Life & Casualty Insurance Co. v. McCray - 291 U.S. 566 (1934)
U.S. Supreme Court
Life & Casualty Insurance Co. v. McCray, 291 U.S. 566 (1934)
Life & Casualty Insurance Co. of Tennessee v. McCray
Argued February 5, 1934
Decided March 5, 1934
291 U.S. 566
1. A state statute by which a life insurance company, if it fail to pay upon demand the amount due under a policy after death of the insured, is made liable in addition for fixed damages, reasonable
in amount, and for a reasonable attorney's fee for collection, to be taxed by the court, is consistent with the due process and equal protection clauses of the Fourteenth Amendment even though payment of the policy was resisted in good faith and upon reasonable grounds. Pp. 291 U. S. 569-570.
So held where the statute was in effect when the policy was issued.
2. The nature of the insurance business and the peculiar hardships commonly experienced by the beneficiary when payment does not follow promptly the death of the insured justify these special requirements. Pp. 291 U. S. 569-570.
3. Damages of twelve percent of the face of the policy (the amount fixed by the Arkansas statute here under consideration) cannot be adjudged unreasonable and oppressive in view of the contrary finding implied in the statute itself and of like measures in other states long acquiesced in. P. 291 U. S. 570.
4. The presumption of validity which applies to legislation generally, is fortified by continued acquiescence. P. 291 U. S. 572.
5. A statutory penalty for refusal to pay an obligation when due may be unconstitutional if so extravagant in amount as to deter the honest debtor from making a bona fide defense in court, and yet may be valid if the amount be gauged reasonably as a stimulus to prompt settlement and as compensation to the creditor in case of delay. P. 291 U. S. 572.
187 Ark. 49; 58 S.W.2d 199, affirmed.
Appeal from a judgment, affirming a recovery in an action on a policy of life insurance. Twelve percent damages and attorneys' fees were included in the judgment.