Rothschild v. New York Life Insurance

Mr. Justice Adams delivered the opinion of the court. Appellant’s counsel bases appellant’s right to the relief prayed on the following, propositions : 1. That a foreign insurance corporation, doing business in this State, is subject to the laws of the State in relation to insurance companies, equally with domestic insurance companies. 2. That section 14 of “An act to organize and regulate the business of life insurance.” Hurd’s Stat. 1899, p. 1014, is so far mandatory that a mutual insurance company must make distribution of its surplus at least every five years. 3. That the policies in question, in providing that no dividend shall be apportioned or paid on them before the end of the accumulation period, viz., April 4, 1915, are in contravention of section 14, above referred to. 4. That the policies in question are gaming contracts and in violation of section 131 of chapter 38 of the statutes. Hurd’s Stat. 1899, p. 590. The first proposition is unquestionably sound. Section 14 is as follows: “Life insurance companies doing business in this State, which do business on the principle of mutual insurance, or the members of which are entitled to share in the surplus funds thereof, may make distribution of such surplus as they have accumulated, annually, or once in two, three, four or five years, as the directors thereof may from time to time determine. In determining the amount of the surplus to be distributed, there shall be reserved an amount not less than the aggregate net value of all outstanding policies, said value being computed by the combined experience or actuary rate of mortality, with interest not exceeding four per cent.” It is contended' that the word “ may ” in the section should be read “ must,” so that the section will read, “must make distribution of sucli surplus as they have accumulated, annually,” etc. In support of this contention Kane v. Footh, 70 Ill. 587; Fowler v. Pirkins, 77 Ib. 271; James v. Dexter, 112 Ib. 489, and Brokaw v. Commissioners, etc., 130 Ib. 490, are cited. Kone of these cases are in point. In Kane v. Footh it was contended that the word “ may ” in a statute providing “And the court may, at the request of either party, require the jury to render a special verdict,” etc., should be read shall, but the court held not. In Fowler v. Pirkins, supra, it was contended that in an act providing “Appeals and writs of error may be taken, etc., the word “may” should be read shall, but the court held not, saying: “ The words may or shall, when used in a statute, may be read interchangeably as will hest express the legislative intention.” In Brokaw v. Commissioners, etc., supra, the language of the statute was : “ That the commissioners, after having given reasonable notice, etc., may remove any such fence or other obstruction.” The court held that the word “ may ” should be read “ shall,” and said: “ The word ‘ may’ in a statute will be construed to mean 6 shall ’ whenever the rights of the public or of third persons depend upon the exercise of the power, or the performance of the duty to which it refers, and such is its meaning in all cases where the public interests and rights are concerned, or a public duty is imposed upon public officers, and the public or third persons have a claim de jure that the power shall be exercised.” It is clear that the court in using the words “ whenever the rights of the public or of third persons depend upon the exercise of the power, or the performance of the duty,” referred to the power- of the commissioners, who were public officers, and to their duty in the premises. Appellant’s counsel rely mainly on certain language of the court in Kane v. Footh, supra. In that case the court cites Schuyler v. Mercer County, 4 Gilm. 20, where the court say: “ The word £ may,’ when used in statutes should be construed as permissive or imperative, according to the intention of the legislature in each case where it is so used. In its grammatical sense it is permissive, and there is nothing to show that in this case it was intended to be imperative.” The vital question is, what was the intention of the legislature? Was it, or not, the intention to use the word “ may” imperatively, and as if the word shall had been used? Mutual insurance companies do not derive their power to distribute their surpltis funds from the statute. Section 14 is not a grant of power, but is perhaps a limitation on the power to distribute surplus oftener than once a year. In the absence of such a,, provision as to the distribution of the surplus, the time of distribution would depend on the directors, except so far as limited by the charter of the company or a valid by-law. Considering the entire section it seems to be for the protection of policy holders. A mutual insurance company is permitted to make distribution not oftener than annually. If the surplus will not warrant annual distribution, then distribution may be made in two, three, four or five years. But it is expressly provided that “ in determining the amount of the surplus to be distributed, there shall be reserved an amount not less than the aggregate net value of all outstanding policies.” The words “ may ” and “ shall ” are both used in the section, the former in the first sentence of the section as to distribution annually, or in two, three, four or five years, as the directors may from time to time determine; the latter in the next and last sentence of the section, requiring an amount to be reserved when distribution is made. The intention of the legislature is to be ascertained from the language used, when such language is plain and unambiguous; and the words of the statute are to be understood in their commonly accepted