Lerdall v. Charter Oak Life Ins. Co.

• Decision Date: 02 March 1881
• Citation: 8 N.W. 280,51 Wis. 426
• Parties: LERDALL v. CHARTER OAK LIFE INS. CO.
• Court: Wisconsin Supreme Court

51 Wis. 426

8 N.W. 280

LERDALL

v.CHARTER OAK LIFE INS. CO.

Supreme Court of Wisconsin.

Filed March 2, 1881.

Appeal from circuit court, Dane county.

This is an action to recover the amount appearing due by the terms of an endowment policy of insurance issued by the appellant to the respondent June 3, 1867. The answer by way of counter claim alleged, in effect, the act of incorporation by the legislature of Connecticut, containing a clause authorizing its alteration, amendment, or repeal; that in 1875 it was enacted that if at any time the assets of any company were less than its liabilities, the insurance commissioner might notify the company to cease issuing new policies or the payment of dividends to stock or policy holders, and, by a petition to a court or judge, wind up its affairs. June 14, 1877, the appellant's assets being less than its liabilities, the commissioner presented his petition to wind up the affairs of the company, but the petition was withdrawn, and August 1, 1877, the management of the company was changed by the election of a now board of directors, who were unable to restore the company to a solvent condition, and therefore adopted the scheme of scaling the policies down to 60 per cent. of the amount insured, and issued a circular to the policy-holders asking them to scale or reduce their policies to 60 cents, and then found it difficult to pay even 60 per cent. of the policies as they became due. January 11, 1878, the commissioner again petitioned a judge and obtained an injunction restraining the company from disposing of any of its property except as therein mentioned, which injunction was modified March 18, 1878, so as to permit compromise, payment, and purchase of such obligations as the directors should deem best, at a rate not exceeding 60 per cent. March 15, 1878, a new act was passed changing the corporation from a stock to a mutual company, in case of acceptance by the policy-holders, (a majority of whom did accept,) and provided that all the assets then belonging to or thereafter acquired by said company should be appropriated to and used only for the benefit of the policy-holders, and be equitably distributed among the policy-holders only, who should scale down their policies, as aforesaid, until such time as the amounts surrendered should be re-imbursed to such policy-holders in full, in such equitable manner as might be determined by the directors, and that it should not be necessary for the old corporation to accept the act; that since the passage and acceptance of said act about 94 per cent. of the policy-holders had scaled their policies down to the amount aforesaid, but that the plaintiff had refused so to do; that, had the affairs of the company been wound up by a receiver, the policy-holders would not have received more than 75 per cent.; that since the mutual plan it had been paying 60 per cent. as policies became due, and was unable to pay more; that before this suit it had offered, and was still ready to pay, the respondent 60 per cent., and that it would be inequitable and unconscionable for it, acting as a trustee, to pay the respondent more than his just proportion of the assets. The answer prays that the respondent be enjoined from collecting more than 60 per cent., and that on payment of that amount all further prosecution should be restrained. This answer was stricken out by the circuit judge as frivolous, and the order thereon affirmed at the circuit, and from which last order this appeal is brought.Vilas & Bryant, for respondent.

Sloan, Stevens & Morris and Wilson Graham, for appellant.

CASSODAY, J.

The counsel for the appellant insists that the answer sets up a good defence, or at least so far colorable as to require investigation, and therefore should not have been stricken out as frivolous, within the rule laid down by this court in Cottrill v. Cramer, 40 Wis. 555, and Talman v. Hanrahan, 44 Wis. 133. The answer is voluminous, and it does require some investigation to understand the facts; but, when ascertained, it at once becomes obvious that it tenders no defence to the policy, nor any denial of the amount due thereon. In fact, it consists wholly of a counter claim or cross-action to restrain the plaintiff from taking judgment for any larger amount than certain other policy-holders have consented to accept. It is an attempt to force consent...