Court Opinion

ID: 4141643
Source: CourtListenerOpinion
Date Created: 2017-02-18 03:12:58.079631+00
Date Added: 2024-06-11T14:35:23.626917
License: Public Domain

non-participating; and ala0 policies or izduatrlal
    life insurahoe ulder irrtiole 4764b. provldlng for
    no participafio~ privileges.     The ordinary 1iPe
    busineeia is profitable but the industrial llfa
    buefness plhoffsa loss, and 'tha Coqxu&e    whole
    operatfona (inoWIing     Ufg, haalth  and aocident)
     show   A0   prQfit*

           *%?I;.CompaAy dO&%6OnUuot    ita'ltie, health
     and aoeidant bosiness fa separate departznants. 'PBS
     Usaim   yaux  opznfan a6 t0 whether   in these eircmw
     atanaeo the Company oan 1awPully py dividend8 to
    the holdem     of ordinarypartlolpating Lffe polleLes."

          titicrle 4729;   Vernon's Awotatm¶    Civki: Btatutee
grovidaar z   8,

             WQ lml   tiewee    coiapany organfied     una+ _
     the   lam ot thts State shall heelage orgay-say
     dlvidendis to its poUoy holders, exekpt Pro;a~th>
     proPllwmde      by auoh wxqmny.     'ilxls&LOU izot
     prohibit the isauame     of polioies gmranteeing
     a U~sf$uLte payment or reduatioa l.ri   precsim ~aot
     exce6dfag.the ~oxpenae'~oading on said prtiuiss.
     %hera said reduatiOA exceeds said ex-perme XoCrd-
     ir~g.,t&e propar reserve therefor mst be held
     by the oonpany to prdvide for the dsc'fciemy oo
     arisirg l.n the' net preniusl, abut thiq skll not
     apply to gayseats t6 holders ot speotil or bosrd
     oontraots hezretofoxs isswd.      fro sach life ia-
      surauge oompauy shall dealare or pey an3 dIvI&
      dends to it& stookholders, except P,roznprofits
     -3ade~ buy 9UOh OOf!@~,  AOt iAOlUdiQ3    8UQ;lUs
     asising   ‘from sale oP.sto&.m

          Axtiale l+753,   Verconls Annotated    Ci0I.L rjtstutas,
reads as PolSower

          *It shall not be lawful ror my insurantle
     cmqaany orga:anizedunder~tbo laws of tbia State
     to z.ske any tiuidende, ~exeept rm= surplue gr0-
     fits arising frara its businsrss, In ‘ssthatiag

                                      ..
     stioh profits, there s&all be zeaeirred "U~erefrorathe
    lawful reserve on all wJ8rpired risk& and al&o the
    smurit oP all unpsLd l~sa88, whether adjusted of uri-
    etljusted, and all other debts due and payable, ere
    to beoone due and payable, by the comganye &y
    dIViaSAaU Bad% OoAtIXWy t0 Amy PrOYfsiOA Or ?ihIS
    hrtiale %&all aubjeot th6'oonjmxy zmkiag than to
    a i0rr8ft0x0 or its ohartez; and me CotPmiasiixer
    shaU.:forth'%ith revoke its &mirioate       Or authorfty.
    iia shaall give   suah  capany  at least ten daya notice
    iA WrlWlg      of-rhia iAtent&oA to 'reVOk se14 c&k-
    iioate, atatiha apeoifioaX3.y the reationa why he
    intend8 to revoke the 88m~+~

            &ticle   503tS1 V+Aon*s   Annotated Civil Statutes
?roviaa#:

