Court Opinion

ID: 5172455
Source: CourtListenerOpinion
Date Created: 2022-01-02 05:04:17.47105+00
Date Added: 2024-06-11T08:26:08.867322
License: Public Domain

McQUADE, Justice,
with whom
PORTER, Justice, concurs (dissenting).
Pursuant to Title 41, Chapter 31, Section 17, Idaho Code, the respondent, an Idaho corporation, made application to the commissioner of insurance, appellant herein, for approval of the insurance form entitled "$500.00 Funeral Benefit.” After a hearing and an examination of the policy, the commissioner of insurance denied the application, from which order the respondents appealed to the district court, as provided by statute, and secured a reversal of the commissioner’s ruling on the record taken by the commissioner. From the order of reversal entered by the district judge, the commissioner of insurance has appealed to this Court for a review of the record, and assigns as error that the trial judge erred in reversing the appellant.
The respondent is known as a mutual benefit life association, organized and existing under the provisions of Title 41, Chapter 31, Idaho Code, for the purpose of issuing a life insurance policy under a mutual benefit plan, and in compliance with our statutes. By virtue of statutory limitations, the respondent may issue only annual renewable term contracts. I.C. § 41-3113. The general limitation governing contracts of insurance is provided in I.C. § 41-3112, to wit:
“Every mutual benefit association organized under the provisions of this act for the principal purpose of providing insurance benefits upon the death, dismemberment or total and permanent disability of any member thereof shall be a mutual benefit life association and shall be limited to the payment of these benefits in the amount and as outlined in part two of this act.”
Respondent issues policies under this authority in multiples of $100 up to a max*541imum of $3,000, provided that in the event the applicant is under the age of 50 years the limits of the policy may be extended to $5,000.
A mutual insurance corporation is a creature of the statutes of the State of Idaho, and its powers thereunder are derived from the power which conceived its inception, and it has only such powers as conferred by statute. Title 41, Chapter 31, Idaho Code; 38 Am.Jur., Mutual Benefit Societies, sec. 11, p. 451; sec. 28, p. 464; State ex rel. Taylor v. Beneficial Protective Association, 60 Idaho 587, 94 P.2d 787; National Union v. Keefe, 263 Ill. 453, 105 N.E. 319; Bankers’ Union of the World v. Crawford, 67 Kan. 449, 73 P. 79; Carson v. Vicksburg Bank, 75 Miss. 167, 22 So. 1, 37 L.R.A. 559.
Insurance companies are subject to the regulation and control of the state within which they operate, under the authority of the police power of that state, on the theory that it is a matter of public interest. La Tourette v. McMaster, 248 U.S. 465, 39 S.C. 160, 63 L.Ed. 362.
It is admitted by the respondent that the policy to be issued is for all intents and purposes substantially the same as its standard policy, and that the premium which will be collected therefor is determined by the graded premium method, the same as the standard policy premium, and the respondent further points out that the proposed form complies’ with our statutes in that the same benefit fund will be used for the subject policy as well as the standard renewable term policy. Further, the respondent contends the proposed form is payable only upon the death of the insured, to a designated beneficiary, as is required by I.C. § 41-3112.
On the other hand, the appellant points out the policy has a caption, “$500.00 Funeral Benefit,” which denotes this policy is in fact different from the standard policy issued by respondent, and further urges the proposed form has attached to it an assignment form which is not included in the standard policy, and urges that a separate benefit fund would be required for these policies, which is contrary to statute. The attachment of an assignment form and the waiver of notice contained in the proposed form appear to be of small moment, and will not be considered herein, nor will the creation of a second benefit fund be discussed. However, under I.C. § 41-3117, the commissioner of insurance has the responsibility of examining all proposed policy forms to assure that such forms comply 'with the statutory requirements and the spirit thereof.
