Court Opinion

ID: 9856966
Source: CourtListenerOpinion
Date Created: 2023-09-24 07:08:43.755987+00
Date Added: 2024-06-11T09:37:36.491611
License: Public Domain

Kaul, J.,
dissenting in part and concurring in part: I dissent from syllabi 10, 11 and 12 and related portions of the court’s decision holding that the protection agreements included in the contracts under consideration do not amount to contracts of insurance.
The protection agreements in substance provide that the indebtedness remaining under the sales agreements shall be canceled upon proof being furnished of the death of the purchaser during the life of the contract, provided that the purchaser was in good health and not more than 65 years of age at the time of the execution of the contract. In some agreements payment of ten percent or more of the purchase price is required and in others twenty percent is required. Cancellation of indebtedness is forfeited if a payment was delinquent for more than thirty-one days.
A search of authorities reveals the majority rule clearly appears to be that a contract providing for cancellation of indebtedness on the death of the obligor is a contract of insurance. (See 29 Am. Jur., Insurance, § 9, p. 438; Couch on Insurance 2d § 1:14.) Supporting cases from many jurisdictions may be found in the following annotations: 35 A. L. R. 1039; 63 A. L. R. 726; 100 A. L. R. 1449 and 119 A. L. R. 1241.
It is my view that the tenor of the Kansas Statute and prior decisions of this court dealing with the subject indicate that the rule should be followed in this jurisdiction and applied to the contract under consideration.
In Kansas any contract of indemnity or suretyship upon any type of risk or loss is deemed a contract of insurance. (K. S. A. 40-201.)
The attitude of this court in defining contracts of insurance was *665first evidenced in 1883 in the case of The State, ex rel., v. Ins. Co., 30 Kan. 585, 2 Pac. 840.
The question was next considered in The State v. Burial Association, 73 Kan. 179, 84 Pac. 757, in which it was stated on page 181 of the opinion:
“If the certificate of membership issued by this burial association be designated a ‘policy,’ the assessment a ‘premium,’ and those who are relieved from paying the funeral expenses of the deceased member ‘beneficiaries,’ this association, both in general plan and phraseology, would be a substantial duplicate of the ordinary mutual-insurance company.
“The fact that no beneficiary is specifically named deserves little consideration, since in reality one exists, and may be ascertained with as much certainty as if directly and specifically mentioned. Whoever would otherwise pay the burial expenses of the deceased member is, by being relieved of that burden, as directly benefited to the amount of such expenses as if the cash were paid immediately to such person. If the deceased member leave an estate, the whole thereof, undiminished by the burial expenses which would otherwise be paid therefrom, will be received by his heirs. If he leave no estate, then his immediate relatives and friends who would otherwise have to furnish the expenses of his burial will be benefited by being relieved of that burden.”
Applying the above quoted language to the contract at hand, if the “protection agreement” be designated a “policy,” the payments “premiums” and those who are relieved from paying the unpaid balance “beneficiaries,” the result is an agreement that must be considered a contract of insurance within the purview of K. S. A. 40-201 and The State v. Burial Association, supra.
It is argued that the cancellation of indebtedness on death agreement was only a “sales gimmick” and incidental to the overall purpose of the sales contract. I cannot agree that the relative importance or incidental nature of a contract is a valid premise upon which to base a determination of whether or not it constitutes insurance.
The judgment of the trial court should be reversed on this point and remanded with instructions that defendants be enjoined from issuing contracts providing for cancellation of indebtedness on the event of death of the purchaser. It is noted from the record that defendants have complied with request of plaintiffs in providing insurance coverage for contracts in existence.
I concur with the court’s decision in all other respects.
Fatzer, J., joins in the foregoing dissenting and concurring opinion.