          TTo life, health, l!ire, ~~?ine or inI.a~& in&r-
    anw ooRtpRy, orga?llzsu maf3r the laws .o::et,is.  State,-~   :
    ahall. sake any dioiaenas  emept frvla the surpm3
    prorits aria-    rrom its busioasa.    In esfinsting
    suoh prorits, there &all be reserved t&m#rcm         a
    sib eqgLt to forty per csnt of the azouat received
                 on uAexpirsd fire risks rind pOllCieOj
    aa pre~+&uzn.s
    and one hundred per ebnti oi the pr&ma       reoeived
    on -expirea   lise, ~bealth, slarine oil Inlend tlrans-
    portation riSk3 eAd po~oisa, wLi.oh afSXAt 80 XT%-
    served Ian hereby dedlared to bs unearned premluza.
    There ahalL alao be ra%erVed tha amuAt of all WI-
    paid loaaes, whether adjusted or unadjueted; all
    suma due the co@aAy 8A bon,nbS,mti@i@t3,      atooks
    and book accounts, of wbi&i ~0 part ot the prinai-
    pal or tie faterest ther5oA has been paid~durlslg
    the gear: preceding suoh sstiolate of profits-, and
    upon  whloh suit for foreo.losare or coflection has
    not been mxmeAoed    or which after judmt      has
    been obtained thereor ehan'@iQe     reJained rcole
    than two year% unsatisfied, and upon whioh SAterest
    shall not haye been paid. IA case Of Amy such
    judgment, the interestdue    or aoorued thereon and
    rsmaiulng unpaid shall alao be reserved.      .uls
    dividends f&a&e CoAtmr~   tO'tbe,protisiOrrs 02 t&is

                                      _.
                 l . I T&a. osdlnasy lire business
              .“.,                                  ie pm-+
      iitable but the fndustr~al Ufe buetieoa shows
      a -lo ss,  8r&d the GOnpiiIy'a whole Operation% (iItoli&-
      ing life, health and accident)'sh~~ no .prgfit.*

            Af%er a.oareful se&oh we hsve PafleU to find
crny ciaae wharo the ap~oU.ate oourba of tt-is &ate have
pmmi    upon e gueetlon like or &ai.lar to the one uader
consideration.    However, to cossestlg answer gow  ;iues-
'uionas stated @owe, we tbiak that it ia aeceasary to
dei;er&e w&ether the coiagaqf as a whole mst 2m.v~ s;lr-
&ui   prof&.ts   aria&g   Itro:a   Its   ‘Jus.Lneas   from   atic&   it   oiw
logafly pag UivLdoada UnllcG the abom =8&ioood   statutes
3~ %&ether each OS any oT such separate sss: dfstinot

                                              _.
                                          .
tionorable 3. P. Lookhart,     page 5.

department8 oan legal-       par dividends   to the poliay   holders
in eucth6epartmnt or dopmtmentr wnere ana when no potits
arS bvall8bls   in other deprrtmnts      of the ooqany to py
dividundo.    Cardully   oonsldarlng   thm sbon mentioned
  statute8 together,   it 18 our opinion,    that the oom;tany a8
II whole nirat are surplus profits from whioh it aan legally
pay divldehd8 and that mrplss profits        in one or more de-
partmJlts aiha not all of the depsrtzaonts 0r the aolupany
will not suthorlse    the payme,nt of diriderxle to the poll07
holder8 in those depgertments    harti& wplus      profitr   while
other departmenta of the canpany shvw loaaae or tha oom-
pany a8 a rhoI. show8 no profita.       It ie apparent that it
was the intention uid purpoar of tha Lagialatus           to pro-
tect the coqany 8na the policy holdrrr u;a that the above
pl4ntimva rtatutvo 0114 rutharia       the gayimit or diviaana8
to palloy holdero whvri the osqsny a(1 e whole ha6 euoh
surplus pmrits    fren uhieh it oan le&ly        _nay dividenda.
There is no authorim%ion      for the gaynent of Ulvlaanda to
poliop holders by eoprmste 6nd dis~lnat departuente of
the oompany. The com~eny as a whole n&ust have suoh aur-
plus profit6 from wbish it aen legally       pay dlVldends be-
fore any dlvidaadu oa~l be paid.      Therefore,   we rrspeob
fully anmer the above atatod ciuc&iiOa in the negatiV8.
            Truati~   that the r0~sOine      fully aneWer    ycur
iqul.ry   we are