"(1) On October 26. 1872, the defendant issued to John S. Follansbee, of Bridgeport, Connecticut, a policy of insurance under the seal of the defendant, on his life, for the benefit of his wife, Eunice R. Follansbee, for a sum of money exceeding one thousand dollars.
"(2) The plaintiffs are unable to state the amount of said policy, or to annex a copy of the same to this count, because, as is hereafter stated, said policy has been delivered to the defendant, and is now in its possession.
"(3) Said policy of insurance was duly signed, executed by the proper officers of the defendant, and was in all respects a valid and binding contract between the defendant and said John S. Follansbee and Eunice R. Follansbee.
"(4) Among other promises and agreements contained in said policy, there was the following agreement, to wit: 'This policy is issued and accepted by the assured upon the following express conditions and agreements: At the request of the assured this policy is issued upon the reserve dividend plan; and the said company agrees that, should the premiums be paid as herein stipulated for ten full years from the date hereof, and that should the life insured survive said period of ten full years, said company will pay to the designee of this policy at the expiration of said period of ten years its equitable proportion of the reserve dividend fund in cash, and the same to be receipted for to said company.'
"(5) Said reserve dividend plan, referred to in the preceding paragraph, is set forth and expressed on pages ten and eleven of a certain book entitled 'Key to Reserve Dividend Plan,' which book is hereto annexed, and marked 'Exhibit A.' Said reserve dividend plan, as therein stated, was originated by one William P. Stewart, who was the sometime defendant's actuary prior to the issuing of any of the policies stated id this complaint, and in the form as stated on pages ten and eleven of this book had been adopted by the defendant prior to the issue of any of such policies, which plan, as expressed by said Stewart, and adopted by the defendant, was as follows: 'All who take policies of any denomination or character within the year form a class, which is treated by the company as a distinct body for ten years. Every year forms a separate class, and all are known by the year in which they terminate; as the class of 1880, 1881, etc. Policies issued in this way. like all other policies, are paid out of the general fund of the company when becoming a claim by death or limitation, and not, as sometimes supposed, out of the class fund. The company, in issuing any policy, guaranty two things: the amount insured, according to its terms, and an equitable share in all the surplus and earnings. The amount insured they pay after it becomes a claim. The surplus they divide by way of a cash dividend at the end of every year. The reserve policies, however, in forming a class, stipulate among themselves that all the dividends allowed upon their policies for ten years shall be retained by the company, invested at the average rate of interest obtained upon their investments, and finally divided at the close of the ten years among the living members only. It is further stipulated that, in case any member fails to keep his policy in force for ten years, he shall forfeit his reserve for the benefit of his class, which sum shall be kept at interest by the company, and divided in like manner. It follows, then, that for every class formed a fund will accumulate from five sources, as follows: First, from the ordinary dividends as allowed by the company, accumulated upon existing policies; second, from the accumulated dividends bequeathed to the class by dying members; third, from the accumulated dividends forfeited to the class by retiring members; fourth, from the reserves of all policies lapsing before the close of the class; fifth, from the addition of compound interest. It follows, then, that the existing members at the close of the class will get, besides receiving all the ordinary dividends earned by their policies, more or less from all the last four sources. It is plain, therefore, that the dividend to the existing member at the close of the class must be considerably larger than the dividend accumulating in the ordinary way. Substantially what may be expected in reason, this work is designed to show. It will be well to remember that policies lapsing in one class do not benefit any other; that the expenses and death claims are paid out of the general fund of the company, and not charged to the class fund; that the lapses among ordinary policies benefit all policies alike; a partial indemnity to the reserve class for their greater vitality; that each class secures the investment of its funds at the best rate of interest available with safety, without any charge for
investing it, as the expenses of the company are borne in an equitable manner by the policy holders in general; that the dividend at the close of the class is paid in cash, and no reversionary additions allowed; that at the close of one class, unless the policy holder signifies his desire to enter the new class then forming, he will become as one of the ordinary members of the company, receiving the dividend at end of every year, and a surrender value in case of lapse.'
"(5 1/2) Between 1869 and 1872 the foregoing plan became well known to the public as the reserve dividend plan of insurance, and was known to the public by the name of the reserve dividend plan. In August, 1872, the defendant, under its corporate seal, agreed with William P. Stewart that the defendant would use the plan for five ensuing years, and at once thereafter the defendant adopted and used it, and announced it to the public as one of the distinctive plans of defendant, owned and used by it alone. In September, 1872, defendant, by writing under its corporate seal, appointed Josiah N. Bacon, of New Haven, its general 'agent to canvass and procure applications for insurance of the lives of individuals, and to appoint and educate sub-agents; and in September, 1872, the defendant, in writing, under its corporate seal, appointed Sherwood Sterling its general agent to canvass and procure applications for insurance on lives of individuals, and to appoint and educate subagents. Thereafter, and in September, 1872, the defendant, by John R. Hegeman, vice president of defendant, and William P. Stewart, actuary of defendant, delivered to Josiah X. Bacon, and also delivered to Sherwood Sterling, copies of the said book entitled 'Key to Reserve Dividend Plan,' and verbally instructed each of them to obtain insurance upon that plan, and to use those books to explain the said plan to applicants for insurance. Pursuant to these instructions, said Josiah N. Bacon and said Sherwood Sterling represented and explained to each of the persons mentioned in the complaint that the reserve dividend plan was the plan as stated in the fifth paragraph of the complaint, and exhibited to them copies of the said 'Key to the Reserve Dividend Plan,' and read to such persons pages ten and eleven of said book, and declared to such persons that the book described the reserve dividend plan practiced by the defendant. Whereupon the persons mentioned in the complaint, upon the faith of the book so exhibited to them, and the declarations of Bacon and Sterling that it represented the reserve dividend plan of the defendant, and of their representations and explanations as to said reserve dividend plan, accepted said policies from the defendant, and paid premiums thereon for ten years to defendant, without notice of any other reserve dividend plan than as above stated.
"(6) The plaintiffs state upon information and belief that in the year 1872 many other persons, to wit, ten thousand, took out policies of life insurance on their respective lives, in varying amounts, from the defendant, under said reserve dividend plan. The policies in each case contained the agreement set forth in paragraph 4 of this count; and all such policy holders formed a class known as the 'class of 1882.'
"(7) The defendant has upon its books the names of all the policy holders insured by the defendant on the reserve dividend plan, and the several amounts of said policies, and the payments thereon; and the plaintiffs know of but a few of the names of said policy holders, which are set forth in this complaint, and do not know the amounts for which said policies were issued, nor the payments made thereon.
"(8) Many of the members of said class of said policy holders allowed their policies to lapse during the said class period of ten years by reason of the nonperformance on their part of the stipulations of said policies, but after payment of one or several premiums upon their respective policies. A few of said policy holders died before the expiration of said period of ten years, and a few of said policy holders, including said John S. Follansbee and Eunice R. Follansbee, maintained and kept their policies in force during the whole of the period of said ten years.
"(9) The books of the defendant will show who of said policy holders died, or allowed their policies to lapse, or kept them in force, during said period of ten years.
"(10)...
