State v. Iowa Mutual Aid Ass'n

• Decision Date: 16 June 1882
• Citation: 12 N.W. 782,59 Iowa 125
• Parties: STATE OF IOWA EX REL. AUDITOR v. IOWA MUTUAL AID ASSOCIATION
• Court: Iowa Supreme Court

12 N.W. 782

59 Iowa 125

STATE OF IOWA EX REL. AUDITOR v. IOWA MUTUAL AID ASSOCIATION

Supreme Court of Iowa, Des Moines

June 16, 1882

Appeal from Wapello District Court.

ON the 17th day of August, 1881, the plaintiff ex rel. W. V. Lucas auditor of State, filed a petition in the Wapello Circuit Court in substance alleging: That the Iowa Mutual Aid Association claims to be a corporation organized and existing for the purpose of affording financial aid and benefit to the families of deceased members, and assistance to members personally, in case of sickness or disability, with its principal place of business at the city of Ottumwa, Wapello county, Iowa; that on the 4th day of April, 1881, W. B Bonifield, George W. Tool, J. E. Fence, George Haw, J Willamson and Messrs. Moore & Hammond, signed and acknowledged before a notary public of said county a certain certificate, which said persons called "Articles of Incorporation of the Iowa Mutual Aid Association of Ottumwa Iowa;" that said certificate so signed and acknowledged was filed with the recorder of Wapello county, Iowa April 7 1881, and recorded, but has not been elsewhere filed with any officer of the State of Iowa; that said association adopted by-laws; that the defendant is an association composed of the persons aforesaid as officers, and E. H. Stiles, Frank Durgan, A. P. Peterson, W. E. Chambers, R. A. Wilson, M. DeCaskey, S. M. Robinson and Christopher How as directors, and exists only under section 1091 of the Code of 1873, which provides only for the organization of incorporations other than for pecuniary profit, and only for the purpose set forth in said section; that the defendant has at no time had any capital stock subscribed, in the sum of $ 100,000, or any other sum; nor has it at any time had $ 25,000, or any other sum of stock paid up; or any sum in any way invested in stock, bonds or mortgages of any kind; that it has deposited with the Auditor of the State no securities at any time; that before issuing policies the said defendant did not have, and has not now, and at no time has had, applications on two hundred and fifty lives for an average of one thousand dollars each, but wholly disregarding section 1163 of the Code of 1873, immediately upon filing said certificate with said recorder, commenced to issue policies or certificates of membership, without any observance of section 1163 of the Code; that defendant is now, and at all times since its organization has been, acting entirely independent of any of the laws, regulations and provisions of chapter 5, title 9 of the Code of 1873; that said company, its officers and servants refuse to recognize the Auditor of the State as having any control or supervision over it, or any of its business or interests; that said company and its officers fail and refuse to make any reports to said auditor of its business and management; that neither it nor any of its officers or agents has any certificate of any kind from the Auditor of State, and that in each and every particular it has failed and refused to comply with any of the provisions of said chapter 5, title 9 of the Code. That some of the officers of defendant receive large salaries for their time and services; that the defendant has issued a large number of polices of insurance, by it called certificates of membership, on the lives of the people of the State; that said contracts of life insurance were not given by said persons organizing defendant, only, but by said persons together with a large number of other persons in no way associated together by business or other ties, and entire strangers to said association, who, since said organization, have been induced to enter into said contracts; and defendant threatens to continue to issue said certificates to all persons of the State, both male and female, the only conditions being that applicant pass an examination as to soundness of health, of mind and body, and pay the required fees and dues; that defendant insists upon the right to so continue business, and will do so unless restrained; that the auditor of State examined into the condition of defendant, and, finding it unsatisfactory by reason of absence of funds, securities, etc., he requested defendant to comply with the insurance laws of Iowa. as set forth in said chapter 5, title 9 of the Code, and that defendant fails and refuses to comply with said request.

The plaintiff prays for an injunction restraining the defendant from doing an insurance business, and that the affairs and business of the defendant be wound up. The petition sets out the articles of incorporation of the defendant, its by-laws, application for membership and certificate of membership. From the articles of incorporation it appears that the defendant is organized under the provisions of title 9, chapter 2 of the Code. Article four says: The object of this association is one of charity, benevolence and mutual aid among its members, and is intended to render assistance to its members, their families and their friends, by the collection and disbursement of fees and assessments, less the cost of maintaining the association. Article two, section 1, of the by-laws says: The business and objects of this association shall be to afford financial aid and benefit to the families and beneficiaries of deceased members, and assistance to the members personally in case of sickness or disability. Article four, provides for the election of a board of directors and the appointment of a general agent. Article six provides: The expense of procuring business must be met from the admission fees and annual dues. Any portion of such fees and dues not used in procuring business may be placed to the credit of the surplus fund. Article seven provides that applications for membership shall be upon printed blanks, accompanied by a fee of $ 10, for certificate of membership, and $ 5 additional as annual dues. It also provides for a local medical examination for which a fee of one dollar is to be paid by the association out of the admission fee, if the application is accepted; but if the application is rejected at the home office, the applicant is to pay for the local medical examination. Article eight provides that the members may be divided into two or more divisions, limited to $ 2,000 benefit in case of death, and $ 6 weekly benefits in case of total disability from sickness or accident, for a term not exceeding twelve weeks in any one year. It also provides that each division shall be divided into five classes, according to age. Article nine provides that upon proof of the death of a member the directors shall pay to his heirs or legal representatives the net result of an assessment, not to exceed $ 2,000 in any one division.

Article ten provides that upon receipt of proofs of death of a member, each member of the division to which the deceased member belonged shall be assessed and shall pay to the secretary of the association a sum according to the class of which he is a member at the time, as follows:

Members of the first class $ .75; of the second class $ 1.00; of the third class $ 1.50; of the fourth class $ 2.00, of the fifth class $ 3.00. Article eleven provides for the payment of weekly benefits to members, for a term not exceeding twelve weeks in one year, upon proper certificate of their total disability from sickness or accident.

Article twelve provides that when necessary the directors shall cause an assessment to be made to provide for the payment of weekly benefits in the same manner and sums as for death benefits.

Article fifteen provides as follows: "A permanent fund may be raised in the following manner: First, from admission fees and annual dues. Second, from that portion of assessments not used for the payment of benefits, which sum shall be securely invested by the board of directors, and shall be for the following purposes: To pay benefits without an assessment, in which case the secretary shall notify all members; for printing, and all the necessary expense of management." Article nineteen provides that upon...