Equitable Life Assurance Society of the United States v. Commonwealth

JUDGE PAYNTER Delivered tiie Opinion of the Court — Reversing. This proceeding was instituted by filing a petition in the Todd circuit court. An amended petition was filed., — 129 — Tbe averments of these pleadings essential to be stated here are that the appellant, through its agent. Wilkinson, entered into a contract with one William Coleman whereby it agreed, in consideration that he would aid and use his Influence to procure another party to take out a policy of •insurance with it, it would issue to him a policy of insurance on his life, and without any payment of premium or other consideration in the fulfillment of the contract; that it issued and delivered to him the policy on liis life; that fhe contract was a distinction and discrimination in favor of him as to the amount and payment of premiums charged for policies of life insurance issued by it, which distinction and discrimination it did not make in favor of other parties of the same class and equal expectation of life to whom it issued policies of insurance; that the contract was not expressed anywhere in the policy; and that the amount of the policy is unknown to the plaintiff. A reversal is asked because it is claimed: (1) Section 1141, Kentucky Statutes', repeals sections 10 and 11 of the Criminal Code of Practice; that the action can not be maintained under that section of the statute. (2) That the proceeding is of the nature of an information, and that it is violative of section 12 of the Kentucky Constitution, which reads as follows: “No person, for an indictable offense, shall be proceeded against criminally by information, except in cases arising in the land or naval forces or in the militia, when in actual service in time of war or public.danger, or by leave of court for oppression or misdemeanor, in office.” (3) That section 65(5 of the Kentucky Statutes, is unconstitutional. It reads as follows: “No life insurance, company doing business in Kentucky shall make or permit any distinction or discrimination in favor of individuals between insurants of the — 130 — same class and equal expectation in life in the amount or payment of premiums or rates charged for the policies of life or endowment insurance, or in the dividends or other benefit payable thereon, or in any other of the terms and conditions of the contracts it makes; nor shall any such company or any agent thereof make any contract of insurance or agreement as to such contract, other than is plainly expressed in the policy issued thereon; nor shall any company pay or allow, or offer to pay or allow, as inducement to insurance, any rebate of premium payable on ■tin1 policy, or any special favor or advantage in the dividends or other benefit to accrue thereon, or any valuable consideration or inducement whatever not specified in the policy contract of insurance. Every company, or officer or agent thereof, who shall violate the provisions of this section, shall be fined in any sum not exceeding five hundred dollars, to be recovered by action in the name of the Commonwealth, and, on collection, paid into the State treasury.” (4) Defendant can not be made to furnish evidence against itself. (5) There is no evidence conducing to sustain the charge. We will consider the questions in the1 order stated. This court recently had under consideration questions similar to the first'- and second ones, raised in the cast1 of Louisville & N. R. Co., v. Com., 112 Ky., — (23 R., 1382), (66 S. W., 505), wherein it was held that section 1141, Kentucky Statutes, did not repeal sections 10 and 11 of tin1 Criminal Code1 of Practice; that.the law which authorized a proceeding like this was not violative of section 12 of the Constitution. In view of the recent consideration and discussion, we forbear to again give reasons for' answering both of the above propositions in the negative. As to the third proposition, it is urged that section 656 of the Kentucky Statutes is unconstitutional, because (a) — 131 — it is a denial of tlie free right of trade and traffic-, and therefore an abridgment of that right of liberty and property •guarantied by the Constitution; (b) that it prevents competition. This court, in Com. v. Equitable Life Assur. Soc., 100 Ky., 341 (18 R., 778) (38 S. W., 491), had under consideration a petition to recover a penalty denounced in section 650. No question seems to have been raised in that .case as to the constitutionality of the law. The court recognized that the Commonwealth had the right to recover the penalty named in the section. In the case of Com. v. Long (17 R., 207) (30 S. W., 628), the court had under consideration a proceeding under section 656. It. recognized the validity of the statute by adjudging what court had jurisdiction of the -proceeding to recover the penalty, although the constitutionality of the act was not questioned in that case*. The Legislature must be ’credited with the design, in the enactment of the statute under consideration, to benefit the public. Wise and prudent business', men not only regard that there is an obligation on them to» support and care for their families, during their lives, but that it is provident and wise to protect them against want by life insurance1. Of course, life is of uncertain duration.. Policies of life insurance may run for 40 or 50 years or more1, and those who buy them are deeply interested in having their policies issued in a solvent company. Every one who takes out a life insurance