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Pioneer Mutual Benefit Association v. Corporation Commission of the State of Arizona

Supreme Court of Arizona

March 23, 1942

PIONEER MUTUAL BENEFIT ASSOCIATION, a Benefit Corporation, Appellant,
CORPORATION COMMISSION OF THE STATE OF ARIZONA, and AMOS A. BETTS, Chairman; WILSON T. WRIGHT, Commissioner, and WILLIAM (BILL) PETERSEN, Commissioner, as Members of the Corporation Commission of the State of Arizona, Appellees

APPEAL from a judgment of the Superior Court of the County of Maricopa. M. T. Phelps, Judge. Judgment affirmed.

Mr. Ross F. Jones, for Appellant.

Mr. Joe Conway, Attorney General, Mr. Edward P. Cline, Assistant Attorney General, Messrs. Stockton and Karam, Messrs. Phillips, Holzworth, Phillips & Jones, for Appellees.

Mr. Robert R. Weaver, Amicus Curiae.


Page 829

[59 Ariz. 113] McALISTER, J.

The Pioneer Mutual Benefit Association, a corporation organized and doing business under the Arizona Benefit Corporation Law of 1937, Code 1939, section 53-601 et seq., with its principal place of business in Phoenix, Arizona, filed this action for a declaratory judgment against the Arizona Corporation Commission and its three duly elected, qualified and acting members, Amos A. Betts, Wilson T. Wright and William Petersen, to determine the respective rights of these parties under that law relative to the creation of a mortuary and reserve fund and the proportionate part of each periodic payment (premium) for a benefit certificate that should be set aside to it.

[59 Ariz. 114] The Arizona Benefit Corporation Law of 1937, an act relating to benefit corporations, is an amendment of the statute providing for benefit societies found in sections 607 to 610, Revised Code of 1928. It permits the formation of corporations to provide cash benefits for members and the nominees of deceased members, but not for profit, and includes all corporations, societies and associations operating an insurance business where funds are provided by mutual contributions, periodical payments, dues or assessments, except those exempt by its terms. It requires that any benefit corporation, before soliciting applications for benefit certificates, shall secure from the corporation commission its approval of the certificate. In an endeavor to comply with this provision the plaintiff filed on May 19, 1941, with the commission, a copy of a benefit certificate which it proposed to use in soliciting applications therefor, and it alleges that this certificate conforms with the requirements of the Arizona Benefit Corporation Law of 1937, in every respect, in that it specifies, first, the maximum amount, not exceeding $5,000 on the life of any individual, to be paid on the happening of the contingency therein stated; second, at least fifteen days grace following the due date of any periodical payments or dues, during which time the certificate could not be forfeited; and third, periodical payments and dues (premiums) sufficient to pay the benefit claims and general operating expenses. But, notwithstanding it

Page 830

meets these requirements, the defendants failed within three days, from the filing of the application, or at all, to issue to plaintiff a written certificate of approval and authority to solicit applications therefor, its refusal in this respect being made known to plaintiff by a letter, dated May 26, 1941, and signed by the corporation commission's director of insurance, Roy B. Rummage, a copy of which is attached to the complaint.

[59 Ariz. 115] The first question in dispute is whether the 1937 law makes it mandatory on plaintiff, and all other benefit corporations formed under it, to "specify and state in all benefit certificates issued pursuant to said law, and in the benefit certificate herein involved especially, the basis, or amount to be set aside to the mortuary and reserve fund." The plaintiff says it does not and bases its contention on section 53-609, subdivision (b), Arizona Code Annotated 1939, reading as follows:

"(b) A mortuary and reserve fund, exclusive of other assets, may be created, out of which may be paid all benefit claims arising under the certificates, the deposits required to be made with the state treasurer as provided by section 608b (§ 53-605), and attorney's fees and necessary expenses arising out of the defense, settlement, or payment of any contested or disputed claim. The residue of payments made by members, after setting aside the amount required for the mortuary and reserve fund, and interest earned by the assets of the corporation, whether deposited with the state treasurer or otherwise invested, may be used for general operating expenses."

Because the word "may" instead of one of stronger compulsion is used here, the plaintiff insists that the law permits, but does not require, the creation of a mortuary and reserve fund. It is, of course, true, that "may" standing alone and unrelated to its context, is usually permissive in meaning. 59 C.J. 1079 and 1080. But in the same volume of Corpus Juris, at page 1082, is found this language:

"Where, from a consideration of the whole statute, and its nature and object, it appears that the intent of the legislature was to impose a positive duty rather than a discretionary power, the word 'may' will be held to be mandatory. A mandatory construction will usually be given to the word 'may' where public interests are concerned, and the public or third persons have a claim de jure, that the power conferred should [59 Ariz. 116] be ...

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