
    Robbins v. Hennessey et al.
    
      Laws governing insurance — Section 289, Revised Statutes — Constitutional exercise of power of General Assembly — Part of contract of insurance — Assignment of contract providing for burial expenses- — Violative of statute, and void, when.
    
    1. Section 289, Revised Statutes, as amended April 9, 1908, is a constitutional exercise of the right of the General Assembly of Ohio to control the business of insurance, and the provisions of this section become a part of the contract of insurance and equally binding on all parties to the contract.
    2. An assignment of a contract of insurance issued by a company, corporation or association engaged in the business of providing for the payment of funeral, burial, or other expenses of deceased members, or certificate holders therein, or engaged in the business of providing any other kind of insurance, to any designated undertaker, or undertaking concern, or to any particular tradesman, or business man, is in violation of the provisions of said section and void.
    No. 12827
    Decided June 5, 1912.
    Error *to the Circuit Court of Miami county.
    The original action was brought by William Hennessey to recover on a policy of insurance issued by the defendant in error, The Ohio Burial Insurance Company, on the 9th day of March, 1909, to William Hennessey on the life of his wife, Mary Hennessey. The petition avers the corporate character of the insurance company, the issuing of the policy, the payment of weekly premiums thereon from the date of its issuance until the death of the wife, which occurred April 27, 1909, about one month and a half after the policy was issued, notice of her death to the company, and a prayer for judgment for $100. The policy provided for the payment of $34.00 if she died within six months after the issuing of the policy, and $68.00 if she died after six months from the date of the policy. The wife having died within the six months, judgment was given for $34.00. The Ohio Burial Insurance Company filed an affidavit averring that E. S. Robbins, who is now the plaintiff in error in this suit, made a claim to the subject of the action, and asking that it be permitted to pay said sum of $34 into court; that E. S. Robbins be made a party plaintiff and that the plaintiff and Robbins litigate their respective right to the fund. Such order was made, and Robbins accordingly filed an answer and cross-petition. The issue in this case, arises on the cross-petition. The cross-petition admits the issuing of the policy to William Hennessey upon the .life of Mary Hennessey, his wife. It averred that at the time the policy was issued, William Hennessey was a member of The Miami County Benefit Association, and by virtue of such membership was entitled to receive from said association upon the death of Mary Hennessey certain funeral and funeral outfit and furnishings for the use and benefit of Mary Hennessey; that William Hennessey was about to withdraw from said benefit association at the time of the issuing of this policy by the defendant company; that he entered into a contract with Robbins that in consideration of the assignment to him by William Hennessey of the policy in The Ohio Burial Insurance Company, and of the moneys to be paid thereunder at the death of Mary Hennessey, Robbins would furnish to and for the use of Mary Hennessey the benefits of funeral and funeral outfit and furnishings to which William Hennessey was entitled as a me'mber of The Miami County Benefit Association; that William Hennessey did then and there execute and deliver to Robbins an assignment of the policy issued to him by The Ohio Burial Insurance Company, the contract in that behalf being' as follows:
    
      “Know all Men by these Presents: That we, E. S. Robbins in consideration of Policy No. 4806 in The Ohio Burial Insurance Company to be paid to us, at the time of the death of Mary Hennessey, do hereby agree to furnish to, and for the said Mary Hennessey the benefits specified in Policy No. 4251 issued by The Miami County Benefit Association.
    
    “I, Wm. Hennessey, hereby agree that there shall be paid to said E. S. Robbins upon the completion of the foregoing covenant on said E. S. Robbins’ part to be performed, the amount of The Ohio Burial Insurance Company’s Policy No. 4806, and to secure the payment of said amount I, Wm. Hennessey, do hereby assign to said E. S. Robbins, all of my right, title and interest in, under, and to Policy No. 4806 in The Ohio Burial Insurance Company of Cincinnati, Ohio, and hereby deliver the same to said E. S. Robbins.
    “Signed and executed in duplicate, this 9th day of March, 1909.
    “Signed, Wm. Hennessey, “E. S. Robbins.”
    “In presence of “Wm. Potts.”
    
