Cosmopolitan Life Ins. Co. v. Northington

• Decision Date: 08 February 1957
• Citation: 5 McCanless 541,300 S.W.2d 911,201 Tenn. 541
• Parties: , 201 Tenn. 541 COSMOPOLITAN LIFE INSURANCE COMPANY v. Arch E. NORTHINGTON, Commissioner of Insurance and Banking of the State of Tennessee and George F. McCanless, Attorney General of the State of Tennessee.
• Court: Tennessee Supreme Court

Page 911

300 S.W.2d 911

5 McCanless 541, 201 Tenn. 541

COSMOPOLITAN LIFE INSURANCE COMPANY v. Arch E. NORTHINGTON, Commissioner of Insurance and Banking

of the State of Tennessee and George F. McCanless,

Attorney General of the State of Tennessee.

Supreme Court of Tennessee.

Feb. 8, 1957.

Rehearing Denied April 1, 1957.

Taylor, Costen & Taylor, Memphis, Denney & Leftwich, Nashville, for appellant.

Jack Wilson, Asst. Atty. Gen., for appellees.

BURNETT, Justice.

This suit was brought by the Insurance Company under the Declaratory Judgments Act statutes, Sec. 23-1101 et seq., T.C.A., for the purpose of declaring Chapter 195 of the Public Acts of 1955 unconstitutional.

The Chancellor, after the original bill had been amended and supplemented, sustained demurrers and held that the Act was constitutional. This appeal resulted. We have heard argument, had briefs filed, read the authorities and given considerable thought to the matter and are now ready for a determination of the questions involved.

Chapter 195 of the Public Acts of 1955 is entitled or captioned, 'An Act to regulate burial insurance and to provide penalties for violation thereof.' This Act originated in the Senate as Senate Bill No. 336. The Senate Journal for 1955 shows the various steps that were taken to enact this bill into law and among the others on page 597 of the Senate Journal this appears:

'Insurance and Banking

'Mr. Speaker: Your Committee on Insurance and Banking begs leave to report that we have carefully considered and recommend Senate Bill No. 336, for passage.

'Eslick, Chairman.'

In a concise manner the Act attempts to separate life insurance business from undertaking business by requiring life insurance companies to pay beneficiaries under their policies in money instead of in funeral merchandise and services. The Act is thus prohibitory in that it prohibits life insurance companies from contracting with particular undertaking establishments to bury the insureds' of the company.

In the final analysis the bill in this case alleges that this Act is in violation of Article 2, of Section 17 of our Constitution; in violation of 'the provisions of Section 1 of the Fourteenth Amendment of the Constitution of the United States;' it violates 'the provisions of Article 1, Section 8, of the Constitution of the State of Tennessee;' and that the Act is in violation of 'the provisions of Article 11, Section 8, of the Constitution of the State of Tennessee.' We will consider each of these questions separately and attempt to arrive at what we consider a correct answer thereto.

The bill as it finally reaches us alleges among other things that the burial insurance business was a perfectly lawful business and resulted in a great benefit to the public in general; that the business was inoffensive to public safety, health and morals of the citizens of the State; that burial insurance companies and associations are today and were prior to the enactment of the Act in question providing funds for respectable burial for literally thousands of people who for nearly a half a century would have been charges upon the community and would have been buried in Potter's Fields, had it not been for such burial insurance companies; that the citizens of the State have been placed in an advantageous position of being able to contract for their funeral and disposition of their bodies at a fraction of the cost of the services otherwise. It is further alleged that the cost of an $800 funeral, if purchased by a 20 year payment burial insurance policy, is 37cents per week at the age of 35. It is also shown that under the form policy issued by this company, which is attached as exhibit hereto, that if the insured dies within a 20 year period the service costs him the amount paid by his weekly premiums. It is also shown that if he lives past the 20 year payment period that the miximum cost of this $800 funeral for him is only $384.80. It is also shown that the survivors of the insured have the option of either taking the funeral as contracted for in the policy or a cash payment as provided in the policy.

The bill also alleges that prior to the burial insurance business that no one but wealthy people could get a respectable burial and that the general attitude of most undertakers was 'to get every penny that the traffic would bear'; that this fact was brought about by the fact that many undertakers were unable to collect their bills for the services of burying a dead person and that a lot of times a person could not be buried for a number of days because the relatives had to scatter about among themselves and raise the money to bury the person; and that by reason of this insurance taken out by a small weekly premium that they would have a decent burial upon their death.

