Mutual insurance

“ One mutual employer's liability insurance company is already doing business and others are about to be organized. A committee of the State Bankers' Association is at work formulating a plan for the organization of a bankers' mutual insurance company for the protection of depositors. Provision has been made for the granting of life insurance and annuities by the state in the state life fund on an absolutely safe plan of collecting a sufficient advance premium and returning the savings. ”

“ Where there is mutual insurance or municipal insurance in its best sense, the losses by fire and the costs of the protection are often booked in one account, and the better protection up to a certain point should mean a smaller individual annual share. Where there is company insurance the municipal rates are increased to cover the cost of extra protection, while a proportionate decrease is expected in the insurance premiums. Competition and public opinion generally impose this decrease of the insurance rates as soon as there is a greater immunity from fire. ”

“ However, premium-institutions are more easily capable of extending the circle of their business; [237a-10] which of itself decreases the general expenses and strengthens their insuring power. Premium-insurance supposes a greater development of capitalistic speculation than does mutual insurance. But, even in the highest stages of civilization, the competition of some mutual insurance companies is desirable to protect the insured from a too high rate of profit to the insurers. ”

“ Mutual insurance may accomplish something analogous to that accomplished by a joint-stock fund by collecting a reserve of yearly dues in advance, thus modifying the burdensome vacillation of the amount payable each year. ”

“ Mutual fire, mutual marine, and mutual life insurance companies are analogous in that each performs the service called insuring wholly for the benefit of their policy holders, and not like stock insurance companies in part for the benefit of persons who as stockholders have provided working capital on which they expect to receive dividends representing profits from their investment. ”

“ The contract of insurance is a peculiar contract, especially when made with a mutual insurance company, for although in terms a contract with a corporation it is in substance a contract between the insured and all other members of that company. The character of this contract was fully considered and discussed by this court in New York L. Ins. ”

“ Looking at the nature and object of life insurance, can it be supposed to be within the contemplation of either party to the contract that the company shall be liable upon its promise to pay, where the assured, in sound mind, by destroying his own life intentionally precipitates the event upon the happening of which such liability was to arise?
Life insurance imports a mutual agreement, whereby the insurer, in consideration of the payment by the assured of a named sum annually, or at certain times, stipulates to pay a larger sum at the death of the assured. ”

“ Provided, that domestic industrial insurance companies shall in no case be required to deposit more than the legal reserve on their policies, but not less than $1,000, which said deposit may be made at the rate of $500 a year, on April 1st, of each year, until the whole be deposited; each domestic mutual life insurance company doing business on a recognized table of mortality with interest assumption not higher than 4 per centum per annum, not less than $3,000. ”

“ You have paid the full cost of your insurance for the years it has been in force, and have contributed a reserve which, in part, is to meet the expense of later years. If you drop your policy, obviously, justice demands that you take this reserve cost with you. If it is not paid back, clearly you have contributed money for which you have received no insurance equivalent. Inasmuch as a mutual company ostensibly seeks to furnish insurance at its actual cost and give value received for every penny paid in, surrender values are an essential part of its structure. ”

“ The policy in question might, in our opinion, be sustained as a joint insurance, without reference to any other interest, or to the question whether the cessation of interest avoids a policy good at its inception. We do not hesitate to say, however, that a policy taken out in good faith, and valid at its inception, is not avoided by the cessation of the insurable interest, unless such be the necessary effect of the provisions of the policy itself. ”

“ The beneficiary has an interest in the contract, and as between the insurer and the beneficiary all the rights and obligations of the parties are not determined as of the date of the death of the insured. The incontestable clause in a policy of insurance inures to the benefit of the beneficiary after the death of the insured as much as it inures to the benefit of the insured himself during his lifetime. ”

“ But the company, ignoring the differences in the provisions concerning fire and marine companies respectively, insists that mutual life insurance rests upon the same principles as mutual fire and marine, and that as the clauses concerning fire and marine companies provide specifically for noninclusion in or deduction from gross income of all portions of premiums returned, Congress must have intended to apply the same rule to all. Neither premise nor conclusion is sound. ”

“ The policy must, we think, be held to be a valued policy.' And, after referring to a policy of insurance obtained by a sister on her brother's life, where no question seemed to have been made as to the amount, but only whether it was an interest which the law would recognize, the court said: 'So, in every case, where a person on his own account insures the life of a relative, if the sum named in the policy is not to be the rule of damages, we inquire what is? ”

“ And it is further understood and agreed that, so soon as said building or buildings shall be in a situation to be insured, said party of the second part shall cause the same to be insured in some good and responsible insurance company, in the fair insurable value thereof, and assign and deliver the same to said party of the second part, and, as soon as said building shall become so insurable, all the provisions contained in said above-described mortgage shall apply to said insurance, and said conditions are hereby made a part of this agreement. ”

