Court Opinion

ID: 3416767
Source: CourtListenerOpinion
Date Created: 2016-07-05 19:44:11.541104+00
Date Added: 2024-06-11T13:52:24.504548
License: Public Domain

I do not concur in the opinion of the majority of the court. Section 10 of the Life Insurance act of 1869 (State Bar Stat. 1935, p. 1876; Smith-Hurd Stat. 1935, p. 1843;) commands the Director of Insurance to "annually make valuations of all outstanding policies, additions thereto, unpaid dividends and all other obligations of every life insurance corporation doing business in this State." The same section also provides that if the director "shall find, in the case of any company doing business under this act, that the admitted assets of a stock life insurance company in excess of the minimum amount of capital stock required under this act, * * * are less than its liabilities, including the net value of its policies computed by the standard of valuation established by this section, such department [director] shall give notice to the company of the amount of such deficit as determined by it, [him,] and shall require that the deficit be made good," etc. The allegations of the relator's petition disclose that the company is insolvent *Page 515 
and that the Director of Insurance has so found. The manifest legislative intent of the Insurance act of 1869 and the Standard Provisions act approved May 20, 1907, is the protection of citizens of Illinois and of other States doing business with insurance companies organized conformably to the laws of this State. These salutary statutes were enacted for the purpose of assuring persons transacting business with Illinois insurance corporations that such companies would, at the time contemplated in the policies issued by them, be able to pay their policies in full, and, further, to assure the persons insured that they would be fairly dealt with upon the high standard of solvency prescribed by the legislature. The Life Insurance act of 1869 and the Standard Provisions act are declaratory of the public policy of this State. They inhibit transaction of the business of insurance in Illinois by any corporation contrary to their regulations by annulling all the stipulations which offend the provisions of the statutes.New York Life Ins. Co. v. Head, 234 U.S. 149.
The statutory provisions invoked by the parties in this case are free from ambiguity and hence do not require construction. The Director of Insurance has no power, under the statutes in question, to give effect to the waiver agreements designated "voluntary liens," and no duty, therefore, rests upon him to consider such waiver agreements either as a reduction of the relator's statutory reserve liability or as an asset to offset the relator's statutory reserve liability. The majority opinion nevertheless holds that the policyholders may enter into contracts with the company waiving the foregoing and other provisions enacted for their benefit, irrespective of whether contained in the statute under which the company was incorporated or in the Standard Provisions act. In particular, the decision rendered in this case holds that the statute prescribing a specific standard of solvency for legal reserve companies may be nullified by contract, and, further, that the statute prescribing and prohibiting *Page 516 
other provisions in life insurance policies may be nullified by agreement of the parties. In short, the standard of solvency prescribed by the legislature is completely abrogated by this decision.
The majority opinion ignores the fundamental principle that the charter of the relator is a contract between the State of. Illinois and the company. (Ward v. Farwell, 97 Ill. 593.) Its charter necessarily includes all statutory requirements imposed, and it cannot be changed without the consent of the State. (North American Ins. Co. v. Yates, 214 Ill. 272; ChicagoLife Ins. Co. v. Auditor of Public Accounts, 101 id. 82; Ward
v. Farwell, supra.) Likewise, every insurance contract is impressed with the applicable statutory provisions. By its charter the company agreed to maintain all required reserves to make its policies conform to the mandatory provisions of the statute with respect to its solvency. Failure to satisfy these requirements constitutes a violation of the contract between the company and the State. In the present case it is conceded that the relator company has violated its charter contract. By reason of such violation it has forfeited its right to engage in the insurance business, and that right, in consequence, may be taken from it in the manner directed by statute. By the proposals of the relator set forth in the majority opinion it endeavors, through agreements made with its policyholders, to effect a waiver of a mandatory statutory provision, namely, to maintain at all times admitted assets equal to all liabilities, including the capital stock liability, and, particularly, its policy-reserve liability. No statutory authority for the imposition of the voluntary liens sought by the relator exists, and it has failed to show any other legal authority for the reduction of the liability imposed by the legislature.
It is not the province of a court to substitute itself for the Department of Insurance and assume the clearly-defined obligation which the legislature has delegated to that administrative *Page 517 
agency. (People v. Niehaus, 356 Ill. 104.) The statutory provisions previously mentioned require no interpretation, so far as the present action is concerned. By undertaking to permit the re-organization of the relator insurance company as prayed for, this court arrogates to itself the performance of the duties, in part, of a court of chancery but without the power which such a court inherently possesses to effectuate the re-organization. The effect of the repeal by this court of the standard of solvency commanded by the insurance laws of this State is far-reaching. Sanctioning nullification or modification of this legislation by contracts between the insurer and the insured will inevitably tend to bring about a condition where certain and definite standards of solvency of insurance companies will be completely lacking.
In my opinion the writ of mandamus should be denied.
ORR, J., and HERRICK, C.J., concur in this dissenting opinion.