Leonard v. American Life & Annuity Co.
| Decision Date | 18 January 1913 |
| Citation | 77 S.E. 41,139 Ga. 274 |
| Parties | LEONARD v. AMERICAN LIFE & ANNUITY CO. |
| Court | Georgia Supreme Court |
Syllabus by the Court.
A mutual life insurance company prepared a form of contract for sale by its agent to certain persons taking insurance, which named the insured as "local inspector," and stated that he agreed, upon written request, to furnish information on certain subjects, which he might be able to obtain without expense to himself. It recited that, in consideration thereof, the company agreed to create a fund equal to $1.25 for each $1,000 of insurance in force in Georgia, and also 25 cents for each $1,000 of insurance in force in the United States, Georgia excepted, which should be written in each and every year for 10 years after the 1st day of September, 1911 and all renewals thereof for 20 years succeeding that date. The total fund was to be divided into 1,000 equal shares, and each "local inspector" who should pay to the company the annual premium on $5,000 of insurance and perform the other duties required by the contract would be entitled to one share therein. Until contracts to the number of 1,000 should be sold, the amount to be paid to each share would be proportioned to the number issued. Held, that this was a special discriminatory contract, prohibited by the twentieth section of the act of August 19, 1912 (Acts 1912 p. 129).
The prohibition contained in the act mentioned against the selling or offering for sale of special contracts, or any other form of policy or contract whereby any discrimination is allowed to any particular person, is not, as a whole violative of the clause contained in the state Constitution or that in the fourteenth amendment of the federal Constitution, which declares that no person shall be deprived of life, liberty, or property without due process of law.
(a) This is true although, prior to the passage of the act, an insurance company may have appointed an agent in a certain territory for a period of two years, with authority to canvass for insurance and to secure and tender to the company such special contracts.
The twentieth section of the act of 1912 (Acts 1912, p. 129) is not unconstitutional as being violative of the clause of the Constitution of the state which declares that laws of a general nature shall have uniform operation throughout the state, and no special law shall be enacted in any case for which provision has been made by an existing general law; and that no general law affecting private rights shall be varied in any particular case by special legislation.
The section of the act mentioned is not invalid on the ground that it contravenes the clause of the Constitution of the state which declares that protection to person and property is the paramount duty of government, and shall be impartial and complete.
After the twentieth section of the act (Acts 1912, p. 129) had prohibited contracting for rebates and the sale or offering for sale of special discriminatory insurance contracts, a clause which declared that, until January 1, 1915, "the provisions of this section shall not apply to any life insurance company now in process of formation under commission from the Secretary of State, which will do a nonparticipating business only," was an arbitrary discrimination in favor of the company or companies thus sought to be temporarily exempted, and was violative of the clause of the fourteenth amendment of the Constitution of the United States, which declares that no state shall deny to any person within its jurisdiction the equal protection of the laws.
The unconstitutional and invalid provision is not so essential and inseparable a part of the general legislative purpose that the entire twentieth section of the act (Acts 1912, p. 129) must fall within it. But such clause can be stricken from the section, and the remainder be left to stand.
There was no error in refusing the injunction prayed, on any of the grounds on which it was sought.
Error from Superior Court, Fulton County; Geo. L. Bell, Judge.
Petition by F. W. Leonard against the American Life & Annuity Company. Judgment for defendant, and plaintiff brings error. Affirmed.
Payne & Jones, of Atlanta, for plaintiff in error.
Smith & Hastings, of Atlanta (Walter McElreath, of Atlanta, on behalf of Atlantic States Life Ins. Co.), for defendant in error.
F. W. Leonard filed his equitable petition against the American Life & Annuity Company, seeking to enjoin the defendant "from breaching" its contract with him, and refusing to accept applications for certain special insurance contracts of the character described in the first division of the opinion. He alleged that the damages would be irreparable. No point was made as to the necessity for equitable relief, but the case was made to turn on two questions: (1) Did the contract which plaintiff claimed the right to sell fall within the prohibition contained in the twentieth section of the act of August 19, 1912 (Acts 1912, pp. 119, 129)? (2) If so, is that section unconstitutional on any of the grounds of attack made upon it, and which will be found in the opinion? The presiding judge refused an injunction, and the plaintiff excepted.
1. The twentieth section of the act of August 19, 1912 (Acts 1912, pp. 119, 129), regulating insurance, prohibits contracting for rebates of premiums and the sale of "any special contract, board contract, or any other form of policy or contract whereby any discrimination in any form or character is allowed to any particular person or persons; provided, however, that until the first day of January, 1915, the provisions of this section shall not apply to any life insurance company now in the process of formation under commission from the Secretary of State, which will do a nonparticipating business only." The contract which the plaintiff contends that he has a right to sell clearly falls within this prohibition. By its terms a fund is to be provided for the benefit of the holders of contracts of this character, which is not for the benefit of other policy holders in this company. It makes a discrimination. Nominally the policy holder who takes this special contract is called a "local inspector," and it is recited that he agrees to furnish to the company certain information and suggestions, on written request. But he receives the benefit of a division of the fund provided, regardless of whether he renders any service or not, and irrespective of the extent thereof. The plaintiff does not claim that the company came under the exemption contained in that section.
2. The twentieth section of the act of 1912 is attacked as unconstitutional on several grounds. It is argued that the plaintiff had a contract with the defendant to act as its agent for a term of two years, and was authorized to sell these special contracts, and that the act was violative of the clauses of the state and federal Constitutions which declare that no person shall be deprived of life, liberty, or property without due process of law. It was not alleged that the contract between the plaintiff and the company expressly provided that he should have the right to sell these contracts. But whether it did or not, this contention as to the entire section is unsound. If it were otherwise, the police power of the state could be practically destroyed by the simple device of making a contract to do a certain thing while a bill was on its passage, the purpose of which was to prohibit the doing of such thing. Regulation of insurance business is unquestionably within the power of the Legislature. Atlantic Coast Line R. Co. v. State, 135 Ga. 545, 69 S.E. 725, 32 L.R.A. (N. S.) 20; Washington v. Atlantic Coast Line R. Co., 136 Ga. 638, 71 S.E. 1066, 38 L.R.A. (N. S.) 867; State v. W. & A. R. Co., 138 Ga. 835, 76 S.E. 577; L. & N. R. Co. v. Mottley, 219 U.S. 467, 31 S.Ct. 265, 55 L.Ed. 297, 34 L.R.A. (N. S.) 671; Orient Ins. Co. v. Daggs, 172 U.S. 557, 19 S.Ct. 281, 43 L.Ed. 552; Chicago Life Ins. Co. v. Needles, 113 U.S. 574, 5 S.Ct. 681, 28 L.Ed. 1084.
3. The section of the act under consideration is further attacked on the ground that it violates the clause of the state Constitution which declares that laws of a general nature shall have uniform operation throughout the state, and no special law shall be enacted in any case for which provision has been made by an existing general law; and that no general law affecting private rights shall be varied in any particular case by special legislation. Civil Code, § 6391. The act is not subject to this objection. It is not a case of a pre-existing general law sought to be varied by a special law. All of the provisions are in the same act. Whether they are subject to attack on the ground that they seek to make an arbitrary discrimination is another question.
4. There is also no merit in the contention that the section of the act violates the provision of the state Constitution which declares that protection to person and property is the...
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