      The cross-petition further averred that William Hennessey performed all the conditions on his part to be performed; that Mary Hennessey died as stated in the petition; that proofs were properly made and accepted by the company; that upon the death of Mary Hennessey, the cross-petitioner, E. S. Robbins, tendered and offered to William Elennessey to furnish to him for the use and benefit of Mary Hennessey all the. benefits that William Hennessey was entitled to receive as a member of The Miami County Benefit Association and the funeral and funeral outfit and furnishings that William Hennessey was entitled to receive for Mary Hennessey, then deceased, but that William Hennessey, without lawful reason or excuse therefor, refused and declined to accept from this defendant the benefits aforesaid, or the funeral or funeral outfit and furnishings for Mary Hennessey; that the cross-petitioner was ready, anxious' and willing, and is now ready, anxious and willing to furnish to William Hennessey and does in open court tender to Wm. Hennessey the benefits and funeral and funeral outfit and furnishings for Mary Hennessey, deceased.
    To this cross-petition William Hennessey filed a general demurrer, which was ■ sustained by the common pleas court of Miami county, and plaintiff in error not desiring to plead further judgment was entered awarding the money in dispute to William Hennessey. A motion for new trial was overruled, error prosecuted in the circuit court of Miami county, which court affirmed the judgment of the common pleas, and this proceeding in error is prosecuted in this court to reverse the judgment of the comriion pleas court and the judgment of the circuit court affirming the same.
    
      Messrs. Dempsey & Nieberding; Mr. Jacob A. Davy and Mr. Alonso G. Duerr, for plaintiff in error.
    The inhibitory provisions of Section 289, as so amended, do not operate upon either the insured or the beneficiary in a policy. The section operates only upon the insurer.
    If the section, as amended, did, even expressly, forbid such assignment or transfer as is contended for, it.would be unconstitutional and void, as infringing the constitutional rights, not only of the person insured, and of the beneficiary, but also of the undertaker, or designated tradesman, to whom the policy had been assigned.
    Section 1, Article I, Constitution of 1851, guarantees to every citizen of Ohio the right to acquire, possess and protect property.
    The right to contract and the right to labor are property, and, in this view, the right to carry on any kind of business, or engage in any occupation, is property. 1 Lewis on Eminent Domain, Sec. 245.
    It will not be assumed that these outside undertakers, or any of them, would give the deceased a more decent burial than the assignee of the policy, or that the employment of said assignee would result in any inconvenience to the family. For this reason this statute cannot be sustained as an exercise of the police power. The statute is sought to be supported on a false basis. Ex parte Drexel, 
      147 Cal., 763; State v. Ramseyer, 73 N. H., 31; Palmer v. Tingle, 55 Ohio St., 423; In re Preston, 63 Ohio St, 428; State v. Robins, 71 Ohio St., 273; Miller v. Crawford, 70 Ohio St., 207; Niagara Fire Ins. Co. v. Cornell, 110 Fed. Rep., 816.
    The assignment of the policy by the insured, or beneficiary, even if consented to by the insurance company, does not constitute a promise by the company to pay, or a contract to pay, the assignee.
    Nor is a payment by the insurance company under an assignment, such a payment as contravenes said Section 269, as amended. Bispham’s Equity, Sec. 165; 2 Am. & Eng. Ency. Law (2 ed.), 1095, 1098; Sullivan v. Visconti, 68 N. J. L., 543; Parkhurst v. Dickerson, 21 Pick., 307; Dubois v. Doubleday, 9 Wend., 318; lessel v. Insurance Co., 3 Hill, 88; McKinney v. Alvis, 14 Ill., 33.
    What insurable interest must Robbins- have to warrant an assignment to him, outside of Section 289?
    So far as the facts disclose, we submit that Robbins may take this assignment without having any insurable interest whatever, and cite Eckel v. Renner, 41 Ohio St., 232; Ryan v. Rothweiler, 50 Ohio St., 595; Clark, Admr., v. Allen, 11 R. I., 439.
    But the contract between Hennessey and Robbins in relation to furnishing funeral and supplies and outfit, for Mrs. Hennessey, created an insurable interest in Robbins, as between him and Hennessey. Coshocton Glass Co. v. N. W. Mutl. Life Ins. Co., 13 C. C, N. S„ 240.
    A life policy, valid in its inception, may be assigned to one having no insurable interest in the life insured, if the assignment is bona ñde, and not a mere device to evade the law, or cover a gambling transaction.
    Mutuality of obligation is undoubtedly necessary to every contract where the promises are executory on both sides; but to show mutuality the obligation may be implied as well as express. Although on its face and by its express terms the contract is obligatory on one party only, yet if the intention of the parties, and the consideration on which the obligation is assumed, is that there shall be a correlative obligation on the other side, the law will imply it. 9 Cyc., 333; Lewis v. Atlas Mut. Ins. Co., 61 Mo., 534; Minneapolis Mill Co. v. Goodnow, 40 Minn., 497; Bangor Furnace Co. v. Magill, 108 Ill., 656; Black v. Woodrow, 39 Md., 194; Railroad Co. v. Brown, 26 Ohio St., 223; Canton Co. v. Railroad Co., 79 Md., 424; Spear v. Orendorf, 26 Md., 37.
    
