American Casualty Company v. Rose, 7700.
| Decision Date | 25 November 1964 |
| Docket Number | No. 7700.,7700. |
| Citation | 340 F.2d 469 |
| Parties | AMERICAN CASUALTY COMPANY, Appellant, v. Mable ROSE, individually, and Mable Rose, as Guardian of Ronald, Cheryle, Carol Lee, Verl, Sarah and Barbara Rose, minor children of Mable Rose and Verl Rose, and Mable Rose, as Administratrix of the Estate of Verl Rose, Deceased, Appellees. |
| Court | U.S. Court of Appeals — Tenth Circuit |
Ernest F. Baldwin, Jr., of Hanson & Baldwin, Salt Lake City, Utah, for appellant.
Bernard M. Tanner, Salt Lake City, Utah (O. H. Matthews, Salt Lake City, Utah, with him on the brief), for appellees.
Before PHILLIPS, PICKETT and HILL, Circuit Judges.
On February 2, 1962 the defendant, American Casualty Company, upon the payment of the required premium, issued and delivered to Verl Rose a 30-day policy of insurance in the amount of $50,000 for accidental death. The named beneficiary was John M. King. Rose was accidentally killed while the policy was in effect. The insurance company denied liability, and while an action by King was pending in an Illinois State court, a settlement was agreed upon whereby King executed a release of further liability on the policy upon payment of $24,000. Thereafter this action was brought in the United States District Court for the District of Utah by the wife and children of Rose, alleging that King had been designated beneficiary on the policy proceeds as trustee for the benefit of Rose's family, and that the insurance money belonged to them. This is an appeal from a judgment against the insurance company for $26,000, the unpaid balance of the policy.
The facts are not in dispute. Early in 1961 Verl Rose, an automobile stunt performer, left his family in Utah and went to Illinois, where he was employed by John M. King as a performer in an "Auto Thrill Circus." After leaving Utah, Rose did not contribute to the support of his family, but there was evidence that he retained a family interest and did not intend to completely desert it.1
The trial court found that King had no insurable interest in the life of Rose except to the extent of an indebtedness due King from Rose, and that any proceeds of the policy paid to King over and above the amount of the indebtedness would be received by him as constructive trustee for the benefit of Mrs. Rose and the minor children. The court also found that when the insurance policy was purchased, Rose intended to provide for his wife and children in the event of his accidental death, and did not intend that King should benefit from the proceeds of the policy in excess of the amount due and owing him by the insured. The court concluded that King did not have authority to compromise the claim for the amount due on the policy.
There was evidence that when Rose purchased the policy, he was indebted to King in the sum of one or two thousand dollars, and we assume that such an indebtedness existed. There was also testimony of a former employee of King to the effect that, several weeks after Rose was killed, he had a number of conversations with King concerning Rose and his family and the insurance. He testified that during these conversations King said that Rose had requested him to act as administrator of his estate, and that King "wanted to see that these children were taken care of and that they did not want for anything, and that he was going to see that they had all their clothes and their education * * and he would take a small percentage of this insurance for himself for his part in seeing that it was taken care of." King was named a defendant in this case, but was not served, and his testimony was never taken.2
Rose had an insurable interest in his own life, and in the absence of statute, was free to take out insurance on it and to name anyone he saw fit as beneficiary, regardless of whether the beneficiary had an insurable interest in the insured. 29 Am.Jur. ¶ 472, p. 799; Ducros v. C. I. R., 6 Cir., 272 F.2d 49; Aetna Life Ins. Co. v. Patton, D.C.S.D. Ill., 176 F.Supp. 368; Wolen v. Metropolitan Life Ins. Co., 287 Ill.App. 415, 5 N.E.2d 249;3 Bloomington Mut. Life & Benefit Ass'n v. Blue, 120 Ill. 121, 11 N.E. 331. The policy designated King as beneficiary without any limitation. Whatever rights the wife and children of the insured have in the proceeds of the policy must flow from the relationship and transactions between Rose and King. Zolintakis v. Orfanos, 10 Cir., 119 F.2d 571. King had no insurable interest in Rose over and above the indebtedness, but a debtor-creditor relationship between the insured and the beneficiary creates no presumption that the right to recover the policy proceeds is limited, nor does it of itself prohibit a beneficiary from a full recovery. In Zolintakis v. Orfanos, supra, at 577, the court said:
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