American Insurance Union v. Manes

• Court: Arkansas Supreme Court
• Writing for the Court: MCCULLOCH, C. J.
• Citation: American Insurance Union v. Manes, 150 Ark. 315, 234 S. W. 496 (Ark. 1921)
• Decision Date: 31 October 1921
• Docket Number: 193,209
• Parties: AMERICAN INSURANCE UNION v. MANES

234 S.W. 496

150 Ark. 315

AMERICAN INSURANCE UNION v. MANES

No. 193, 209

Supreme Court of Arkansas

October 31, 1921

Appeal from Searcy Circuit Court; J. M. Shinn, Judge; affirmed.

Judgment affirmed.

Basil Baker, for appellant.

The application upon which the policy was issued was a wagering contract, and against public policy. 98 Ark. 52; 222 S.W 1067; 132 Ark. 458; 119 Ark. 498.

The act of 1917, p. 2091, does not apply to mutual benefit associations not having a lodge system; neither is it retroactive. Mutual Benefit Association v. Keller, 148 Ark. 361; 226 S.W. 525; 2 Joyce on Insurance, Secs. 1066 to 1071, inclusive; 104 U.S. 775-778, with Rose's notes thereon; Ann. Cas. 1917C, p. 155; 14 R. C. L. 905 to 919 inclusive.

W. F Reeves, for appellee.

The application upon which the policy was issued was written by the agent of the company, with full knowledge of the relationship, and the company is now estopped from denying liability. 64 Hun (N. Y.) 534; 19 N.Y.S. 432; 25 Cyc. 711-712 and cases cited.

The appellant having, without question, assumed the contract in all particulars, and by rider thereto attached, to carry out the provisions thereof, is bound by the original contract. 28 S.C. 431; 6 S.E. 286; 32 Ark. 346; 36 Ark. 248; 42 Ark. 500.

MCCULLOCH, C. J. HART, J., concurring.

OPINION

MCCULLOCH, C. J.

This is an action instituted on a life insurance policy or certificate of membership issued by the Home Protective Association, a domestic corporation, to Jesse Welborn, the plaintiff, J. H. Manes, being named as beneficiary. Welborn lived nearly four years after the policy was issued, and all of the premiums or assessments were paid up to his death. During his lifetime the defendant, American Insurance Union, a foreign corporation, entered into a contract with the Home Protective Association, whereby it took over all the memberships of the latter association and assumed its obligations to its members, and issued to Welborn a certificate in the form of a rider to the original benefit certificate, certifying that the obligations of the original insurer were assumed by defendant.

Defendant denies liability on the ground that plaintiff, the specified beneficiary in the certificate, had no insurable interest in the life of Welborn, and that the certificate constituted a wager contract and unenforceable on grounds of public policy. This is the sole defense offered in the case. According to the evidence adduced, plaintiff was the son-in-law of Welborn at the time the latter became a member of the Home Protective Association, and was not dependent in anywise on Welborn. Welborn was solicited to join the association, and declined, but stated that he was willing for any of his children to take a policy on his life. Thereupon the agent of the Home Protective Association procured an application from Welborn, and plaintiff was present and signed Welborn's name to the application. It was agreed in advance between Welborn and plaintiff that the latter should pay the assessments and all other expenses necessary to obtain and maintain the membership. This evidence establishes the fact that the contract was, under our decisions, a wager contract, and void in its inception. Langford v. National Life & Acc. Ins. Co., 116 Ark. 527, 173 S.W. 414; Cotton v. Mutual Aid Union, 132 Ark. 458, 201 S.W. 124; Home Mutual Benefit Assn. v. Keller, 148 Ark. 361, 230 S.W. 10.

In Langford v. National Life & Acc. Ins. Co., supra, we held that "a person may take out insurance on his own life, and name any one that he pleases as beneficiary," even though the beneficiary has no insurable interest at the time the policy is taken out; but that "an agreement between the assured and the beneficiary, having no insurable interest, to the effect that the latter shall pay the premiums, and that the policy shall be taken out in his name, * * * * and shall be assigned to the person having no insurable interest," will render the policy void as a wagering contract.

The above declaration of the law is applicable to the present policy in its inception.

However it has been ruled by this court, in line with the weight of authority, that only the insurer can take advantage of the ineligibility of the beneficiary in such a certificate or policy of insurance. Johnson v. Knights of Honor, 53 Ark. 255; Longer v. Carter, 102 Ark. 72, 143 S.W. 575. Defendant is not the original insurer, but entered into a contract to perform the original contract of insurance entered into between Welborn and the Home Protective Association. This contract contains some of the elements of one for re-insurance, in which both the original beneficiary and the insurer are interested. The contract with defendant is, in other words, one to pay the amount of the policy according to its terms,...