Carroll v. Equitable Life Assur. Soc. of United States, 9041.

• Decision Date: 30 November 1934
• Docket Number: No. 9041.,9041.
• Citation: 9 F. Supp. 223
• Parties: CARROLL v. EQUITABLE LIFE ASSUR. SOC. OF UNITED STATES.
• Court: U.S. District Court — Western District of Missouri

9 F. Supp. 223

CARROLL v. EQUITABLE LIFE ASSUR. SOC. OF UNITED STATES.

No. 9041.

District Court, W. D. Missouri, W. D.

November 30, 1934.

Edward E. Naber and S. M. Carmean, both of Kansas City, Mo., for plaintiff.

W. C. Michaels (of Meservey, Michaels, Blackmar, Newkirk & Eager), of Kansas City, Mo., for defendant.

REEVES, District Judge.

Upon petition and answer both parties have moved for judgment on the pleadings. The allegations of the pleadings must therefore be accepted as true.

The plaintiff is the executrix of the estate of May Massey, deceased. The decedent in her lifetime purchased several annuity contracts from the defendant. She paid an aggregate of $4,900 for said contracts. By the terms of said several annuity contracts, the decedent was to receive specified annual payments from the defendant. Such payments were to continue throughout her life. A single payment was made on one of the annuities and the annuitant died before the others became due. Plaintiff sues for money had and received, but makes the contention that the contracts were in violation of the laws of Missouri, and, being illegal, the executrix is entitled to recover the full amount paid. The alleged illegality of the contracts is predicated upon the theory that the defendant is a mutual insurance company and that it was forbidden to issue insurance contracts save only upon the mutual plan. It is contended that by the mutual plan, the policyholders were entitled to participate in the surplus of the company. The pleadings show that the company earned a large surplus during the period covered by these several annuity contracts. Plaintiff's theory is that the contracts were in fact insurance policies.

1. Section 5690, R. S. Mo. 1929 Mo. St. Ann. § 5690, p. 4350, specifically sets out the purposes for which insurance companies may be formed in the state of Missouri. These objects are alike applicable to stock companies and mutual companies. The first part of the section provides that they may be formed "for the purpose of making insurance upon the lives of individuals, and every assurance pertaining thereto or connected therewith."

The foregoing expresses the extent to which such companies might issue insurance contracts. However, insurance companies may be formed for the following additional purpose: "and to grant, purchase and dispose of annuities and endowments of every kind and description whatsoever."

The statute does not treat the latter as insurance, but, nevertheless, permits the transaction of that character of business.

2. The pleadings showed that the charter powers of the defendant were broad enough to enable it to write insurance on the lives of individuals and also to grant annuities.

3. An examination of the authorities does not warrant the conclusion that an annuity contract is an insurance contract. It may be defined as "a yearly payment of a certain sum of money granted to another in fee for life or for years, and charging the person of the grantor only." 2 R. C. L., § 1, p. 2. The granting of such contracts is not limited to insurance companies.

The granting of annuity contracts is in the nature of an investment and has very little to do with mortality tables. The only case where a mortality table would be involved is where the annuity is granted for the life...