State ex rel. Attorney Gen. v. Merchant's Exch. Mut. Benevolent Soc'y

• Decision Date: 31 October 1880
• Parties: THE STATE ex rel. ATTORNEY GENERAL v. MERCHANT'S EXCHANGE MUTUAL BENEVOLENT SOCIETY
• Court: Missouri Supreme Court

72 Mo. 146

THE STATE ex rel. ATTORNEY GENERAL

v.MERCHANT'S EXCHANGE MUTUAL BENEVOLENT SOCIETY

Supreme Court of Missouri.

October Term, 1880.

Quo Warranto.

OUSTER AWARDED.

The writ charged that respondent, without any charter, act of incorporation or other legal authority, was usurping and using the liberties, privileges, rights and franchises of a life insurance company; that it was making and entering into contracts whereby, in consideration of a stipulated sum of money paid to it, it undertook to indemnify individuals against losses by death; that it was insuring human lives for and in consideration of premiums paid to it; that it was receiving premiums for the insuring of human lives; that it was issuing insurance policies for hire, upon the lives of individuals; that it was collecting premiums from individuals for the insurance of human lives; that it was making contracts whereby, for a stipulated consideration, it undertook to indemnify individuals against the risks attendant upon the duration of human life; that it was making contracts by which it, in consideration of a sum of money in gross and of periodical payments of stipulated sums of money, undertook to pay money at a time depending upon the death of the person whose life was insured; that it was carrying on and transacting the business of making assurances upon the lives of individuals; that it was transacting the business of a life insurance company; that it was insuring the lives of the members thereof for the benefit of such members, or for the benefit of the widows, children and legatees of members.

The respondent's return denied the alleged usurpation of powers; denied that respondent was doing a life insurance business; but alleged that it had obtained a certificate of incorporation March 2nd, 1876, as a benevolent society, and that it was nothing else. The return further averred that the occasion for the establishment of this benevolence arose from the fact, that the members of the Merchants' Exchange of St. Louis, their agents, employees and servants, transacting business on the floor of the Exchange, found their limited time for doing business each day upon the floor of said Exchange so frequently impeded and interrupted by importunate and urgent appeals to them for charitable relief, during their busy hour so devoted to aforesaid certain business transactions, for aid to bury some broken merchant or dealer, or former frequenter of said Exchange, or to relieve the widow, family, orphans or dependents of some person admitted to said floor to transact business for members, from destitution and need, that it became necessary to form this benevolent and charitable society, not merely as a means of providing relief for such cases consistent with humanity, but also as a benevolence to the living survivors in saving their valuable time, and remedying the occasion for having the time devoted to active business from being taken up in hearing and deciding upon such applications, to the great loss of their time and interruption of their business; that to meet this constantly recurring exigency the Merchants' Exchange Mutual Benevolent Society was organized, not as an insurance on life, but simply as a means of immediate cash relief, depending not upon the irregular generosity of a few liberal subscribers, but upon a small contribution from each of the former associates of the person in whose behalf charity was invoked; that it carried on all the necessary business in conducting its affairs in the office of the said Exchange; that the officers and members of said Exchange allowed the entire business of the respondent to be carried on by the employees of said Exchange, at its aforesaid office, without any charge for desk room or rent; that all the trustees and officers of respondent are members of the said Exchange; that for a short time after organizing the society, it admitted from time to time, by the unanimous consent of the trustees, proper persons who were visitors to the Exchange, not to exceed fifty in all; but after learning the decision of the St. Louis court of appeals in the case of State ex rel., &c., Circuit Attorney v. The Citizens' Benefit Association, the society had ever since upon advico of counsel, declined and refused to admit to its membership any person who was not a member of the Merchants' Exchange, or admitted on the floor to do business for members, and having the privileges of the floor; that the society had accumulated a permanent fund of about $7,500, which was invested in United States bonds; that it held no certificate from the insurance department; that it had not paid into the State treasury any fees under section 21, article 10 of the State constitution; that it held no authority to carry on an insurance business from any state, employed no actuary, paid no solicitors, and issued no shares of stock or other evidence of pecuniary profit.

