Illinois Bankers Life Assur. Co. v. State ex rel. Cline

WELCH, J. The State of Oklahoma ex rel. Ralph H. Cline, county attorney of Comanche county, filed petition against Illinois Bankers Life Assurance Company, a corporation, hereinafter referred to as “Company” alleging that defendant corporation was the owner of certain described real estate and that defendant had held the same for more than seven years, in violation of House Bill No. 77 of the Sixteenth Legislature (Title 18, secs. 86, 86a to 861, inch, O. S. 1941) and article XXII, sec. 2 of the Oklahoma Constitution, and that defendant is liable for the penalties prescribed by such laws. In its answer to plaintiff’s petition defendant states that formerly another corporation, the Illinois Bankers Life Association, hereafter referred to as “Association,” owned separate mortgages covering each tract of real estate described in plaintiff’s petition, and that said mortgages were assigned to defendant pursuant to a contract of reinsurance whereby the Association agreed to convey to defendant Company all the assets, moneys, notes, bonds, mortgages, securities, judgments, choses of action, real property and property of every kind and character, to be held and administered by the defendant according to the terms of said contract as a trust fund for the benefit of the individual members of the Association. That the title of record covering each of said tracts of real estate has stood in the name of defendant from and after the date of its acquisition of title thereto in its attempted collection of debts secured by said mortgages, but that defendant has held such title in trust for the benefit of the members of the Association, according to the terms of the said reinsurance contract; that the equitable right, title, interest and estate in said real estate has, since the acquisition of title thereto as aforesaid, been vested in the members of the Association, and defendant has not owned or held such real estate within the meaning, spirit or intent of the Constitution and statutory provisions set forth in plaintiff’s petition. From an adverse judgment, defendant appeals. Plaintiff assigns error in the allowance of attorney’s fee, but did not perfect cross-appeal. All assignments of error are presented by defendant under the following propositions: (1) The court erred in finding that the defendant owned a beneficial interest in the real estate. (2) A corporation is not the owner and holder of real estate within the intent and meaning of House Bill No. 77 of the Sixteenth Legislature, where such corporation holds the mere legal title and the equitable or beneficial title is vested in individuals. (3) Where real estate constitutes a portion of the corpus of a trust estate and the trust directs the distribution of the corpus to the beneficiaries only through the mediums of money, such real estate is in equity considered or treated as personal property. [297] The cause was submitted and tried upon written stipulations of fact, which contain a copy of the reinsurance contract. It is contended by defendant that under the terms of the reinsurance ■contract, the defendant holds title to the real estate in trust for the use and benefit of the members of the Association. It is said in the preamble to the contract that the “Association” was engaged in insuring the lives of its members on the assessment plan and that the “Company”, the defendant herein, was a life insurance company operating upon the legal reserve basis and that the “Association” deemed it “wise and prudent and for the best interest of its members, that its risks be rein-sured with a life insurance company ■operating upon the legal reserve basis.” The contract provides: “Section 1. The association hereby transfers its risks to the said company, .... “Section 2. It is agreed . . . the said Association shall, by proper deeds of assignment and transfer, convey and set over to the said company all of its assets, moneys, notes, bonds, mortgages, securities, judgments, choses in action, real property and property of every kind and character and wheresoever situated, belonging to the said Association. “Section 3. The said Company hereby agrees to accept said transfer to it and agrees to reimburse all the certificates and policies held by living members, . . . “Section 5. All the present funds of the Association shall be considered as trust funds for the benefit of the members of the Association. ...” The words “present funds” in their ordinary usage would have reference solely to cash on hand. The language of section 5 gives no indication of intention to consider anything as trust funds other than the cash on hand at the date of the contract and the accretions thereto as are provided for therein. The references to trust funds in the paragraphs following section 5 and the uses and purposes of the trust fund as set forth give no indication that the words “present funds” have any broader meaning than the express language of section 5, and give no indication of any other trust fund, than that provided by section 5. Paragraph 3 of section 5 provides that the trust fund is charged with all policy payments to assessment plan members. Sections 7 and 8 provide for equitable apportion-ments from the trust fund to members who elect to convert or transfer their assessment policies to other forms of policies. Section 9 provides that the trust fund is charged with all valid death claims then pending and other valid claims maturing before the effective date of the contract. We think it clear from the terms of the contract that the parties intended that all assets of the association be transferred to defendant upon assumption by defendant of the risks of the association and without limitations on such assets transferred except that all cash on hand should be considered as trust funds for the benefit of the members of the Association. It is shown by the stipulation of facts that the record of assets of the Association transferred to defendant under section 2 of the contract have been entered in the records and books of account of defendant separate and apart from the record of other assets and business of defendant and have been held and earmarked as trust funds and administered as trust funds subject to the terms and provisions of the reinsurance contract. The fact that the record of the assets received under section 2 and the administration thereof is kept in separate account by defendant and earmarked as trust funds does not in itself show that they were held and earmarked as trust funds for the benefit of the members of the Association. The stipulation does not so state. [298] The stipulation does not state that the separate trust fund account was held and administered for the benefit of the members of the Association, but administered subject to the provisions of the contract. No other assets of the Association were declared by the contract to be transferred in trust for the benefit of the members except the funds mentioned in section 5. The purpose of defendant in setting up in separate account and as trust funds all of the assets received from the Association is not made clear. It seems clear from the terms of the reinsurance contract that the mortgages from which title to the real estate here involved was derived did not pass in trust to defendant. Under our construction of the reinsurance contract the defendant became possessed of the full title to the real estate, charged with no estate in trust, and defendant’s propositions 2 and 3 require no discussion. The judgment is affirmed. HURST, C.J., DAVISON, V.C.J., and BAYLESS, and GIBSON, JJ., concur.