Clark v. Equitable Life Assurance Society

• Decision Date: 11 April 1898
• Citation: 76 Miss. 22,23 So. 453
• Court: Mississippi Supreme Court
• Parties: ELIZA J. CLARK v. EQUITABLE LIFE ASSURANCE SOCIETY

23 So. 453

76 Miss. 22

ELIZA J. CLARK v. EQUITABLE LIFE ASSURANCE SOCIETY

Supreme Court of Mississippi

April 11, 1898

March 1898

FROM the chancery court, second district, of Coahoma county HON A. H. LONGINO, Chancellor.

The husband of Mrs. Clark, the appellant, complainant in the court below, nearly thirty years ago took out a policy of insurance in the Equitable Life Assurance Society, the appellee, for the sum of $ 10, 000, and before his death he had paid the company nearly that sum. By the application for insurance the husband requested that he be put in what is called the southern class of policy holders, and the policy issued recites that he was put in that class at his request and the policy on its face discloses that he, as a policy holder, was to participate in profits. The extent of this participation in profits to the holders of this class, is stated in the policy itself, to be determined in this way The participation was to be in the proportion that the rate of mortality of the southern class bore to the rate of mortality of the others assured by the society, but not in the southern class.

When Mr. Clark died, Mrs. Clark applied for the fruits of the policy, and requested the company to notify her what the policy was then worth. She knew it was worth $ 10, 000, as the policy on its face stipulated for payment of that sum but, under the participation in profits clause, she expected a great deal more. She received a letter from the company stating there were no profits, and nothing in which to participate. She had further correspondence on the subject, but with no satisfactory results. At length she was led to believe that the representations of the company were true, and so she surrendered the policy and received $ 10, 000 in full payment of the company's obligation.

Thereafter she filed her bill in this cause, seeking to have cancellation of the receipt in full given by her to the company on the surrender of the policy, on the ground that she was misled by false statements made to her by the company at the time of the surrender; statements untrue, as she avers in the bill, both in law and fact. She seeks, by this cancellation, to be put in position as if she had not surrendered the policy and receipted the company in full payment of the obligation. She prays an accounting with the company, by which she may see what they owe her. The bill avers that complainant does not know what the company owes her, but she avers that it owes her a considerable sum; that she has not the data with which to ascertain the true amount. Complainant seeks an accounting, averring that in determining she had no right to participation in profits, the company had proceeded along erroneous lines, it having based its calculations on the theory that she was entitled to participate only in profits made in the business of the southern class, whereas, according to the terms of the policy, she was entitled to participate in any profits made by the company generally, limited only by the proportion that the rate of mortality of the southern class bears to the rate of all others assured by the society.

The company answered, and denied any overreaching, misrepresentations or untrue statements, and affirmed that it did not proceed upon erroneous lines in arriving at the conclusion that the appellant was not entitled to participation in profits, alleging, as a matter of fact, that there were no profits to be apportioned under the policy. Much evidence was taken on the issues thus presented. Notwithstanding the fact that the defendant answered fully, and elaborate depositions were taken, and exceptions were filed to the depositions, the case was submitted, by consent of the parties, on the issues of law raised by a demurrer to the bill, which demurrer was incorporated in the answer. The court below sustained the demurrer, and dismissed the suit. Complainant appealed to the supreme court.

Reversed and remanded.

J. W. Cutrer, for appellant.

The contract of insurance provided that the appellant should be entitled to receive, on the maturing of the loss, upon her claim the sum of ten thousand dollars, augmented by participation in all profits accrued to the appellee during the term of the natural life of John Clark. The contract, as written, gives appellant a fixed and vested right to receive ten thousand dollars, and to participate in the profits of the company during the term the policy should be in force, as other policy holders were entitled to participate therein.

