Opinion ID: 1757986
Heading Depth: 1
Heading Rank: 2

Heading: Protective Has An Insurable Interest in Shearn Moody, Jr.

Text: Protective now owns, by assignment from Empire, Shearn Moody, Jr.'s life estate interest in the Moody trust. That interest was the major asset of Empire and from that asset substantial sums of money have been paid to Empire or its receiver. [2] The income from the trust will now be paid to Protective as long as Moody continues to live, but upon his death, the income from the trust will cease. Under the rule stated in Drane v. Jefferson Standard Life Ins. Co., 139 Tex. 101, 161 S.W.2d 1057 (1942), Protective has a present insurable interest in the life of Moody to the extent of the asset value which the Alabama court approved as $4,250,000. Moody v. State ex rel. Payne, 344 So.2d 160 (Ala.1977), cert. denied, 434 U.S. 996, 98 S.Ct. 634, 54 L.Ed.2d 490 (1977); Moody v. State, 520 S.W.2d 452 (Tex.Civ.App.Austin 1975), writ ref'd n. r. e. per curiam, 547 S.W.2d 958 (Tex.1977). The court in Drane recognized these three classes of persons who have an insurable interest in the life of another: (1) one so closely related by blood or affinity that he wants the other to continue to live, irrespective of monetary considerations; (2) a creditor; and (3) one having a reasonable expectation of pecuniary benefit or advantage from the continued life of another. The court explained the third category in relation to the case before it as follows: Bluntly expressed, insurable interest under (the third) classification, is determined by monetary considerations, viewed from the standpoint of the beneficiary. Would he regard himself as better off from the standpoint of money, would he enjoy more substantial economic returns should the insured continue to live; or would he have more, in the form of the proceeds of the policy, should she die? The Pennsylvania Supreme Court held in In re Gibbons Estate, 331 Pa. 36, 200 A. 55 (1938), that where an assignment is merely of a life interest, the assignee has an insurable interest since the amount of income to be received from the assigned estate depends directly upon the duration of the assignor's life. Likewise, a tenant holding property or an estate during the life of another has an insurable interest in the latter's life. 3 Couch on Insurance 2d § 24:153 (1960). Further support for this holding is expressed in the 1975 amendment of the Texas Insurance Code, Tex.Ins.Code Ann. art. 3.39, which states that a life insurance company may invest in certain life income interests provided satisfactory evidence is presented that the life income interest is supported by life insurance in an amount not less than its admitted value. The Treaty between Empire and Protective provides for the transfer of possession of the insurance policies to Protective and the assignment of the absolute and irrevocable right to receive proceeds in the amount of $4,350,000. The amount of the assignment is subject to adjustment as provided in a further provision of the Treaty. Notwithstanding the transfer of possession of the policies, the receiver of Empire will remain the owner and beneficiary of the policies. Empire continues, therefore, to have an insurable interest under the provisions of the Insurance Code. Tex.Ins.Code Ann. art. 3.49-1. Section 1 provides: Any person of legal age may apply for insurance on his life in any legal reserve or mutual assessment life insurance company and in such application designate in writing any person, persons, partnership, association, corporation or other legal entity, or any combination thereof, as the beneficiary or beneficiaries, or the absolute or partial owner or owners, or both beneficiary and owner, of any policy or policies issued in connection with such application; and with respect to any such policy or policies any such beneficiary or owner so designated shall at all times thereafter have an insurable interest in the life of such person.... Moody applied for the policies in question and designated Empire as beneficiary and owner. As such, under the provisions of the statute, Empire shall at all times thereafter have an insurable interest. Article 21.28, Section 13, of the Insurance Code provides for the appointment of an ancillary receiver in this state. Such receiver has the right to possess the assets of the insurer in this state and has the same powers and is subjected to the same duties with respect to such assets as a receiver of a domiciliary insurer. Section 2 of Article 21.28 authorizes the receiver to take possession of the assets of such insurer and to deal with the same in his own name as receiver or in the name of the insurer as the court may direct. Under these provisions, the receiver was empowered to assign Empire's right to receive the insurance proceeds to Protective to the extent necessary to secure the life income asset. Judgment of the court of civil appeals is reversed and the judgment of the trial court is affirmed.