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HARTFORD LIFE INSURANCE COMPANY v. IBS.

decided: June 1, 1915.

HARTFORD LIFE INSURANCE COMPANY
v.
IBS.



ERROR TO THE DISTRICT COURT IN AND FOR THE COUNTY OF RAMSEY, STATE OF MINNESOTA.

Author: Lamar

[ 237 U.S. Page 665]

 MR. JUSTICE LAMAR delivered the opinion of the court.

On April 4, 1885, The Hartford Life Insurance Co. issued to Herman Ibs a certificate of membership in its Safety Fund Department which was conducted on the Mutual Assessment plan. The certificate provided that if the policy was kept in force, by the payment of all assessments duly levied upon all the members to create a Mortuary Fund, his wife should be entitled to receive at his death an indemnity of $2,000 payable out of such Mortuary Fund.

On May 2, 1910, under Call 127, he was assessed $35.95 to meet 145 claims which matured during the quarter ending March 31. He failed to pay and his policy was cancelled June 23, 1910. He died June 27 and thereafter his wife brought suit in a Minnesota court against the Company. It defended on the ground that the policy had been forfeited by reason of Ibs' failure to pay the assessment levied to meet the 145 claims. To this the plaintiff replied that most of these claims had been paid out of the Mortuary Fund during the quarter and that the balance of cash on hand March 31 was sufficient to have paid all of the other claims. Because of these facts she claimed the assessment of May 2 was both unnecessary and void.

In answer to this the Company insisted that the Fund was maintained as a source from which to make prompt

[ 237 U.S. Page 666]

     settlement of claims, but that such advances did not prevent the levy of the quarterly assessment which when collected was to be used in replenishing the Fund. In support of this defense it offered a certified copy of the decree of a Connecticut court, in the case of Dresser and Other Certificate Holders v. Hartford Life Ins. Co., in which it was adjudged that the Company had the right so to maintain and use the Fund. The plaintiff objected to the admission of this decree on the ground, among others, that she was not a party to the proceeding in which it was rendered. The court sustained her objections, excluded the decree, and directed a verdict in her favor. That ruling having been affirmed by the Supreme Court of the State (121 Minnesota, 310), the case was brought here by the Insurance Company on a record which raises the sole question as to whether the Minnesota courts failed to give full faith and credit to the judicial proceedings of another State as required by Art. IV, ยง 1 of the Constitution.

In order to answer that question it becomes necessary to make a brief statement of the facts giving rise to the suit and to the terms of the decree -- not for the purpose of determining whether the decision was correct but in order to decide whether the Connecticut court had jurisdiction to enter a decree binding on a beneficiary who was not a party to the proceeding.

The Hartford Life Insurance Company, though a stock corporation under the laws of Connecticut, had what was known as the "Safety Fund Department," conducted on the Mutual Assessment plan. The Company kept the books, levied the assessments, deposited the collections in the Mortuary Fund, and paid claims therefrom as they matured. It was not otherwise liable on the policies.

The Mutual Insurance plan contemplated the creation of a Safety Fund of $1,000,000 from membership fees. In addition to this there was to be a Mortuary Fund, raised

[ 237 U.S. Page 667]

     by graduated assessments levied on all the members for use in payment of death claims. These assessments were levied periodically and provision was made that in fixing the amount to be levied an allowance should be made "for discontinuance in membership." It so happened that the lapses were not so numerous as had been estimated and consequently each assessment realized something more than was needed to pay the matured claims. This difference, between the collections and the insurance paid, was retained in the Mortuary Fund and, in time, the "excess margins" amounted to nearly $400,000.

In 1908 the Hartfore Life Insurance Company determined to discontinue the Safety Fund Department and to write no more insurance on the Assessment plan. Thereafter no new members were admitted. This change of policy was the occasion of a disagreement between the Certificate-Holders and the Company. Accordingly, Dresser and thirty other members, residing in different States, brought suit in a Connecticut court, "in their own behalf and on behalf of all others similarly situated," against the Company, its Directors and Trustees. The Bill attacked the management of the Company and, among other things, insisted that it had been and was still levying assessments too many in number and too large in amount. The Bill also alleged that the Company had recently decided to discontinue writing insurance on the Assessment plan and was endeavoring to induce members to surrender their Certificates and to take out ordinary life policies in the Company's stock department. By reason of this change of policy and ...


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