Biggs v. Reliance Life Ins. Co.

• Decision Date: 26 May 1917
• Citation: 195 S.W. 174,137 Tenn. 598
• Parties: BIGGS v. RELIANCE LIFE INS. CO.
• Court: Tennessee Supreme Court

195 S.W. 174

137 Tenn. 598

BIGGS v. RELIANCE LIFE INS. CO.

Supreme Court of Tennessee.

May 26, 1917

Appeal from Chancery Court, Shelby County; Israel H. Peres Chancellor.

Suit by Asa Biggs, administrator, against the Reliance Life Insurance Company. From decree for defendant, plaintiff appeals. Reversed and rendered.

W. P Biggs, of Memphis, for appellant.

J. W Canada, of Memphis, for appellee.

WILLIAMS J.

This is a suit to recover on a policy of insurance issued on the life of Howard A. Biggs, complainant's intestate.

The taking of the policy was solicited by H. T. Adams, as agent of the defendant. In December, 1913, Adams was a contestant for an automobile offered by his company to the agent, who should write the greatest amount of insurance during that month. He applied to Biggs and two other friends to take policies and thus aid him to win the prize. He was urged to apply to Biggs and the others by his superior, the supervisor of agents, who advised Adams "to write them even though Adams had to take a long chance on the collection" of the premiums on same. Biggs, upon being solicited, replied that he did not want to take a policy because he was not able to pay for it. Adams then proposed that if Biggs would take a $5,000 term policy he would deliver the policy and take Biggs' note in payment, same to mature April 1st, at which time, if Biggs was not able to pay, Adams would carry the note, and cause Biggs no further concern until he saw fit to settle with Adams. The note was intended to be and was discounted in bank, and its portion of the first premium, or "net," was settled for with the company at its home office by Adams and his supervisor.

The policy contract was promptly written and delivered, and, as Adams testifies, in good faith. At the note's maturity, Adams paid the bank and took over the note. In June following, Adams asked Biggs for a part payment on the note; but the latter was not in financial condition to make it. The agreement between the agent and the insured was that the former would carry the note until the latter was able to pay, and the agent says he was under moral obligation not to sue; the note, however, was deemed a legal obligation. Adams testifies that he would have taken no steps to enforce collection. Biggs died in the following November without having made any payment on the note. The company contends that in April Biggs repudiated the note as one having no true existence, but the record does not sustain the claim.

The decree of the chancery court was in favor of the defendant company, and from that decree an appeal was prayed to this court.

The question has been raised and debated whether these facts establish that there was a rebate given to the insured within the meaning of our statute on that subject. We find it unnecessary to decide that question, as we are of opinion that, if they were held to constitute such a rebating, the complainant is entitled to recover notwithstanding.

Section 3312 of Thomp. Shan. Code, above referred to, is identical with that passed in many other states:

"No life insurance company doing business in Tennessee shall make or permit any distinction or discrimination between insurants of the same class and equal expectation of life in the amount or payment of premiums, or rates charged for policies of life or endowment insurance, or in the dividends or other benefits payable thereon, or in any other of the terms and conditions of the contracts it makes; nor shall any such company, or any agent thereof, make any contract of insurance or agreement as to such contract other than is plainly expressed in the policy issued thereon, nor shall any such company or agent pay or allow, or offer to pay or allow, as an inducement to insurance, any rebate or premiums payable on the policy, or any special favor or advantage in the dividends or other benefits to accrue thereon, or any valuable consideration or inducement whatever, not specified in the policy contract of insurance."

As indicated above, the defendant company contends that there was a rebate granted and received, which, being prohibited by the statute, rendered the policy contract void, with result that there can be no recovery on the same.

The only case cited by the insurance company in support of its position, and the one evidently considered to be controlling by the special chancellor, is Cary-Lombard Co. v. Thomas, 92 Tenn. 587, 22 S.W. 743. It was there held that where a foreign corporation had failed to file a memorandum of its charter as required by Acts 1891, c. 122 (Thomp. Shan. Code, § 2546), all contracts made by it in this state were illegal, and that the corporation could have no recovery thereon. It was not held that the contract was void for every purpose. It has never been ruled by this court that a contract so entered into was so far void as to be unenforceable by the other contracting party. The contrary was indicated in the later case of Singer Mfg. Co. v. Looney, 103 Tenn. 262, 52 S.W. 879, by this language:

"It must be borne in mind that as between the parties the contract is not void, and the principle which prevents the plaintiff's recovery is that the courts will not lend their aid to enforce contracts and transactions made in fraud and violation of its laws, and which it has impliedly prohibited."

The great weight of authority in other jurisdictions is to the effect that the corporation itself will not be heard to say that the contract is void for such reason, for the purpose of defeating the other contracting party, and thus take advantage of its own wrong. 12 R. C. L. 89, and cases cited.

We are of opinion that no support of the special chancellor's construction and application of the case of Cary-Lombard L. Co. v. Thomas, supra, can be found in our decisions or in sound reason.

It remains to be determined whether his decree can be sustained on other grounds.

In

arriving at the effect of the statute (section 3312) on the validity of the policy contract, there is open for consideration the objects and reach of ...