“ There are two kinds of Insurance Companies, one known as a "Mutual" office, in which all the profits which may be earned are periodically added to the amount insured, the other in the form of a Joint-Stock Company, in which a small proportion of the profits are distributed amongst the Shareholders and the remainder added to the Insurances. The Mutual Office dividing the whole of its profits amongst the insured would appear to be the more advantageous of the two, and undoubtedly it is, all other things being equal ”

“ The appellant Francis asserts he is denied equal protection because agents of mutual insurance companies may be licensed even though their compensation consists of a salary rather than commissions. The answer sets up that mutual insurance companies are organized on a different basis from stock companies, do business in a wholly different way and sustain an altogether different relation to their policy-holders than do stock companies. ”

“ The leading mutual life insurance company has property exceeding $204,000,000 in value, the income of which is wholly exempted. The insertion of the exemption is stated by counsel to have saved that institution fully $200,000 a year over other insurance companies and associations, having similar property and carrying on the same business, simply because such other companies or associations divide their profits among their shareholders instead of their policy holders. ”

“ To hold otherwise would be to maintain that the contract of insurance requires good faith of the assured only, and not of the insurers, and to permit insurers, knowing all the facts, to continue to receive new benefits from the contract while they decline to bear its burdens. ”

“ It is doubtless an interesting question how far the action of the insured can affect or bind the beneficiaries in a life-insurance policy. If the answer in this case contained simply the allegation in respect to the insured's agreement with the company, we should be compelled to enter into an examination of that question; but it is alleged, not only that the insured and the company agreed to abandon the contract, but also that the beneficiary, his wife, and the plaintiffs, their children, 'failed, neglected, and refused' to pay the premium. ”

“ It is enough to say that they do not, in fact, arise in the instant case, and they could not arise except as a result of the contract, whose words the insurance company itself selected and by which it is bound. ”

“ It is further insisted, that by the law merchant insurance can be effected only by a contract in writing. We do not doubt that the commercial law of all countries has treated of insurance as made in writing by an instrument, denominated by us a policy; and there may be provisions of positive law, in some countries, requiring an agreement to make a policy to be in writing. ”

“ It was not liable to be reduced on account of dividends or for any other reason, and the insured, therefore, knew the exact amount to be paid in order to prevent a forfeiture of the policy. Now, although the policy issued upon Riddle's life required payment annually of a specific sum as a premium, that stipulation must be construed in connection with the agreement set out in the application, that the premium might be discharged pro tanto by such dividends as were allowed to the insured from time to time. ”

“ In all these countries, indeed, corporate enterprise on a large scale, in every branch of business, is of comparatively late growth, and mutual fire insurance was a familiar practice long before joint-stock companies entered upon this field of activity. The tendency in the large cities and commercial centres is to throw new insurances into the business corporations, while the time-honoured mutual associations retain their standard character and customary clientage. ”

“ The money was paid to the agent at Washington on that day. The insurance was post-dated so as to include that day. The full amount of the premium for one year was paid by the applicant, viz., $137.50. The company cut off the insured from two and a half months of his policy when they issued it on the 1st of October, and dated it as of July 16, although taking payment of the premium for a year. ”

“ They thus force the insured, during the first half of the premium paying period, to advance a considerable amount on the insurance cost of the latter half. These advance payments, with accumulated interest, are the company's reserves. The Mutual Life, for example, collects each year about $60,000,000. from its policy-holders; but pays in death losses only about $20,000,000. Its $40,000,000. balance, after deducting expenses and other larger disbursements, is really the advance payment of the insurance cost of succeeding years ”

“ Ten years' annual "dividends" in the old-fashioned companies regularly amount to more than the ten-year "dividend" in the New York companies. In fact, the showing is so much against the latter companies that they no longer publish their results. The same is true of the fifteen-year periods. If you took a $10,000. policy at forty—or almost any other age—in the Connecticut Mutual in 1890—your insurance cost—the premiums for 15 years, less the cash value at the end of 15 years—would amount to $776.50. ”

“ Mutual Reserve Life Insurance Co., supra, and Provident Savings Society v. Kentucky, supra, that an insurance corporation is not doing business within a state merely because it insures lives of persons living therein, mails notices addressed to beneficiaries at their homes and pays losses by checks from its home office. See, also, Pembleton v. Illinois Commercial Men's Association, 289 Ill. ”

“ Div. 363, on which the insurers relied at the argument, did not arise on a question including several interrogatories as to whether another application had been made, and with what result, and the amount of existing insurance, and in what company. But the application or proposal contained two separate questions,-the first whether a proposal had been made at any other office, and, if so, where; the second whether it was accepted at the ordinary premium, or at an increased premium, or declined ”

“ The said insurance to date from Aug. 7, 1869, subject to the conditions and agreements of the policies of said company, provided that the said application shall be accepted by the said company, and a policy be by them granted thereon. ”