meaning. City of Beardstown v. City of Virginia, 76 Ill. 34; C., M. & St. P. R. R. Co. T. Dumser, 109 Ib. 402, 410; City of Chicago v. McCoy, 136 Ib. 344, 352; Richmond v. Moore, 107 Ib. 429, 436. In the first case cited, supra, the court say : “ Statutes and contracts should be read and understood according to the natural and most obvious import of the language, without resorting to subtle and forced construction for the purpose of either limiting or extending their operation. McCluskey v. Cromwell, 11 N. Y. 601. The rule is well expressed by Johnson, J„ in Newell v. The People, 3 Seld. 97, in these words: ‘Whether we are considering an agreement between parties, a statute or a constitution, with'a view to its interpretation, the thing we are to seek is, the thought which it expresses. To ascertain this, the first resort in all cases is to the natural signification of the words employed, in the order and grammatical arrangement in which the framers of the instrument have placed them. If, thus regarded, the words embody a definite meaning, which involves no absurdity, and no contradiction between different parts of the same writing, then that meaning, apparent upon the face of the instrument, is the one which alone we are at liberty to say was intended to be conveyed. In such a case there is no room for construction.’ ” Applyingthese rules to the words “ may” and “shall” in section 14, the former must be regarded as permissive and the latter as imperative. We can conceive of no good reason, nor are we aware of any rule of interpretation, which would warrant the holding that the words “ may ” and “ shall” are used in the same sense in the section, and that imperative. Therefore we can not sustain the contention that the section requires distribution of surplus at least once in every five years, or that the contracts between the company and appellant, assuming that such contracts contain the charter provision in regard to distribution of surplus, are in violation of section 14. Counsel for appellant contend that the contracts between apnellant and the company are in violation of section 27 of chapter 73 of Hurd’s Stat. 1899, p. 978, which is as follows : “ That no life insurance company or association organized under the laws of this State, or doing business within the limits of the same, shall make or permit any distinction or discrimination between insurants of the same class and equal expectation of life in its established rates; nor in the charging, collecting, demanding or receiving of the amount of premium for insurants of the same class and equal expectation of life; nor in the return ratably of premium, dividends or other benefits accruing or that may accrue to such insurants as aforesaid; nor in the terms and conditions of the contract between such company and the insurants; and such contract of insurance shall be fully and wholly expressed and contained in the policy issued and the application therefor; nor shall any such company or its agents pay, or allow, or offer to pay or allow to any person insured any special rebate or premium, or any special favor or advantage in the dividends or other benefits to accrue on such policy, or promise the same to any person as inducement to insure, or promise to give any advantage or valuable consideration whatever, not expressed or specified in the policy of such company.” The argument, as we understand it, is that a discrimination as to the distribution of the surplus is made in favor of those who survive April 4,1915, the accumulation period, and against those who may die before that time; that the former are to be regarded as one class and the latter another. Assuming, for the sake of the argument, that all the policies issued by appellee, including those issued to appellant, contain the charter provisions as to the accumulation period and the distribution of surplus, we can not perceive that any discrimination is made in violation of the section last quoted. Each member or policy holder of the mutual company contracts with the company, which is practically contracting with all the other policy holders, that in the event of his death, whenever that may occur, a sum certain will be paid on his policy by the company, and that if he shall survive April 4,1915, he will receive an equitable proportion of the surplus. There is no discrimination against any member. Each member, in so far as surplus is concerned, makes the same contract. It is the same in principle as if • each member contracted for a sum certain in the event of his death, plus a certain percentage of such sum, in case he should survive April 4, 1915. Lastly, it is contended that the effect of the provision as to the accumulation period, April 4,1915, and the provision that no dividend shall be apportioned or paid before the end of that period, is that each policy holder bets with all the others that he will survive April 4, 1915, and therefore the provisions are in violation of section 181 of chapter 38, Hurd’s Rev. Stat. 1899, in respect to gaming contracts. We can not concur in the view that the contracts are wagers or bets within the meaning of section 131. Section 131 of the same chapter is as follows : “ Nothing contained in sections 131 and 132 above, shall be (so) construed as to prohibit or in any way affect any insurance made in good faith for the security or indemnity of the party insured, and which is not otherwise prohibited by law, nor to any contract of bottomry or respondantia." The averments of the bill do not sustain the view that appellant’s contracts of insurance were not made in good faith for his security or indemnity; and, as we have already held, they were not prohibited by law. The decree will be affirmed.