Metropolitan Life Ins. Co. v. McNall

• Decision Date: 29 June 1897
• Docket Number: 7,490.
• Citation: 81 F. 888
• Parties: METROPOLITAN LIFE INS. CO. v. McNALL.
• Court: U.S. District Court — District of Kansas

81 F. 888

METROPOLITAN LIFE INS. CO. v. McNALL.

No. 7,490.

United States Circuit Court, D. Kansas, First Division.

June 29, 1897

The bill avers: That the complainant is a corporation organized and existing under the laws of the state of New York, and is a citizen of that state. That it has a capital stock of $2,000,000, actually paid up. That its capital stock and assets amount to over $3,000,000. That it is carrying on the business of life insurance in various states of the Union including the state of Kansas. That in transacting its said business within the state of Kansas it has fully complied with all the laws for the regulation of life insurance companies, and with all legal rules and regulations of the department of insurance of said state. That it has been transacting business in Kansas since 1894, and prior thereto. That it has established a large number of agencies, and expended large sums of money in advertising and soliciting business, and has acquired a large and profitable business within said state. That license and permission to transact business within said state has been granted to it, and has been renewed and extended by the superintendent of insurance from year to year, for several years past. That on February 10, 1887, on due proceedings had before him, said Webb McNall, as superintendent of insurance of the state of Kansas, properly and legally renewed and extended the certificate of authority of complainant to transact business in said state until the last day of February, 1898, and did then and there issue and deliver to complainant a certificate of authority therefor. A copy of the certificate is attached to the bill. That complainant paid to defendant for issuing said certificate the full sum required by law to be paid, to wit, the sum of $50, and also other fees in the sum of $50. That since February, 1897, complainant has continued to transact the business of life insurance in said state under the authority of said certificate, and is now engaged in transacting a large and profitable business, and has at this time full authority to continue in the transaction thereof and that there is no legal or valid reason why it should be prevented or forbidden from so continuing to transact its business in said state until the last day of February, 1898. The complainant then recites at length the facts concerning the issuance of two policies of insurance on the life of one Pertha E. Emery, of Wyandotte county, Kan., during the year 1896, one in the sum of $288, and the other in the sum of $500, and alleges that in her written applications for said policies she purposely made false and fraudulent representations and concealments concerning her health and physical condition, etc.; that the assured died on the 3d day of February, 1897; and that by reason of her fraudulent representations and concealments said policies were void, and complainant is not, and should not be, held to the payment of the same. The complainant further avers: That on the 11th day of May, 1897, the defendant wrote and mailed a letter to complainant, of which the following is a copy:

'Topeka May 11, 1897.

'George B. Woodward, Secretary Metropolitan Life Insurance Company,

New York-- Dear Sir: From evidence presented to this department I

find that on the 19th day of October, 1896, your company issued policy No. 13,863,661 to Pertha E. Emery, of Wyandotte county, Kan., in the sum of $288; that the terms and conditions of such policy provide that one-fourth of the above sum is payable if death occurs within six months from date. Mrs. Emery died on the 3d of February, 1897. There is due upon said policy the sum of $72. Further, your company on the 24th day of November, 1896, issued to the same party policy No. 36,620, in the sum of $500. Under the terms and conditions of this policy a deduction should be made in the sum of $23.58, leaving the amount of the sum due at the time of her death, $476.42, making in the aggregate due on both policies $548.42. Proofs of loss were made in the above cases and delivered to your company. The beneficiaries of these policies are the heirs. The attorneys for the heirs are the firm of Morse & Morse, Kansas City, Kan. No settlement has been made upon these policies. Permit me to say that the letters concerning your company in this state are becoming entirely too frequent, and that if you desire to remain in Kansas, and transact business, you would better adjust this loss.'

That on the 15th day of May the complainant wrote and mailed to the defendant a letter, of which the following is a copy 'New York, May 15, 1897.

