Court Opinion

ID: 7055854
Source: CourtListenerOpinion
Date Created: 2022-07-24 07:06:09.650923+00
Date Added: 2024-06-11T16:11:58.199377
License: Public Domain

*628On Petition for Rehearing.
Myers, J.

s'.

The learned counsel for appellant have presented a very able argument in support of its petition for a rehearing, based upon the contention that the corn-plaint is bad for failing to embody, or make as an exhibit, the so-called contract of reinsurance, and that we were in error as to the construction given to that contract.
The question of pleading was given deliberate examination by all members of the court before the original opinion was written, and on reexamination we see no reason to change the views expressed.

*629
1.

*628Exception is taken specially to that part of the opinion in which the reinsurance contract is likened unto an application for insurance, which counsel concede need not accompany a complaint, for the reason, as they state, “that the application contains the statements and answers of the applicant, and the policy is the contract which the insurance company issues to him on his application.” The original policy provides, in so many words, that the application “is hereby made a part of this contract, ’ ’ and it is unvaryingly held that such application need not be set out or exhibited in the complaint. In this case, under the new contract, the original policy was not taken up, and the contract, both under the statute and by the contract itself, is the taking over of the risk under the original policy, without any attempt or pretense of taking up the old contract, or substituting another for it, and the language of the certificate attached to the original policy is so worded as not readily to convey to one unskilled in interpreting such instruments, if not to mislead such an one, any other idea than that of assumption of that risk. It was an unnecessary thing, if it was intended merely to give notice of the fact that the new agreement had been entered into, for appellee’s decedent was bound to know, if she was given notice, that a contract might be entered into by two-thirds of the policy-holders, and if it was, she was *629charged with notice of it. While the certificate is dated March 12, the date of the assumption contract, it must be presumed that the statute was followed, and that ten days elapsed during which election to transfer to some other company might be made before the certificate was in fact executed. Supposing appellee’s decedent to have been ignorant of the terms of the assumption contract — and it is not pretended that she knew them until the certificate was given to her — it was then too late for her to extricate herself. Neither will it be presumed, nor was she in fact bound to know, that the other members without her knowledge or her assent would attempt, by virtue of mere numbers, to destroy the value of her contract; so that instead of serving any legitimate purpose it simply operated as a trap to ensnare her, under the contention that the certificate gave her notice, when it is perfectly apparent that that certificate was not executed until the ten days had elapsed, and dating on the day of the assumption contract is now used as a basis for imputing knowledge to her of facts now claimed to bind appellee, which it is not pretended that she knew until it was too late for her to help herself. Hence it fails of the purpose now claimed for it, as conveying notice, and legally fails to be effective for any purpose other than as an agreement of assumption of the risk, for the plain reason that there was no option then left to her as to any course, so as to put her to an election, unless it be to bring an action at once for damages. The statute does not require that the notice of the stockholders’ meeting shall disclose any of the terms of the proposed contract, which is in and of itself a strong argument in favor of the proposition that the statute contemplates the taking over of the obligations of the transferring company as they exist. These reflections enforce the correctness of our former views, that the transfer contract is not, either by the law or by the recitals in the certificate attached to the original policy, such part of either the assumption or the *630certificate that it is required to be set out or exhibited iu the complaint.

7.

