Opinion
No. 32777.
October 25, 1937. Suggestion of Error Overruled November 8, 1937.
1. INSURANCE.
The insurance commissioner has power to cancel burial insurance licenses only in cases provided by statute (Code 1930, sections 3998, 4002; section 3990 et seq., as amended by Laws 1932, chapter 290; section 3995, as amended by Laws 1932, chapter 290, section 2; section 3999, as amended by Laws 1932, chapter 290, section 4).
2. INSURANCE.
The insurance commissioner could not cancel burial insurer's current license on ground of insurer's refusal to accept new rate and contract form adopted by insurance commissioner, and hence could not enjoin insurer's continuing in business without license (Code 1930, sections 3998, 4002; section 3990 et seq., as amended by Laws 1932, chapter 290; section 3995, as amended by Laws 1932, chapter 290, section 2; section 3999, as amended by Laws 1932, chapter 290, section 4).
APPEAL from the chancery court of Lincoln county. HON. V.J. STRICKER, Chancellor.
W.W. Pierce, Assistant Attorney General, for the state.
The main question involved in this case is whether or not a person engaged in the burial association business can lawfully issue contracts in advance of death to bury or pay the funeral expenses of any person in this state without the rate charge therefor being approved by the Insurance Commissioner. All other questions are merely incidental to the main question.
The Commissioner of Insurance has the right to withdraw his approval of rates used by a burial association.
Fikes v. State, 87 Miss. 251.
Burial contracts are insurance contracts and subject to regulation by the Insurance Commissioner. The authorities are not all agreed as to whether or not burial contracts are insurance contracts. However, a majority of the courts hold that a burial contract is an insurance contract. The Mississippi Supreme Court has aligned itself on the side of a majority holding such contracts to be insurance contracts.
Fikes v. State, 87 Miss. 251.
We refer the court to the following cases from other jurisdictions to the effect that burial contracts are insurance contracts.
State v. Willett, 86 N.E. 68; Smith v. Bullard, 61 N.H. 381; Oklahoma Southern Burial Assn. v. State, 63 A.L.R. 704; Session, ex rel. Nordallio v. Prata Undertaking Co., 141 A. 76; Rouchler v. State, 187 N.E. 758; State, ex rel. Fishback v. Globe Casket Undertaking Co., 82 Wn. 124.
Under the police power the state can regulate insurance and provide what contracts may be issued and upon what terms.
Assurance Co. v. Walker, 99 Miss. 404; German Alliance Ins. Co. v. Lewis, 233 U.S. 389, 58 L.Ed. 1011; State v. Allen, 96 Miss. 720.
The statutes of this state require that the rates charged by burial associations must be in all cases subject to the approval of the Insurance Commissioner, which is a prerequisite to the lawful exercise of the right to issue burial and funeral benefit contracts.
Sections 3990, 3191, Code of 1930; Sec. 1, Chap. 290, Laws of 1932; Lewis v. Simpson, 176 Miss. 123.
We respectfully submit that if a person can engage in the burial association business and write contracts in advance of death to bury or pay the funeral expenses of any person without the approval of the rates to be charged therefor, then the statute can have no meaning at all. It leaves burial associations to operate at will and without supervision.
We respectfully submit that the trial court erred in refusing to grant the injunction prayed for and in dismissing the bill of complaint.
The rates charged by appellee without the approval of the Insurance Commissioner are inadequate for proper fulfilment of a burial contract.
The burden of showing that the rates are reasonable are upon the appellee.
Aetna Ins. Co. v. Commonwealth, 169 S.E. 859.
Hugh V. Wall, of Brookhaven, and Breed O. Mounger, of Tylertown, for appellee.
For a decision in this case, we look solely to the Mississippi statutes. There is no common law on the subject and the Mississippi statutes are our sole guide.
Chapter 197, Laws of 1928; Chapter 93, Code of 1930; Chapter 290, Laws of 1932; Section 3991, Chapter 290, Laws of 1932; Section 3991, Chapter 93, Laws of 1930.
