Case Name: CALIFORNIA STATE LIFE INS. CO. v. KRING
Court: Texas Courts of Civil Appeals
Jurisdiction: Texas
Decision Date: 1918-10-30
Citations: 208 S.W. 372
Docket Number: No. 1367
Parties: CALIFORNIA STATE LIFE INS. CO. v. KRING.
Judges: HUFF, O. J., disqualified.
Reporter: South Western Reporter
Volume: 208
Pages: 372–380

Head Matter:
CALIFORNIA STATE LIFE INS. CO. v. KRING.
(No. 1367.)
(Court of Civil Appeals of Texas. Amarillo.
Oct. 30, 1918.
Dissenting Opinion, Nov. 20, 1918.
On Motion for Rehearing, Jan. 8, 1919.
On Second Motion for Rehearing, Feb. 5, 1919.)
1. Insurance <©=>676 — Insurance Company —Acquisition of Other’s Assets and Lia- ■ bilities — Statute.
Petition, in life insurance company’s suit on premium note acquired by having taken over all assets and liabilities of another company, held not demurrable as showing that transaction whereby note was acquired was not authorized by Rev. St. 1911, art. 4737, providing any life insurance company may reinsure, therefore repugnant to anti-trust statutes, articles 7797, 7807.
2. Monopolies <©=>23 — Acquisition in Violation of Law.
If transaction, whereby one life insurance company acquired assets and liabilities, including premium notes, of another, illegal as in violation of the anti-trust statutes (Rev. St. 1911, arts. 7797, 7807), was executed, title to premium note passed, s6 that acquiring company could enforce it against maker.
Hall, J., dissenting.
3. Contracts <©=>141(1) — Presumption op Legality.
Unless the facts alleged clearly show that a contract was unlawful, it will be presumed that it did not violate the law. (Per Boyce, J.)
4. Evidence <©=>88 — Presumption op Continuation dp Status — Innocence.
The presumption of continuation of a status is weaker than the presumption of innocence in making a contract which might possibly be construed as illegal. (Per Boyce, J.)
5. Bills and Notes <©=>4G7(2) — Action — Pleading.
Under Rev. St. 1911, art. S82, providing-assignee may sue in his own name, in an action on an assigned note, it was not necessary that the pleader state in detail the circumstances of the .transfer of the note, though it was not indorsed. (Per Boyce, J.)
6. Contracts <©=>136 — Illegality—Statute —“Void.”
Though “void” involves the idea of utter ineffectiveness, in Rev. St. 1911, art. 7897, providing any contract violative of anti-trust statutes shall be absolutely void, term was used to describe usual legal effect of an unlawful contract, which is that when executed resulting titles will not be disturbed. (Per Boyce, J.)
[Ed. Note. — For other definitions, see Words and Phrases, First and Second Series, Void.]
On Motion for Rehearing.
7. Pleading <®=>34(3) — Demurrer—Presumption.
Every reasonable presumption in favor of sufficiency of petition should be indulged on general demurrer.
8. Insurance <©=>676 — “Reinsurance.”
The common acceptation of the term “reinsurance” is to assume the obligation imposed by a policy of insurance.
Hall, J., dissenting.
[Ed. Note. — For other definitions, see Words and Phrases, First and Second Series, Reinsurance.]
On Second Motion for Rehearing.
9. Judges <©=>45 — Court oe Civil Appeals— Disqualification of Chief Justice — Interest.
In insurance company’s suit on premium note assigned to it by another insurance company, Chief Justice of Court of Civil Appeals, holder of policies in assignor company, and whose son-in-law was its vice president and acting manager, and had discussed the transaction in his presence, was disqualified to sit in the case.
Appeal from Potter County Court; T. W. McBride, Judge.
Suit by the California State Life Insurance Company against J. D. Kring. From judgment dismissing the cause, plaintiff -appeals.
Reversed and remanded.
Madden, Trulove, Ryburo & Pipkin and T. H. Cody, all of Amarillo, for appellant.
Kimbrough, Underwood & Jackson, of Amarillo, for appellee.

Opinion:
ROLLINS,. Special Chief Justice.
