Court Opinion

ID: 3474559
Source: CourtListenerOpinion
Date Created: 2016-07-05 20:45:47.244272+00
Date Added: 2024-06-11T12:49:00.486758
License: Public Domain

My opinion is that Act No. 193 of 1906 is not applicable to the business of industrial life insurance, and that the court has misconstrued the statute in its application to legal reserve life insurance. *Page 41 
The opinion that Act No. 193 of 1906 is not applicable to the business of industrial life insurance is not founded merely upon the seventh section of Act No. 65 of 1906, which provides: "That no law, hereafter passed, shall be held or deemed to refer to the business of industrial life insurance unless the same is expressly referred to in said law." Notwithstanding this section, it was held in McBride v. Acme Industrial Life Insurance Soc.,179 La. 701, 154 So. 741, 742, that the laws relating generally to life insurance (specifically Act No. 97 of 1908 and Act No. 227 of 1916), and not repugnant to the provisions of Act No. 65 of 1906, were applicable to industrial life insurance. That decision was founded largely upon a provision in the second section of Act No. 65 of 1906, to the effect that all companies or associations carrying on the business of industrial life insurance should be "subject to this Act and all the other laws of this State, not repugnant to this Act, regulating the business of life, health and accident insurance in this State."
McBride v. Acme Industrial Life Insurance Soc., is authority for the proposition only that the Legislature may enact a law which shall by its terms or by necessary implication be applicable to industrial life insurance, without its being "expressly referred to in said law." But the McBride Case is not authority for the proposition that all laws relating to life insurance generally are, essentially, applicable to industrial life insurance. The ruling made *Page 42 
in that case did not deny the fundamental rule of statutory construction, that a statute shall not be construed in a way in which the Legislature did not intend it to be construed.
I am convinced by the language of Act No. 193 of 1906 itself, and by the circumstances surrounding the adopting of the two statutes at the same session of the Legislature, Act No. 65 dealing exclusively with the business of industrial life insurance and Act No. 193 dealing exclusively with the business of the old line legal reserve life insurance companies, that the provisions of Act No. 193 of 1906 are not applicable or appropriate to the business of industrial life insurance. It is pointed out in the brief of one of the amici curiæ in this case that Act No. 65, which was House Bill 79, and Act No. 193, which was introduced as House Bill 82 and became H.B. 367, were introduced on the same day and by the same member of the House of Representatives, and were referred to the same committee, committee on life insurance, on the same day, and were reported on the same day; H.B. 79 being "Reported favorably with amendments," and H.B. 82 being "Reported by substitute"; the substitute being H.B. 367, which was adopted as Act No. 193 of 1906. It seems impossible that the committee on life insurance, dealing with the two bills at the same time, could have overlooked the section of H.B. 79 (Act No. 65 of 1906) which required that if the Legislature intended that H.B. 82 or the *Page 43 
substitute bill (Act No. 193 of 1906) should "be held or deemed to refer to the business of industrial life insurance" the same should be "expressly referred to in said law." The Legislature at any subsequent session might have overlooked the provision in section 7 of Act No. 65 of 1906, that no law should be held or deemed to refer to the business of industrial life insurance unless the same was expressly referred to in said law; but I do not believe that the members of the committee on life insurance, in the session of the Legislature of 1906, overlooked the requirement in Act No. 65 of that session, that if Act No. 193 of the same session was intended to refer to the business of industrial life insurance, "the same" would have to be "expressly referred to in said law." It is a matter of no importance in this discussion that it has been decided (in the McBride Case) that this provision in section 7 of Act No. 65 of 1906 is without effect. The members of the Legislature, in the session of 1906, and particularly the members of the committee on life insurance, did not know that section 7 of Act No. 65 of 1906 would be declared to be of no force or effect.
The language of Act No. 193 of 1906 itself shows that it is not applicable or appropriate to industrial life insurance. That class of insurance was unknown in Louisiana until the Legislature adopted Act No. 65 of 1906, defining and regulating industrial life insurance. It is defined in the first section of the act as that class *Page 44 
of insurance for which the stipulated premiums, advance assessments, or dues are payable regularly every four weeks, or triweekly, biweekly, weekly, semiweekly, or at any other stated term, less than a month apart, and the policies or benefit certificates for which are for $500 or less on a life, on which policies or benefit certificates provide a weekly cash benefit for disability, caused by sickness or accident, of $20 per week or less, or which provide for the attendance of a physician or the supplying of drugs, or furnishing a funeral. The life insurance companies organized under the legal reserve laws were not engaged in the industrial life insurance business in this state at the time when Act No. 65 and Act No. 193 of 1906 were adopted. For that reason, it seems plain that, when the Legislature defined the kind of insurance policies that were to be governed by the provisions of Act No. 193, as being policies issued by companies "organized under the legal reserve laws of this State, or of any other State" (section 1), the Legislature could not have been referring to industrial life insurance policies. Besides, Act No. 193 declares that every policy issued by a company organized under the legal reserve laws shall contain a stipulation that after three full annual premiums have beenpaid thereon it shall not lapse or become forfeited for nonpayment of the premium thereafter, etc. Inasmuch as a life insurance policy, in order to be within the definition of an industrial life insurance policy, must be *Page 45 
one on which the premiums or dues or assessments are payable at stated terms less than a month apart, the expression "after three full annual premiums have been paid thereon" (section 1) is not applicable or appropriate to an industrial life insurance policy. The premiums on all old line legal reserve life insurance policies are, and always have been, payable annually, or semiannually, or quarterly. By judicial interpretation, therefore, the expression "after three full annual premiums have been paid thereon" would mean six semiannual premiums, or twelve quarterly premiums, as well as three full annual premiums; but it cannot have reference to a class of policies on which there cannot be such a thing as an annual premium.