Section 3995 of the Laws of 1932, Chapter 290, provides that before any person, firm, etc., can do a burial association business in Mississippi he must deposit with the Treasurer of the State securities approved by the Insurance Commission of the par value of not less than $500 for each $125,000 or fraction thereof of the face value of the certificates in force but the minimum of said securities shall be $1000 par value and the maximum amount of said securities shall not exceed $10,000. The defendant complied with this law and it is admitted that he placed with the Treasurer of the State $11,000 worth of bonds and approved by the Insurance Commissioner.
Section 3996, Chapter 290 of the Laws of 1932, provides for the filing of an annual report before the 15th day of February of each year. This was done by the defendant and admitted by the complainant.
Section 3999 of Chapter 290 of the Laws of 1932 provides that the Insurance Commissioner shall have authority to examine the books of any person engaged in the burial association business at any time, for which the association shall pay $100 per year, and if, upon such examination it appears to the Commissioner that such person is insolvent he has the power to cancel his license.
The statutes are conclusive and are to be construed as they are written and the only power that is given to the Insurance Commissioner to cancel permits is provided: (1) Failure to promptly pay obligations, Section 3998, Code of 1930. (2) Refusal to permit the Insurance Commissioner to examine the books, etc., Section 3999, Code of 1930, as amended by the Laws of 1932, Chapter 290. (3) Receiver to be appointed when person engaged in burial association business refuses to carry out his contract or is insolvent, Section 4002, Code of 1930. (4) If person, etc., engaged in the burial association business should write contracts in excess of $150 he would then be engaged in the life insurance business, 3rd par., Section 3995, Laws of 1932.
We say that the Chancellor construed the action of the parties in the light of reason and held that the fact that the defendant did not physically resubmit this rate for the approval of the present Insurance Commissioner was not necessary, because the Insurance Commissioner said on the witness stand that he would not have approved it, and further the defendant actually submitted to the Insurance Commissioner his rate and the Insurance Commissioner declined to approve it.
After having issued the permit and after calling on the defendant for additional bonds, and after having accepted the privilege license fee, knowing that the defendant was asking permission to carry on a burial association business at the rate of $1 per family as shown by the evidence in this case, the Commissioner then files a bill in the Chancery Court and asks the court to enjoin the defendant from doing the business that he licensed him to do.
The Chancellor in his decree adjudicates the questions involved in this lawsuit; based upon the facts and under an unbroken line of decisions of this court, such finding of facts by the Chancellor will not be disturbed unless palpably wrong.
Our position is that appellee was operating under an approved rate and contract when the present Insurance Commissioner went into office; that the rate was reasonable and the Insurance Commissioner gave notice that he would not approve the rate, and that he was cancelling the appellee's contract and rate, not on the ground that appellee had not submitted it to him, but on the ground that it was unreasonable. We do not contend that if appellee had a rate which had been approved by an Insurance Commissioner prior to the time that the present insurance commissioner went into office which was unreasonable that it would be binding upon the present insurance commissioner. Our contention is that we were operating under a reasonable rate, with the approval of the Insurance Commissioner prior to January 1, 1936, and that after the appellee received notice from the present Insurance Commissioner that he would not approve his rate, it was not necessary for the appellee to then physically resubmit the rate under which he was doing business to the present Insurance Commissioner because it would have been doing an unnecessary thing, and we submit and we say the Chancellor so held that for all practical purposes the appellee did submit to the present Insurance Commissioner his rate when he went into office and the present Insurance Commissioner refused to approve it, and we say further that, in effect, appellee did physically submit his rate and contract to the present commissioner when he went in office, in that after the Insurance Commissioner had given him notice that he was cancelling his contract, he, the Insurance Commissioner, with the rates on file before him and with the contract before him issued to this appellee a permit, and we say that this is tantamount to a physical submission of appellee's rate and contract to the Insurance Commissioner and when he issued to the appellee a permit to do business we say he thereby approved appellee's rate and counsel is in error when he states that our main contention is that the Insurance Commissioner could not withdraw an approval of his predecessor.
Under counsel's construction of the statute the appellee, who has spent twenty-five years of his life in building up a profitable business, would have to abandon it, notwithstanding he had done all the law required of him, on the ground that an insurance commissioner conceived it to be his authority that he could be the sole judge of what was a reasonable rate and there was no appeal from it.
