Mutual Bank & Trust Co. v. Shaffner, 42739

• Decision Date: 14 April 1952
• Docket Number: No. 42739,No. 1,42739,1
• Citation: 248 S.W.2d 585
• Court: Missouri Supreme Court
• Parties: MUTUAL BANK & TRUST CO. et al. v. SHAFFNER et al

Page 585

248 S.W.2d 585

MUTUAL BANK & TRUST CO. et al. v. SHAFFNER et al.

No. 42739.

Supreme Court of Missouri, Division No. 1.

April 14, 1952.

Rehearing Denied May 12, 1952.

Jones, Hocker, Gladney & Grand, James C. Jones, Jr., Lon Hocker and Vincent L. Boisaubin, all of St. Louis, for appellants.

J. E. Taylor, Atty. Gen., George W. Crowley and Julian L. O'Malley, Asst. Attys. Gen., for respondents.

LOZIER, Commissioner.

Plaintiff-appellant bank and trust company (herein called the bank) and plaintiff-appellant insurance company (herein called the insurer), both Missouri corporations, filed a declaratory judgment action against defendant-respondent State Finance Commissioner (herein called the Commissioner) and the State Superintendent of Insurance (herein called the Superintendent). Defendants answered. The case was submitted on the pleadings. The trial court found for defendants. Plaintiffs appealed.

As both defendants are 'state officers,' the appeal is properly here. Art. V, Sec. 3, 1945 Const., 2 V.A.M.S., p. 31. See In re Wellston Trust Co., Mo.Sup., 131 S.W.2d 720; Klaber v. O'Malley, Mo.Sup., 90 S.W.2d 396.

The cause involves the validity of a proposed arrangement (herein called the plan) whereby the insurer is to insure under a group policy, for specified lengths of time and under certain conditions, the lives of the bank's depositors making deposits of a certain type. The petition outlined the plan. Defendants' answer challenged its legality. The trial court held that the plan: Was not within the bank's express powers and was 'not necessary or rightly incident to the exercise of' its express powers, and involved employment of its moneys in trade or commerce in violation of Secs. 362.200 and 363.270. (This and all subsequent statutory references are to both RSMo 1949 and V.A.M.S. unless otherwise indicated.) Plaintiffs were enjoined from putting the plan into effect.

Essentially, the plan consists of three contracts. The first is one between the bank and the insurer. Its terms are contrained in a 'Group Savings Certificate Policy.' The insurer agrees that: subject to the terms of 'this policy and the representations made in each application made to [the bank] for the purchase of an Insured Life Savings Certificate which shall be accepted by the bank, to pay immediately upon receipt of due proof of the death of the Purchaser [depositor] prior to the completion of all of his monthly deposits, an amount of insurance equal to the difference between the maturity value of the certificate, exclusive of interest, and the amount deposited by the Purchaser up to the date of his death. The amount of insurance effective on the life of a Purchaser [not exceeding $2,000, is] an amount equal to the difference between the maturity value of the Certificate, exclusive of interest, and the amount deposited in the Insured Life Savings Account at the time of the Purchaser's death. In the event of the death of the depositor before interest at the rate of ___% per year upon the deposits to such account shall equal or exceed the cost of insurance upon the life of such depositor, the amount of insurance shall be increased by such difference.' The insurance commences when the bank issues its Certificate and continues 'month to month as long as the bank pays the premium for the insurance on the lives of the Purchasers insured under this policy. Insurance hereunder extends to those individuals who have purchased from the bank Insured Life Savings Certificates while in good health and who have kept their Certificates in force by making the required deposits and who have not withdrawn any funds from said account before its maturity.' The policy does not cover Purchasers who, at the time of purchase, are under 1 or over 50 years of age. The bank agrees not to knowingly issue a Certificate to any applicant in ill health, 'and any such insurance shall be void.'

The bank is to furnish the insurer monthly reports of the total of the maturity values of all Certificates in force, less the total amounts of the accounts covered by such Certificates. The basic monthly premium rate, 83.3cents per $1,000 of insurance is adjustable downward annually according to mortality savings actually achieved; methods of computing the adjusted rates are set out. The policy is renewable annually by continuance of premium payments. Either the bank or the insurer may, upon 30 days notice, discontinue insurance under the policy as to subsequent Purchasers.