By Section 1 of the Act life insurance companies and others similarly situated are prohibited from issuing contracts in which they designate any particular person or company to conduct the funeral of the insured, and they are prohibited from entering into any type of contract which otherwise restricts freedom of arrangement for funeral services.

Under Section 2, the companies are prohibited from issuing contracts payable in any thing other than legal tender of the United States. Contracts in effect at the time of the passage of the Act are not affected by this provision.

In Section 3, of the questioned Act such companies as it affects are prohibited from entering into contracts with funeral directors providing that such funeral directors shall conduct the funeral of persons insured by such companies. This section, however, permits the beneficiary under the policy to assign the policy to an undertaker after the death of the insured and after liability has accrued.

By Section 4, the companies covered by this Act are forbidden to enter into any contract to furnish funeral merchandise or services upon the death of any person insured. By Section 5, the Commissioner of Insurance is directed to revoke the license of companies and agents for the violation of the Act and Section 6, makes the violation a misdemeanor.

As indicated above it was first insisted that the Act is in violation of Article 2, Section 17 of our Constitution because the caption indicates that the purpose of the bill is to regulate burial insurance whereas the provisions in the body of the Act (as above indicated) prohibit burial insurance to be paid in merchandise and thus it is said that the body of the bill of broader than the caption. One of the purposes of this Section of the Constitution is to protect the people against surprise legislation. It is said that under this caption or title of the Act there is nothing in the world to indicate the prohibitions which are contained in the body of the Act and it is thus said that since there is this inconsistency between the caption and the body of the Act it is unconstitutional and void for this inconsistency. The argument on this feature is extended to some length but we are satisfied that this contention is erroneous here because we do not believe that there has been any violation of this provision of the Constitution.

'The two-subject clause of the Constitution was intended to prevent a combination in the same act of laws upon wholly different subjects; to avoid the union of incongruous matters in one statute; to secure unity of purpose in legislative enactments.' Bell v. Hart, 143 Tenn. 587, 223 S.W. 996.

The late Chief Justice Green in speaking on the subject in Davis v. Hailey, 143 Tenn. 247, 252, 227 S.W. 1021, 1022, said:

'So far as section 17, article 2, is concerned, if the various provisions of an act are directed toward a common purpose, and that purpose is expressed in the title, it would make no difference if the several provisions of the act involved all powers of the legislature. This section of the Constitution regulates the syntax of statutes. It imposes no restriction upon the powers exerted, nor upon the commingling of such powers, so long as the provisions of the statute are not incongruous and are germane to the subject expressed in the caption.'

And again the Court said in Kizer v. State, 140 Tenn. 582, 589, 205 S.W. 423, 425, that:

'The unity of the subject is to be looked for in the ultimate object of the statute; it cannot with reason be held that each step towards the accomplishment of an end or object should be embodied in a separate act, and so long as the steps are of the same general nature and legitimately parts of one system, end, or object, the act is constitutional.'

The obvious purpose of this Act is that as stated in the title to regulate burial insurance. When we read the Act we find that burial insurance is regulated to the extent of keeping the insurance companies from writing insurance in furnishing a funeral to bury people and employ undertakers to do this burying. It seems to us that there is nothing incongruous or out of line in thus regulating this business. We have comparatively recently discussed similar questions in the case of Elliott v. Fuqua, 185 Tenn. 200, 204 S.W.2d 1016, and Rule v. Town of Etowah, 195 Tenn. 634, 263 S.W.2d 498. We see no reason why this rule as there laid down and as is pointed out from the excerpts above quoted is not applicable here. We pointed out at the outset that this Act, before it had been enacted in the Legislature, had gone through the necessary steps and channels to be enacted into law and among others was the statement as quoted from the Senate Journal that it had been before the insurance and banking committee and had been fully considered by that committee. Thus it is seen that this is not surprise legislation--the Legislature apparently, and even more than presumptively, knew what they were doing.

The Act is not entirely prohibitory because it is noticed that under Section 2, of the Act that contracts in force at the time of the passage of the Act are not affected. Likewise Section 3,...