The appellant filed its suit in the county court of Potter county, Tex., to recover on a promissory note,, executed by the appellee and payable to the Amarillo National Life Insurance Company. The appellant alleged that it was a corporation, incorporated under the laws of the state.of California, with a per mit to do business in Texas, and that the Amarillo National Life Insurance Company is a corporation, incorporated under the laws of the state of Texas. On the 19th day of October, 1913, the appellee executed his promissory note, payable to the Amarillo National Life Insurance Company, for the amount of the premium due on the policy issued by the Angarillo National Life Insurance Company. The appellant alleges that—
After the execution of the note sued on, "the California Life Insurance Company, took over all of the assets and liabilities of said the Amarillo National Life Insurance Company, and became the legal owner and holder of the note above described, having assumed the obligations imposed by all policies of insurance issued by said the Amarillo National Life Insurance Company, including the defendant's policy, and having purchased and become the legal owner and holder of all premium notes due on such-policy, and having the right by reason of such purchase to collect premiums due on such policies of insurance, including the defendant's policy of insurance and the premium thereon due as here sued for, plaintiff becoming the owner of said note above set forth by reason of said purchase on or about the 18th day of March, A. D. 1916."
The appellant, by supplemental petition, alleged that—
"About the 18th day of March, A. D. 1916, the plaintiff, by purchase, took over the Amarillo National Life Insurance Company's life insurance business with all its assets and liabilities pertaining to such insurance business, assuming liability on its existing policies of insurance and having transferred to it all notes and choses in action of said Texas corporation pertaining to said insurance business, among which was the note of the defendant herein sued upon. That such contract of sale of said Amarillo National Life Insurance Company to the California State Life Insurance Company was in all things according to law, and such contract was approved by the department of insurance and banking of the state of Texas."
The trial court sustained a general demurrer, and, the appellant refusing to amend, the •cause was dismissed, from which judgment the appellant has appealed to this court
Article 7797, Rev. St. 1911, provides as follows:
"A monopoly is a combination or consolidation of two or more corporations when effected in either of the following methods: (1) (2) Where any corporation acquires the shares •or certificates of stock or bonds, franchise or other rights, or the physical properties, or any part thereof, of any other corporation or corporations, for the purpose of preventing or lessening, or where the effect of such acquisition tends to affect or lessen competition, whether such acquisition is accomplished di-reetly or through the instrumentality of trustees, or otherwise."
Article 7807, Rev. St. 1911, provides as follows:
"Any contract or agreement in violation of the provision of this chapter shall be absolutely void and not enforceable either in law or equity."
Article 4737, Rev. St. 1911, provides as follows:
"Any life insurance company, organized under the laws of this state, may reinsure in any insurance company authorized to transact business in this state, any risk or part of a risk which it may assume; provided, that no such company shall have the power to so reinsure its entire outstanding business until the contract therefor shall be submitted to the commissioner of insurance and banking, and be by him approved, as protecting fully the interest of all the policy holders."
The allegation that the appellant "took over all the assets and liabilities of the Amarillo National Life Insurance Company" does not necessarily mean that the transaction was not authorized by the provisions of article 4737 of the Revised 'Statutes. -All of the assets and liabilities of the Amarillo National Life Insurance Company may have been represented by the outstanding policies of insurance and the premium notes unpaid. If this was true, the transaction was not,repugnant to the provisions of the anti-trust statutes above quoted.
The allegations of the appellant are susceptible of the construction that the transaction pleaded had been fully executed by the voluntary act of the parties. If the transaction was an executed one, the authorities seem to hold the title to the note in question passed to the appellant. The rule is stated in 13 C. J. p. 511㤠467:
"That property has been acquired in violation of some law does not rob it of its character as property nor prevent it from becoming the subject of legitimate contract which may be enforced in courts of law."
In the case of Wegner v. Biering, 65 Tex. 511, the rule is stated that—
"When the contract has been executed without the aid of courts by the voluntary acts of the parties, the profit or estate realized is not contaminated."
We are of the opinion that the pleadings of the appellant are not subject to general demurrer, and therefore reverse and remand the cause that the matters in controversy may be tried out.
HUFF, O. J., disqualified.
HALL, J., dissents.
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