State ex rel. Covenant Mut. Ben. Ass'n of Ill. v. Root

• Citation: 54 N.W. 33,83 Wis. 667
• Parties: STATE EX REL. COVENANT MUT. BEN. ASS'N OF ILLINOIS v. ROOT, INSURANCE COMMISSIONER.
• Decision Date: 10 January 1893
• Court: United States State Supreme Court of Wisconsin

83 Wis. 667

54 N.W. 33

STATE EX REL. COVENANT MUT. BEN. ASS'N OF ILLINOIS

v.ROOT, INSURANCE COMMISSIONER.

Supreme Court of Wisconsin.

Jan. 10, 1893.

Petition for mandamus by the Covenant Mutual Benefit Association of Illinois to compel William M. Root, insurance commissioner, to issue a license authorizing it to do business within the state, under chapter 418, Laws 1891. The case, which involved certain issues of fact, was sent by this court to the Dane circuit court for trial, and with directions to make return.

The findings of that court are substantially as follows: That relator was a corporation under the laws of Illinois. That its object was to give financial aid to the widows, orphans, heirs, or devisees of deceased members, or to totally disabled members. That all moneys, received from whatever source, should be placed in and belong to one of the following funds, to wit, the mortuary fund, the reserve emergency fund, the advance fund or the general fund. That the secretary should keep separate accounts with the several funds of the association, and the interest arising therefrom, which interest should belong to and become a part of the respective funds from which it accrued. That any surplus not required in conducting the regular business of the association, belonging to any one or all of these funds, should be invested by the managing directors. That all moneys realized or received by the association from assessments or bimonthly calls made and collected for mortuary or total disability purposes should belong to and be placed in the mortuary fund, and no part or portion of this fund should be used in any maner or appropriated for any purpose other than the payment of death and total disability claims and the protection of the mortuary fund, except that the managing directors might set aside and transfer to the reserve emergency fund 20 per cent. or less of the total amount collected from time to time for mortuary and total disability purposes, which amount, when so set aside and transferred, should be securely invested, and held in trust for the exclusive benefit of members of the association, to be used only for the payment of death losses or total disability claims that may occur in any one year in excess of the rate stated in the actuary's tables of mortality; and to provide for and pay the actual increase of cost by reason of the advancing age of members, and annually to January 1, 1897, (provided in the judgment of the management it can be safely done,) to equitably distribute for use in paying mortuary premiums, any unappropriated surplus derived from the contributions made thereto during the sixth respective preceding year, on the death of a member who shall have contributed to the reserve emergency fund six years, to return to his beneficiary the unused and unappropriated portion of such reserve emergency fund which may have been contributed by said deceased member in his lifetime. That all moneys realized from fees, dues, expense premiums, or assessments, or received by the association from any other source, and not properly belonging to either the mortuary, reserve emergency, or the advance fund, should be placed in the general fund; and each member should pay 12 1/2 cents per month on each $500 insurance carried, which should be collected with each bimonthly mortuary call. That all agency and general expenses should be paid from this fund; and when it should be in excess of the current mortuary requirements the managing directors might transfer such excess into the mortuary fund. That all moneys received by the association as advance premiums, or deposited with it to provide for the payment of future bimonthly calls or assessments, should be placed in the advance fund, and used as prescribed, except, upon the death of the insured for whose benefit the advance deposit was made, any unused portion thereof should be withdrawn, and paid with the certificate at its maturity in addition thereto. That the investment and management of all the funds belonging to the association should be under the directions of the board of managing directors. That an advance premium, in accordance with the following table, must be collected with each application for membership, to wit: $7 on $500 certificate; $9 on $1,000; $11 on $1,500; $13 on $2,000; $15 on $2,500; $20 on $5,000; $30 on $7,500; $35 on $10,000,--with limitations as to age. The following shall be the annual cost upon each $1,000 indemnity carried: (Here follows table showing the cost for different ages.) The above rates provide for the accumulation of the mortuary, reserve emergency, and general fund. That in February, 1891, at the time of the amendment of the articles of said corporation, the said corporation adopted a new form of contract, a copy of which is in the record as Exhibit C. By this contract or certificate the company agreed to pay from its mortuary fund, and not otherwise, except as thereinafter provided, a certain sum as a benefit to the insured if living, and, if not, to his legal heirs or devisees, together with such part of the emergency fund as might be due, subject to the following conditions:

(1) To provide for the payment of all death claims or other current expenses, and to maintain an emergency or reserve fund to guaranty the prompt payment in full of all future obligations, that shall be due according to the mortality experience and emergency fund requirements of the association, and payable at its general office, in Galesburg, Illinois, on the first business day of January, March, May, July, September, and November, respectively, of each and every year during the continuance of this contract, a bimonthly premium or assessment, based upon the table of rates, and graded according to age and amount of benefits named herein; provided, however, that at such time or times as the insured shall be entitled to the advantages of the emergency fund, as hereinafter stated, the board of managers may readjust the grading or basis of the bimonthly assessments or premiums due thereafter in accordance with the amount of such emergency fund then available, the current age of members, and the mortality experience of the association. If the bimonthly premium, as above provided, is not received by the association within each of the calendar months designated above, whether notice is actually received by the insured or not, this contract shall terminate, and all rights and benefits hereunder be absolutely forfeited to the association. The insured may, however, pay, annually or semiannually, in advance, in accordance with the rates given in the table of rates indorsed hereon for such payments.

(2) The net amount received from bimonthly premiums or calls, less the amount hereinafter provided for the general and emergency funds, shall constitute the mortuary fund, and shall only be used for the payment of death claims and the protection of the mortuary fund, except that the first mortuary premium paid under this certificate shall be charged with an equitable proportion of the medical examination fees actually paid by the association during the two preceding months. Twenty-five cents on each $500 of insurance, to be collected bimonthly, (which is included in the above-mentioned tables of rates,) shall be carried to the general fund, to provide for agency and general expenses, and when said fund shall be in excess of the current and emergency requirements of the association, such excess shall be converted into the mortuary fund. To provide for the actual increase of cost by reason of the advancing age of members, and the payment of death losses in excess of the actuaries' mortality tables, 20 per cent. of the mortuary premium received under this certificate may be converted into the emergency fund, and held in trust, as provided in the by-laws, for the exclusive benefit of the members, to be used only for the purposes named above, except that after this certificate has been in force for six years from the 1st day of January following its date, and annually thereafter, there shall be an equitable distribution, for use in paying future mortuary premiums, of so much of the then unappropriated emergency fund and its accumulations as are derivable from the contributions made thereto during the sixth respective preceding year, and except, further, that upon the death of the insured after this certificate has been in continuous force six years from the 1st of January following its date, there shall be due to the beneficiaries hereunder, payable in like manner and under the same conditions as the benefits named herein, such part of the then total emergency fund and its interest accumulations as the association's actuary shall determine legally due in proportion to the contributions made by the insured thereto. Upon the back of said policy, and as a part thereof, is the following table of rates on each $1,000: “The following rates include the amount set aside for the reserve emergency fund, and for total disability and expense purposes.” Here follows a table of the annual rate, being the same as in section 2, article 5, of the constitution; and also including the rates when paid semiannually and bimonthly, and also where compared with the annual cost of old line companies. Five hundred dollars indemnity may be secured at one half the above rates. These rates are based upon the actuaries' mortality tables, which are fully 20 per cent. higher than the average mortality cost experienced by the American life companies during the past 30 years. Any annual mortality in excess of the above rates for current ages, which may be loaded 20 per cent. for the reserve emergency fund, shall be paid from said fund without assessment; and that said corporation as thus organized continued to do life insurance business from Feburary, 1891, down to the present time in the state of Illinois and some 26 other states and territories, and in the dominion...