Taylor v. Mut. Reserve Fund Life Ass'n Of N.Y.

• Decision Date: 06 April 1899
• Citation: 97 Va. 60,33 S.E. 385
• Court: Virginia Supreme Court
• Parties: TAYLOR. v. MUTUAL RESERVE FUND LIFE ASS'N OF NEW YORK et al.

33 S.E. 385

97 Va. 60

TAYLOR.

v.MUTUAL RESERVE FUND LIFE ASS'N OF NEW YORK et al.

Supreme Court of Appeals of Virginia.

April 6, 1899.

FOREIGN CORPORATIONS—INQUIRY INTO INTERNAL AFFAIRS—JURISDICTION-LIFE INSURANCE.

1. The rule that the courts will not interfere with the management of the internal affairs of a foreign corporation has not been changed by Code, § 1104, requiring a foreign corporation to appoint a resident as its agent on whom service of process shall be made, and who shall have authority to appear for it in court, and section 1105, providing that all its officers, agents, and employes doing business without complying with section 1104 shall be liable to any resident having a claim against it, and that service on either of said officers, agents, or employes shall be sufficient service on it.

2. The courts of one state will not take jurisdiction of a suit by a member of a mutual assessment life association, incorporated under the laws of another state, against the corporation and its officers and directors, where the wrongs complained of are the imposition of illegal assessments upon him and other members over 60 years of age; the adoption of a new plan of insurance without authority, the advantages of which are denied him and those of his class; the unlawful action of the association in inducing by persuasion and threats the young members togive up their old policies, and take out policies under the new plan, thereby increasing his burdens and those of the old members, and thus compelling them to pay exorbitant assessments, or leave the association, and lose all that they have paid; and the fraudulent misappropriation of the assets of the association by its officers and agents; and the relief sought is to enjoin the association from taking any proceedings to have complainant's policy declared lapsed or forfeited, and to compel the association to exhibit its books, papers, and vouchers, and furnish a list of its policy holders, for inspection by him, in order that he may ascertain whether there has been a misappropriation of the assets of the association, and in order that the court may determine what would be a reasonable rate of assessment upon him, and to decree payment at that rate, require the association to receive it. give receipts therefor, and to keep its policy alive, or to issue him one of its new policies, —since the acts complained of pertain so distinctively to the management of the internal affairs of the corporation that they can be inquired into only by the courts of the state creating it.

3. The fact that a policy issued to a member of a foreign assessment life association provided that the rates of assessment should always be what they were at the time of insurance, to be raised in emergencies according to a scale applied to all in the same way. will not give the courts of a state other than that in which the association was incorporated jurisdiction of a suit by such member against the association to restrain it from increasing its rate of assessments contrary to such contract.

4. Where a suit against an assessment life association by a member thereof is not within the jurisdiction of the court, it will not construe the policy of insurance.

Appeal from law and equity court of city of Richmond.

Bill in equity by one Taylor against the Mutual Reserve Fund Life Association of New York and others. Prom a decree sustaining a demurrer to the bill, complainant appeals. Affirmed.

W. L. Royall, for appellant.

Chas. S. Stringfellow and L. L. Lewis, for appellees.

BUCHANAN, J. The bill in this case was filed against the Mutual Reserve Fund Life Association, its officers and directors, by the appellant, who sued in behalf of himself and all other policy holders in that company similarly situated who would come Into the suit, and contribute to its prosecution.

The bill was afterwards amended for the purpose of giving the names of the president and directors of the association, which were not given in the original bill because unknown, and of making a statute of the state of New York an exhibit with the bill.

The allegations of the bill are, in substance, that in the year 1882, when the complainant was 60 years of age, he insured his life in the sum of $5,000 for the benefit of his wife, who has since died, in the Mutual Reserve Fund Life Association, a corporation chartered under the laws of the state of New York, then and now doing business in the state of Virginia; that the association had an agent in this state upon whom process could be served, and had deposited with the auditor the securities required of a foreign insurance company doing business here, as pro vided by statute; that the defendant association was a mutual assessment company, having no capital stock, and its policy holders were members of the association; that each policy holder paid an admission fee, annual dues on each $1,000 of insurance, and bimonthly mortuary assessments; that 75 per cent. of these assessments, under the charter, went into the death fund, from which all death losses were paid, and 25 per cent. into the reserve fund, which belonged to members of the association, except certain death losses which were to be paid from it; that after an expiration of each period of five years while a certificate of membership or policy of Insurance remained in force a bond was to be issued to the holder of the certificate of an equitable proportion of the reserve fund, bearing 4 per cent. interest annually, the principal of which bond after 10 years became available towards paying future dues and assessments under the certificate; that this was the general plan for insurance upon which the association was organized, and upon which it had been conducting its business until a comparatively recent period, when It had wholly departed from that plan, to the great injury and loss of the complainant and many others.

It is further alleged that when the defendant company commenced business all its policies or certificates of membership represented upon their face that, when the death fund was insufficient to meet losses by death, an assessment would be made upon the entire membership in force at the date of the last death to cover losses, and that such assessment would be apportioned among all the members according to a most reasonable table, which was printed upon the certificate of membership; that, while some of the policies subsequently issued did not set out that agreement as explicitly as did the earlier policies, yet there was an implied agreement in all of them that no assessment would be made while there was money enough in the death fund to meet all death losses, and that, when an assessment was made, it would be upon all the members of the association, according to the scale established, or according to a just and reasonable scale; that, in addition to the express or implied agreements to that effect, contained in the policies issued, the association authorized its agents all over the United States to make express representations to that effect to persons who were solicited to insure, and that its agents did actually assure many such persons that the company would never make any assessments greater than those printed upon the certificate of membership; that it is true that the first policies issued contained a few words of doubtful meaning, hidden away at the end of a clause relating to a wholly different subject, that might possibly be held to authorize assessments at the discretion of the managers, and that later policies assert such right in bolder language, but their later as-sertions were not made until after a general belief had grown up everywhere by reason of its long-continued public representations that no assessment would be made except of the smallest and most reasonable character, and which would be ratable upon all members of the association; that the complainant so understood and was justified in so understanding its plan of assessment when he insured in the association; that, notwithstanding its said assurances and representations, the association gradually increased the rate of assessment over that in force in the year 1882, which was $00 a year on his policy of $5,000, until it was $169.20 in the year 1894, $360.90 in the year 1895, and would be $707.70 for the year 1898, according to the bimonthly assessment made in February of that year; that this increase in its assessments was not a fair and reasonable use of its power, even if the power to increase existed, as claimed by the association, but was extortion and robbery, imposed upon the complainant and all others situated like him to coerce him and them into abandoning their policies, and forfeiting all that they had paid into the treasury of the association; that these increased assessments were in violation of the express and implied agreements made with the complainant and other policy holders when they were insured, and were wholly unnecessary, unless the association had been for years making false statements of its condition; that its annual reports filed under the provisions of the statutes of this state showed that in the year 1893 it had over 82, 000 policies of insurance, aggregating over $260,-000, 000, and that its losses for that year were less than $4,000, 000; that in 1894 it had over 96, 000 policies of insurance, amounting to over $293,000, 000, and that its losses for that year were a little over $4,000, 000; that for 1895 its policies were over 105, 000, insurance over $308,000, 000, and losses a little less than $5,000, 000; that in 1896 its policies were over 118, 000, insurance over $325,000, 000, and losses less than $5,000, 000; that the report for 1897 had not been filed, but in the address of the president of the association it was stated that its business for that year was as satisfactory as for any previous year; that, if these statements of its auditor were true, there was no excuse for making any extraordinary...