Equitable Life Assurance Society of United States v. Weil

• Decision Date: 14 October 1912
• Docket Number: 15,428
• Citation: 103 Miss. 186,60 So. 133
• Court: Mississippi Supreme Court
• Parties: EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES v. RUDOLPH WEIL

60 So. 133

103 Miss. 186

EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES v. RUDOLPH WEIL

No. 15,428

Supreme Court of Mississippi

October 14, 1912

APPEAL from the chancery court of Warren county, HON. E. N. THOMAS Chancellor.

Suit by Rudolph Weil against the Equitable Life Assurance Society of the United States. From a decree overruling a demurrer to the bill, defendants appeal.

The facts are fully stated in the opinion of the court.

Decree reversed, and bill dismissed.

Mayes &amp Longstreet, for appellant.

The contract in question is a New York contract. Naturally therefore, we shall most fully, and primarily, consider its effect in the light of the New York authorities:

Uhlman v. New York Life, 109 N.Y. 421, was decided in June, 1888 about four years before this contract was made. The Uhlman policy was on the ten year tontine plan, with a provision for the equitable apportionment amongst all policies in force at the expiration of the ten-year period of all surplus and profits derived from lapsed policies of the same class. The court says:

"The plaintiff claimed that upon the mere proof of the issuing of a policy such as was issued to him, and that it had been kept alive during the ten-year period, and was in full force at the time the dividend was payable, the right arose to demand from the defendant a full and complete accounting of the debit and credit items of what he terms the tontine account with a list of the members entitled to participate therein, and also all the details demanded in his prayer for judgment in the complaint. . . .

"He claims now to maintain the action and to have the right to an accounting upon the ground: 1. That the relation between the plaintiff and defendant is not one solely of contract, but that as to the participation in the profits of this tontine system, that relation is similar to one of trustee, and cestui que trust. . . .

"As to the first we are convinced, after a careful examination of the character of the relations existing between these parties, that it cannot be said that the defendant is in any sense a trustee of any particular fund for the plaintiff, or that it acts as to him and in relation to any such fund in a fiduciary capacity. It has been held that the holder of a policy of insurance even in a mutual company, was in no sense a partner of the corporation which issued the policy, and that the relation between the policy holder and the Company was one of contract, measured by the terms of the policy. See Cohen v. N. Y. Mut. Life Ins. Co., 50 N.Y. 610; People v. Security Life Ins. Co., 78 N.Y. 114."

See also on this point that the company is not a trustee for the assured, whether the policy be ordinary life or tontine, see the following additional authorities: Everson v. Equitable Life, 68 F. 258, affd. U. S. Cir. Ct. App., 71 F. 570; Hunton v. Equitable Life, 45 F. 661; St. John v. American Mutual Life Ins. Co., 13 N.Y. 31; Cohen v. Mutual Life Ins. Co., 50 N.Y. 610; People v. Security Life Ins. Co., 78 N.Y. 114; Taylor v. Charter Oak Life Ins. Co., 9 Daly, 489; affd. 8 Abb. N. C. 331; Bewley v. Equitable Life, 61 How. Pr. 344; Buford v. Equitable Life, 98 N.Y.S. 152; Pierce v. Equitable Life, 145 Mass. 56; Greef v. Equitable Life, 160 N.Y. 19.

In the case of Equitable Life v. Brown, 213 U.S. 25, this question was finally disposed of. The court there said, on page 44-45, that:

"We come, then, to a careful analysis of the other averments in the bill, and it is seen that it is largely founded upon the theory of the existence of a trust in favor of the policy holders, past and present, of the defendant as against the defendant, its officers and stockholders, and it is asked that they, and each of them, be decreed to hold the funds and surplus as they may be ascertained, as trustees for such persons as shall be declared to have interests in such fund and surplus, under the decree of the court to be entered in the case. The complainant alleged that this so-called surplus of the defendant belongs entirely to the policy holders, after making certain deductions, and the defendant holds it, or at any rate a large portion of it, in trust for them, and that such is the proper construction of the charter and the policy; and he also avers that defendant has not distributed it from time to time to the policy holders, as intended by the charter and the policy. The various allegations in regard to waste, mismanagement, and improper investment and reinvestment of the funds of the defendant, and also the alleged fraudulent conduct of the officers guilty of such acts, do not show any inequitable or improper actual distribution of the fund as amongst the policy holders themselves. Although the effect of such conduct has plainly been to prevent the growth of the surplus to greater proportions than it has reached, there is still no averment anywhere in the bill that the amount of the surplus that was, in fact, distributed, was not fairly and equitably distributed to each of the policy holders, according to the amount of his policy, and in strict accordance with the rules and regulations theretofore adopted by the defendant for such distribution, which rules had been accepted by the complainant from time to time as such distribution was made. The fact, as alleged, that the amounts were paid to the complainant and accepted by him on the fraudulent representations of the officers that such amounts were all that were due, has no effect upon the question of the equitable and proper distribution of the fund that was, as a matter of fact, actually distributed. Nor does it give a cause of action of an equitable nature. These averments only show waste and misappropriation of the moneys of the defendant before they ever reached the surplus fund, and before any distribution of it was made. In other words, they aver facts of mismanagement of the funds and wrongdoings by others, upon which a cause of action might arise against the officers and stockholders, or other persons guilty of such acts of wrongdoing and waste, in favor of the company itself. They lay no foundation for the jurisdiction of a court of equity in such a case, unless it appears that the relation between the policy holder and the defendant is that the latter is the trustee of the former by reason of the trust relation between them resulting from the insurance policy. The complainant's contention, as above stated, that there is such a trust in the fund mentioned, has never been regarded as the law in the state of New York" (citing New York cases) "nor anywhere else so far as any case has been cited on the subject."

The only case to the contrary of the position taken by appellant herein, so far as we have discovered, and the case on which apparently this bill is based, is the case of Equitable Life v. Winn, 126 S.W. 153, decided by the court of appeals of Kentucky on March 18, 1910, and after all of the decisions above cited. In that case the Kentucky court departed from and ignored the numerous well-considered cases in which it had been held that the trust relation did not exist. The court does not cite a single case in support of its holding; and did not answer a single opposing case except by its own ipse dixit. It should not be followed. It whistled down the wind the suggestion of the impracticability and objectionableness of the rule it declared, as to which the court of appeals of New York, in the Uhlman case, cited above, said this:

"Upon the theory of the plaintiff, every one of the policy holders of this class has a right of action such as this against the defendant to call it to an account, and to cause it to give in the trial of the action a detailed account of every transaction (proved by reference to or the production of its books, and by the oaths of its officers) which took place from the commencement to the termination of the tontine period in regard to those matters material to be known upon the question of an equitable apportionment of the fund. There would be no necessity for an allegation, much less the slightest, even prima facie, proof of wrongdoing, or that there had been any mistake made by the company in the apportionment made by it. But the mere fact that an individual was the owner of one of those policies in force at the termination of the tontine period would give him a right of action and a right to demand this proof from the defendant.

"The mere statement of such a fact, it seems to us, is conclusive against the existence of any such right. Of course it is not to be supposed that each individual policy holder would avail himself of this right, but the fact that each one might would place the company in the power of unscrupulous parties to take advantage of it for the purpose of endeavoring to levy contribution from it, which it might pay in order to secure freedom to itself from troublesome, expensive, unnecessary and wholly disingenuous investigations (and made in numerous suits) into the affairs of the company and its accounts running through many years. That this should be permitted without an allegation, even on information and belief, that any fraud, mistake, or impropriety in the accounts, or in the manner of their statement, or in the result attained, had been made by the officers or agents of the company, would seem to be intolerable."

No demand at law or equity stated. The bill bases its whole case on the allegation of a trust relation. There is, however, a prayer for general relief; and since the chancellor took jurisdiction by overruling the demurrer, we conceive that our constitutional provision will necessitate a discussion of the question whether there is any cause of action stated.

The bill shows none such. It is a bill of discovery; it contains no such prayer, and relieves de...