Court Opinion

ID: 4474738
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:11:07.400957+00
Date Added: 2024-06-11T15:02:41.087993
License: Public Domain

Opper, J., dissenting: Modern level-premium life insurance contracts issued by great companies engaged primarily in that business have become so commonplace that the contention can now be made, and apparently with success, that nothing else is “life insurance.” I venture to suggest, however, that neither legal authority nor ordinary usage justifies even today so narrow a construction of the term. The definition resorted to here is that contained in Helvering v. Le Gierse, 312 U. S. 531. Since the Supreme Court was there construing the very language in the very provision of law with which we are here confronted, that seems an eminently appropriate point of departure. But having, in reliance upon the language of that case, reached the proposition that insurance “historically and commonly” should involve “risk-shifting and risk-distributing,” the present opinion proceeds to rule out those essential factors because there was no agreement for payment “by each member of a named sum” (a stipulated premium)-, no agreement by the Exchange to pay more than it collects from assessments on the participating membership (a principal sum), no physical examination, and no determination of the assessment payable by the surviving members upon the decease of a participant “with reference to his life expectancy as determined by the mortality tables. Certainly,” the opinion reasons, “some of these elements must exist * * * before any amounts * * * may be deemed ‘proceeds of insurance’ * * Logically, “historically,” and “commonly,” I can not agree that any of these elements is essential to the “risk-shifting” and “risk-distributing” aspect of life insurance, which the Le Oierse case — and indeed the present opinion — seize upon as its distinguishing characteristic.1 Risk of death, or for that matter of “premature death,” if there is any distinction, is shifted and distributed here automatically as in any assessment insurance. Whenever death occurs to any member, young or old, its financial impact is softened by the contributions of his associates. That is the sharing, or distributing. The risk, of course, is that death will come sooner than savings equal to his assessments would have built up an equivalent fund. Otherwise he could protect himself. Some may eventually pay more in assessments than their estates can receive. That is the other side, of the risk. It is necessarily present in all insurance. And that the Exchange acted merely as collecting agent from the members, who were the real participants, bound at least as firmly by the Exchange’s constitution as by any life insurance policy, is again a historical element of assessment insurance. The Exchange member “pledges himself” in a “solemn agreement” to pay. If all keep that agreement, the full death benefit will be received. No life insurance policy is proof against breach. That Congress used the term “life insurance” in its commonly accepted meaning would be a reasonable conclusion even without the Le Oierse case to support it. But that case links “common” and “historic” in a context whose significance can not be escaped. As late as 1936, long after Congress first used the term, Webster’s New International Dictionary (2d Ed.) defined “life insurance” in part as: Life insurance or assurance. A contract of insurance based upon tbe life of a person. * * * Life insurance paid upon tbe death of the insured in whole or in part from the proceeds of an assessment levied upon the members of an association for that purpose is called assessment life insurance. And the craft, guild, or trade union concept of insurance, based upon a common occupation and following assessment principles, is not only a historic and fundamental form of life insurance, but appears actually to be one of its origins. Thus the latest (1948) edition of the Encyclopedia Britannica, under the subject of “Life Insurance,” refers to: The principle that groups of persons should agree to make common cause against dangers which threaten all, but are individual in operation * * *. Action of this nature was moreover, in its origin, dictated by the interest of the group rather than by the interests of its members. As communications became more widely organized, the character of the group granting the benefit naturally tended to become that of a class or trade union, but until what are historically known as modern times, insuring associations were associations of persons, not of capital, and insurance of members would only have been one of their reasons for existence. * * * Even more illuminating is the Encyclopedia of Social Sciences (1935), vol. 9, p.462: * * * In the second century of the Christian era the Roman collegia built up funds to provide burial for their members; and some insurance of this sort, often connected with crafts or guilds, has been maintained in many communities from that time to the present day. * * * ******* Life insurance * * * has two principal origins. * * * The second origin is in the craft guilds. From earliest times men of similar occupation or with common interests bound .themselves together in friendly association. Members were helped in sickness and old age, and burials were arranged. On the death of a member it became customary to seek charitable donations on behalf of the family. This charitable practise developed into a right, and each surviving member was assessed a fixed sum for each death. In some cases the contributions were made definite, and the amount was distributed among the beneficiaries. Out of these practises arose the early forms of life insurance along assessment lines. * * * In the light of this “common” and “historic” concept of life insurance, I find it impossible to concur in the elimination of assessment life insurance from the statutory definition. But there is still another reference in the Le Gierse case which can not be avoided. That is the “apparent purpose of §302 (g),” now 811 (g). By his participation in the death benefit fund, and his contributions as required by its terms, decedent procured the payment to his beneficiaries at his death of a sum which has the same relation to his estate that any other life insurance would have. It would take unmistakable language in the statute to convince me that such a discrimination was intentional. Since the statute not only expresses no purpose to exclude this type of life insurance, but, on the contrary, the term used is actually susceptible only of a meaning which embraces it, I would sustain the deficiency. TurneR, J., agrees with this dissent.   For example, In referring to tlie necessity of a physical examination, Keller v. Commissioner, 312 U. S. 543, says : “Absence of a physical examination may well be inconclusive as to the existence of an insurance risk. For example, some companies do not require such an examination for group insurance. But there the risk as to one is distributed among the group, an insurance risk squarely within the definition stated in the La Gierse case. * * *”