Some of the old line legal reserve companies are now engaged also in the business of industrial life insurance. In fact the Metropolitan Life Insurance Company, defendant in this suit, is a legal reserve company. When such companies write an industrial life insurance policy containing a stipulation that after a stated number of premiums have been paid the policy shall not lapse or be forfeited for nonpayment of a premium, and that the policy then "shall have a surrender value as agreed upon in the policy," or that the reserve on the policy shall be applied to the continuance of the policy for the full amount thereof, or to paid-up insurance for such amount as the reserve will pay for, the contract is a valid one, but is not *Page 46 
governed by Act No. 193 of 1906. In other words, this statute neither compels nor forbids a stipulation for a cash surrender value, or for an option in favor of the policyholder to receive the cash surrender value in the form of either paid-up insurance or extended insurance, in the writing of industrial life insurance policies. Hence, when such a stipulation is made in such a policy it is the contract, and not the Act No. 193 of 1906, which determines the rights of the contracting parties. But the fact that an industrial life insurance policy (as defined by Act No. 65 of 1906) is written by an old line legal reserve life insurance company does not change the character of the policy, or require that it shall be written in conformity with the provisions of Act No. 193 of 1906. Nor does the writing of a legal reserve stipulation in an industrial life insurance policy subject the policy contract to all of the requirements of Act No. 193 of 1906.
Putting aside now the question whether Act No. 193 of 1906 is applicable to the business of industrial life insurance, I respectfully submit that the statute does not forbid the parties to a contract of life insurance to stipulate in the policy that, if there is a lapse in the payment of the premiums after the policy has been in force three years, the surrender value, measured by the reserve, shall be applied in a certain way, as agreed upon in the policy; i.e., either that the surrender value shall be paid in cash, or that it shall be applied to the payment of paid-up insurance *Page 47 
for the amount which the surrender value of the policy will pay for, or that it shall be applied to the payment for extended insurance, for the full amount of the policy, for as long an extension as the surrender value of the policy will pay for. The prevailing opinion in this case, and in the five companion cases that are being decided today, is that section 2 of Act No. 193 of 1906 compels the insurance company to give the insured the three options, and forbids the insured to waive his right to the three options, viz., to receive the surrender value of the policy (1) in cash, (2) in paid up insurance for the reduced amount, or (3) in extended insurance for the full amount of the policy. That is not my interpretation of the second section of the statute. It provides, first, that after a policy has been in force three years it shall not be forfeited for nonpayment of any premium. That provision merely guarantees to the insured the surrender value of the policy, measured by the legal reserve. The statute declares further that the reserve on the policy shall be applied as a surrender value, as agreed upon in the policy; and that, if no other option expressed in the policy, as to how the reserve shall be applied as a surrender value, is availed of by the owner of the policy, the reserve shall be applied to continuing the insurance in force for as long a period as the surrender value will pay for. That provision of the law serves merely to extend the insurance automatically when the policy contract allows the *Page 48 
insured an option as to how the reserve shall be applied and he fails to avail himself of the option. But the statute does not require that the policy contract shall allow the insured an option as to how the reserve shall be applied as a surrender value. On the contrary, the statute (section 2) declares: "The reserve on such policy computed according to the standard adopted by said company, together with the value of any dividend additions upon said policy, after deducting any indebtedness to the company and one-fifth of the said entire reserve, shall upon demand with surrender of the policy be applied as a surrender value as agreed upon in the policy." (I supplied the italics.) Then comes the proviso, to take care of a failure of the insured to avail himself of an option, if an option is given in the policy, as to how the reserve shall be applied as a surrender value. And, finally, comes the proviso, "that any value allowed in lieu thereof [meaning in lieu of the extended or temporary insurance] shall be at least equal to the net value of the temporary insurance." That means that a payment of the surrender value in cash, or in paid-up insurance, may be agreed upon in the policy, in lieu of the temporary or extended insurance, provided that any such value that may be agreed upon in the policy shall be at least equal to the net value of the temporary or extended insurance. All of which is in amplification of the declaration: "The reserve on such policy * * * shall * * * be applied as a *Page 49 
surrender value as agreed upon in the policy."
For these reasons I respectfully dissent from the prevailing opinion, and the decree rendered in this case and in the companion cases, namely, Ernestine Thomas v. Metropolitan Life Insurance Company, 183 La. 53, 162 So. 799; Erline Williams v. National Life  Accident Insurance Company, 183 La. 64,162 So. 803; Julia Crump, Widow of Miles v. Metropolitan Life Insurance Company, 183 La. 55, 162 So. 800; Olivia Cryer v. National Life Accident Insurance Company, 183 La. 67, 162 So. 804; and Charlotte Foley v. National Life  Accident Insurance Company,183 La. 49, 162 So. 798.