Wall v. Bankers' Life Co. of Des Moines, No. 38892.

CourtUnited States State Supreme Court of Iowa
Writing for the CourtKINDIG
Citation208 Iowa 1053,223 N.W. 257
Docket NumberNo. 38892.
Decision Date23 January 1929
PartiesWALL ET AL. v. BANKERS' LIFE CO. OF DES MOINES (LYNCH ET AL., INTERVENERS). LINDLY ET AL. v. BANKERS' LIFE CO. OF DES MOINES. BOUGHTON v. BANKERS' LIFE CO. OF DES MOINES.

208 Iowa 1053
223 N.W. 257

WALL ET AL.
v.
BANKERS' LIFE CO.
OF DES MOINES (LYNCH ET AL., INTERVENERS).
LINDLY ET AL.
v.
BANKERS' LIFE CO.
OF DES MOINES.
BOUGHTON
v.
BANKERS' LIFE CO.
OF DES MOINES.

No. 38892.

Supreme Court of Iowa.

Jan. 23, 1929.


Appeal from District Court, Polk County; O. S. Franklin, Judge.

This is a suit in equity by the plaintiffs, as holders of life insurance contracts in the Bankers' Life Company, asking that said company, as defendant, be, first, enjoined from making assessments alleged to be in violation of such contracts; and, second, required to make a full and complete accounting of its funds accumulated for the use and benefit of the plaintiffs. Affirmed.

Albert, C. J., and Faville, J., dissenting.

[223 N.W. 259]

John M. Stewart and Don W. Stewart, both of Lincoln, Neb., and R. & F. G. Ryan, of Des Moines, for appellants Lindly and others.

J. G. Mitchell, of Des Moines, for appellant Boughton.


Roberts & Roberts, of Ottumwa, and W. H. Keating, of Oskaloosa, for appellants Hightshoe and others.

Allen G. Fisher, of Chadron, Neb., for appellant Baird.

Charles S. Bradshaw, W. S. Ayres and R. B. Alberson, all of Des Moines, for appellee Bankers' Life Co.

Howard L. Bump, Parsons & Mills and Clarence I. Spencer, all of Des Moines, and Salinger, Reynolds & Meyers, of Carroll, for plaintiffs Wall and others.

Vernon W. Lynch, of Des Moines, for interveners Lynch, Klemm, and others.

C. H. E. Boardman and Ray P. Scott, both of Marshalltown, amicus curiæ.

KINDIG, J.

The primary dispute in this litigation arises over the contractual rights of the plaintiffs-appellants, Joseph Wall et al., William A. Lindly et al., and Curtis Boughton, and the interveners-appellants, J. J. Lynch, L. J. Klemm et al., Arthur B. Hightshoe et al., and Frederick S. Baird, as certificate holders in the Bankers' Life Company of Des Moines, a mutual insurance corporation, defendant-appellee. Consolidation was made of the several suits.

A solution of the problem, therefore, involves the specification of those rights and the determination as to whether or not there has been any infringement thereof on the part of the insurance company. To accomplish this, it is quite necessary to study the history of appellee's organization, including the state Constitution and statutes, which controlled or made possible its existence.

On June 24, 1879, the appellee was duly incorporated in this state as a mutual benefit life assessment concern under the name “Bankers' Life Association.” As declared in its articles of incorporation, the purpose of the association was as follows:

“The object of this association shall be the creation of a fund for making mutual pledges and giving valid obligations of the members to each other for their own insurance from loss by death, the preservation of the funds from mismanagement and loss by the judicious investment of the same in registered bonds of the United States, and the equitable distribution of that fund among the families or designated beneficiaries of deceased members.”

Control of the company was, by these articles, vested in a board of five directors. By-laws were duly authorized.

Basis for this corporate formation was the following provision of the 1873 Code, as amended by chapter 104, Acts of the Seventeenth General Assembly:

“Section 1160: Nothing in this chapter shall be so construed as to prevent any number of persons from making mutual pledges and giving valid obligations to each other for their own insurance from loss by fire or death, but such association of persons shall in no case insure any property not owned by one of their own number, and no life except that of their own numbers, nor shall the provisions of this Chapter be applicable to such associations or companies * * *. But such association or companies, shall receive no premiums nor make any dividends; but the word premiums herein, shall not be construed to mean policy and survey fees, nor the necessary expenses of such companies.”

Subsequently, chapter 65 of the Laws of the Twenty-First General Assembly was passed as an amendatory act to regulate mutual benefit associations. That chapter later was embodied in chapter 7 of title 9 of the 1897 Code, and is now embraced within chapter 400 of the 1924 Code.