policy is interested in tlm solvency of the company. It is important that the business, of the company should be successfully conducted, and that •it should at the end of a long period be able, by collecting sufficient premiums to meet the demands of the beneficiaries, in the policies. The General Assembly evidently thought that it was wise to prevent insurance companies and their agents from engaging in a cut-rate business, and thus avoid — 132 — ■the dangers that might follow from the collection of insufficient amounts from the policy holders. These, perhaps, are the considerations which influenced the General Assem-. bly to enact the statute. Insurance companies are somewhat of a quasi public nature, and the law-making department so regarded them, because it established an insurance bureau to inquire into their condition, and see that certain laws enacted for the benefit of the public were enforced. The argument of counsel for the appellant is largely based upon what he believes to be an erroneous conception of the statute. The statute does not prevent competition of insurance companies in the matter of fixing the rates to be charged for policies of life or endowment insurance. It does not attempt .to require or authorize insurance companies to make a uniform rate fdr persons of specific ages or classes of policies. The statute, in effect, declares that, when a company fixes a rate for the insurance, of the same class and equal expectation of life, that rate shall be adhered to, without distinction or discrimination; that there shall be no .special contract as to dividends or benefits payable on the policy; that whatever contract of insurance is made betw'een the parties shall be written in the policy; that no company or agent shall pay or allow, as an inducement to insurants, any rebate on premiums payable on the policy, or any special favor or advantage in dividends or other benefits, or any valuable consideration or inducement whatever not specified in the policy contract of insurance. It is assumed by counsel for appellant that under this section the premiums must be paid in money-can not be paid in anything else. It is therefore argued that it is in restraint of trade; that it is an abridgment of that right of liberty and property guarantied by the Constitution. If counsel’s conclusions as to the meaning of — 133 — tlie section is correct, then the question which they discuss would arise. It is our opinion that- the section does not bear the interpretation given it. Of course, the law requires that the contract between the parties shall be expressed in the policy Among other things, it shall show the amount of premium to be paid; when payable; whether or not the beneficiary is to participate in the dividend; whether or not it. is an endowment policy, etc. The section does not say that the premium shall be paid in money. There is nothing in the section which would prevent an insurance company from accepting from the insured property in payment of the premium. Suppose that the annual premium was_ to be $100 on the policy on the life of A. A. did not have the money, but had a horse of the value of $100, and the insurance company desired to buy it, and would accept it in payment of the $100, and did so. It would not incur the penalty denounced by the statute. It would not be issuing a policy to A. on more favorable terms than one to B., who was of the same age and equal expectation of life, who was required to pay the same amount in money. A. paid his premium by giving the company its equivalent in a horse. If there was a recitation in the policy that A. had paid his premium, it would not be untrue, nor would it fail to express the terms between the parties. The premium was as fully discharged by the delivery of the horse as it would have been by the payment of the money. The •company had the right to employ Coleman to solicit business for it. It had the right to agree with him as to what his compensation should be. We are of the opinion that it is not a violation of the statute for the company to discharge its debt to Coleman by issuing a policy of insurance on his life, providing" he is charged the same rate that is charged other insurants of the same age and equal expee — 134 — tat ion of life. It would not be a violation of the statute if the contract had not recited how the premium was paid. The demands of the statute are satisfied when the regular rate of premium is charged, and that rate, etc., is stated in the policy. If an insurance agent or company should pay more for property than a fair value in accepting it in the payment of premiums, or should agree to pay one more for his services than they were worth to solicit business for the company, and either was done with the design to give the insured a rebate on premiums, etc., it would be a violation of the statute. In a proper case these questions of ■fact can be submitted to a jury under appropriate instructions. The Commonwealth has no right to make the defendant furnish evidence against itself in this case, any more than if it was a proceeding by indictment. All the defendant need do is to plead “Not guilty.” Then the Commonwealth must establish its case in the same manner as it would do if it was a proceeding under an indictment. This court so ruled in Louisville & N. R. Co. v. Com. The bill of exceptions does not show that any evidence was heard to establish the guilt of the defendant. The judgment is reversed for proceedings consistent with this opinion. Whole court sitting.