Rideout v. Mars

• Citation: 99 Miss. 199,54 So. 801
• Decision Date: 10 April 1911
• Docket Number: 14,700
• Court: Mississippi Supreme Court
• Parties: W. T. RIDEOUT, ADMINISTRATOR, v. W. H. MARS

54 So. 801

99 Miss. 199

W. T. RIDEOUT, ADMINISTRATOR, v. W. H. MARS

No. 14,700

Supreme Court of Mississippi

April 10, 1911

APPEAL from the chancery court of Neshoba county, HON. J. F. MCCOOL Chancellor.

Suit by W. T. Rideout, as administrator of J. H. Rideout, deceased against W. H. Mars, to recover the balance of first insurance premium on life insurance policy, written by deceased as agent, for the Union Central Life Insurance Company. From a decree for defendant, complainants appeal.

The facts are fully stated in the opinion of the court.

Case reversed and remanded.

Flowers Alexander & Whitfield, for appellant.

So then the only question in this case is whether the administrator of the insurance agent is precluded from making his claim in the courts to recover the balance of this premium when there was an agreement that it should not be paid, such agreement being in violation of law.

Counsel cite two cases. They quote from Bohn v. Lowery, 77 Miss. 426. In that case a physician, who had no license to practice medicine was suing upon an account for professional services rendered. It was unlawful for one to practice medicine without license. This man had practiced medicine without license so to do and was undertaking to collect compensation for his services.

In Woodson v. Hopkins, 85 Miss. 171, the second case cited by counsel, there was being carried on a business in which both parties to the suit had been interested which was declared by the court to be an unconscionable business. It was held to be against public policy. One of the parties had appealed to the courts to make the other party account for profits received in the conduct of the business.

In both the above cases the well recognized rule was followed that "a contract founded upon illegal consideration or when made against public policy is void, and no action can be maintained thereon." But in both these cases the claim which was attempted to be prosecuted grew out of an illegal contract and was based upon an illegal contract. The party making the claim was entitled to the thing he was asking for if at all because the other party had promised to pay it under a contract which was held to be void.

In the case at bar, however, no suit is brought upon an illegal contract. We deny that there was any agreement to grant a rebate. We got the policy for Dr. Mars; he has his policy; he has paid only a part of his premium. When we bring a suit for the balance of the premium he undertakes to defend by setting up a contract which he says and which we say was illegal, if any such contract was made. Dr. Mars owes this premium unless he is relieved of the payment of it by this agreement which he is undertaking to prove. As we have already stated the principle invoked by counsel for appellee would control, if Dr. Mars had paid the entire premium at first and relying upon an agreement to allow a rebate had brought suit against Rideout to get the money back. In such case Mars would have had to defend upon a void agreement. The promise to refund would have been illegal.

Byrd & Wilson, for appellee.

It appears in the proof that Rideout solicited this policy and he may have made some deduction or concessions to Mars as to the amount of the first premium in order, as testified about, to get the benefit of this large policy as advertisement to aid him in his business of soliciting insurance in this section. Now, if this court should hold from the testimony that this fact is true then all the law that is written on this subject condemns it and neither Rideout nor his personal agent can be heard now to claim any payment above the amount agreed upon to be paid by Mars for the policy, for the contract is not only in violation of public policy but right in the teeth of the Code of 1906, section 2600, which makes it unlawful for an agent to rebate the premiums on policies in favor of any one, and section 2649 of the Code of 1906 makes it a penal offense to give such rebates and prescribes the punishment.

Complainant in his brief admits that the contract is in violation of public policy, but seeks to evade it by contending that appellee has no lawful right to plead the unlawful act as a defense in this cause, and cites certain authorities to sustain their position which have no application whatever to this case. The doctrine is well settled in this state that every contract in violation of public policy, whether it grows out of violation of the statute or otherwise, is outlawed in both the courts of law and equity. Bohn v. Lowery, 77 Miss. 426.

OPINION

ANDERSON, J.

This is a bill by the appellant, W. T. Rideout, as administrator of J. H. Rideout, deceased, against the appellee, W. H. Mars; and from a decree in favor of the appellee, the appellant prosecutes this appeal.

The decedent, J. H. Rideout, as agent of the Union Central Life Insurance Company, effected a policy of insurance on the life of the appellee for twenty-five thousand dollars. The policy recites the payment of the first premium of nine hundred and fifty dollars. As a matter of fact, only three hundred dollars of this was paid. The decedent, for the purpose of inducing the appellee to take the insurance, with a view of promoting his own interest as a life insurance agent, by being able to show to others that he had written so large a policy, rebated to the appellee all of the first premium except three hundred dollars, which appellant claims, under his contract of agency with the company, was its share of the premium; the balance being his commission. The appellee and his wife both testified (and the fact is undisputed) that the appellee was to pay and did pay only three hundred dollars of the first premium; the decedent giving him the balance. Cavett, the state agent for the Union Central Life Insurance Company, testified that the first premium was nine hundred and fifty dollars, of which his company's share was three hundred dollars, which had been paid. However, he states further, that decedent's share of the first premium was only sixty per cent., which is less than the difference between three hundred and nine hundred and fifty dollars. If the decedent was to...