Chamberlain v. Butler

• Decision Date: 22 May 1901
• Docket Number: 9,406
• Citation: 86 N.W. 481,61 Neb. 730
• Parties: CHARLES M. CHAMBERLAIN ET AL. v. FLORENCE M. BUTLER
• Court: Nebraska Supreme Court

86 N.W. 481

61 Neb. 730

CHARLES M. CHAMBERLAIN ET AL. v. FLORENCE M. BUTLER

No. 9,406

Supreme Court of Nebraska

May 22, 1901

ERROR from the district court for Johnson county. Tried below before STULL, J. Reversed.

REVERSED.

Edward C. Hall, M. E. Cowen, J. W. Deweese, Isham Reavis and Davidson & Giffin, for plaintiffs in error.

Frank Irvine, for the insurance company: The interest of the client I represent is such that it can not well permit an adjudication of the questions of law argued in the briefs without an effort to protect its own position. This interest is twofold. In the first place, having been compelled to pay its policy to Crandall, the last assignee, by virtue of a judgment in New York, if this court should adopt the theory of the defendant in error and hold the assignments void, then the company, after it supposed its liability was discharged would be subject to the peril of a double liability from litigation in Nebraska. Secondly, the peril of double liability might arise at any time from a conflict of jurisdictions.

It has been settled ever since the decision in Dalby v. India & London Life Assurance Co., 15 C. B., 365, that a policy of life insurance differs in its nature from one of fire or marine insurance. The latter are contracts of indemnity, and liability ceases with the cessation of insurable interest whereas the contract of life insurance is an absolute agreement to pay a stated sum on the death of the insured and, if valid in its inception and if the premiums are paid, the company, must, upon the death of the insured and compliance, with the terms of the policy, pay this sum to the persons entitled thereto, although the insurable interest no longer exists. This doctrine has been recognized throughout the United States and was emphasized in Connecticut Mutual Life Ins. Co. v. Schaefer, 94 U.S. 457.

William H. Kelligar and Edgar Fernean, contra:

A wager policy is defined to be: A pretended insurance founded on an ideal risk, where the insured has no interest in the thing insured, and can, therefore, sustain no loss by the happening of any of the misfortunes insured against. Beach, Insurance, 1142; Bouvier's Law Dictionary, vol. 2, 694; 3 Kent, 225. Wager policies are so universally condemned that it would be useless to cite authorities. The principle upon which the condemnation is founded is that the policy-holder has no interest in the insured, except in his early death.

The theory of Chamberlain's counsel is that since the policy is valid in its inception, it could be transferred like a chose in action. That policies of life insurance are assigned for proper motives and sound consideration, is not to be denied. Our claim is that Butler had a right to insure his life. The policy was valid; and he had a right to assign it as collateral. Chamberlain had a right to agree to pay Butler's premium and to take an assignment as security. But the law will not allow him to go further and acquire an interest in the death of the assured. Such speculation in human life is against public policy. Cammack v. Lewis, 82 U.S. 643; Warnock v. Davis, 104 U.S. 775; Franklin Life Ins. Co., v. Hazzard, 41 Ind. 116; Alabama Gold Life Ins. Co. v. Mobile Mutual Ins. Co., 81 Ala. 329; Bayse v. Adams, 81 Ky. 368; Seigrist v. Schmoltz, 113 Pa. 326; Tate v. Commercial Building Ass's, 45 L. R. A. [Va.], 245; Long v. Meriden Britannia Co., 94 Va. 594; New York Life Ins. Co. v. Davis, 96 Va. 737; Corson's Appeal, 113 Pa. 438.

The assignee of a policy of insurance having no insurable interest in the life of the insured, can collected only the amount of his debt or advances. Missouri Valley Life Ins. Co. v. McCrum, 36 Kan. 146; Helmatag v. Miller, 76 Ala. 183; Price v. Knights of Honor, 68 Tex. 361; Equitable Life Ins. Co. v. Hazlewood, 75 Tex. 338; Exchange Bank v. Loh, 44 L. R. A. [Ga.], 372; Crotty v. Union Ins. Co., 144 U.S. 621; Morris v. Georgia Loan, Savings & Banking Co., 46 L. R. A. [Ga.], 506; Schonfield v. Turner, 12 S.W. [Tex.], 626; Cheeres v. Anders, 87 Tex. 287; Clement v. Insurance Co., 101 Tenn. 22; Trinity College v. Travelers' Ins. Co., 22 L. R. A. [N. Car.], 291.

Where the disproportion between the amount of a policy taken out by a creditor on the life of a debtor, and the debt thereby secured, is very great, as where the insurance is $ 3,000 and the debt $ 100, it is the duty of the court to declare the transaction a wager. Cooper v. Shaeffer, 11 A. [Pa.], 548; Cammack v. Lewis, 15 Wall. [U. S.], 643; Gilbert v. Moose, 104 Pa. 74; Corson's Appeal, supra; Grant v. Kline, 9 A. [Pa.], 150.