By virtue of this enabling provision, the appellee, in November, 1886, amended its original articles of incorporation by enlarging upon and more definitely defining its method of operation so as to include the creation of the following funds: Guaranty, benefit, surplus, and contingent.

After this, on March 21, 1907, the Legislature passed the following act:

“Section 1. * * * No life insurance company or association, other than fraternal beneficiary associations, which issues contracts, the performance of which is contingent upon the payment of assessments of call made upon its members, shall do business

[223 N.W. 260]

within this state except such companies or associations as are now authorized to do business within this state and which shall value their assessment policies or certificates of membership as yearly renewable term policies according to the standard of valuation of life insurance policies prescribed by the laws of this state.”

“Section 2. * * * Any existing domestic assessment company or association may, with the written consent of the auditor of state, upon a majority vote of its trustees or directors, amend its articles of incorporation and by-laws in such manner as to transform itself into a legal reserve or level premium company, and upon so doing and upon procuring from the auditor of state a certificate of authority, as prescribed by law, to transact business in this state as a legal reserve or level premium company, shall incur the obligations and enjoy the benefits thereof, the same as though originally thus incorporated, and such corporation, under its charter as thus amended, shall be a continuation of such original corporation, and the officers thereof shall serve through their respective terms as provided in the original charter, but their successors shall be elected and serve as in such amended articles provided; but such amendment or re-incorporation shall not affect existing suits, rights or contracts. Any assessment company re-incorporated to transact life insurance business, shall value its assessment policies or certificates as yearly renewable term policies according to the standard of valuation of life insurance policies prescribed by the laws of this state.” Chapter 83, Acts of Thirty-Second General Assembly.

Other states (wherein appellee was operating) had taken the position that assessment insurance of the kind written by the Bankers' Life Company was unsafe and ultimately sure to fail, because not based upon cost, so it became more difficult, as time went on, to convince prospects that they should accept this kind of insurance. Furthermore, the officers of the Bankers' Life Company received expert advice to the effect that the assessment plan, as inaugurated, was destined to be unsuccessful, and that the company, therefore, could not long endure. In order to avoid such catastrophe, and in harmony with the legislation last above quoted, appellee decided to “transform itself” from the mutual assessment plan “into a legal reserve or level premium company,” and for that purpose adopted articles of incorporation, including the following:

“The purpose and intent of this amendment is to transform this corporation into a legal reserve or level premium, mutual insurance company, as provided by Section 1798 (b) of the supplement to the Code, 1907, and its business shall be that of life insurance on the mutual plan, as a legal reserve or level premium company, and it shall have and possess, full power to transact and conduct every kind of mutual life insurance provided for or permitted under chapters one, six and eight, of title nine, of the code of Iowa of 1897, and all amendments thereto now or hereafter adopted, and shall be a continuation of the original corporation and retain all its original rights, powers, privileges and franchises, so far as may be necessary to carry out all its contracts, heretofore made with its members including the issuance of certificates upon examinations made at the time these articles become in force, as such association, and this amendment shall not be construed to affect existing suits, rights or contracts, and these articles are and shall be construed as, a substitution for the original articles, except in so far as the rights of existing members are concerned.”

By-laws were passed and all other necessary steps taken for completing the reorganization, so that henceforth the appellee was the Bankers' Life Company, authorized to transact business as a legal reserve or level premium concern. At the time of this transition, the appellants and interveners held assessment certificates under the old form.

New contracts for all incoming members thereafter were written under the level premium or legal reserve scheme rather than the old assessment idea. Many of the certificate holders transferred to the legal reserve and level premium method. Consequently, young members ceased coming into the assessment part of the organization, and those certificate holders remaining therein were caused to bear the burden of the death losses under that department. Resultantly, the reserves became depleted, and it was necessary to increase the rates to be paid by the assessment members in order to satisfy the death benefits accruing thereunder. So there were finally made by the company assessment calls 176 and 177, payable respectively in April and July, 1927.

Because of this, appellants demand an injunction restraining such collection, and in behalf thereof now argue: First, that they cannot be affected by the changed insurance system, and that the assessment for their benefit must be spread over all the membership of appellee, including the new legal reserve or level premium policyholders as...

