Continental Mut. Ins. Co. v. Cochrane

• Decision Date: 05 October 1931
• Docket Number: 12513.
• Parties: CONTINENTAL MUT. INS. CO. v. COCHRANE, State Com'r of Insurance.
• Court: Colorado Supreme Court

4 P.2d 308

89 Colo. 462

CONTINENTAL MUT. INS. CO. v. COCHRANE, State Com'r of Insurance.

No. 12513.

Supreme Court of Colorado, En Banc.

October 5, 1931

Error to District Court, City and County of Denver; Henry Bray Judge.

Action for a declaratory judgment by the Continental Mutual Insurance Company against Jackson Cochrane, as State Commissioner of Insurance. To review the judgment, plaintiff brings error.

Reversed and remanded, with directions.

R. H Walker, of Denver, for plaintiff in error.

Robert E. Winbourn, Atty. Gen., and Fred A. Harrison, Asst. Atty Gen., for defendant in error.

MOORE J.

The Continental Mutual Insurance Company, a mutual insurance corporation organized under the laws of Colorado, and authorized to transact business therein, sued Jackson Cochrane, as insurance commissioner of the state of Colorado, in the Denver district court seeking to obtain a declaratory judgment determining an alleged controversy between it and the defendant claimed to arise out of the opposing legal constructions of certain provisions of its charter membership policy, form No. 6.

These controverted provisions are alleged in the complaint as follows:

'In consideration of a Two Hundred Dollar Charter Membership Fee, the payment of which is hereby acknowledged, the Insured is hereby appointed a Charter Member of the Company and, as such, shall be entitled to the Charter Membership Benefits as provided on the third page hereof.'

'If, after the Company shall have received cash for the Charter Membership Fee named herein, this policy shall permanently terminate a Certificate of Membership will be issued to the Insured, if he be living, otherwise to his executors, administrators or assigns, continuing each and every Charter Membership benefit herein mentioned, the same as if this policy had not terminated.'

'Within two years after discontinuing the sale of Charter Membership Policies a meeting of the policyholders of the Company will be called to consider the proposition of converting the Company into a Stock Insurance Company--hereinafter referred to as Stock Company--having the right, among other rights, to issue Health and Accident Insurance; such conversion to be by consolidation with, or reinsurance of any part or all of this Company's business in, such Stock Company. If at such meeting or any subsequent meeting of the policyholders of the Company a sufficient number, as now required by law, of the policyholders shall vote, either in person or by proxy, in favor of such conversion this Company will invest its surplus in the stock of such stock company and the stock so acquired will be distributed ratably to all Charter Membership policyholders, or their executors, administrators or assigns, who have paid their Charter Membership Fees. The amount of stock to be distributed hereunder shall be such a part of all of the stock so acquired as the Charter Membership Fee paid by the Insured be in proportion to the total Charter Membership Fees paid by all Charter Membership policyholders.'

'Until this Company be converted into such Stock Company, as aforesaid, this Company will in February, 1930, and in February of each year thereafter ascertain a Charter Membership Profit Fund which shall be equal to all the Company's net profits made during the calendar year immediately prior to the date the Charter Membership Profit Fund be ascertained and such a part of such Charter Membership Profit Fund shall be payable as a Charter Membership Dividend hereunder as the Charter Membership Fee named herein shall be in proportion to the aggregate Charter Membership Fees under all Charter Membership policies authorized. The number of Charter Membership policies authorized is Five Thousand, each with a Charter Membership Fee of One Hundred Dollars or an aggregate equivalent thereof in other amounts.'

It is further alleged in the complaint that said policies, having been approved by the defendant, were sold by the plaintiff to numerous persons in the state of Colorado during the year 1928; that the amount of charter membership fees contracted to be paid by the purchasers of said policy during the year 1928 were $50,350; that of this amount $7,177.52 was paid by cash by such policyholders, and of said last named amount $4,796.77 was paid by plaintiff as commission to its agents, and that plaintiff received and holds in cash the balance of said cash payments amounting to $2,380.75. Plaintiff further received notes representing the unpaid portion of said charter membership fees.

These facts were incorporated in plaintiff's 1929 annual report filed. The complaint charges that said report shows plaintiff to have a surplus over and above all of its liabilities. It further avers that:

'* * * Defendant, upon the filing of said report advised the plaintiff that in the opinion of the defendant, under the said Act of 1921, and other acts amendatory thereof and supplementary thereto, and under the terms of said policy, plaintiff could not lawfully expend for commissions, or for any other purpose, any part of the moneys received by it as charter membership fees from holders of said policy, but that plaintiff under said laws and said policy is obligated to retain and

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