Curtis v. New York Life Ins. Co.

• Decision Date: 28 February 1914
• Parties: CURTIS v. NEW YORK LIFE INS. CO.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

217 Mass. 47

104 N.E. 553

CURTIS v. NEW YORK LIFE INS. CO.

Supreme Judicial Court of Massachusetts, Suffolk.

February 28, 1914

COUNSEL

Samuel M. Child, of Boston, for plaintiff.

Ropes Gray & Gorham, of Boston (Henry L. Shattuck and S. G. Barker both of Boston, of counsel), for defendant.

OPINION

De COURCY, J.

On February 16, 1905, Samuel D. Jenness, the plaintiff's testate, who was then 54 years of age, applied to the defendant company for a five-year single premium endowment policy for $5,000. The premium for this policy would have been $4,636.45. Under it Jenness would have been entitled to $5,000 if living at the end of five years from its date, and the beneficiaries named in the application would have been entitled to that sum in case of his death during the five-year period. After a prescribed medical examination this application was declined.

Subsequently Jenness made written application for pure endowment, the single premium for which was $3,946.25. Pursuant to this application the defendant issued to Jenness, under date of March 18, 1905, the contract in controversy, whereby Jenness was to receive $5,000 if living on March 18, 1910; and it provided that if he should die before that time, then and thereupon the policy should 'cease and become null and void, and the premium paid' thereon should 'remain the property of the company.' He kept the policy until his death on April 10, 1909. His executor seeks in this action to recover the premium paid contending that the contract is not an insurance policy as defined by R. L. c. 118, and that the defendant was not authorized to make any such contracts in this commonwealth with a resident thereof. These contentions were embodied in the rulings requested by the plaintiff and refused by the presiding judge, who thereupon directed a verdict for the defendant.

1. R. L. c. 118, § 3, defines a contract of insurance as 'an agreement by which one party for a consideration promises to pay money or its equivalent or to do an act valuable to the assured upon the destruction, loss or injury of something in which the other party has an interest.' It also provides that with certain exceptions not here material, 'it shall be unlawful for a company to make a contract of insurance upon or relative to any property or interests or lives in this commonwealth, or with any resident thereof * * * except as authorized by the provisions of this chapter.' This definition, substantially taken from the opinion of this court in Commonwealth v. Wetherbee, 105 Mass. 149, was adopted by the Legislature in the Massachusetts Insurance Act of 1887, and has been retained since; the word 'loss' being inserted after the word 'destruction,' in 1897. St. 1887, c. 214, § 3; St. 1894, c. 522; St. 1897, c. 66; R. L. c. 118, § 3; St. 1907 c. 576, § 3. The contract in question does not provide for payment upon the 'destruction, loss or injury' of anything. Under it the defendant assumed the obligation of payment not upon the destruction or loss during the period named, but upon the continuance of the life of Jenness during that period. It is not what ordinarily is known as an endowment insurance policy, under which the sum named in the policy is payable to the insured himself, if he lives a certain length of time, and in the event of his prior death is payable to his beneficiaries, as in the ordinary life policy. Carr v. Hamilton, 129 U.S. 252, 9 S.Ct. 295, 32 L.Ed. 669; Briggs v. McCullough, 36 Cal. 542; State v. Federal Investment Co., 48 Minn. 110, 50 N.W. 1028. Such a contract is in reality a combination of a contract of investment and one of term insurance; and it is the kind that Jenness first applied for and which the defendant declined to issue. The plaintiff is right in his contention that the policy in controversy was not a contract of insurance within the scope of our statutory definition.

2. A pure endowment contract, such as that involved in this case not being a contract of insurance within the definition of R. L. c. 118, § 3, the next question is whether it is an agreement which our laws prohibit an insurance company from making in this commonwealth. In the case of Lord v. Dall, 12 Mass. 115, 7 Am. Dec. 38, where the legality of a contract of insurance on a life was first decided in this state, Parker, C.J., in delivering the opinion of the court said: 'This is a contract fairly made; the premium is a sufficient consideration; there is nothing on the face of it which leads to the violation of law; nor anything objectionable on the score of policy or morals. It must then be valid to support an action, until something is shown by the party refusing to perform it, in excuse of his non performance.' At that time insurance contracts were usually on marine risks. The system since then has grown and broadened until it now furnishes protection and indemnity in almost every department of business and private life and enterprise. See St. 1907, c. 576, § 32, as amended by St. 1908, cc. 248, 509, and St. 1910, c. 499. Some of these contracts for many years have been a recognized part of the insurance business, although they do not come within our present statutory definition. This is especially true of contracts of pure endowment with return of premium. See Gould v. Curtis, [1912] 1 K. B. 635; Prudential Ins. Co. v. Commissioners of Inland Revenue, [1904] 2 K. B. 658; Carter v. John Hancock Ins. Co., 127 Mass. 153. And one of the well-known forms of contract is that of annuities--not within the technical meaning of the term, or incorporeal hereditaments created by grant--but in the modern sense of a simple promise to pay a certain amount yearly. There is nothing in such contracts that offends against public policy or any principle of law. Hayden v. Snell, 9 Gray, 365, 69 Am. Dec. 294; Cahill v. Maryland Life Ins. Co., 90 Md. 333, 45 A. 180, 47 L. R. A. 614; Berry v. Doremus, 30 N. J. Law. 399. As was said by the court in Mutual Life Ins. Co. v. Smith, 184 F. 1, 106 C. C. A. 593, 33 L. R. A. (N. S.) 439: 'We see very little to be urged against insurance of the nature in question, * * * that does not go to the merit of insurance itself. It is not unnatural that one should act upon the idea that, in the days when he is handling money, it is the part of wisdom to safeguard the period of old age, in which business and earning capacity will have become a thing of the past. Under modern conditions in the various industries, as well as in business and in official life, men are influenced to enter upon a particular work by various old-age safeguards which become operative at the end of a...