James Clark McReynolds

“ The plaintiff has a form of contract of employment with many of its soliciting agents under which, if such agents for a period of 20 years continuously devote their entire time, talents and energies in soliciting applications for insurance, and if they shall for the 20 years accomplish certain prescribed minimum results, then at the end of twenty years of such service each such agent becomes entitled to an income for life payable monthly, the amount of the payment being based upon the results obtained by each such agent during the twenty year period. ”

“ We there pointed out the probable reason for the permitted noninclusion in the net income of a life insurance company of 'such portion of any actual premium received from any individual policy holder as shall have been paid back or credited to such individual policy holder, or treated as an abatement of premium of such individual policy holder, within such year.' Here it is insisted that within the meaning of the quoted provision each deferred dividend policy holder's overpayment was actually credited to him during the year ”

“ But, under the policies on the lives of those who had become totally and permanently disabled and whose contracts provided for the waiver of the payment of future premiums, no future premiums will be received by the plaintiff, and therefore the net reserve reported for these policies in understated to the extent of the value of these future premiums. ”

“ The difference between their sum and the total of advance payments and other income, then becomes the 'overpayment' or surplus fund for immediate pro rata distribution among policy holders as dividends or for such future disposition as the contracts provide. An 'annual dividend' policy holder receives his proportionate part of this fund each year in cash or as a credit upon or abatement of his next premium. ”

“ Obviously, no actual ascertainable loss had occurred. All of the securities might have been sold thereafter above cost. The result of the venture could not be known until they were either sold or paid off. 3. ”