The second contract is one between the bank and the depositor. Its terms are set out in the depositor's Application and the bank's Certificate. The depositor may purchase for himself and as 'trustee' for a named 'beneficiary' or for himself and a named co-owner. He 'makes application to purchase' an 'Insured Life Saving Account' of a 'Certificate maturity value' of $_____, 'plus accrued interest, which shall be purchased by' a specified number of consecutive monthly installments in stated amounts. The form includes: 'I hereby certify and represent that I am in good health and that I have not had medical or surgical treatment in the last two years for cancer, tuberculosis, circulatory or heart condition, kidney trouble, nervous disorder, except as follows: _____. I request the bank to include me as an insured on my life in an amount equal to the difference between the maturity value of the Certificate hereby applied for, exclusive of interest, and the aggregate amount of the deposit during each month that said Certificate remains in force,' but not exceeding $2,000 under all of the depositor's Insured Life Savings Accounts. There is a waiver of nondisclosure of physician-patient communications.

The bank then issues the 'Certificate For Insured Life Savings Account,' certifying that the depositor 'has purchased' the Certificate with a fixed maturity value, 'plus interest on the deposits made by the Purchaser.' The Certificate matures upon the making of the final deposit 'or upon receipt of due proof of the death of the Purchaser, whichever first occurs.' Receipt of the initial monthly deposit is acknowledged. Monthly deposits are due on the first of the month. 'This Certificate shall be void if any monthly deposit is not made within 30 days of the due date thereof, or in the event of any withdrawal from the Insured Life Savings Account. In such event, this account shall be converted into an ordinary savings account, less a service charge equal to 1% of the maturity value of this Certificate. The bank may require, at its option, 60 days notice in writing of intention to make any withdrawal.' Upon maturity, the Certificate's value is the total amount of the deposits, plus any life insurance necessary to complete its maturity value. This maturity value is payable 'to the Purchaser, if living, by transferring these funds into a regular savings account in the name of the abovenamed Purchaser and beneficiary or joint owner, or if Purchaser is dead, in the name of the above-named beneficiary or joint owner.

'The undersigned bank has secured from the [insurer] a policy of life insurance which insures the life of the above-named Purchaser in an amount equal to the difference between the maturity value of this Certificate, exclusive of interest, and the aggregate amount of the deposit during each month this Certificate remains in force. This insurance is issued in consideration of the statements and representations of the Purchaser in his written application for the Insured Life Savings Certificate. In the event of a material misrepresentation therein, the insurance feature of this Certificate shall be void.

'Maximum insurance on the life of any Purchaser under all Life Savings Accounts issued by the [insurer] shall not exceed $2,000. If the maturity value of all such accounts calls for more aggregate insurance than $2,000, the maturity value of the later accounts at death shall be reduced to the amount of deposits, interest and insurance remaining available within the maximum aggregate of $2,000.

'In case the [insurer] should disclaim any liability for the insurance on the life of the above-named Purchaser or should become insolvent, the liability of the bank hereunder is limited to the deposits, plus interest, less the service charge, and the bank will assign to the beneficiary or joint owner of the account its claim against the [insurer].'

The Policy, the Application and the Certificate constitute the third contract--that between the depositor and the insurer. Adair v. General American Life Ins. Co., Mo.App., 124 S.W.2d 657, 659.

Has the bank power to effectuate the plan? Both parties cite and rely upon: Sec. 5, Art. XI, 1945 Const., 2 V.A.M.S., p. 538, prohibiting a corporation from engaging in business 'other than that expressly authorized in its charter or by law'; and Sec. 362.105, authorizing banks 'to conduct the business of receiving money on deposit', with or without interest. Plaintiffs insist and defendants deny that authorization for the plan is implied in this expressly granted power.

The parties agree that 'the settled rule is that a corporation possesses only such powers as are expressed or fairly implied in the statute by or under which it is created'. Hanlon Millinery Co. v. Mississippi Valley Trust Co., 251 Mo. 553, 158 S.W. 359, 363. They also agree that implied powers 'are defined to be those possessed by a corporation not indispenably necessary to carry into effect others expressly granted, and comprise all that are appropriate, convenient, and suitable for that purpose, including as an incidental right a reasonable choice of the means to be employed in putting into practical effect this class of powers.' State ex inf. Harvey v. Missouri Athletic Club, 261 Mo. 576, 170 S.W. 904, 909, L.R.A.1915C, 876. See also: 9 C.J.S., Banks and Banking, Sec. 160, page 343; Fletcher, Cyclopedia Corporations, Perm. Ed., Vol. 6, Sec. 2538, p. 384; Malone v. Republic National Bank,...