Columbian National Life Insurance v. Withers

The writ of certiorari brings up for review an order of the commissioner of banking and insurance of this state disapproving a form of life insurance policy submitted by the prosecutor, a Massachusetts company, doing business in this state. The objectionable portion of the policy is that it permits the taking in advance by the company of interest upon a policy loan at the rate of six per cent. The commissioner held that this violated the usury laws of the State of New Jersey.

The prosecutor has been engaged in the insurance business in New Jersey more than thirty-five years. Its policy form has heretofore been approved in this and many states of the union, including Massachusetts, New York and Pennsylvania. Many insurance companies do deduct interest in advance. Such action does not offend the usury laws of the state of prosecutor's origin. It is very doubtful whether it offends the laws of this state. Banks, though expressly authorized, have done so since earliest times. But it is not necessary for us to consider that question, nor is it necessary for us to consider whether an advance upon a policy of life insurance is a loan within the Usury act. When the insured makes an application to an insurance company of another state for a loan upon his policy, the application is either accepted or rejected at the domicile of the corporation, and the loan is, therefore, governed by the laws of that state. See New York Life Insurance Co. v. Dodge,246 U.S. 357.

The action of the commissioner is set aside.