and customary practice to rate an applicant for insurance according to various characteristics which it is believed in the insurance business have an effect on longevity. Among these characteristics are the applicant's physical condition, occupation, age, habits, morals, medical history, and the medical history of his parents. The applicant is rated by a numerical system, receiving credits for characteristics tending to increase his .life expectancy and debits for characteristics tending to decrease his life expectancy. If the applicant's final numerical rating is within a predetermined range the applicant is considered a standard risk. If the applicant's final numerical rating exceeds the limit of the standard range, the applicant is classified as substandard. The plaintiff uses such a numerical rating system in determining what applicants are to be granted insurance. Concluding that the average mortality rate of American Negroes is approximately fifty per cent higher than that of American whites and that this fact alone would give any Negro applicant a substandard classification, the plaintiff and his predecessors in office have declined to issue insurance in the State Life Fund to any Negro.
The plaintiff offered no proof in support of his inference that the higher mortality rate among Negroes is the result of some inherent difference between them and white persons. The defendant, on the other hand, produced expert testimony, which is not controverted, that physically and biologically white and Negro persons are essentially the same. There is a difference in skin color, form of hair, and facial features, none of which directly affects mortality. The defendant's experts state that the difference in the mortality figures is due mainly to environment, which they define as everything which an individual experiences during his life. This is an oversimplified statement of their testimony, but a complete review thereof would add little to the basic issue.
The trial court was of the opinion that the statute does not prohibit the plaintiff from insuring Negroes, and stated that the plaintiff could, if he deemed certain Negroes to be standard risks, with the exercise of reasonable and proper discretion, accept their applications. The trial court was also of the opinion that the statute does not require the plaintiff to insure Negroes, and that his action in excluding them was not arbitrary or capricious, and cannot be so considered until such time as the mortality rates of the two races become substantially the same or until new methods of classifying risks without regard to race have been devised and accepted in the insurance business.
We do not think that the practices of private insurance companies are controlling in this case. The record discloses that a few private insurance companies grant life insurance to Negroes upon the same basis that they do white persons. Other insurance companies write Negro applicants as substandard risks at a higher premium. Private companies are free to make their own regulations, but when the state law requires the commissioner of insurance to grant a policy to persons who are residents of the state of Wisconsin, he is bound to treat each applicant alike. He is not authorized under his rule-making powers to exclude all Negroes without absolute proof that their length of life is shortened solely because of their color or race.
The plaintiff has failed to show that the racial classification is the only one which will achieve the purposes for which the State Life Fund was created. There is evidence in the record that some Negroes whose applications are properly screened and evaluated would have a mortality equal to that of white persons. Those applicants are entitled to insurance in the State Life Fund.
In this case the plaintiff is not dealing with a group, but with an individual applicant. To say that all white persons are entitled to insurance because as a group they live longer than other persons would not be an acceptable rule. Many of them are refused insurance when they are investigated and evaluated according to the numerical classification used. To say that no Negro can qualify when the same standards are applied to him is equally unacceptable as a rule. The defendant, as a person residing in Wisconsin, has a right to have his application considered. He has a duty to submit to a thorough medical examination and to furnish the plaintiff with all reasonable requests for information that will be of aid in processing his application. The plaintiff is authorized to secure additional information from sources other than the defendant. When all of the information procured is finally evaluated and applied by means of the numerical rating system, the plaintiff can determine whether or not the defendant is entitled to the insurance applied for. Until then, he cannot do so. His rejection of the application summarily did not comply with the provisions of the statute under consideration.
By the Court. — Judgment reversed and cause remanded with directions to enter a judgment not inconsistent with this opinion.