State ex rel. National Life Ass'n of Hartford, Conn. v. Matthews
| Decision Date | 01 March 1898 |
| Parties | STATE ex rel. NATIONAL LIFE ASS'N OF HARTFORD, CONN., v. MATTHEWS, State Superintendent of Insurance. STATE ex rel. HOME MUT. LIFE INS. CO. v. SAME. |
| Court | Ohio Supreme Court |
Petitions by the state of Ohio, on the relation of the National Life Association of Hartford, Conn., against W. S. Matthews, state superintendent of insurance, and by the state of Ohio, on the relation of the Home Mutual Life Insurance Company, against W. S. Matthews, state superintendent of insurance, is mandamus, to compel issuance of insurance certificates. The cases, being heard together, are decided in one opinion. Writs of mandamus refused, and petitions dismissed.
Syllabus by the Court
1. By virtue of the provisions of section 2745, Rev. St., the superintendent of insurance of this state may revoke, or decline to renew, a license to transact business in this state to a life insurance company created under the laws of another state, if, ‘after demand therefor has been made,’ such company refuses to pay the taxes assessed against it, and which are payable to him according to the terms of said section. This power of the superintendent continues, and may be exercised, notwithstanding the commencement and pendency of an action brought by him against such company to recover the taxes thus assessed.
2. Although sections 3587-3596, inclusive, Rev. St., under which life insurance companies intending to transact business on the mutual or stock plan are organized, require such companies to have capital stock and stockholders, and although, when thus organized, they have no authority to transact business on the assessment plan, the want of such authority is not a consequence of their having capital stock and stockholders, nor of want of power in the legislature to confer it, but results solely from an omission of the legislature to clothe them with such power. Notwithstanding the want of such authority in an Ohio corporation created under those sections, yet, as the powers of a corporation depend on its charter and the laws of the state where it is organized, if the charter of an insurance company created in another state, together with the laws of such state authorize it to transact business on the assessment plan, it should be admitted, under section 3630e, to transact business on that plan within this state, upon its complying with this section in other respects, although it may have capital stock and stockholders for whose benefit it was created.
3. However, what constitutes the transaction of the business of life insurance on the assessment plan, within the meaning of that term as used in said section 3630e, should be determined by the laws of this state, and according to those laws that phrase should be held to contemplate a scheme of insurance conducted for the sole benefit of the policy holders of a concern, the principal source of revenue of which must arise from post mortem assessments intended to liquidate specific losses.
Henry M. Huggins, J. A. McEwen, and Huggins & Sowers, for National Life ass'n.
T. E Powell, Daniel J. Ryan, and George B. Okey, for Home Mut. Life Ins. Co.
M. R. Patterson, for defendant.
These two actions were brought in this court, by the respective relators, against the superintendent of insurance of this state, to compel him to issue to them, respectively, a certificate authorizing each of them to transact the business of life insurance within this state, under section 3630e Rev. St., that prescribes the conditions upon which life insurance companies, organized under the laws of other states, etc., may be permitted to transact the business of life insurance on the assessment plan within this state. The superintendent of insurance, contending that the method of insurance pursued by these companies, respectively, was not according to the assessment plan, declined to issue the certificate demanded of him.
In respect of the National Life Association or Hartford, Conn., the refusal to grant a certificate rests on the additional ground that it had refused to pay the taxes which the superintendent of insurance claimed were assessable against it by virtue of section 2745, Rev. St. This section of the statute expressly authorizes the superintendent of insurance, in case ‘such company refuse to pay said tax, after demand therefor has been made,’ to ‘revoke the license of such company to do business in this state.’ If, upon this ground, he may revoke a license previously issued, it would seem to unquestionably follow that he may also, upon such ground, refuse to issue or renew such license to the defaulting company. An action brought by the superintendent of insurance to recover this tax is pending in the court of common pleas of Franklin county. This effort, however, to recover, according to the ordinary course of justice, through the instrumentality of the courts, the amount claimed to be due from the relator as taxes, does not suspend the power of revocation explicitly given by the section above cited. Even if this power of suspension should be regarded simply as an additional and summary remedy for such default, it ought not, in the absence of a legislative intention to that effect, to be held to require the state, through its officer, to elect between the two remedies. And certainly there is nothing in the statute, or in the nature of the proceedings in the courts to recover the amount already payable, to indicate that the legislature intended that the authority thus conferred on the superintendent of insurance should be held in abeyance during the pendency of such action. However, as the taxes claimed to be due from the relator rest on the assumption that it is not engaged in the business of insurance on the assessment plan, the right to revoke its license must stand or fall upon the determination of that question. If it is transacting business on the assessment plan, then the taxes in controversy were not legally assessable against it, and its refusal to pay them would not justify a revocation of, or refusal to renew, its license.
Both relators are bodies corporate,-the first named, the National Life Association, being organized under the laws of the state of Connecticut; the other, under the laws of the state of Michigan. An inspection of their respective charters shows that their schemes of organization widely differ. The charter of the National Life Association, as far as material to the consideration of any matter before the court, reads as follows:
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These provisions of its charter show conclusively that it is a corporation created for profit. It has a capital stock of $100,000, divided into shares of $100 each, which capital stock may be increased to $500,000 and similarly divided. These shares are declared to be personal property, transferable on the books of the ‘association in conformity with its by-laws.’ The ultimate power to manage its affairs is lodged in its stockholders, to the entire exclusion of its policy holders; for the right to attend corporate meetings, as well as to elect its officers, is vested solely in the former. Whatever net profits may accrue from its business will ultimately go to its stockholders, the policy holders having no interest therein; the rights of the latter being measured by the contract evidenced by their respective policies. It is true that, in an agreed statement of facts submitted to the court, it is stated that: ‘The plaintiff pays a dividend of 6 per cent. per annum on the amount of stock actually paid into its treasury; the same being paid out of moneys raised and used by it for expense purposes, and the amount thereof being $3,000 per annum.’ We do not see how this bears upon the question of the character or nature of the concern. There is nothing in its charter to prevent the payment of a larger dividend, if the earnings of the company at any time would warrant it, or to prevent its setting aside or investing its accumulation in any way it may choose for the eventual benefit of its stockholders.
Counsel for defendant strenuously contends that a corporation of the character of the relator-that is, one possessed of a...
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