Court Opinion

ID: 6695410
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:48:52.203621+00
Date Added: 2024-06-11T16:01:13.072323
License: Public Domain

Hoke, J.,
after stating tbe case: It is very generally held that tbe relationship of uncle and nephew does not of itself create an insurable interest in favor of either. Corson, exr. of McLean, 113 Pa. St., 438; Singleton v. Insurance Co., 66 Mo., 63; Dood Co. v. Green, guardian, 131 Ga., 568. And we are not called on to determine whether tbe additional facts set forth in section 6 of tbe complaint would bring about such an interest, for tbe reason tbat; on tbe facts as tbey appear, we are of opinion tbat if tbe assignment is otherwise valid, plaintiff has a right to recover tbe proceeds of tbe policies, whether at tbe time of tbe assignment be bad an insurable interest in the life of tbe deceased or not.
It is accepted doctrine here, and elsewhere, tbat in order to a valid policy of life insurance there must have existed an insurable interest at the time tbe contract is entered into, but tbe question whether such a policy, valid at its inception, can be assigned to one who has no insurable interest, has been very much discussed in tbe courts, and on tbis there is some conflict in tbe cases. We consider it, however, as established by tbe great weight of authority tbat where an insurant makes a contract with a company, taking out a policy on bis own life for tbe *289benefit of himself or bis estate generally, or for tbe benefit of another, tbe policy being in good faitb and valid at its inception, tbe same may, with tbe assent of tbe company, be assigned to one not having an insurable interest in tbe life of tbe insured; provided this assignment is in good faitb, and not a mere cloak or cover for a wagering transaction.
Decided intimation in favor of this general principle was given by this Court in tbe recent ease of Pollock v. Household of Ruth, 150 N. C., 211, and tbe position will be found sustained by a large number of authoritative and well-considered decisions and by text-writers of approved excellence. Insurance Co. v. Armstrong, 117 U. S., 591; Connecticut Mutual v. Schafer, 94 U. S., 457; Crosswell v. Association, 52 S. C., 103; Rylander v. Allen, 125 Ga., 206, annotated in 5 A. and E. Anno. Cases, 355; Murphey v. Redd, 64 Mississippi, 614; Brown v. Greenfield Insurance Co., 172 Mass., 498; Mutual Life v. Allen, 138 Mass., 24; Steinback v. Diepenbrock, exr., 158 N. Y., 24; Chamberlain v. Butler, 61 Neb., 730; Moore v. Guarantee Fund, 178 Ill., 202; Prudential Co. v. Liersch, 122 Mich., 436; Cooley’s Briefs on Insurance, vol. 1, p. 262 et seq.; Yance on Insurance, 1, p. 140 et seq.
To quote from some of tbe cases .referred to, in Steinback v. Diepenbrock, supra, it was held: “That one having no insurable interest in tbe life of another may acquire by assignment a valid policy upon bis life and enforce it to tbe full amount.” •
And in Murphey v. Redd, supra: “Tbe bolder of a valid policy of insurance on bis own life, payable to bimself or bis legal representative, may assign tbe same for a valuable consideration, as be may any other cbose in action, if there is nothing in tbe terms of the policy to prevent tbe assignment, and tbe assignee or purchaser of such policy, transferred according to its terms, is entitled to tbe proceeds of tbe same when due, notwithstanding be may have no insurable interest in tbe life of tbe insured.”
In several cases, where tbe opinion apparently upholds tbe contrary view, it will be found that tbe cause was correctly decided and sustainable on tbe ground that tbe policy, though taken out in tbe name of tbe insured, was procured in pursuance of a scheme and purpose to assign ^to one having no insurable interest, and that tbe proposed assignee was cognizant of tbe arrangement and took part in it. This was true in tbe case of Warnock v. Davis, 104 U. S., 775, and also in Cammack v. Lewis, 94 U. S., 643. In both of these cases tbe assignees were parties to tbe arrangement by which tbe policies were procured and assigned, and having no insurable interest in tbe life of *290the insured, the. facts disclosed, as far as the assignments were concerned, a clear case of wagering contract on the duration of a human life, forbidden by the law, and the assignments were not allowed to stand. Accordingly, we find the same high court, in Life Insurance Co. v. Armstrong, supra, under a different state of facts, deciding the general principle:
“That a policy of life insurance, without restrictive words, is assignable by the assured for a valuable consideration equally with any other chose in action, where the assignment is not made to cover a mere speculative risk, and thus evade the law against wager policies, and payment thereof may be enforced for the benefit of the assignee, and, under the procedure of many States, in his name.”
Undoubtedly, however, there are decisions which directly hold that a life insurance policy, though valid at its inception, may not be as'signed to persons having no insurable interest in the life of the insured; and North Carolina has been referred to as upholding this view both in text-books and in decisions of other courts. If this is a correct interpretation of our cases on this subject, we would not hesitate to hold that they were not well decided; but, while some of them certainly give color to this view, we think that a more careful consideration of our decisions will disclose that in all of them, where the contract was declared void or set aside, it appeared that the assignment of the policy to one having no insurable interest was made in pursuance of a preconceived purpose, and that the assignee had suggested the arrangement or been a party to it.
