Court Opinion

ID: 7905106
Source: CourtListenerOpinion
Date Created: 2022-09-08 21:59:37.252988+00
Date Added: 2024-06-11T16:32:23.538001
License: Public Domain

Dawson, J.
(concurring) : A condition and not a theory concerning many of these fraternal insurance societies has arisen with increasing frequency in recent years. Although designed in the most commendable spirit, they have too often been mathematically unsound; their obligations could not be met from their sources of income. They did not charge enough for the service — the insurance — which they furnished. This inherent weakness only grew acute after their seemingly successful careers had run for a considerable number of years. As time developed the certainty of their ultimate insolvency, the several state legislatures, the courts, and the supervising departments of insurance have faithfully sought to make the best of a bad situation. Thus, mergers and increased rates have been countenanced. I do not think these mergers and increased rates violate the true spirit of the constitutional inhibition against the impairment of contracts. To insist on the cold letter of that inhibition brings to the front the fact of the fraternal society’s inherent insolvency, and the same cold letter of the law would require a summary termination of the society’s existence by cancellation of its charter, a receivership, a winding up of its affairs, and a distribution of its fragmentary assets among all its members holding certificates of insurance. In such a situation no one member is equitably entitled to a preference — to an exaction of the uttermost farthing; he is equitably entitled to a pro rata division with his *221fellow members, and no more. So long as a merger, constrained into existence by such necessity, equitably and economically preserves what assets the failing institution has, no member has any just cause of complaint. To hold otherwise, is to declare that a merger of a weak or insolvent insurance society, to prolong its life and possible usefulness, may not be undertaken at all unless such merger provides for the literal discharge of. all the merged society’s obligations dollar for dollar — and for the impossible fulfillment of the hopes of its founders as well. I should only yield to that conclusion if I could find no logical escape from it.