Insured Life Fund Co. v. Ward

WOOD, J.

Defendant appeals from a judgment rendered in an action for declaratory relief, by which it was adjudged that he was not the holder of an insurance policy claimed to have been issued by one of the plaintiff corporations.

Plaintiff Insured Life Fund Company was originally incorporated in October, 1930, under the name of Providential Assurance Corporation, under the provisions of chapter VI, title II, part IV, division I, of the Civil Code, as then in force. These or similar provisions have since been included in the Insurance Code. The name of this corporation was later changed to its present title.

Insured Life Fund Company, which will hereinafter be referred to as plaintiff, was organized by defendant Ward

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with two others, Portman and Holmes. Ward was the owner of certain copyrights in a type of insurance policy and he formed the plaintiff corporation for the purpose of marketing this type of insurance. Another corporation, Assurance Agency Ltd., was formed by defendant and his associates and was made the general agent to sell the policies to be issued by plaintiff. Assurance Agency Ltd. then appointed Holmes and Portman as its exclusive sales managers to do the selling. Holmes made an agreement to share his profits on the selling with Ward.

At the time of the organization of plaintiff corporation section 453 (e) of the Civil Code provided in part: “Corporations may be formed to carry on the business of mutual insurance upon the assessment plan, and are subject only to the provisions of this chapter. No such corporation which may be hereafter formed may issue contracts of insurance until at least one thousand persons have applied, in writing, to the insurance commissioner, for membership or insurance therein, and have paid to the treasurer of such corporation the sum of twenty-five thousand dollars.” Defendant and his associates interested in the project a number of residents of Santa Barbara, who are referred to in the briefs as the Santa Barbara group. The sum of $25,000 was paid by the Santa Barbara group for stock in Assurance Agency Ltd., and this sum was in turn deposited with the state treasurer to be held in accordance with the provisions of section 453 (e) of the Civil Code. At some later time this sum of $25,000 was withdrawn from the state treasurer and returned to the Santa Barbara group and in its stead there was deposited with the state treasurer, with the consent of the insurance commissioners, securities of the value of $45,000, which were the property of the Angelus Securities Corporation.