Crosswell v. Connecticut Indem. Ass'n

• Citation: 28 S.E. 200,51 S.C. 103
• Parties: CROSSWELL v. CONNECTICUT INDEMNITY ASS'N.
• Decision Date: 09 November 1897
• Court: United States State Supreme Court of South Carolina

28 S.E. 200

51 S.C. 103

CROSSWELL v. CONNECTICUT INDEMNITY ASS'N.

Supreme Court of South Carolina

November 9, 1897

Appeal from common pleas circuit court of Richland county; O. W Buchanan, Judge.

Action by T. M. Crosswell against Connecticut Indemnity Association to recover on a policy of life insurance. From judgment in favor of plaintiff, defendant appeals. Affirmed.

John T Seibels and Melton & Melton, for appellant.

Allen J. Green, for respondent.

JONES J.

This action is on a life insurance policy, and the defendant appeals from a judgment thereon in favor of plaintiff.

1. The first question we will consider is whether there was error in overruling defendant's demurrer to the complaint on the ground that it did not state facts sufficient to constitute a cause of action, in that it states no insurable interest in the life of the insured on the part of the original beneficiary, or of her assignee, the plaintiff. The complaint alleged, among other things, as follows: "Par. 2. That on the 15th day of April, 1893, at Eastover, in the state of South Carolina, in consideration of the payment by Susan A Crosswell of the sum of forty-three and 23/100 dollars annually during her life, the defendant made and delivered their policy of insurance in writing, a copy of which is annexed as part of this complaint and marked 'Exhibit A,' and thereby insured the life of Susan A. Crosswell in the minimum sum of one thousand dollars, conditioned to increase said sum by one per cent. for each policy year the said policy should run until the end of the tenth year, when the maximum should be reached. Par. 3. That on the second day of January, 1895, the said Susan A. Crosswell and Mary E. Crawford, the beneficiary named in said policy, duly signed said policy to the plaintiff, who is the son of the said Susan A. Crosswell, and due notice and a copy of such assignment was given to the defendant, who assented to the said assignment, and filed said assignment in its office." The policy attached to the complaint shows that it was payable "to Mary E. Crawford, her daughter, if living; otherwise to the executors, administrators, or assigns of said insured." It is therefore alleged in the complaint substantially that Susan A. Crosswell procured a policy of insurance on her own life, in consideration of the payment by her of the annual premiums, and made the same payable to her daughter Mary E. Crawford, if living, otherwise to the executors, administrators, or assigns of Susan A. Crosswell; and it further appears that the policy was assigned to the son of the insured by both the beneficiary and the insured, with the consent of the insurer.