What we have said here with respect to the complaint, applies also to the interpretation to be given to the transfer contract, except that we are further fortified in those views by the answers exhibiting the transfer contract, along with which is set out as an exhibit of the general application to the Model Life Insurance Company, a general proxy by which the insured authorized the executive committee of the Model Life Insurance Company to vote in her absence as her proxy at all meetings of the members of said company, in addition to which it is disclosed by the transfer contract that none of the members shall be deemed to have been reinsured until the expiration of ten days from the date of ratification, clearly showing that the certificate attached to the original policy was not in fact executed until the expiration of ten days from the date it bears. If the transfer contract was ratified by a vote under that proxy, it was a clear violation of a trust for the protection of the insured, and those similarly situated, to barter away their rights, as was here sought to be done. Referring to a statutory provision almost identical with our own, the supreme court of Illinois, in the ease of Bolles v. Mutual Reserve, etc., Assn. (1906), 220 Ill. 400, 77 N. E. 198, held, under a contract providing for the transfer of all certificate holders “who by its books and records were in good standing,” that it was immaterial whether the books and records showed decedent to be in good standing, if he was in fact in good standing, and said: “Being a public statute, it entered into and became a part of the contract of transfer, and if it can be construed so as to protect the plaintiff in this ease, and all those who may be similarly situated, every one will agree that it should receive that construction. If it can be held that such companies cannot transfer a part of their members and risks, but must transfer all or none, except those who may elect to be transferred to other companies, then the ends of justice can be *631attained and the courts will be prompt to adopt that construction. The section of the statute in question does not contemplate a transfer of a part of its members or risks. Its language is, ‘its risks’ — i. e., all of them. The meeting to ratify the contract is to be a meeting of all members, the language being, ‘notice * * * shall be mailed to each member. ’ The two-thirds vote must be two-thirds of all the members, and if the transfer shall be approved, ‘every member’ is given the right to file with the secretary notice of his preference to be transferred to some other corporation than that named in the contract, clearly indicating that unless that choice is ?nade the contract of transfer ipso facto operated to transfer ‘every member’ to the new or transferee company. It would scarcely be contended that a corporation, under this statute, could transfer only its members of a particular class. If it should tender, by contract, to another company all of its members of a certain age or all residing in a particular place, and should attempt to have that contract ratified by its members, how would it proceed? Manifestly, without reading into the statute language which it does not contain [and which the legislature manifestly never intended] it could not do so, and hence the contract would be illegal and void, and we think the transferee company would be bound to take notice of such illegality. ’ ’
In National Mut. Ins. Co. v. Home Benefit Soc. (1897), 181 Pa. St. 443, 37 Atl. 519, 59 Am. St. 666, under a very similar statute, a contract by which the transferee company agreed to reinsure the members of the original company ‘ ‘ on the basis of their original applications to the former company, and on the execution of a satisfactory transfer application,” it was held that the transferee could not, as a condition of such reinsurance, require that the applying member should furnish a medical examination. The court said: “The words ‘satisfactory transfer application, etc.,’ considered in connection with what precedes and follows them, do not mean that the defendant will reinsure the applicant for *632transfer on condition that his age and health are satisfactory to it. To attribute to them this meaning is to defeat the obvious purpose of the contract and the statute which authorized it. The paramount purpose of the contract was protection to the members of the National Mutual Insurance Company by reinsurance with the defendant. In our view of the contract it bound the latter to reinsure the members of the former who elected to have their insurance transferred in accordance with its provisions. ’ ’
These cases sufficiently indicate the correctness of our former opinion upon the subject of the construction of the contract, that the attempt to destroy the incontestability clause in the policy was ineffective, and the possibility that two-thirds in number would do, or attempt to do, what was attempted in this case, was certainly a good reason, if not the impelling one, for the legislature to require the transfer of all the risks as they were. There is no claim or pretense that the insured attended the meeting, or had any notice of the proposed contract or its terms until it was too late for her either to interpose objection or elect to be transferred to some other company. "We were, however, led into a partial inaccuracy of statement respecting the reserve fund of the Model Life Insurance Company on hand, in saying that “it is attempted to be transferred to another company without liability of the latter to account for it, for the benefit of those having an interest in it.” The contract was very voluminous. One section provides, as shown in the original, opinion, for charging up as a lien upon each certificate an amount sufficient to equal the amount which should have been charged and accumulated to the credit of each certificate according to the actuaries’ table of mortality, and four per cent, and according to appellant’s premium rate, for a like'policy at the age of entry. Our attention was not called by either party to the provisions of another section by which it was agreed that the certificate holders should be allowed in five equal annual installments as a credit *633on their annual premiums, in ease of payment thereof only, an amount “to he determined by the proportion which the total premiums heretofore paid by said members respectively to said party of the first part bears to the total amount of the cash, and principal of the mortgages, transferred and delivered hereunder. This clause seems to provide for an accounting for the cash, and principal of the mortgages transferred to appellant, in case the future premiums are paid; but the contract makes no provision for accounting for interest on the mortgages, if any, and for the other property transferred under the agreement, which is recited as “notes, bonds, good-will, collaterals, furniture, fixtures, and all and singular its assets and property of every kind and character. ’ ’ Whether much or little in amount or value is not disclosed.
To the extent of the partial inadvertence of statement respecting the cash and principal of mortgages, the original opinion is modified, but we see no reason to depart from the results formerly reached, and the petition for a rehearing is overruled.