      Mr. A. B. Campbell; Mr. Edward I. Dempsey; Mr. T. H. Hennessey; Messrs. Southard & Southard; Mr. Wm. C. Rowe and Mr. Charles I. Pretzman, for defendants in error.
    As we view this case there are two other questions involved. The first is: Can a person, who is not related to the insured, have a policy issued in his favor, or can he have an assignment of the policy from the beneficiary, when he is not related? And second: Is there any consideration passing in the assignment of this policy?
    As to the first proposition, it is not contended, and it is not a fact that E. S. Robbins was related to the insured. He, therefore, could not have a policy issued directly in his favor, under the laws of Ohio. Evans v. Moore, 7 C. C, N. S., 123; Russell v. Grigsby, 168 Fed. Rep., 577; Warnock v. Davis, 104 U. S., 775; Ryan v. Rothweiler, 50 Ohio St., 601; Newmore v. Western & So. Life Ins. Co., 8 C. C, N. S., 308.
    It is unlawful for The Ohio Burial Insurance Co. fo agree to pay or to pay this insurance to E. S. Robbins. State, ex rel., v. Ackerman et al., 51 Ohio St., 163; John Hancock Life Ins. Co. v. Warren, 59 Ohio St., 53; 22 Cyc., 1387.
    The cross-petitioner sues for the total proceeds of the policy when he is not entitled to anything except damages even if the undertaker’s contract of March 9, 1909, were not contrary to law. Doolittle & Chamberlain v. McCullough, 12 Ohio St, 360; Welision Coal Co. v. The Franklin Paper Co., 57 Ohio St., 182.
    E. S. Robbins had no insurable interest in the life of Mary Hennessey, and the contract between him and William Hennessey is a wager contract and illegal and void. State v. Willett, 171 Ind., 296, 23 L. R. A., N. S., 197; Insurance Co. v. Schott & Sons Co., 11 C. C., N. S., 401, 83 Ohio St, 507.
   Donahue, J.

It is difficult for this court to determine just what importance should be attached to the averments of the cross-petition that William Hennessey was a member of The Miami County Benefit Association, a corporation of Miami county, and that at and about the time he undertook to assign this policy issued by The Ohio Burial Insurance Company to E. S. Robbins he was about to withdraw from this benefit association, and that the contract of assignment provided that Robbins should furnish the benefits specified in Policy No. 4251 issued by The Miami 'County Beneñt Association.

