State v. Phoenix Mut. Life Ins. Co.

• Citation: 170 S.E. 909,114 W.Va. 109
• Decision Date: 26 September 1933
• Docket Number: C. C. 475.
• Parties: STATE v. PH×NIX MUT. LIFE INS. CO. et al.
• Court: Supreme Court of West Virginia

170 S.E. 909

114 W.Va. 109

STATE v. PH×NIX MUT. LIFE INS. CO. et al.

C. C. No. 475.

Supreme Court of Appeals of West Virginia.

September 26, 1933

Submitted September 13, 1933.

Syllabus by the Court.

Terms of insurance policies generally control, but general principles affecting contracts form part of every contract as fully as if expressly incorporated therein.

Common law permits no man to profit by his own wrong, and equity will require one wrongfully acquiring property rights to hold them in trust for one equitably entitled thereto.

Resulting trust is raised by equity only to remedy position of one having equitable interest in property involved.

Where beneficiary of life policy murders insured, public policy extends no further than denial of beneficiary's right to recover.

Where beneficiary murdering insured was insured's sole distributee, state could not escheat proceeds of life policy as derelict (Code 1923, c. 78, § 10).

1. The pure contractual rights arising out of an insurance policy are ordinarily determined by its provisions, but it is a basic rule of construction that all general legal principles affecting contracts enter by implication into and form a part of every contract as fully as if specifically expressed therein.

2. It is a fundamental rule of the common law that no man shall be permitted to profit by his own wrong, and it is a settled expedient of equity to impress a constructive trust on whoever acquires property rights by the commission of a wrong to hold the same as a trustee for the one equitably entitled thereto.

3. A resulting trust is raised by a court of equity only to remedy the position of one having an equitable interest in the trust property.

4. "Where the beneficiary in a life insurance policy murders the insured, the doctrine of public policy will extend no further than to denying to such beneficiary the right to recover." Johnston Adm'r v. Ins Co., 85 W.Va. 70, 100 S.E. 865, 7 A.L.R. 823.

5. Upon the murder of an insured by the beneficiary of a life insurance policy, the beneficiary being the sole distributee of the insured, the state may not escheat the sum named in the policy as derelict.

Case Certified from the Circuit Court, Kanawha County.

Suit by State of West Virginia against Ph nix Mutual Life Insurance Company and others. Sufficiency of original and amended bills certified to Supreme Court of Appeals after Circuit Court had sustained them on demurrers.

Reversed.

L. S Trotter and John T. Copenhaver, both of Charleston, for the State.

Brown Jackson & Knight and Geo. S. Couch, all of Charleston, for defendant Insurance Company.

HATCHER Judge.

This suit involves the right of the state of West Virginia to escheat the proceeds of an insurance policy as derelict and without a rightful owner (bona vacantia).

The state, by T. C. Townsend, tax commissioner, filed bills (original and amended) which contain the following allegations: In April, 1926, Albert F. O'Dell secured an insurance policy on his life for the sum of $5,000 from the defendant, the Ph nix Mutual Life Insurance Company; the beneficiary in the policy was O'Dell's wife, Elsie with the right reserved to him to change the beneficiary; in September, 1926 (while the policy was in full force), Mrs. O'Dell feloniously killed her husband and two days afterwards took her own life; O'Dell died intestate and M. M. Wickline was appointed his administrator; Mrs. O'Dell left a will naming B. J. Pettigrew as executor; Wickline as administrator prosecuted a suit against the insurance company to recover the proceeds of the policy, but was denied recovery by this court in Wickline, Adm'r, v. Ins. Co., 106 W.Va. 424, 145 S.E. 743; O'Dell left no blood relatives, and his wife was his sole distributee; there are no unpaid creditors of his estate; the heirs of Mrs. O'Dell are not entitled to the insurance (because of her crime), the insurance company is not entitled to keep it, it is without rightful owner, and is accordingly escheated to the state.

Upon demurrers of the insurance company the circuit court sustained the bills and certified their sufficiency to this court.

The insurance company makes the point that murder of the insured by the beneficiary is a risk impliedly excepted from the policy. As I am not in accord with my brethren on this point, Judge MAXWELL has very kindly furnished a statement of the position of the court thereon, as follows:

"In a life insurance policy, the insurer insures the insured against death for the benefit of a named beneficiary or beneficiaries or the estate of the insured. The undertaking of the insurer is against death from any cause, whether disease, accident, or homicide. But there is usually a stipulation in modern policies of standard life insurance that there shall be no liability in case of suicide of the insured within a designated period, ordinarily one or two years, except, as is sometimes stipulated, the company will pay to the beneficiary a sum equal to the premiums which have been paid on the policy prior to the time of the suicide. And, on the basis of public policy the law precludes a beneficiary who has murdered the insured from receiving the benefits of the policy. Subject to these exceptions, namely, suicide of the assured within a limited time specified in the policy, and the deprivation of the right of recovery by a homicidal beneficiary, and possibl y where the insured forfeits his life by law (Scarborough v. Ins. Co., 171 N.C. 353, 88 S.E. 482, L.R.A. 1918A, 896, Ann.Cas. 1917D, 1181), the broad liability of the insurer stands paramount and unqualified with respect to creditors and distributees of the estate of the assured.

"If the insured is murdered by a stranger, there can be no question of the liability of the insurer, nor, in reason, can there be any less basis of liability of the insurer if the insured is murdered by the beneficiary. The thing insured against is the death of the insured without regard to the manner of his going. When the insured dies of natural causes or from violence, the thing insured against has transpired. The liability to pay the principal of the policy has thus become fixed. Public policy does not preclude recovery on a policy where the assured has been murdered by the beneficiary, save only as the beneficiary, or those claiming under him, would profit from such recovery. Subject to that exception, the 'trust fund' should stand for the benefit of those having equitable interest in the estate of the insured."

The "trust fund" doctrine was adopted by this court in Johnston v. Ins. Co., 85 W.Va. 70, 100 S.E. 865 867, 7 A.L.R. 823, which is similar in all material respects to this suit. That...