Ashurst v. Preferred Life Assur. Soc. of Montgomery
Decision Date | 11 April 1968 |
Docket Number | 3 Div. 186 |
Parties | Hugh ASHURST et al. v. PREFERRED LIFE ASSURANCE SOCIETY OF MONTGOMERY, Alabama et al. |
Court | Alabama Supreme Court |
Sol E. Brinsfield, Jr., and Jones, Murray & Stewart, Montgomery, for appellants.
Godbold, Hobbs & Copeland, Montgomery, for appellees.
This is a class action filed in the Circuit Court of Montgomery County, in Equity against Preferred Life Assurance Society of Montgomery, sometimes hereafter referred to as the Assurance Society, and against Preferred Life Insurance Company, a corporation, sometimes hereafter referred to as the Insurance Company.
The Assurance Society was authorized to do business in 1929 as an incorporated nonstock fraternal benefit society under the provisions of §§ 8439--8508, 1923 Code of Alabama.
In 1962 the Assurance Society converted itself into the Insurance Company, a stock life insurance corporation. The conversion was effectuated under the provisions now codified as §§ 236--244, Title 28, Code of Alabama 1940. The provisions so codified were originally enacted by the Legislature of this state in 1927, before the Assurance Society was organized. See Act 537, approved September 6, 1927, General Acts of Alabama 1927, p. 624.
The original bill was filed on April 22, 1964, by eight individuals who averred that 'they are now and have been for many years policyholders' in the Assurance Society and that:
On February 1, 1965, the complainants filed an 'Amended Complaint,' wherein certain of the conversion statutes were alleged to be unconstitutional. We may sometimes hereinafter refer to the amended complaint simply as the bill, since it contains substantially all of the averments of the original bill as well as those added by the 'Amended Complaint.'
The complainants concede that in effectuating the conversion, the Assurance Society substantially complied with the conversion statutes, §§ 236--244, Title 28, 1940 Code, which sections will be set out in the report of the case by the court reporter.
This litigation resulted from a disagreement between complainants and the Insurance Company in regard to the disposition to be made of the surplus accumulated by the Assurance Society at the time of the conversion. The Insurance Company took the position that the surplus was property of the Assurance Society, which after the conversion became the property of the Insurance Company under the provisions of § 242, Title 28, Code 1940. The complainants, on the other hand, insisted that upon conversion the surplus should have been returned to the members of the Assurance Society, its policyholders.
The bill contained seven special prayers in addition to a prayer for general relief, but we entertain the view that the ultimate objectives of the complainants are found in special prayers 2 and 4, which ask the court to:
* * *
* * *
In brief filed here by the complainants below, the appellants here, they assert that they were entitled to recover the surplus of the Assurance Society at the time of the conversion for its members on these grounds:
We will consider those grounds as being the complainants' summary of the stating portion of the bill and, hence, we see no occasion to burden this opinion with a delineation of all of the averments of the bill.
The 'Justice case' referred to in Ground 1 above is a case decided by the Circuit Court of Montgomery County, in Equity, in 1951, which will be considered later in this opinion.
Because the bill sought declaratory relief and alleged statutes of this state to be unconstitutional, the Attorney General of Alabama was served with a copy of the bill.--s 166, Title 7, Code 1940. The Attorney General filed an answer wherein he denied that the statutes involved were unconstitutional but he did not participate further in the trial below.
The Insurance Company filed an answer to the bill, which contains the following language:
'* * * this answer is filed for said corporate entity under its present name of Preferred Life Insurance Company and its former name of Preferred Life Assurance Society.'
We see no occasion to refer at length to the contents of that answer. It admitted certain averments of the bill, but denied all of the averments upon which the complainants based their right to relief for which they prayed.
This cause came on for a hearing on February 11, 1965, which was concluded on February 15, 1965. On March 19, 1965, the trial court rendered a final decree wherein all of the relief sought by complainants was denied and the bill was dismissed. On April 15, 1965, the complainants who were living at the time the final decree was rendered appealed to this court from the decree of March 19, 1965.
In the bill the complainants alleged, in part, as follows:
'J. In 1949, Preferred Life Assurance Society proposed to convert to a stock company and at that time submitted to its membership and to the Insurance Department of Alabama and to the Securities Commissioner of Alabama a plan in all respects similar to the plan it has adopted in 1962, with One major exception. In the 1949 plan the surplus of the Society was to be distributed to its members as of the date the Society converted to a stock company.
'Certain of the Society's members brought suit against the Society in the Circuit Court of Montgomery County (J. E. Justice, Jr., et al. v. Preferred Life Assurance Society, Case No. 20776) objecting to the plan of conversion and other matters. After more than a year of litigation, the Circuit Court approved the plan of conversion by decree dated June 16, 1951, in which the Court stated:
'The right of the policyholders or members of Preferred Life Assurance Society to receive the surplus of the Society upon its conversion to a stock company has been previously determined by this Court in the Justice case, and is a conclusive determination of this right, binding upon the Society.'
The respondent, Preferred Life Insurance Company, a corporation, in its answer averred as follows:
'J. For answer to par. J, Respondent admits that conversion of the corporation in 1962 was carried out in a manner similar to a proposal made in 1949 for conversion. The said 1949 proposal was made by the Board of Trustees of the Society and a meeting of the Supreme Lodge was called to consider said proposal, as required by the conversion law. Said meeting of the Supreme Lodge was never held, in fact was enjoined under an injunction or restraining order obtained (by an attorney of counsel for Complainants in the present case) in the above-described case of Justice et al. v. Preferred Life et al. The Supreme Lodge, the supreme governing and legislative body of the Society, did not authorize conversion in 1949, did not adopt said conversion proposal or even consider it, and did not adopt any procedure or plan for conversion until 1962.
'Respondent alleges that in said case of Justice et al. v. Preferred Life et al, the Circuit Court of Montgomery County, Alabama in Equity, denied the claim of Complainants therein that the 1949 conversion proposal was illegal and found that said proposal complied with the requirements set out in the Code for such conversion and 'went further than required by law.' The question of whether the corporate surplus as a matter of law vested in the stock company as an asset thereof and could not be distributed was not an issue in said case and was not determined in said case.
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