Mutual Life Ins. Co. of N. Y. v. Prewitt, Ins. Com.

• Citation: 127 Ky. 399
• Parties: Mutual Life Ins. Co. of N. Y. v. Prewitt, Ins. Com.
• Decision Date: 03 December 1907
• Court: Court of Appeals of Kentucky

Page 399

127 Ky. 399

Mutual Life Ins. Co. of N. Y. v. Prewitt, Ins. Com.

Court of Appeals of Kentucky.

December 3, 1907.

Appeal from Franklin Circuit Court.

R. L. STOUT, Circuit Judge.

From a judgment of dismissal the plaintiff appeals — Reversed.

GRUBBS & GRUBBS for appellant.

JOHN W. RODMAN, HAZELRIGG, CHENAULT & HAZELRIGG of counsel.

N. B. HAYS, Attorney General, and C. H. MORRIS for appellee.

WILLIAM LINDSAY for appellee.

OPINION OF THE COURT BY JUDGE HOBSON — Reversing.

The Mutual Life Insurance Company of New York, having complied with the laws of this State, license to transact business in this State was issued to its agents by the insurance commissioner. After this had been done, and the company had acquired a large business in the State, the Legislature of New York passed an act requiring an election to be held on December 18, 1906, to elect 36 trustees of the company. Under the act the trustees then in office were charged with the duty of naming a ticket, designated the "Administration ticket." Pursuant to this direction, the trustees in office named such a ticket. The law also provided that any number of policy holders not less than 100 might name a ticket. Under this provision two additional tickets were named; one designated the "United Committees ticket," and the other the "Selected Fusion ticket." Biscoe Hindman was the company's manager for Kentucky, under a contract which it had power to terminate on 30 days, notice. The management of the company earnestly supported the Administration ticket. Biscoe Hindman was a candidate for trustee on one of the opposition tickets, and the contest was a bitter one. The opposition to the Administration ticket charged that the affairs of the company had been mismanaged, and urged that the company should be placed in new hands. The trustee in office notified Hindman that he must either retire from the opposition ticket or resign as manager of the company. He refused to do either, and they removed him, and also removed other managers for like cause. Thereupon, Henry Prewitt, the insurance commissioner for this State, addressed to the president of the company the following: "Mt. Sterling, Ky., Oct. 4, 1906. President Charles A. Peabody, Mutual Life Insurance Company: Associated Press dispatches today state that Col. Hindman, of Louisville, Ky., has been dismissed from your service on account of his having been nominated as a candidate on the opposition ticket to the administration ticket. Is this true? Any rule or by-law of your company which permits such action on your part, to say the least, is unjust and unfair to the policy holders of your company, and in spirit un-American and tyrannical. Such a company, managed by men that undertake to coerce employees by such methods, will not be tolerated in this State. You are notified to appear at Frankfort, Ky., on or before October 13th, and give a full account of your actions in reference to this matter. Henry Prewitt, Insurance Commissioner." The president of the company appeared before the commissioner and admitted the facts stated, but insisted that the management had but done its duty, his position being that the first duty of a manager of the company was to solicit people for life insurance; that the basis of life insurance is confidence in the company's solvency and the integrity of its management; that it is impossible for an agent to do his full duty to the company in soliciting life insurance when he is publicly proclaiming that the company is unworthy of confidence, and that the management is corrupt or incapable; that such an agent would do the company incalculable harm; that his utterances would be given peculiar weight by reason of his position, and that no man has the right to insist on wearing the livery of the company for the purpose of using it to destroy public confidence in the management of the company; that he had the right to exercise free speech, but that he should exercise it against the company as an individual and not as its manager. On the other hand, the commissioner concluded that the trustees had no right to remove Hindman for the cause stated. It also appeared that a letter had been sent out to every policy holder asking his support of the Administration ticket, and giving reasons therefor in view of the charges that had been made. The cost of the sending out of these letters amounted to $10,000, and as it is claimed was paid out of the company's funds. The commissioner was proceeding to cancel the license to the company's agents, when this suit was filed enjoining him from so doing. On final hearing the circuit court dissolved the injunction and dismissed the petition, and the insurance company appeals.

The judgment of the commissioner to revoke a license depends upon section 753, Ky. St. 1903. "If he is of the opinion, upon examination or other evidence that a foreign insurance company is in an unsound condition, or if it has failed to comply with the law, or if its officers or agents refuse to submit to examination or to perform any legal obligation in relation thereto, or, if a life insurance company, that its actual funds are less than its liabilities, he shall revoke or suspend all certificates of authority granted to it or its agents." It is manifest from the proof that the insurance company was not in an unsound condition. Its assets were far in excess of its liabilities, and its solvency was undoubted. Whether the $10,000 spent in postage was paid by the company or was a proper expenditure to preserve the good name of the company and maintain the confidence of its policy holders we need not consider, as manifestly from the proof this expenditure affected in no way the solvency of the company. It is...