The Insurance Commissioner of the State of Mississippi has no authority to promulgate and prescribe forms of contract and schedules of rates which shall be charged by all burial associations.
Chapter 290 of the General Laws of Mississippi, 1932, which we urge controls the rights of the parties in this case, does not by remotest inference bestow upon the Insurance Commissioner the authority to prescribe the form of contract which a burial association proposes to issue.
As a matter of established fact in this case, the appellant, the Insurance Commissioner, proclaimed the form of contract and the schedule of rate which he demanded every burial association to write and adhere to and gave notice he would approve no other. The appellee declined to conform to this decree on the part of the insurance commissioner, but applied for permit based upon the rate he had been under for about twenty-five years and the Insurance Commissioner issued the permit and later filed this suit for injunction. Thus we urge that the power and authority claimed by the appellant and upon which he predicated this action is not conferred by the controlling statutes.
The court below, upon the hearing, found the rate charged by the appellee to be fair and reasonable.
Argued orally by W.W. Pierce, for appellant, and by Hugh V. Wall, for appellee.
Appellant, the State of Mississippi, on relation of Greek L. Rice, Attorney General, filed its bill against appellee, Frank H. Hartman, doing business as the Frank H. Hartman Burial Association, seeking to enjoin appellee from issuing, or causing to be issued, burial insurance contracts. Hartman filed an answer thereto, and after a hearing the court below dismissed the bill and the Attorney General appeals here.
The bill charges that Hartman was engaged in issuing, in advance of death, contracts containing agreements to pay the funeral expenses of persons, the rate being $1 upon the delivery of the contract, and the further payment of $1 per month per family, without regard to the number of its members. The bill also charges that on February 17, 1936, John S. Williams 3d, the insurance commissioner, approved a form of contract and the rates to be charged by all persons, firms and corporations engaged in this State in issuing contracts providing for funeral benefits, including appellee, and providing that after March 1, 1936, in this State, contracts must be in conformity with such forms and rates, and subsequently, on March 14, 1936, the insurance commissioner wrote to Hartman that the approval of all forms of burial contracts and the rates to be charged therefor was withdrawn as of March 1, 1936. The bill further charges that Hartman ignored these letters and continued to write burial insurance in conformity with the regulations of September 8, 1932, which had been withdrawn, and continued to ignore the efforts of the insurance commissioner to change the rates so as to make them uniform, and that the complainant, the insurance commissioner, was without an adequate and complete remedy at law.
Hartman filed an answer setting up the contracts of burial insurance which he had been writing since 1928, and the rates charged, and that they were reasonable, while the rate adopted by the insurance commissioner was unreasonable, and that since 1932 the insurance commissioner had issued to him permits and licenses to conduct a burial insurance business.
We think it is unnecessary to go into detail as to the pleadings or proof in this case. The proof shows that the insurance commissioner, on March 1, 1936, had issued a permit and a license to Hartman to conduct a burial insurance business in Mississippi, but the contention of the insurance commissioner is that, under the statutes found in chapter 93, Code 1930 (section 3990 et seq.), as amended by chapter 290, Laws 1932, he had the power to withdraw approval of rates, and, inferentially, cancel permits and licenses.
An examination of this chapter and its amendment shows that power is granted to the insurance commissioner to cancel licenses only in the following cases:
(1) For failure to pay obligations. Section 3998, Code 1930.
(2) For refusal to permit the insurance commissioner to examine the books, etc. Section 3999, Code 1930, as amended by chapter 290, section 4, Laws 1932.
(3) A receiver to be appointed when the person or corporation engaged in the burial insurance business refuses to carry out his or its contract, or is insolvent. Section 4002, Code 1930.
(4) When persons engaged in the burial insurance business write contracts in excess of $150, as then they would be subject to the regulations controlling the life insurance business. Section 3995, chapter 93, Code 1930, as amended by chapter 290, section 2, Laws 1932.
The insurance commissioner is not permitted, by the controlling statutes, to withdraw permits and licenses for any other reasons. Hartman had been authorized to carry on his business by the insurance commissioner until March 1, 1937, and an injunction to prevent his doing so will not lie.
We have not discussed any other questions presented, and express no opinion as to the meaning of the various sections of the statutes involved.
Affirmed.