One claiming an insurable interest in the life of another must plead and prove such interest. Rose v. Mutual Benefit Life Ins. Co., 23 N.Y. 516; Fowler v. New York Indemnity Ins. Co., 26 N.Y. 422; Burton v. Commercial Mutual Life Ins. Co., 119 Ind. 207; Continental Life Ins. Co., v. Volger, 89 Ind. 572; Singleton v. St. Louis Mutual Ins. Co., 66 Mo. 63.

Where there has been an actual conversion, no demand is necessary. Wright v. Greenwood Warehouse Co., 7 Neb. 435; Miller v. Wilson, 98 Ga. 567; Union Stock Yards Co. v. Mallory, 157 lll., 554; Baltimore & O. R. Co. v. O'Donnell, 49 Ohio St. 489; Ensley Lumber, Co., v. Lewis, 25 So. Rep. [Ala.], 729; Mohr v. Langan, 77 Mo. App., 481; Rushin v. Tharpe, 88 Ga. 782.

The defendant below made the defense that the policy was actually his property by virtue of an absolute sale. This defense rendered a tender unnecessary. First Nat. Bank v. Kickbush, 47 N.W. [Wis.], 267; Davis v. Winona Wagon Co., 52 P. [Cal.], 487.

A. M. Appelget, also for defendant in error:

If the allegation of the answer was true, to-wit, that the assignment was absolute in the sum of $ 75, the contract was a reality, a gambling transaction, a mere wager policy. Warnock v. Davis, 104 U.S. 775.

The question in trover is: Does the defendant exercise a domination over the property in exclusion or in defiance of the plaintiff's rights? Liptrot v. Holmes, 1 Kelly [Ga.], 381, 391; Thompson v. Currier, 24 N.H. 237.

OPINION

NORVAL, C. J.

Florence M. Butler, as administratrix of the estate of Robert L. Butler, brought action in the district court of Johnson county against Charles M. Chamberlain and the Chamberlain Banking House, alleging in her petition, substantially, that said Robert L. Butler in his lifetime procured to be issued to him a policy of insurance on his life by the Home Life Insurance Company of New York, in the sum of $ 5,000, payable to his executors, administrators of assigns; that after the issuance of this policy said Robert assigned it to Chamberlain as security for the payment of a loan of $ 75 made by defendants to said Butler; that afterward Butler died, the insurance policy being at that time in full force, and that plaintiff, as the duly appointed administratrix of his estate, made due proof of the death of Butler, but the company refused to pay the amount of the policy to her, and had in fact paid it to one Crandall, to whom the policy had been assigned by Chamberlain, and that the latter had converted the policy and insurance to his own use; and she prayed for judgment against the defendants in the sum of $ 4,925, with interest and costs. Chamberlain answered, alleging that the policy was by Butler sold and assigned to him absolutely, for the sum of $ 75 paid Butler by defendant, and that by such sale and assignment Chamberlain became the owner thereof, and paid all premiums and dues thereon from the time of assignment to the death of Butler; that after such death defendant assigned the policy to one Crandall, of New York, who prosecuted a suit in said state against said company on said policy, secured judgment for the amount thereof, which was by the company paid to Crandall in full; that when suit was commenced the insurance company gave due notice thereof to plaintiff, who failed to appear therein. To this answer a reply in the nature of a general denial was filed. On trial in the district court the following statements of facts (not copying unnecessary documents) was agreed upon:

"It is agreed that on the 8th day of December, 1891, the policy in controversy then being in force and subsisting was sold and assigned to defendant Charles M. Chamberlain for the agreed price of $ 75,00; that an assignment thereof was then made and executed by said Robert L. Butler in due from, which was immediately forwarded to the insurance company to be examined, and if approved, recorded by the company in the office of its secretary; that afterwards said assignment was so approved and recorded. The assignment in the first place being executed in duplicate, both copies of the assignment being sent to the insurance company; and after the same was approved and recorded one copy was returned to the defendant Chamberlain with an indorsement upon it that it had been recorded by the company, and immediately upon the receipt of the assignment thus approved and recorded the said seventy-five dollars was paid to said Butler by Charles M. Chamberlain; that said Chamberlain continued to hold and own said policy which was turned over to him with the assignment until the 12th day of November, 1895, when the same was sold and assigned and delivered to one Elbert Crandall, of the city of New York, by said Chamberlain by written assignment duly and properly executed at that time; which assignment is in words and figures as follows: [Here copy of assignment follows.]

"That on the 12th day of November, 1895, said policy with said assignment to Crandall was forwarded to said Elbert Crandall at New York city, who thereafter brought suit in his own name in the supreme court of the county of New York in the state of New York and recovered a judgment against the insurance company for the amount of the policy, interest...