American Security Benevolent Ass'n v. District Court of Black Hawk County

147 N.W.2d 55, 259 Iowa 983, 1966 Iowa Sup. LEXIS 904
CourtSupreme Court of Iowa
DecidedDecember 13, 1966
Docket52279
StatusPublished
Cited by15 cases

This text of 147 N.W.2d 55 (American Security Benevolent Ass'n v. District Court of Black Hawk County) is published on Counsel Stack Legal Research, covering Supreme Court of Iowa primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
American Security Benevolent Ass'n v. District Court of Black Hawk County, 147 N.W.2d 55, 259 Iowa 983, 1966 Iowa Sup. LEXIS 904 (iowa 1966).

Opinions

Mason, J.

Plaintiffs Dale Armstrong, Gerald Timmer, Wallace Hopkins and Richard Pirkl were granted review by certiorari of four orders of the district court of Black Hawk County, Peter Van Metre, Judge, each sentencing a named plaintiff to pay a $500 fine and serve six months in the Black Hawk [985]*985County jail as punishment for contempt committed by willfully violating a temporary injunction issued by Blair C. Wood, Judge of the Tenth Judicial District.

On November 5,1965, the attorney general of Iowa filed two petitions in the district court of Black Hawk County against these individual plaintiffs and others of the corporation’s agents and salesmen. The actions differed only in that defendant corporation in one was American Security Benevolent Association, Inc., and in the other Iowa State Security Association, Inc. They were instituted pursuant to chapter 438, Acts of the Sixty-first General Assembly, now section 713.24, Code, 1966, sought the appointment of a receiver for each corporation and a temporary and permanent injunction restraining those named as defendants.

Iowa State Security Association, Inc. and American Security Benevolent Association, Inc. are corporations not for pecuniary profit, chartered under chapter 504, Code, 1966. Iowa State Security, organized in January 1965, engages in sale of contracts to collect donations payable to named beneficiaries in the event of death of a member.

Organized in October 1965 American Security sells separate contracts both for death benefits and disability benefits in the event a member becomes hospitalized.

The activities of the officers, agents and salesmen of American Security are involved in the present proceedings. At the time here pertinent the plaintiffs Dale Armstrong, Gerald Timmer and Wallace Hopkins were officers of this corporation, Richard Pirkl a sales representative. The plaintiff-officers were also sales representatives of the corporation.

I. American Security is not a fraternal beneficiary association organized under chapter 512, nor a domestic insurance company as set forth in chapter 506, nor is it qualified to contract to sell life, health or accident insurance in Iowa as authorized in chapters 508, 512 and 515, Code, 1966. The contracts offered are not in the nature of insurance contracts as contemplated in those chapters or chapter 514A.

Under the operations conducted by American Security through its officers, agents and salesmen, it seeks to develop [986]*986groups with 2500 members. However, size of the groups in process of formation did not exceed 400 in November 1965. The disability benefits are limited to $2000. The burial benefits are $1000 and $500 depending on the age of the member. The corporation does not guarantee nor assume any obligation for payment of benefits. Its responsibility is assessing other members of the group. It merely acts as a clearing house for collection and distribution of an assessment. Donations are required of members to pay the benefits to a member in the event of death, illness or accidental injury and are not guaranteed in any specific amount but are limited to the size of the group and wholly dependent upon the members who voluntarily respond to the call for donations. If the donations received are less than the expenses of disability or less than the amount payable on a burial contract, the member receives the lesser amount.

The corporation’s plan or contract is distinguished from insurance on the ground it does not agree to pay a sum of money upon the happening of a particular event, here death or disability, but promises only to transmit to the claimant such sums as may be received from assessments levied upon members of claimant’s group.

To remain eligible for benefits under the contract members are required to remit to the corporation the assessment in the event of sickness and/or accidental injury or death of a member of their association. The member pays an initial membership fee and a yearly renewal fee in addition to such assessments. If he fails to pay the assessment his membership is cancelled.

II. November 22 the attorney general filed a petition for temporary injunction against defendants named in the two actions. The injunction was issued that day and restrained defendants from falsely and fraudulently representing themselves to others as insurance agents for defendant corporation. Among other provisions the temporary injunction. restrained each defendant named in the action “from omitting the material fact that in order to remain eligible for benefits * * * members will be required to remit to defendant corporations * * * money * * * upon the event of sickness and/or accident, injury, or death of a member of their association. Further * * * from [987]*987omitting the material fact that payments to a member upon the event of death or illness or accidental injury are not guaranteed to a specific amount, but are wholly dependent upon the voluntary contributions of other members.”

Defendants were further enjoined from fraudulently representing the contracts as policies of insurance, from the use and employment of deception, fraud, false pretenses, false promises, misrepresentation and from- the concealment, suppression and omission of material facts until further order of court.

On January 12, 1966, the State filed an application for a rule to show cause why plaintiffs should not be punished for contempt in violating the injunction on December 30, 1965, by falsely and fraudulently misrepresenting the provisions of contracts of membership offered to Jessie Greathouse, a 78-year-old Cedar Rapids lady. That day defendant Judge ordered the rule returnable January 26. Hearing was held January 28 and February 10 before defendant Judge.

On May 17 Judge Van Metre decreed that Pirkl had willfully violated the temporary injunction and was guilty of willful contempt. Timmer, Armstrong and Hopkins were found guilty of contempt as participants in the preparation of the entire scheme as corporate officers responsible for Pirkl’s supervision and as coconspirators with Timmer and Pirkl in a calculated scheme of fraud and false pretenses. Accordingly, they also were found guilty of willful violation of the injunction and liable for punishment therefor.

The decree directed plaintiffs to appear May 31 for sentencing when the fines and commitments to jail were entered. No order was entered against American Security and it is not a plaintiff here.

In the meantime, hearing on the two consolidated petitions was commenced December 15 before Judge Wood. April 28 findings of fact, conclusions of law and decree upholding, the validity of the temporary injunction and granting a permanent injunction as prayed was filed.

An appeal from Judge Wood’s decree is now pending in this court.

[988]*988. III. Our concern here is the alleged violation of the temporary injunction of November 22.

The evidence is without dispute that a membership in the association was sold to Mrs. Jessie Greathouse December 30, 1965, by Richard Pirkl. This sale is the entire basis for the citation for contempt.

Plaintiffs contend the evidence is insufficient to sustain the trial court’s judgment of guilty of.contempt (1) as to Richard Pirkl, and (2) as to plaintiffs, Armstrong, Hopkins and Timmer.

Defendant in support of the judgment of conviction contends Pirkl in making the sale omitted the material fact that payment to Mrs.

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Bluebook (online)
147 N.W.2d 55, 259 Iowa 983, 1966 Iowa Sup. LEXIS 904, Counsel Stack Legal Research, https://law.counselstack.com/opinion/american-security-benevolent-assn-v-district-court-of-black-hawk-county-iowa-1966.