The proposed “Funeral Benefit” policy in effect being approved except for the caption thereof, we must then look to what authority the statute gives the corporation for the issuance of a policy being so entitled. Our statute appears to question the usage of certain terminology, one of which is I.C. § 41-3111(4), which is as follows:
*542“The words ‘life insurance policy,’ or any of these words, shall not be used in any public announcement or advertising medium describing the benefits to members, unless such description shall clearly state that such life insurance or policy is on the mutual benefit plan.”
There are other provisions of this chapter which require the policies of mutual companies to meticulously describe the type of policy and type of benefit which is thereby procurable.
By enacting such restrictions, it appears the legislature had an avowed purpose in conferring discretionary power upon the commissioner of insurance to ascertain if the form of the policy might tend to mislead the purchasing public in the procurement of insurance. Most assuredly the Association will advertise and secure insured on the basis that the policy is for “funeral benefits” when in truth and in fact it is only another of the standard policies, wearing a different garment. Such advertising would then be contrary to the statutory authority, and a duty rests upon the insurance commissioner to protect the public from being misled thereby.
Being mindful of the public trust which rests upon the commissioner in approving these forms, he must take every precaution to protect the public from investing in a policy which carries with it a misconception as to its nature. In this instance, the policy is identical, for our purposes, with the respondent’s standard provision policy, and should be so designated. When a proposition such as is before us is ventured, it is possible to dwell upon all types of hypothetical circumstances, language and conditions. We have before us, not an ordinary sale of products or services, as in commerce, but that of insurance upon lives. If there is any ambiguity, it must be resolved in favor of the public and against the respondent, as it occupies a position of trust and is thereby required to exercise a higher degree of care in its representations than is a merchant dealing in the ordinary course of commerce, where no position of trust prevails, and where the buyer and the seller deal at arm’s length.
Although the subject matter was fire insurance, nevertheless this Court, even as to that type of coverage, announced the following principle in the case of Inter-mountain Lloyds v. Diefendorf, 51 Idaho 304, 5 P.2d 730, 731:
“The right to carry on the business of insurance in this state, as in most states, is carefully regulated by statute. It is quite generally held, and we hold that the public interest is so affected by the insurance business carried on in the state that private right of contract must be subjected to the police power of the state prescribing the terms and conditions on which it may be conducted and in regulating the *543business and all who are engaged in it. * * *"
During the hearing on the application to issue this policy, the commissioner of insurance stated that the caption, “$500.00 Funeral Benefit” could be misconstrued and could mislead the purchasers thereof.
This raises the question as to why the respondent desires to issue a policy in this proposed form. In the transcript there appears the following:
“Commissioner O’Connell: But the question is why is it necessary to issue this particular type of policy, you already have one you say.
“Mr. Christensen: I will let Mr. Allen explain the reason for it.
“Mr. Allen: There is no particular reason, the same — let’s not say the same effect could be had by the issuance of any $500.00 policy. This policy is made up for convenience. It is made up for simplicity. It is dealing with one thing and one thing only. It isn’t anything new. It is just a carrying on of the same things as we now do. We could issue one of our standard policies in the amount of $500.00 for the same premium that this little policy requires, and we could do that indefinitely, which would have no bearing on this policy or any other policy, and by using this policy it is just merely a simple form, it has a specific purpose.
“Commissioner O’Connell: It is a different policy then.
“Mr. Allen: ferent policy. Certainly it is a dif-
“Commissioner O’Connell: In other words, you are using two policy forms, for the same person.”
Unquestionably, the foregoing testimony would not be a satisfactory basis nor explanation to warrant the approval of any insurance form, nor does it explain why the respondent wants to issue such a form policy. Being mindful of the legislative purposes expressed in Title 41, Chapter 31, Idaho Code, and it appearing that the commissioner of insurance differs with the well-experienced trial judge, we are led to the ultimate conclusion that the general public would undoubtedly be misled as to the nature of the policy. By the commissioner of insurance and the trial judge differing over the language, we have before us the very object lesson of the controversy. It must be concluded that the citizens of the State of Idaho should not be exposed to such problematically-captioned policies when persons of keen perception, learning, and wide experience are unable to agree.