Counsel inform us in their briefs that prior to April 9, 1908, there was in this state a form of mutual benefit corporation known as burial associations. The purpose of these associations was to provide at their death a funeral and proper burial for the members, and these associations were organized on the mutual benefit plan, the members contributing a stipulated sum weekly, in consideration of which the association contracted to give on a particular member’s death a proper funeral with certain stipulated funeral furnishings and outfit, which were to be furnished by and through a designated undertaker known as the association undertaker or official undertaker, and we take it that Policy No. 4251, issued by The Miami County Benefit Association, and referred to in the contract of assignment of the policy herein sued upon, was in the nature of these contracts. On April 9, 1908, the legislature of this state passed an act entitled: “An act to amend Section 289 of the Revised Statutes of Ohio, making it unlawful to engage in the insurance business in Ohio unless the same is expressly authorized by the laws of this state.” This act reads as follows:

“Sec. 289. The provisions of this chapter shall apply to individuals and parties, and to all companies and associations, whether incorporated or not, now or hereafter engaged in the business of insurance; and it is unlawful for any company, corporation or association, whether organized in this state or elsewhere, either directly or indirectly, to engage in the business of insurance, or to enter into any contracts substantially amounting to insurance, or in any manner to aid therein, in this state, or to engage in the business of guaranteeing against liability, loss or damage, or for any company, corporation or association, engaged in the business of providing for the payment of the funeral, burial or other expenses of deceased members or certificate holders therein, or engagéd in the business of providing any other kind of insurance, to contract to pay or to pay the same, or its benefits or any part of either, to any official undertaker, or to any designated undertaker or undertaking concern, or to any particular tradesman or business man, so as to deprive the representative or family of the deceased from, or in any way to control them, in procuring and purchasing said supplies and services in the open market with the advantage of competition, unless the same is expressly authorized by the statutes of this state, and such statutes and all laws regulating the same and applicable thereto have been complied with, provided that nothing in this chapter nor in any other statute of the state of Ohio, pertaining to insurance shall so operate or be construed as to apply to the establishment and maintenance by individuals, associations or corporations, of sanitoriums or hospitals for the reception and care of patients for the medical, surgical or hygienic treatment of any and all diseases, or for the instruction of nurses in the care and treatment of diseases and in hygiene, or for any and all said purposes, nor to the furnishing of any and all of said services, care or instruction in or in connection with any such institution under or by virtue of any contract made for such purposes,- with residents of the county in which such sanitorium or hospital is located.”

Whatever may have been the abuses against which the provisions of this act were directed, it clearly appears from the act itself that the general assembly of Ohio considered these contracts to be in restraint of trade, and therefore against public policy, and sought to prevent the making of all such contracts, except as they might be expressly authorized by statute.

It is averred in this cross-petition that at the time the policy in suit was issued to William Hennessey that “Hennessey was a member of The Miami County Benefit Association, a corporation •of Miami county, and was entitled to receive from said association in case of the death of Mary Hennessey certain funeral and funeral outfit and furnishings for the use and benefit of Mary Hennessey.” There is no averment as to the time that William Hennessey became a member of The Miami County Benefit Association. The averment is that he was,' at the time this policy in suit was issued to him, to-wit, March 9, 1909, a member, and that he was then and there entitled as such member to certain funeral and funeral outfit and furnishings for the use and benefit of Mary Hennessey. E. S. Robbins did not agree to furnish to William Hennessey anything of value in addition to what he was then entitled to receive under Policy No. 4251, issued by The Miami County Benefit Association* From the averments of this cross-petition it is difficult to get a correct notion of the real relation of the parties to each other, or the motives that induced William Hennessey to assign to E. S. Robbins a policy of insurance for a sum certain on the life of his wife, Mary Hennessey, for no other or further consideration except that which he was then entitled to receive from an entirely different and distinct corporation, to-wit, The Miami County Benefit Association. So far as the averments of this cross-petition are concerned this contract of assignment of this policy is without any consideration whatever moving to William Hennessey, nor does it disclose a loss on the part of the promisee. Section 289, Revised Statutes, as amended April 9, 1908, absolutely prohibited this association from designating in its contract, or policy, E. S. Robbins, or any one else to "perform for it, and on its part, the covenants and agreements by it to be performed. If it could not do this directly, it follows that it could not evade the terms of the statute by any subterfuge so as to accomplish indirectly the very thing that the statute was designed to prevent. This court cannot travel outside the pleadings ox speculate upon what may or may not have been the purpose of this arrangement. As the pleading stands, William Hennessey was entitled to receive from The Miami County Benefit Association all these things that Robbins undertook to furnish, and it is not important whether The Miami County Benefit Association undertook to pay Robbins directly therefor, or for the purpose of evading the statute called to its aid this defendant company to reimburse or compensate Robbins for the performance of its part of its contract with William Hennessey. In either event the cross-petitioner must fail.