The demurrer was properly overruled. It is firmly established that insurance procured by one person on the life of another in which the party effecting the insurance has no interest, is void as a wager contract against public policy, which condemns gambling speculation upon human life. But it is also well settled that a person may insure his own life, and make the policy payable to whomsoever he chooses, even though the beneficiary has no insurable interest in his life, provided the transaction is bona fide, and not a mere cover to evade the law against wager policies. 11 Am. & Eng. Enc. Law, 318; Bac. Ben. Soc. § 249; May Ins. §§ 75, 535. In such case the interest which the insured has in his own life supports the policy, and prevents it from being condemned as a wager contract. Therefore, according to the allegations of the complaint, we have in this case a policy supportable by an insurable interest in the hands of the beneficiary, Mary E. Crawford. Whether a policy, valid in its inception, may be afterwards, before the death of the insured, assigned to one having no interest in the life of the insured, has been much controverted, and the authorities are in hopeless conflict. See note to section 302, Bac. Ben. Soc., where the authorities pro and con are cited; also note by Mr. Freeman to Morrell v. Insurance Co., 57 Am. Dec. 103; also note to Currier v. Insurance Co., 52 Am. Rep. 143. In this case the assignment by the beneficiary to the plaintiff was with the consent of the insured and the insurer. If the assignment was not a device to evade the law against wager contracts, which we are bound to assume in the discussion of the demurrer to this complaint, then it is difficult to perceive why the contract, if valid in the hands of the beneficiary, is not also valid in the hands of the beneficiary's assignee, the insured and insurer consenting. Those authorities which hold that the assignee of a life insurance policy must have an insurable interest in the life of the insured rest upon the ground that the same reasons which condemn a policy procured by one without an insurable interest in the life insured should also condemn an assignment to one without such interest. On this point we quote from May, Ins. (Ed. 1891) § 398a, which is in brackets, showing that it is new matter: "Indeed, the doctrine that the assignment of a policy to one without interest in the life is as objectionable as the taking out of a policy without interest does not seem good sense. If this be so, it is difficult to understand how the designation of a beneficiary outside of those having an insurable interest in the life can be upheld. There seems to be a clear distinction between cases in which the policy is procured by the insured bona fide of his own motion and cases in which it is procured by another. It is a very different thing to allow a man to create voluntarily an interest in his termination and to allow some one else to do so at their will. The true line is the activity and responsibility of the assured, and not the interest of the person entitled to the funds. It is well established that a man may take out a policy on his own life payable to any person he pleases, and it is drawing a distinction without a difference to hold that he cannot take out a policy and afterwards transfer its benefits. An assignment by the beneficiary, or by an assignee, unless with the consent of the 'life,' is, however, a very different matter, and involves what seems to be the real evil that the law is blunderingly seeking to exclude, viz. the obtaining by B. of insurance on the life of A., in contradistinction to its obtainment by A. for B.'s benefit." In the case before us the assignment by the beneficiary and the "life," with the consent of the insurer, was practically a substitution of the plaintiff as beneficiary. The following authorities support the doctrine that a life policy, valid in its inception, may be assigned to one having no insurable interest in the life insured: Clark v. Allen, 11 R.I. 439; Insurance Co. v. Allen, 138 Mass. 31, approved and largely quoted from in Bac. Ben. Soc. § 302; St. John v. Insurance Co., 13 N.Y. 31; Olmsted v. Keyes, 85 N.Y. 593; Bursinger v. Bank, 67 Wis. 75, 30 N.W. 290; Fitzpatrick v. Insurance Co., 56 Conn. 116, 13 A. 673; Murphy v. Red, 64 Miss. 614, 1 So. 761; Martin v. Stubbings, 126 Ill. 387, 18 N.E. 657; Insurance Co. v. Baum, 29 Ind. 236, reaffirmed in Association v. Houghton, 103 Ind. 286, 2 N.E. 763. See, also, Fairchild v. Association, 51 Vt. 628; Harrison v. McConkey, 1 Md. Ch. 34; Souder v. Society, 72 Md. 511, 20 A. 137; Eckel v. Renner, 41 Ohio St. 232; Succession of Hearing, 26 La. Ann. 326; Langdon v. Insurance Co., 14 F. 272; Cunningham v. Smith, 70 Pa. St. 450; McFarland v. Creath, 35 Mo.App. 112, cited in May, Ins. § 398. The cases of Cammack v. Lewis, 15 Wall. 643, and Warnock v. Davis, 104 U.S. 775, are cited as holding the contrary view. The case of Cammack v. Lewis stands upon the ground that to procure a policy for $3,000 to cover a debt of $70 is of itself a mere wager, the disproportion between the real interest of the creditor and the amount to be received by him depriving the transaction of all pretense to be a bona fide effort to secure a debt. The insurance was taken out by Lewis, the husband of the complainant, at Cammack's suggestion, who paid the premium for the first year, and took an assignment of the policy. In the case of Warnock v. Davis, supra, the defendant, previous to the issuance of the policy, had entered into an agreement with the insured looking to the procurement of said policy, and the assignment thereof to the defendant. Of these cases the supreme court of Massachusetts in Insurance Co. v. Allen, supra, said they "were both cases in which the policies were taken out by the procurement of the assignees, in order that they might be assigned to them under such circumstances as that they might well be held to be in evasion of the law prohibiting gaming policies. The remark of Mr. Justice Fields in the latter case, that 'the assignment of a policy to a party not having an insurable interest is as objectionable as the taking out of a policy in his name,' was not necessary to the discussion." On the contrary, in Insurance Co. v. France, 94 U.S. 561, the court said: "As held by us in the case of Insurance Co. v. Schaefer, 94 U.S. 457, just decided, any person has a right to procure an insurance on his own life and to assign it to another, provided it be not done by way of cover for a wager policy." Again in Insurance Co. v. Armstrong, 117 U.S. 591, 6 S.Ct. 877, the court said: "A policy of life insurance, without restrictive words, is assignable by the assured for a valuable consideration, equally with any other chose in action, where the assignment is not made to cover a mere speculative risk, and thus evade the law against wager policy, and payment thereof may be enforced for the benefit of the assignee, and, under the system of procedure in many states, in his name." It cannot be denied that there are cases which do support the view that an assignment of a life...