Court Opinion

ID: 5204016
Source: CourtListenerOpinion
Date Created: 2022-01-06 15:57:59.623714+00
Date Added: 2024-06-11T08:27:15.105210
License: Public Domain

Kellogg, J.
(dissenting):
The plaintiff brings the defendant into a court of equity, contending that he is entitled to have' his policy of insurance rescinded on account of the defendant’s fraud, and the rights of the parties adjusted upon equitable principles. ' There are two reasons why he is not entitled to recover in this action.
First. Ho fraudulent representations are shown which have been in any manner injurious to or affect the Value of his policy. He contends that in the report made to -the. Insurance Department''in 1891, which was communicated to him by an officer of the association before filing, the contingent liabilities' of the association were misstated by the omission of $523,000 on account of deaths which had been reported but as to which no proofs.of loss had been received. The report was made upon blanks furnished by the Insurance Department, and the evidence shows that it was the practice of all such co-operative companies, approved by the Insurance Department, to treat losses which had been reported, but as to which no proofs had been received, as not forming a liability against the association. In stating the contingent mortuary liabilities, the report states the amount of losses approved, the losses reported and in process of adjustment, the losses resisted, and then as another item “ All other contingent liabilities, viz: Het present value of all policies in force December 31st, 1891, computed as renewable term insurance for 60 days, Actuaries Table of Mortality, Interest 4$ — All policies terminate by limit of time each 60 days — Subsequent pay*349ments maturing each 60 days equal liability for future death claims, based on combined Experience Table of Mortality, $570,072.00 ”
It is time that no such liability as that mentioned after the “ viz ” in the paragraph above quoted existed. We, therefore, may disregard that part of the paragraph and treat the report as stating “All other contingent liabilities against the association as $570,072.00.” The report, therefore, as an entirety, is an over statement instead of an under statement of the contingent liabilities. But if we assume that this contingent mortuary liability is not mentioned in the report at all, and should have been stated, the plaintiff has suffered no harm, for the.reason that this contingent liability would be balanced in the report by the statement of an equal amount as contingent assets, for the association had the right to issue an assessment against its policyholders for all losses, so that if this item had been put under the liabilities, the assessments to be levied to meet it should have been put in as contingent mortuary assets. It is error to say that the contingent mortuary assets contain an item to balance this $570,072, because the statement shows that the contingent mortuary liabilities exceed by over $100,000 the contingent mortuary assets, and all the contingent mortuary assets are stated to be mortuary assessments called and not yet due. It is .evident that no assessment could be called for deaths which had not been approved or audited. In any event, therefore, the report which was communicated to the plaintiff overstated the contingent mortuary liabilities of the defendant, and the claim that it understated them is purely technical and without merit. The Appleton report to the Insurance Department, in evidence, shows clearly that if these claims are reported as a contingent mortuary liability, the assessment which the policyholders must pay to meet the claims must be stated as an asset, so that it is immaterial for the practical purposes of this case whether an omission was made of this contingent mortuary liability so long as there was an omission of the contingent mortuary assets which would meet the liability.
It is not claimed that the losses during the sixty days which were omitted from the report were extraordinary, or of such an amount that the occurrence of the- number of deaths within the- time stated would have been a circumstance detrimental to the standing of the association, or that said losses in any way-impaired or lessened the *350assets or the financial standing of the association.. The plaintiff is wrong in assuming that after he became a member he was assessed for the payment of these prior unreported deaths. Under the law and the rules of the association he could only be assessed for deaths occurring while he was a member of the association, and no assets of the association in which the plaintiff had or could have had any interest could be used to pay any such death claims.
Second. The policy of insurance provides that the contract is a bi-inonthly term insurance, renewable at the option' of the member, and that no personal liability is incurred by becoming a member of the association. This policy differs in many respects from ordinary life insurance policies, and may properly be considered as temporary insurance whereby the insured gets the protection for the two months in which the policy is in force and for the following like periods for which it is renewed and gets no further benefit from the policy. It is not a policy where accumulations are' made to it. At the end. of each two months the association has earned all the money the member has paid, and the member has received all the benefits which the policy contemplates that he may have in any event. The plaintiff, therefore, has received every benefit which he expected when he took out his insurance. I think it is too narrow a view to consider an insurance policy like a lottery ticket. It is a definite contract, having a market value, and costs ,the company issuing it certain sums and is worth to the member just such a sum as like insurance would cost him elsewhere. We may, therefore, in this case treat it in the same way that we would a barrel of flour, a commodity bought in the market and which when- consumed is of no further value to the purchaser, but which was of passing value to him for the purpose for which he purchased it. It seems to be conceded that if a sale of flour is induced' by fraud and the flour has been used up by the purchaser, he cannot recover the entire purchase price, but must allow what the flour .was actually worth. The cost of this policy of insurance to the association and its value to the insured can be ascertained by those familiar with insurance nearly as definitely as the value of a barrel of flour. The plaintiff has received all that the contract contemplated he should receive. If he had died during any of the years we must assume that his-estate would have been paid according to the tenor of the policy. *351He, therefore,, had the full benefit of it, and it would be inequitable and unjust to the other policyholders in this mutual association to require assets belonging to them to be paid over to the plaintiff upon a technicality when during all the years he has received the full benefit which the association agreed to give him or which he intended to receive. There is no evidence in the case tending to show how this policy would have been any more valuable to the plaintiff if this contingent mortuary liability referred to had not existed or how the statement of such a liability in. the report, if .balanced by- a corresponding asset which the defendant was entitled to, could prejudice the plaintiff.
It is suggested that the plaintiff is now older and the cost of insurance is greater if he is required to take a new policy in another company, and that, therefore, he is wronged. Ho actual wrongdoing has been shown against the defendant with reference to the plaintiff. The fact that he allowed his policy to lapse and must now go uninsured or obtain insurance at a higher price can be of no advantage to him here. As stated. before, for all that appears in this case, the omission to report these deaths as a contingent mortuary liability and to balance it upon the other side by a statement of the assessments to be levied as a contingent mortuary asset does not. affect the standing of the association or the value of his policy. It would be inequitable after the plaintiff had received just what he bought now to allow liim to recover the purchase -price and interest upon it upon a strained construction of a report which was made to correspond with the general practice of such association and the ruling of the Insurance Department. Therefore, for the reason that no material misrepresentation has been shown and also that the plaintiff has suffered no loss, I favor a reversal of the judgment.. ’
Judgment" modified as per prevailing opinion, and as modified affirmed, with costs to plaintiff. ’