If it be that this right of participation in profits was limited by the policy being placed in the southern class, nevertheless, the right to participate in profits existed, and the policy holder being entitled to such dividends as should be found due, regard being had to the mortality experienced in the southern class, as compared to the mortality experienced among the rest of the insured, So that, at all events, the right to a proportion of profits existed, and the extent of such profits is to be fixed in a certain way, determinable, if need be, by resort to and adjudication by the courts. There is nowhere in the contract a stipulation that the appellee shall exercise the exclusive and final right to determine what part of its profits it shall apportion to policies reading like the policy held by appellant, and on what basis such apportionment shall be made. If this was to be the contract, it should plainly have been so expressed. It did not so state the contract. On the contrary, the contract gave the right to participate, and the manifest meaning of the words used cannot be disregarded. Miss. Mut. Ins. Co. v. Ingram, 34 Miss. 215.

This policy does not read as do the tontine policies now generally in force, where the company is vested, in terms, with the right equitably to apportion its profits among its policy holders; but, even in this class, where the right is given the insurer to make equitable apportionment of its dividends and profits, the courts have jurisdiction to correct the action of insurance companies about the making of such apportionment. It may be that where the apportionment is arrived at upon correct principles, the action of the company would be prima facie correct, but where it is alleged that the apportionment is not just and equitable, as a matter of fact, and as, also, in this case, that the apportionment was made entirely on mistaken principles, and in disregard of the legal rights of appellant, in assuming a false basis for making the apportionment, a court of equity will interfere and see to it that the insurer does equity and renders a correct account. The allegations of the bill are, that the apportionment was erroneously made, as a matter of fact, and also, that the apportionment was based upon erroneous principles. These allegations are all sufficient to invoke the aid of a court of equity to see that the account is correctly stated.

The claim is not a claim for dividends per se, but it is the claim of a creditor of a corporation, demanding that the debtor surrender what it contracted to surrender--that is to say, that it account for and pay to the creditor his certain proportion of a fund made up, inter alia, of dividends, surplus, extra premiums charged, lapses, and all the other multitudinous sources of revenue, from which appellee has accumulated its vast reserve, and make its enormous profits. The amount due is a certain proportion of the profits owing to appellant, which it is the plain duty of appellee to pay. In case of a failure to pay the correct amount due, or to state the amount due upon correct principles, a cause of action arises; and, therefore, the matters stated in the bill of complaint do show a cause of action cognizable by the courts. Uhlman v. New York Life Ins. Co., 109 N.Y. 421, 432; Pierce v. Equitable Life Assurance Society, 145 Mass. 56, s.c. 12 N.E. 858; 17 N.E. 363.

It is sad by appellee that, conceding appellant's bill states a cause of action, the cause of action so stated is one which may be tried and determined at law; in other words, that a court of chancery has no jurisdiction to hear and determine the matters presented by the bill of complaint as grounds for relief, but that appellant should have sued at law. The grounds for maintaining the jurisdiction of a court of equity, stated in this bill, are, that by reason of improper representations, a contract of assurance was placed for the benefit of appellant different from that which the parties had contracted for, and the contract as made, and not as written, should be enforced; that appellant is entitled to certain profits, which can be ascertained only by an accounting, which said profits appellee has heretofore attempted to state, but has stated upon erroneous principles that by falsely representing that it had, proceeding upon correct principles, stated the profits to be due upon appellant's policy, and had found no profits to be due appellant thereon, appellee had secured the possession of and canceled the policy of appellant, which cancellation appellant seeks, by her bill, to have set aside; and that, finally, under the constitution of Mississippi, courts of chancery have jurisdiction of matters of account which are complicated; and even if not so, and if jurisdiction be not properly reposed in the chancery court, it was error for the chancellor to have dismissed the bill for such reasons, but on such a state of facts, the suit should have been transferred to the circuit court, to be there proceeded with as provided by section 162 and the constitution of 1890. So that, so far as the existence of grounds for a resort to the jurisdiction of a court of equity may be concerned, they seem ample, and, if not ample, the court should have ordered the cause...