Knott v. State Ex Rel. Guaranty Income Life Insurance

Thomas, J. — The judge of the Second Judicial Circuit issued an alternative writ of mandamus directing the State. Treasurer, ex officio Insurance Commissioner, to delete from the following certificate authorizing relator, a foreign corporation, to do business in Florida, the paragraph shown in italics: “Certificate of Authority “State of Florida “Office of the State Treasurer “Tallahassee, Miay 9, 1938.. “The Guaranty Income Life Insurance Company of Baton Rouge, Louisiana, having filed a satisfactory financial *186 statement in accordance with the laws governing such company or association is hereby authorized to transact business in this State until the first day of March following date of this Certificate subject to compliance by said company with all the laws regulating such company or association in this State. “It is expressly understood that this Certificate of Authority does not extend authority to the above named, Company to issue its so-called policy. Endorsement at Age 70, with Special Endowment Benefits, or any other policies of a similar plan in the State of Florida. The Company heretofore submitted this particular policy form for approval stating unless it could write this particular form of policy in Florida, application for Authority to transact business in this State would not be made. The policy form and plan were disapproved. “Application is now made to write general life insurance business and permit is hereby granted, but expressly prohibits the writing of the aforementioned policy form or any other similar policies in the State of Florida. “W. V. Knott (S) “State Treasurer.” A peremptory writ was, upon motion therefor notwithstanding the return, issued. The portion of the proposed policy to which the Commissioner found objection is: “14 Classification by Entry Age and Calendar Year of Issue Policies issued on this plan are automatically placed into Classes determined by two factors, which are: (1) Enüy-Age of the policy holder (the age of the in *187 sured at nearest birthday), and (2) the Calendar Year in which the Policy is issued. Policies issued during the same Calendar Year to persons of the same Entry-Age shall constitute a Special Endowment Benefit Class. “15 Amount and Maturity of Special Endowment Benefit Fund The Special Endowment Benefit Fund available for policies in this Class shall always equal the Face Amount of the Policy or policies in this Class under which the Company experiences a mortality loss. Special Endowment Benefit shall become due and payable immediately upon receipt by the Company of due proof of each such mortality loss. “16 Distribution of Special Endowment Benefit Fund Policies in the same class shall share in the distribution of the Special Endowment Benefit Fund, each in proportion to its Face Amount. This policy shall receive its share of the Special Endowment Benefit Fund (the ratio of its Face Amount to the sum of the Face Amounts of all policies in the same class) upon each maturity thereof for this class to the End of the Endowment Period, provided this policy shall have been kept in force on a premium-paying basis. In .the event of the death of the insured hereunder while this policy is in force on a premium-paying basis, the bene *188 ficiary shall be entitled to share in the Special Endowment Benefit Fund then available for this Class, in the ratio of its Face Amount to the sum of the Face Amounts of all policies in the same class.” The objection to the policy raised by the plaintiff in error is that one feature of it described in the above, quoted portions is a wagering contract. The contract provides for paying to insured the sum of one thousand dollars upon his reaching the age of seventy or, upon his death, the same amount to' the beneficiary. In addition it contains provisions above set out, and objected to by the plaintiff in error, whereby insured receives upon the death of each polic)? holder of his age and insured in the same year a sum equal to the ratio'the face amount of the policy bears to the total of the face amounts of all policies in the same class. Thus if all policy holders in the same class except one should die before reaching the age of seventy years the sole survivor would have received his proportionate share on each death and the beneficiary of the first to die would have received only the first allotment. We have examined the case discussed by counsel for the respective parties, Colgrove v. Lowe, 343 Ill., 360, 175 N. E. Rep. 569, and do not find where the policy there declared to be against public policy differs in principle from the one we are considering. The Supreme Court of Illinois condemned an insurance contract whereby a definite number of persons took out policies naming a