Ficke v. Prudential Ins. Co. of America

• Decision Date: 20 June 1947
• Citation: Ficke v. Prudential Ins. Co. of America, 305 Ky. 172, 202 S.W.2d 429 (Ky. 1947)
• Parties: Ficke v. Prudential Ins. Co. of America et al.
• Court: Supreme Court of Kentucky

Page 172

305 Ky. 172

Ficke v. Prudential Ins. Co. of America et al.

Court of Appeals of Kentucky.

May 6, 1947.

Rehearing denied June 20, 1947.

1. Insurance. — An insurable interest is necessary to the validity of an insurance contract, regardless of whether subject matter of policy is property or life.

2. Insurance. — Where insured has no interest in the thing insured and can sustain no loss by the happenings insured against, insurance contract is void on grounds of public policy, at least to the extent of preventing a recovery by person who obtained such insurance as a wager.

3. Insurance. — An insurable interest at inception of life policy is ordinarily sufficient in absence of statute or policy provision to the contrary, and cessation of such interest before death of insured is immaterial.

4. Insurance. — Every person has an insurable interest in his own life and may insure it for the benefit of his estate, or, in absence of statute, he may insure it in good faith for the benefit of any person, regardless of whether such person has an insurable interest in his life.

5. Divorce; Insurance. — Wife who procured and paid for insurance on life of husband during marriage did not obtain rights as beneficiary therein "by reason of marriage" within statutory provisions for restoration upon divorce of all property obtained by either spouse from the other by reason of marriage, and hence divorce did not abrogate wife's rights as beneficiary of insurance thus procured and paid for, and she could continue to pay premiums after divorce and collect proceeds of policy upon its maturity. Civil Code of Practice, sec. 425; KRS 403.060.

6. Courts. — Where former decisions were predicated on misconceptions or misapplication of well-settled principles of law and were out of line with the majority of other courts, the Court of Appeals would not blindly follow them when no rule of property had been established which would be overturned with resulting hardship on persons who had relied upon such erroneous decisions.

Appeal from Kenton Circuit Court.

Howard & Howard and William A. Young for appellant.

John E. Shepard and Bert J. King for appellees.

Before Rodney G. Bryson, Judge.

OPINION OF THE COURT BY JUDGE DAWSON.

Reversing.

This action was instituted by the appellant as beneficiary of certain insurance policies issued by The Prudential Insurance Company of America on the life of her former husband from whom she was divorced in 1937, after having been married many years. All the policies involved were issued after the marriage and before the divorce, and appellant paid all the premiums on the policies. She claims she is entitled to the entire proceeds of the policies as she had an insurable interest in the life of her husband at the time the policies were issued, and, in the alternative, if she is not entitled to the principal amounts of the policies she is entitled to recover the premiums paid by her, with interest from the dates of payments.

After the divorce the husband, George Ficke, married again and his widow, who is administratrix of his estate, is a party to this proceeding, claiming the amount due on the policies, which has been paid into court.

The circuit court dismissed appellant's petition as amended and this appeal presents the question of whether she is entitled to the face amount of the policies, the amount of premiums paid on the policies by her, with interest from the dates of such payments or nothing.

In order to determine this question we must examine several opinions by this court which, broadly stated, are to the effect that a wife's right to the proceeds of insurance on the life of her husband is abrogated by a divorce because of the provisions of section 425 of the Civil Code of Practice and KRS 403.060. We have also said that where it is shown that the divorced wife paid premiums on such policies she is entitled to recover the amount of the premiums paid, together with interest from the dates of such payments. See Schauberger v. Morel's Adm'r., 168 Ky. 368, 182 S.W. 198; Eversole v. Eversole's Adm'x., 169 Ky. 234, 183 S.W. 494; Western & Southern Life Insurance Co. v. Webster, 172 Ky. 444, 189 S.W. 429, L.R.A. 1917B, 375, Ann. Cas. 1917C, 271, and Sea v. Conrad, 155 Ky. 51, 159 S.W. 622, 47 L.R.A., N.S., 1074, Ann. Cas. 1915C, 318. Also see Guthrie v. Guthrie, 155 Ky. 146, 159 S.W. 710; Bradley v. Bradley's Adm'r., 178 Ky. 239, 198 S.W. 905, and Warren v. Spurlock's Adm'r., 292 Ky. 668, 167 S.W. 2d 858.

In the last cited case we were urged to depart from this rule, which is contrary to the general rule, but we refused to do so because of the rule of stare decisis, and the fact that for thirty years the legislature had accepted our construction of the sections of the code and statutes referred to. However, in that case we were not confronted with the precise question involved here. In the Warren case the premiums were paid by the insured, but here it is admitted by the pleadings that all premiums on all policies were paid by appellant and, as stated, her alternative plea is that she is entitled to recover the premiums paid by her, together with interest. If we follow the decisions referred to above we would be forced to say that the judgment of divorce, by reason of the code and statute, compels the estate of the deceased husband to restore to appellant the money which she paid to keep the insurance policies in force, but, according to the pleadings, a judgment to this effect would permit appellant to recover an amount in excess of the insurance due on one of the policies involved. This is one troublesome result which is created by the rule laid down in the cases cited.

Another problem which has apparently not been recognized by these opinions is what, if anything, should a divorced wife be charged for the protection she received from the insurance carried on her husband's life during their marriage? Thus it will be seen that these and possibly other problems are presented and will continue to be presented if we adhere to our rule that a divorce abrogates the wife's right to the proceeds of insurance on the life of her husband which she has paid for from her own property or earnings. Admittedly our rule is contrary to the general and almost universal rule, and is based wholly on Section 425 of the Civil Code of Practice and KRS 403.060, both of which provide that upon a judgment of divorce there shall be a restoration of all property either party obtained from the other by reason of marriage.

We have concluded that it is advisable to re-examine our opinions in order to determine whether we have been erroneously construing the effect of the cited code and statutory provisions. In doing so we must likewise consider some elementary principles of insurance law which apparently were overlooked in reaching the decisions laying down our former rule with respect to situations such as this.

The general rule is that an insurable interest is necessary to the validity of an insurance contract, whether the subject matter of the policy is property or life, and if no insurable interest exists the contract is void. See 29 Am. Jur., Insurance, Section 318,...