Court Opinion

ID: 7065452
Source: CourtListenerOpinion
Date Created: 2022-07-24 07:25:29.236712+00
Date Added: 2024-06-11T16:12:21.324404
License: Public Domain

On Petition for Rehearing.
Rabb, J.
9. Appellant in its petition for a rehearing insists that appellee, in her complaint, planted her case on the contract of reinsurance entered into between appellant and the Model Life Insurance Company, because an excuse for failure to make said contract or a copy thereof a part of the pleadings is alleged in the complaint. These allegations of the complaint are not of controlling importance. They do not give character to the cause of action. The action is expressly based upon the policy issued by the Model Life Insurance Company to the assured, and the certificate of reinsurance issued by appellant, and in no essential respect, is there any difference between the complaint under consideration and that in the ease of Federal Life Ins. Co. v. Kerr (1909), 173 Ind. 613, so far as it relates to the contract of reinsurance entered into between the two companies; and what is said by the court in deciding that case, in reference .to the liability of appellant company, under its reinsurance contract, is equally pertinent here.
5. Appellant also insists that, in deciding the question of the power of the Model Life Insurance Company to contract for extended insurance, the court overlooked the important and controlling provisions of the statute under which the Model Life Insurance Company was organized. The provisions of the statute to which our attention is directed is this clause from section four of the Act of 1897 (Acts 1897 p. 318, §4742 Burns 1908), “and may change the same from time to time ás the experience of the corporation, *123association or society may require,” in addition to the quotation given in the original opinion. Section four reads as follows: “The trustees, directors or managers * * * shall fix the * * * amounts of premiums, assessments or. periodical calls, and the time and manner of the payment thereof, and the risks to be assumed by such corporation, * * * and the duration thereof, and may change the same from time to time as the experience of the corporation # * * may require.” Section six of the same act (§4744 Burns 1908) reads as follows: “Any incorporation, association or society organized to insure lives, which provides for the payment of policy claims, or the accumulation of reserve or emergency funds, and the expenses of the management and prosecution of the business by payments to be.made either at periods named in the contract or upon assessment as required, by persons holding similar contracts, and wherein the insured’s liability to contribute to the payment of policy claims accrued or to accrue is not limited to a fixed sum, shall be deemed to be engaged in the business of life insurance upon the assessment plan.” And it is insisted that giving to these provisions of the law the weight they are entitled to receive, it becomes clear that a life insurance company doing business on the assessment plan, as defined in §4744,- supra, is prohibited from contracting for the periodical payment of a fixed premium or assessment by the assured, and that inasmuch as the company cannot so contract, therefore there can be no basis for the valuation of the policy or fund provided for the payment of mortuary claims under such contract.
If appellant was correct in its contention that under this law the Model Life Insurance Company had no power to fix the premiums or assessments on its policies at such sum as would produce funds out of which the mortuary demands upon it, arising out of this feature of the contract could be paid, there might be some force in its contention, but these provisions of the law, to which our attention has been espe*124cially directed, do not admit of the construction appellant seeks to give to them. No words can be found in these provisions that prohibit, as appellants contend, the board of directors of the company, organized under the act, from making any kind of a life insurance contract they choose, so far as concerns the premiums to be paid by the assured, upon the policies they may issue. The language used does not purport and was not intended to place limitations on the ■powers of the board, and the fact that power is conferred upon it to change, in its discretion, the rate of premium, or levy assessments additional to those provided for in the contract, cannot be tortured into'a limitation on its power to contract for a fixed premium. These provisions of the law relate to the liability of the assured, not to the powers of the board. They extend the liability of the assured; they do not restrict, or undertake to restrict, the power of the company. Extension of the liability of. the assured is one thing, and limitations upon the power of the board of control of the company is another and entirely different thing.
Clearly, under this law, the board of control of the company has’ full power to fix the amount of premiums to be paid on its policies, and to require these premiums to be paid at certain fixed periods, precisely the same as may be done by any old line company, and the premiums and the periods of payment so fixed, so far as any right of the assured is concerned, are irrevocably fixed. Assured cannot insist on any change. The company can compel the payment as it has fixed it, or forfeit the policy, and the premium may be fixed at such sum as will create a fund not only sufficient to meet all mortuary claims that may arise under the contract of insurance as it has made it, but create an unlimited reserve beside. As shown in the original opinion, the law clearly contemplates the creation of such a reserve, and clearly contemplates the power of the board to raise such a fund as will give to its policies a withdrawal value.
There are many assessment plans of doing life insurance *125"business. Under some plans, assessments can only be made on policy-holders to meet mortuary claims as they shall arise, and such companies possess no power to require the payment of assessments or premiums beyond a sum sufficient to meet such requirements. They possess no power to provide for, the payment of given premiums at stated periods, regardless of the current mortuary- claims against the company. Companies doing business under this plan, of course, -cannot contract for extended insurance, because no fund can be created to meet such contract; but that is not the case here. This company was doing business under a different plan. It possessed the power, under the law, to fix a premium that would create a fund to pay for extended insurance, and it is the láclc of this power on the part of an insurance company, whether it does 'business on the ’assessment plan or any other plan, that precludes it from contracting-for extended insurance, as is well illustrated in the case of Mutual Reserve Life Ins. Co. v. Roth (1903), 122 Fed. 853, 59 C. C. A. 63.
6. As stated in the original opinion, it is to he presumed that this company, having the power to fix its premiums at whatsoever it chooses, fixed-the premium on all its policies at such'a,sum as would meet all mortuary demands that could arise under the Oontract it made with the policy-holder, and to hold that the company, vested with -such power, having entered into this contract and having received the full consideration it contracted to receive, should he permitted to avoid the contract now, after its full execution on the assured’s part, would do violence to every principle of justice, and to the reason and philosophy of the law.
-Appellant’s petition for rehearing overrruled.