Accompanying the return and forming part of it were the articles of incorporation. These declared the object and purpose of the corporation to be “to give financial aid to the widows and children of deceased members, or to such uses and purposes as such members shall by last will and testament direct. Provided, Such aid shall be given: First, To the widow. Second, If there be no widow, then to the children of such deceased member; but in case such deceased member shall by will direct a division of such aid between such widow and children, then the same shall be distributed accordingly. Third, If there are neither widow nor children, then as may have been directed by the last will and testament of such deceased member. Fourth, If there be neither widow, children nor last will and testament of such deceased member, then such aid is to be paid into and be a part of the permanent fund of this society.”

The article relating to membership was as follows: “All applicants for membership shall be members of the Merchants' Exchange of St. Louis, or an employee of a member or an officer registered on the books of said Merchants' Exchange, and entitled, under the rules of said Exchange, to the privileges of the floor of said Exchange during business hours; of sound mind and in good health, and between the ages of twenty and sixty years; provided, members may be received in this society when over the age of sixty, or who are not members of the Merchants' Exchange, by the unanimous consent of the board of trustees; and when once a member of this society, the membership shall not cease as long as such member complies with the articles of association and by-laws, though he may have withdrawn and be no longer a member o the Merchants' Exchange, or employee or officer thereof.”

Persons desiring to become members were required to sign an application in the following form:

To the Trustees of the Merchants' Exchange Mutual Benevolent Society of St. Louis:

The undersigned desires to become a member of your society, and if accepted, agrees to abide by all the laws and regulations now in force, as well as such as may hereafter be adopted for the government of the same:

Name of Applicant______

Post Office Address______

Street and Number______

Where Born______

Date of Birth______

If an Employee, name the Employer______

Occupation______ How long have you been a resident of St. Louis______

How long have you been a member of the Merchants' Exchange, or employee of a member______

I am in good health, and have no chronic disease that will tend to shorten life. The above statements are true to the best of my knowledge and belief.

_______Applicant.

A certificate of membership was granted in the following form: This is to certify that D. H. has been received into and is a member of Class A, in the Merchants Exchange Mutual Benevolent Society of St. Louis, subject to the rules and regulations now in force, or which may be hereafter adopted, and as such is entitled to all the benefits and privileges provided for and due to members of this society, according to the articles of association and by-laws governing the same

This was the only evidence given members of their connection with or claim upon the society.

The attorney general, not disputing the facts as alleged, moved for judgment notwithstanding the return.

J. L. Smith, Attorney-General, with whom were Given Campbell and Carr & Reynolds in support of the writ.

1. The State, under its general power to enact laws for the good government and regulation of the community and the protection of its citizens, has the undoubted right to prescribe the conditions upon which persons, associations or corporations may engage in and conduct the business of insurance. State v. Mathews, 44 Mo. 523; Slaughter House Cases, 16 Wall. 62; Paul v. Virginia, 8 Wall. 168. This is a regulation, not a prohibition. Nathan v. Louisiana, 8 How. 73. The legislature is the exclusive judge of the mode of regulation and terms to be prescribed. Munn v. Illinois, 94 U. S. 133; Chicago, etc., R. R. v. Iowa, 94 U. S. 164. it is obvious from an examination of the insurance aws that neither an individual, nor an association of individuals, can lawfully engage in the business of insurance without a corporate organization. By the 46th section of the act of 1869, (1 Wag. Stat., § 46, p. 756,) the regulations of the act did not in terms extend to individuals or associations of individuals. But by the act of March 28th, 1874, (Laws 1874, p. 81,) now section 6012, Revised Statutes, individuals and associations of individuals were and are included. This is an answer to the claim that has been made that the corporation does not, but the individual members do insure each other and themselves.

2. Is the business in which the respondent is engaged insurance? Under power conferred by article 8, chapter 37, Wagner's Statutes, to practice benevolence and charity, has it gone beyond the bounds of benevolence, charity, donations, and entered upon the domain of contract? Does its benevolence flow, not from mere good...