trust company as beneficiary trustee. It was agreed by all that premiums would be paid for five years. In the event of death of any one of the group his insurance was to be paid 75 per cent, to the beneficiary, and 25 per cent, to the beneficiary trustee for *189 proration among the survivors. As in the instant case, the policy studied-by the Illinois Court contained certain provisions which were unobjectionable. It was said there that: “if has been uniformly held that a contract of insurance upon a life in -which the insurer has no interest is a pure wager, that gives the insurer a sinister counter-interest in having the life come to an end.” 175 N. E. Rep. text 571. Clearly, the holder of one of the policies of defendant in error would profit by the death of another in his class as did a contract holder under the Colgrove system, and it is plain, too, that here, as there, the one policy holder in the same group has no more interest in the continuance of the life of the others. The above cited case was determined by the public policy of the State but it is maintained by defendant in error that public policy does not forbid the issuance of policies containing the above quoted “Special Endowment Benefit” clause. A discussion of the subject “public policy” may be found in Atlantic Coast Line R. Co. v. Beazley, 54 Fla. 311, 45 South. Rep 761, text pages 785 and 786. To be void because of this infirmity the agreement must appear “injurious to the public” interest or have a “bad tendency” or contravene established interests of society. Yv’e think a wagering contract is against the public policy of the State of Florida despite Chapter 17947, Acts of 1937, giving to Fraternal Benefit Societies the right to fix classes and provide benefits from special funds to the oldest member of the class upon death of another member. The following is quoted from the statute of 14 George III, Cap. XLVIII, (See Summary of British Statutes', part of the Common Law of Florida under Section 87 C. G. L. 1927, Published Linder Supervision of the Attorney General State of Florida, January, 1931.) *190 “Whereas it hath been found by experience, that the making infurances on lives, or other events, wherein the a ff tired fhall Imve no inter eft, hath introduced mifchievous kind of gaming: For remedy whereof, be it enacted by King’s moft excellent majefty, by and with the advice and confent of the lords fpiritual and temporal, and commons, in this prefent parliament affembled, and by the authority of the fame, That from and after the paifing of this act, no infurance fhall be made by any perfon of perfons, bodies politick or corporate, on the life or lives of any perfon or perfons, or on any other event or events whatfoever, wherein the perfon or perfons for whofe ufe, benefit, on on whofe account fuch policy or policies fhall be made, fhall have no intereft, or by way of gaming or wagering; and that every affurance made, contrary to the true intent and meaning hereof, fhall be nul and void, to all intents and purpofes whatfoever.” In considering a fire insurance policy, Phenix Ins. Co. v. Hilliard, 59 Fla. 590, 52 South. Rp. 799, text page 801, Mr. Chief Justice Whitfield wrote: “Wager policies are not approved and should be avoided.” Having concluded that the “Special Endowment Benefit” is a wagering contract, hence contrary to public policy in this State, we pass to the remaining question whether the State Treasurer as Insurance Commissioner, had power to insert in his certificate the restriction that no policy should be issued containing this plan. We do not find in Section 6197 et seq. C. G. L. 1927, specific power given the State Treasurer to pass upon the type of contracts to be issued but they do confer upon him supervision of companies engaged in the insurance business, and prohibit them from selling insurance without having first obtained his permission to do- so.- He must be fur- *191 wished 'with a sworn statement on a form “adopted by the National Convention of' Insurance Commissioners. ■ Iiis certificate recites that the “particular policy form” was submitted by the Company and disapproved. We do not think that in all the circumstances the relator showed a clear legal right to the writ commanding the State Treasurer to omit the restriction in his certificate in view of our finding that the sale of insurance in the form described would be violative of the public policy of the State. See State v. Greer, 88 Fla. 249, 102 South. Rep. 739, 37 A. L. R. 1298; State v. Atlantic Coast Line R. Co., 53 Fla. 650, 44 Soth. Rep. 213, 13 L. R. A. (N. S.) 320, 12 Ann. Cas. 359; State v. Carey, 121 Fla. 515, 164 South. Rep. 199. The judgment of the lower court is reversed. Terrell, C. ]., and Whitfield, Brown, and Chapman, J. J., concur. Buford, J., dissents.