Court Opinion

ID: 4011353
Source: CourtListenerOpinion
Date Created: 2016-07-06 11:14:22.69189+00
Date Added: 2024-06-11T12:10:53.812038
License: Public Domain

A careful review of the matters brought to our attention upon defendant's motion for rehearing has failed to convince us that there should be any change or modification of the views expressed in the original opinion.  We think that a detailed discussion of these matters would not be profitable.  Appellant, however, presents certain constitutional contentions not previously argued, and we address ourselves briefly to these points.
Defendant contends that the decision of this court, as well as the order of the insurance commissioner giving rise to this litigation, deny to defendant rights guaranteed to, it by the United States constitution.  More specifically, it is said, (a) that a state, under the guise of regulation, may not deny *Page 188b 
to an insurance corporation the power to enter into a contract requiring its members to pay costs incurred by the corporation prior to, or as an incident to the completion of the insurance contract; (b) the state may not require inclusion of membership fees in any reserve for insurance liability or protection when by the express terms of the insurance contract this item is independent of the insurance premium, is not repayable in whole or in part, and is collected to reimburse the company for expenses incurred by it in the execution of the contract. It is further contended that by the holding of this court in sustaining these powers defendant's constitutional rights are violated, (1) because it imposes an arbitrary and unreasonable interference with the right of contract in violation of section 1 of the Fourteenth amendment of the United States constitution; (2) because it impairs the obligation of contracts in violation of section 10, article I, constitution of the United States.
Reduced to its lowest terms, the contentions deny the power of a state, (1) to require maintenance of reserves for portions of the premium covering acquisition expenses, or (2) to prevent the insurance company from contracting with the insured for the giving of a life privilege in return for the payment of a portion of the premium separated and denominated a "membership fee," or (3) to require that unearned-premium reserves be maintained upon the premium as defined in the opinion, or (4) to forbid the latter to be so split and labeled as to make inapplicable reserve provisions relating to premiums generally.
We do not deem these contentions valid.  We consider the statutes to constitute a reasonable exercise of the power of the state to regulate insurance policies in order to promote the *Page 189 
solvency and providence of the contract and to prevent forfeiture and discrimination.  We cannot say that the statutes are not reasonably adapted to this end, and hence they neither constitute an unreasonable or arbitrary interference with the right of contract nor impair the obligation of contracts.
Some concern is expressed in defendant's brief upon rehearing whether the scope of the opinion is sufficiently circumscribed. While we are of the view that it is, we see no objection to reiterating that the decision is put upon the ground that defendant's plan violates the statutes because of its use of a membership fee as the consideration for a life privilege — a fee to which is allocated a portion of the expenses of furnishing insurance protection, which is treated as earned at once and against which unearned-premium reserves cannot be set up as required by the statutes.
By the Court. — The motion for rehearing is denied with $25 costs.