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14 practice notes
  • Robertson v. Security Benefit Assn., No. 35030.
    • United States
    • United States State Supreme Court of Missouri
    • 1 Abril 1938
    ...73 S.W. (2d) 794; Hartford Life Ins. Co. v. Barber, 245 U.S. 146, 38 Sup. Ct. 54, 62 L. Ed. 208; Wall v. Bankers Life Co., 208 Iowa, 1053, 223 N.W. 257; Supreme Lodge, N.E.O.P. v. Hines, 82 Conn. 315, 73 Atl. 791; Supreme Colony, U.O.P.F. v. Towne, 87 Conn. 644, 89 Atl. 264; Palmer v. Welch......
  • Rechow v. Bankers Life Co., No. 32847.
    • United States
    • United States State Supreme Court of Missouri
    • 9 Julio 1934
    ...Arcanum v. Green, 237 U.S. 531, 59 L. Ed. 1100. (c) Association may increase rates if necessary. Wall v. Bankers Life Co., 208 Iowa, 1053, 223 N.W. 257; Garretson v. Sov. Camp, 210 Mo. App. 546, 243 S.W. 257. (d) Estoppel cannot be based on opinions or promises. Delaney v. Grand Lodge, 138 ......
  • Baker v. Sov. Camp, W.O.W., No. 36169.
    • United States
    • United States State Supreme Court of Missouri
    • 8 Marzo 1939
    ...Wheat. 636; McClement v. Supreme Court, 222 N.Y. 470, 119 N.E. 99; Sanger v. Upton, 91 U.S. 58; Wall v. Bankers Life Co., 208 Iowa, 1053, 223 N.W. 257; Supreme Lodge, N.E.O.P. v. Hines, 82 Conn. 315, 73 Atl. 791; Supreme Colony, U.O.P.F. v. Towne, 87 Conn. 644, 89 Atl. 264; Palmer v. Welch,......
  • Lubin v. Equitable Life Assur. Soc. of United States, No. 42933.
    • United States
    • Illinois Appellate Court
    • 15 Junio 1945
    ...the accumulation of a contingency reserve or safety fund but the Supreme court of that state in three cases-Wall v. Bankers Life Co., 208 Iowa 1053, 223 N.W. 257;Central Life Assur. Soc. v. City of Des Moines, 212 Iowa 1254, 238 N.W. 535, 78 A.L.R. 551;New York Life Ins. Co. v. Burbank, 209......
  • Request a trial to view additional results
14 cases
  • Robertson v. Security Benefit Assn., No. 35030.
    • United States
    • United States State Supreme Court of Missouri
    • 1 Abril 1938
    ...73 S.W. (2d) 794; Hartford Life Ins. Co. v. Barber, 245 U.S. 146, 38 Sup. Ct. 54, 62 L. Ed. 208; Wall v. Bankers Life Co., 208 Iowa, 1053, 223 N.W. 257; Supreme Lodge, N.E.O.P. v. Hines, 82 Conn. 315, 73 Atl. 791; Supreme Colony, U.O.P.F. v. Towne, 87 Conn. 644, 89 Atl. 264; Palmer v. Welch......
  • Rechow v. Bankers Life Co., No. 32847.
    • United States
    • United States State Supreme Court of Missouri
    • 9 Julio 1934
    ...Arcanum v. Green, 237 U.S. 531, 59 L. Ed. 1100. (c) Association may increase rates if necessary. Wall v. Bankers Life Co., 208 Iowa, 1053, 223 N.W. 257; Garretson v. Sov. Camp, 210 Mo. App. 546, 243 S.W. 257. (d) Estoppel cannot be based on opinions or promises. Delaney v. Grand Lodge, 138 ......
  • Baker v. Sov. Camp, W.O.W., No. 36169.
    • United States
    • United States State Supreme Court of Missouri
    • 8 Marzo 1939
    ...Wheat. 636; McClement v. Supreme Court, 222 N.Y. 470, 119 N.E. 99; Sanger v. Upton, 91 U.S. 58; Wall v. Bankers Life Co., 208 Iowa, 1053, 223 N.W. 257; Supreme Lodge, N.E.O.P. v. Hines, 82 Conn. 315, 73 Atl. 791; Supreme Colony, U.O.P.F. v. Towne, 87 Conn. 644, 89 Atl. 264; Palmer v. Welch,......
  • Lubin v. Equitable Life Assur. Soc. of United States, No. 42933.
    • United States
    • Illinois Appellate Court
    • 15 Junio 1945
    ...the accumulation of a contingency reserve or safety fund but the Supreme court of that state in three cases-Wall v. Bankers Life Co., 208 Iowa 1053, 223 N.W. 257;Central Life Assur. Soc. v. City of Des Moines, 212 Iowa 1254, 238 N.W. 535, 78 A.L.R. 551;New York Life Ins. Co. v. Burbank, 209......
  • Request a trial to view additional results

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