Cheeves v. Anders

• Decision Date: 12 November 1894
• Citation: 28 S.W. 274
• Court: Texas Supreme Court
• Parties: CHEEVES v. ANDERS.<SMALL><SUP>1</SUP></SMALL>

28 S.W. 274

CHEEVES v. ANDERS.¹

Supreme Court of Texas.

November 12, 1894.

Error from court of civil appeals of Third supreme judicial district.

Action by J. H. Anders, as administrator of L. B. Chilton, deceased, against T. A. Cheeves and the New York Life Insurance Company for the amount of a policy on his intestate's life. From a judgment of the court of civil appeals (25 S. W. 324) affirming a judgment for plaintiff, defendant Cheeves brings error. Reversed.

Clark, Dyer & Bolinger, for plaintiff in error. J. A. Martin, for defendant in error.

BROWN, J.

J. H. Anders, as administrator of L. B. Chilton, brought this suit in the district court of Falls county to recover the amount of a policy issued by the New York Life Insurance Company for $10,000, payable to Cheeves & Chilton, or their administrators or assigns, making the insurance company and Cheeves defendants. The insurance company did not deny liability, and the contest was between the plaintiff and Cheeves as to the right to receive the proceeds from the policy. Cheeves filed an answer in which he pleaded that he was entitled to the proceeds of the policy, as against the company and plaintiff, because at the time of issuing the said policy, on the 17th day of May, 1889, he and the deceased, L. B. Chilton, were partners engaged in mercantile business in Falls county, and that the said partnership procured the issuance of the said policy of insurance upon the life of the said Chilton, and paid the premium thereon, $590, out of and with the money and assets of said firm, and that thereafter, on April 23, 1890, the said firm paid out of its assets another premium of $590 upon said policy, which kept it in force until the death of Chilton. It is alleged in the answer that at the same time another policy was issued by the said insurance company, payable to Cheeves & Chilton, or their administrators or assigns, upon the death of T. A. Cheeves, and for the like sum of $10,000, upon which premiums were paid out of the assets of the said firm amounting to an equal sum to that paid upon the policy in suit; that on the 23d day of September, 1890, the firm of Cheeves & Chilton was dissolved, and Chilton, for a consideration of about $20,500, by writing, conveyed to Cheeves all his right and claim in and to all of the partnership property and rights of every kind, the language being set out broadly enough to include all interest that the firm had in the policy at the time of the transfer. Chilton died November 7, 1890, and proofs of loss were duly furnished. Cheeves claims that he was interested in the life of Chilton, as his partner, at the time the policy was issued, and also that Chilton transferred the policy to him. He closed his answer with a prayer for general relief. There is no allegation in the answer that L. B. Chilton was indebted to the firm of Cheeves & Chilton or to Cheeves, or in what respect Cheeves had any interest in the life of Chilton, except simply that he was a partner when the policy was issued. Plaintiff filed a general demurrer to the answer, which the court sustained, and, upon trial without a jury, gave judgment for the plaintiff against both defendants for the whole amount of the policy, which judgment was by the court of civil appeals affirmed.

It is against the public policy of this state to allow any one who has no insurable interest to be the owner of a policy of insurance upon the life of a human being. Price v. Supreme Lodge, 68 Tex. 361, 4 S. W. 633; Schonfield v. Turner, 75 Tex. 329, 12 S. W. 626; Insurance Co. v. Hazlewood, 75 Tex. 351, 12 S. W. 621. In some states it is held that an element of wagering likewise enters into such contracts, which has led, as we believe, to inconsistencies in the decisions in some of the courts. Our court has placed the inhibition against such contracts upon the higher and sounder ground that the public, independent of the consent or concurrence of the parties, has an interest that no inducement shall be offered to one man to take the life of another. Making this the test in every phase of such cases, there can be no inconsistency in our decisions, and the public good will be better guarded. Applying this salutary rule, the conclusion has been reached by our court that such policy cannot be beneficially owned by any one not interested in the life insured, whether the policy be taken out in the first instance by the non-interested party, with or without the consent of the insured, or whether he acquired the policy by assignment from the person whose life is insured, or from another who had an insurable interest. A man may insure his own life, making the policy payable to his legal representatives, and afterwards assign it to any one, or he may procure such policy, and make it payable to any person that he may name; but in either case, if the person to whom it is assigned or who is named in the policy has no insurable interest, he will hold the proceeds as a trustee for the benefit of those entitled by law to receive it. Price v. Supreme Lodge, and Schonfield v. Turner, cited above. The law permits one who is interested in the life of another to become the owner of insurance upon the life of such other person, either by contracting with the insurance company, or by contract made by the party whose life is insured, or by assignment of the policy after it is issued. If, however, the interest is of a definite character, as that of a creditor of the insured, or of one who may, from the life of the insured, reap some pecuniary advantage of a definite nature, the interest of the holder of...