'Hon. Webb McNall, Superintendent of Insurance, Topeka, Kansas-- Dear Sir: We have received your letter of the 11th of May in reference to the claims on these policies. Your letter closes as follows: 'Permit me to say that the letters concerning your company in this state are becoming entirely too frequent, and that this department desires to suggest that if you desire to remain in Kansas, and transact business, you had better adjust your losses as they occur.' We respectfully protest against this sentence. We have no knowledge of the frequency of the letters concerning this company received by you. We have, however, before this, received only one communication from you. That was concerning a death claim, known from your statements in the newspapers as the 'Dunn Claim,' which had been paid several days before your letter was received. Your letter was entirely unnecessary in that case. The claim was investigated and paid in due course of business, without any knowledge on our part that it had been brought to your notice, and payment had never been refused. As this is the only case to which you have ever previously called out attention, we protest that it does not form a basis for the threat contained in your letter. We also protest against the prejudgment of the two policies, numbered above, which is involved in the concluding sentence of your letter: 'My advice to you is to proceed and adjust this loss.' We do not owe anything upon these policies. You say the claimant has put her claim in the hands of lawyers. We are entirely willing that they shall bring suit, and to abide by the result of the trial. If the court shall adjudge that we owe this money, we will pay it; otherwise not, for we do not owe it. We protest against your assumption that we owe this claim without having heard the evidence. We do not know any reason why insurance companies' rights to a fair day in court are not equally guarantied by the constitution and laws with the rights of other citizens. We deny your jurisdiction to deliver judgment, and assert that if you had jurisdiction it would be your duty to hear both sides before deciding. It is our custom to pay just claims, and many unjust claims, as soon as they are received. Occasionally, however, but very seldom, we have been imposed upon to such an extent that we believe it is our duty to the public to defend the claims to prevent conspiracies to rob insurance companies. The amount of the claims in these two cases is small, and our defense of them will probably cost more than the amount. The fraud attempted, however, was so aggravated, that we believe it to be our duty to contest the cases in the public interest. The insured under these policies had, at the time of making application to us, for many years been suffering from angina pectoris. She concealed this fact from our agent and from our physician. It is not a disease such as can at all times be detected by physical examination. It is a disease, however, which is certain to progress, and is certain to be fatal, and is incurable. Our physician who examined the lady in question asked her the questions contained in the applications about diseases of the heart, as well as other organs, and about her previous attendance by physicians. She denied any disease, and she denied any attendance by a physician, except that she admitted having been attended for some nervous prostration during change of life. We now find the fact to be that this woman had been under the care of a physician for many years, the attendance going back as far as the year 1887,-- the policies being dated in 1896. We find she knew perfectly well of the disease she had, and that it was serious, and that she took care of herself on account of it. We have witnesses to prove this, and that the examination made by our physician was careful; that the questions were put one by one, and the answers given were correctly recorded. Under the terms of the contract the policy was avoided by this deliberate misrepresentation and fraud of the insured. We live up to our contracts, and other people should be required to do the same. Under these circumstances, we decline to pay this claim.'

That each and every statement in said letter was authorized by the complainant, and was true. That said McNall, as superintendent of insurance, received said letter about the 20th day of May, 1897, and immediately thereupon, without legal authority so to do, and arbitrarily, capriciously, and maliciously, attempted to exclude complainant from transacting life insurance business in the state of Kansas, ËHC891 and to revoke the authority of complainant to do business in said state by virtue of the license theretofore duly granted, and did arbitrarily, capriciously, and maliciously issue his order directing complainant to 'cease soliciting business, receiving premiums, and issuing policies after this date in this state. ' That said order is as follows:

'Topeka, May 20th, 1897.

'Haley Fiske, Vice Prest. Metropolitan Life Ins. Co., New York, N.Y.-- DEAR Sir: I have received your communication, dated May 15th, concerning the claim of the heirs of Pertha E. Emery under policy No.

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