If this defendant company sustained any relation whatever to The Miami County Benefit Association, by which it undertook to do for this asso'ciation that which it could not do for itself, then it is a clear attempt to evade the statute, and comes within the .meaning and intention of the prohibition thereof.

If, on the other hand, it be conceded that notwithstanding the averments of this cross-petition that The Miami County Benefit Association has nothing to do with this case, that all that part of the cross-petition in reference to that association and the rights and benefits accruing to William Hennessey by reason of his certificate of membership therein is mere surplusage, and that this cause must be determined the same- as if there had been no such organization as The Miami County Benefit Association, or William Hennessey was never a member thereof, the result must necessarily be the same. While Section 289, as amended, was undoubtedly intended to correct abuses that had flourished under existing burial associations that designated directly in their contracts the undertaker or undertaking concern that should furnish the funeral and funeral outfit for the insured, yet in doing this the legislature sought to make certain that the objects of the statute should not be defeated by any subterfuge or evasion. The statute provides not only that companies and corporations or associations engaged in the business of providing for the payment of funeral, burial or other expenses of deceased members, or certificate holders therein, should not contract to pay, but also that they should not pay the same to any official undertaker, or to any designated undertaker or undertaking concern, or to any particular tradesman or business man. It is further provided that the same restrictions and limitations of contract should apply to all insurance companies writing any other kind of insurance. If this provision of the statute is to obtain, then The Ohio Burial Insurance Company comes as fully within the purview of this section as The Miami County Benefit Association, notwithstanding that the policy issued by the former company provides for the payment of a sum certain upon the death of the insured. This statute prohibits not only a contract on the part of an insurance company to pay, but it also provides that such company “shall not pay the same or its benefits or any part of either to any official undertaker, or to any designated undertaker or undertaking concern.” Any attempted assignment of this policy to any person or company included in the prohibited classes is in direct violation, not only of the letter, but the spirit of the law, and such attempted assignment cannot confer a legal right upon an assignee coming within either of the prohibited classes, to compel payment, nor can such assignment relieve the insurance company from the positive terms of the statute and authorize it to pay the benefits secured by the policy to any one to whom such payment would be otherwise unlawful. In other words, the law is supreme, and no contract between individuals can make it lawful to do that which the statute positively commands shall not be done. This attempted assignment is in direct violation of the terms of the statute, and purports to authorize the insurance company to pay the benefits of this policy to a designated undertaker, the very thing that the statute says shall not be done. So that if this statute is constitutional it is the end of the case.