In Hinton v. Insurance Co., 135 N. C., 314, this was expressly made the basis of the decision. In the case of Powell v. Dewey, 123 N. C., 103 — -and this is the case which more nearly justifies the statement that the courts of our State have decided against assignments of this character — it appears, we think, by fai-r intendment, that the partner and assignee having no insurable interest was cognizant of the scheme and took part in it. In that case the insured and the assignee were partners and associates in the insurance business, “and without any averment or claim of any indebtedness on the part of the insured, or that he was to furnish any labor, skill or otherwise, as his contribution in lieu of n\oney, procured a policy for the benefit of his co-partner, and immediately assigned the same to such copartner, the assignee paying all premiums thereon.” And the judge, in delivering the opinion, states as the ratio decidendi: “In the case before us, at the very time the policy was issued in which the life of the plaintiff was insured, there was an assignment of the policy to 'the beneficiary, who paid the first and all the premiums.”
*291Here, as stated, we think it clearly appears that the taking out of the policy and its assignment was a part of one and the same transaction, and the Court holding that one partner, without more, had no insurable interest in the life of the other, declared the entire policy void. True, the opinion may be somewhat misleading in giving too much weight to the payment of the “first and all the premiums,” apparently making this fact determinative, whereas, it is only evidential on the question of good faith (Rylander v. Allen, 125 Ga., 206, supra), but the decision was made to rest on the fact that this .was a transaction between these two insurance agents, in which they both took part, and that the taking out of the policy and the assignment, as stated, was one and the same transaction.
In College v. Insurance Co., 113 N. C., 244, the assignee was one of the contracting parties, and the policy'taken out for its benefit was clearly a wagering policy. And so in Burbage v. Windley, 108 N. C., 357, the contract of insurance was made directly with the company by one having no insurable interest in the life of the insured, and was against public policy. In Albert v. Insurance Co., 122 N. C., 92, also referred to and to some extent relied upon by defendant, the decision was in favor of the validity of a policy taken out by an insurant in favor of one having no insurable interest, and the case is not an authority in favor of defendant’s position.
In his learned and well-considered opinion in the case of Crosswell v. Insurance Co., 52 S. C., supra, the present Chief Justice of that State, speaking to the suggestion sometimes made in support of the view that these assignments are necessarily invalid, “That the same reasons which condemn a policy procured by one without an insurable interest in the life of an insured, should also condemn an assignment to one without such interest,” quotes with approval from May on Insurance, as follows:
“On this point we quote from May on Insurance (Ed. 1891), see. 398A, which is in brackets, showing that it is new matter: ‘Indeed, the doctrine that the assignment of a policy to one without interest in the life is as objectionable as the taking out of a policy without interest, does not seem good sense. If this be so, it is difficult to understand how the designation of a beneficiary. outside of those having an insurable interest in the life can be upheld.. There seems to be a clear distinction between eases in which the policy is procured by the insured bona -fide of his own motion, and cases in which it is procured by another. It is a very different thing to allow a man to create voluntarily an interest in his termination, and to allow some one else to do *292so at tbeir will. The true line is the activity and responsibility of the assured, and not the interest of the person entitled to the funds. It is well established that a man may take out a policy on his own life payable to any person he pleases, and it is drawing a distinction without a difference to hold that he cannot take out a policy and afterwards transfer its benefits. An assignment by the beneficiary, or by an assignee, unless with the consent of the “life,” is, however, a very different matter, and involves what seems to be the real evil that the law is blun-deringly seeking to exclude, viz., the obtaining by B of insurance on the life of A, in contradistinction to its obtainment by A for B’s benefit.’ ”
And in Nance on Insurance, p. 140 et seq., the rule is thus stated: “That on principle, and according to the clear weight of authority, an assignment of a life policy to one having no insurable interest therein is perfectly valid, if made in good faith, and not as a cover for fraudulent speculation in life.”
And, referring to the opinions of Warnock v. Davis, 104 U. S., 775, and Cammack v. Lewis, 82 U. S., 643, and to the subject generally, the author says: “These confusing influences' have further been aided and abetted by a catch phrase, which, however, does not state the issue fairly, to the effect that the law will not allow a person to procure by assignment, insurance that he could not procure directly. A fair statement of the issue is found in the postulate that the law will allow the insured to designate a beneficiary under the policy as well by assignment as by original nomination.
“The true principle governing the question may be derived from the statement of some generally accepted rules of law.:
“(1) A person insuring his own life may designate any person whatever as beneficiary, irrespective of insurable interest in that beneficiary.
“(2) The law requires an insurable interest only at the inception of the policy, as evidence of good faith. The presence of such interest at any subsequent .period is wholly immaterial.
“(3) Life insurance, though based on the theory of indemnity at its inception, is not a contract of indemnity, but chiefly of investment. As a chose in action it has at any time after its issue a recognized value, termed the ‘reserved value.’
“Hence we conclude that a policy of life insurance, validly issued to one having an insurable interest, becomes in his hands a valuable chose in action, which should be assignable as any other property right, unless such assignment be opposed to some clear rule of public policy.”
*293Tbis, we think,, correctly states the true doctrine, and applied to the facts admitted fully justifies the court below in overruling defendant’s demurrer, and the judgment to that effect is
Affirmed.