It is not contended that the statute is unconstitutional in so far’ as it relates to the insurance company. It seems to be conceded, and certainly it is the law, that the insurance company having been granted the right and the franchise of writing contracts of insurance in this state, is subject to the control of the state, not only as to the nature of the business it may do, but also as to the form of contract it may make. In other words, it cannot avail itself of the benefits of this legislation and challenge the constitutionality of the statute as to its. burdens. The real contention on the part of the plaintiff in error is, that this statute, if it does prevent the assignment of this policy of insurance after the same has been issued, to anyone to whom the insured or the beneficiary desires to assign the same, that in that respect it is an unreasonable interference with the right of private contract, and, therefore, unconstitutional. It would be sufficient perhaps to say in answer to this contention that if the statute is constitutional in so far as it seeks to control and regulate insurance companies, that it is also a constitutional enactment with reference to those who deal with the company with knowledge of the law, and thereafter seek by private contract to defeat the provisions of the law. When William Hennessey secured this contract of insurance from the defendant company he knew the limitations and the rights and powers of that company, the character of the contract it could write and the persons to whom it could make payment of the benefits, and he took under this policy just such rights and benefits as the insurance company could grant to him and no more. It was his privilege to accept or reject that contract. He voluntarily accepted it and his payments of premium were made with the knowledge of the limitations of his rights thereunder. If such rights and benefits were limited, it is proper to presume that the premihm was fixed with reference to such limitations. After securing the contract he sought to enlarge his rights' under the same by assigning it .to an individual of a prohibited class. The individual accepting the assignment knew that he was prohibited by the statute from receiving payment of the benefits of that policy. Now, seemingly forgetful of the fact that when William Hennessey received the policy of insurance it had impressed upon its terms by the force and effect of the language of this statute these limitations as .to who might rightfully claim payment thereunder, it is insisted that this policy holder and this assignee have such natural right of private contract that by such contract they can enlarge the operation of the policy of insurance, and thereby set at naught the prohibitions of the statute under which the contract of insurance was issued and accepted. This statute was a part of the contract just as much as if it had been written into the same, and by accepting it William Hennessey became bound by the terms of the statute equally with the insurance company. It follows, therefore, that the statute does not interfere with the right of private contract, but leaves to William Hennessey every right, privilege and authority to deal with this policy of insurance according to the terms and conditions of the policy itself, just as it was when it was handed to him by the insurance company. If there is any limitation on his right to assign the same, that limitation is in the original contract of insurance read in the light of the statute authorizing its issue, and having accepted it subject to such limitations, there is no theory upon which he can now claim further right or privilege than such contract purported to grant him under the terms and provisions of the law controlling the other contracting party. The right of the state to control the insurance business is so well settled that citations of authority are unnecessary. Insurance has grown to be an important factor in our business life, and of such vast proportion that it affects all classes of people and property, and, therefore, it can no longer be doubted but that it is the duty as well as the right of the state to protect not only the private citizen dealing in insurance, but also the companies, corporations or individuals engaged in the business of insurance along legitimate lines, otherwise in the very nature of things such abuses would arise as would destroy the benefits of the business to insurer and insured. Nor is it now important how the law originally regarded these contracts. The statutes of the state now require compliance with certain conditions designed for the security and protection of the public, and, therefore, the right to transact this business is no longer a private right, but a franchise. This question was so fully-considered in the case of State, ex rel., v. Ackerman, 51 Ohio St., 163, that it would be a waste of time and space to review the subject further. In that case this court held that the right to carry on the business of insurance was a privilege or franchise and no longer a matter of natural right. The state is authorized to grant or withhold a franchise, and where it grants the same it has the right to impose terms and conditions that shall control in the exercise of the right so granted. The business transacted in the exercise of such franchise is subject to all the limitations, terms an I conditions imposed by the state, whether such provisions are written into the contract or not, and every individual purchasing insurance is as fully bound by these limitations, terms and conditions as the company issuing the policy. In other words, he can receive no further rights, no further privileges, no further immunities, no further benefits than the insurance company in the exercise of its franchise is authorized to grant.

The provisions and prohibitions of Section 289, Revised Statutes, as amended April 9, 1908, are constitutional and binding alike on insurer and insured. It is, therefore, unnecessary to consider any of the further questions raised in the briefs of defendants in error.

The judgment of the circuit court is affirmed.

Judgment affirmed.

Davis, C. J., Shauck, Johnson and O’Hara, JJ-, concur.  