Hack v. Metz

• Decision Date: 02 October 1934
• Docket Number: 13915.
• Citation: 176 S.E. 314,173 S.C. 413
• Parties: HACK v. METZ et al.
• Court: South Carolina Supreme Court

176 S.E. 314

173 S.C. 413

HACK v. METZ et al.

No. 13915.

Supreme Court of South Carolina

October 2, 1934

Appeal from Common Pleas Circuit Court of Greenville County; C.J Ramage, Judge.

Action by N. A. Hack against Frances B. Metz and the Commonwealth Life Insurance Company, Inc. From a judgment for plaintiff defendant last named appeals.

Reversed and remanded, with directions.

Haynsworth & Haynsworth, of Greenville, for appellant.

Price & Poag, of Greenville, for respondent.

BONHAM Justice.

June 12, 1922, the Commonwealth Life Insurance Company (which we shall in this opinion speak of as the company) issued its policy contract whereby it insured the life of James C. Metz an infant of the age of one year, in the sum of $250, with Frances B. Metz, mother of the infant as beneficiary.

C. S. Bowen, N. A. Hack, and A. S. Thomas were engaged as partners in the business of buying up industrial policies of life insurance which had, or would soon have, a cash surrender value, and cash them in if the company assented. The business was conducted in the name of C. S. Bowen, Attorney. The premiums on the policy on the life of the infant James C. Metz were paid by his father, R. L. Metz, until April 30, 1932, on which day R. L. Metz and Frances B. Metz, the beneficiary named in the policy executed and delivered to C. S. Bowen a paper purporting to be a power of attorney and executory agreement by which, in consideration of the sum of $20, the policy was assigned and delivered to C. S. Bowen. Hack and Thomas were interested with Bowen in the transaction. R. L. Metz and Frances B. Metz assert that they understood that by this transaction they were securing a loan from Bowen of $20; that Bowen was to pay $1.36 additional premiums to convert the policy into a ten-year paid-up policy; that the loan of $20 and the additional premiums were secured by the pledge of the policy. Bowen claims that he bought the policy outright for himself, Hack, and Thomas, and expected to cash it in on June 12, 1932. None of these men had an insurable interest in the life of the insured infant. Subsequently, when Bowen discovered that the policy could not be cashed until the insured reached the age of fifteen years, he sold his interest in the assignment of the policy to Hack, as did Thomas, and a new power of attorney and executory agreement was executed by R. L. and Frances Metz in favor of Hack.

November 12, 1932, the insured was killed in an automobile accident. He was then eleven years of age. Hack, who had at one time been an agent of the company, procured the necessary blanks for proof of death and claim, which were made out in the name of and signed by Frances B. Metz, as claimant. In due time a check payable to Frances B. Metz for the face of the policy was sent to the agent of the company at Greenville for delivery to Frances B. Metz upon surrender of the policy. The parties met at the Metz home. As Hack had the policy and Mrs. Metz refused to sign the check to Hack, the policy was not surrendered to the agent, who refused to deliver the check to either Hack or Mrs. Metz, and sent it back to the company. Thereupon Hack brought this action to recover the amount of the death benefits of the policy, to wit, $250.

The case was tried by Judge Ramage and a jury with the result of a verdict for plaintiff in the amount claimed.

A motion for new trial was refused and this appeal followed.

It appears from the record, as admitted facts, that Bowen, Hack, and Thomas had bought some three hundred policies of like nature of that involved in this transaction. Mr. Bowen said on cross-examination:

"I knew I was purchasing a policy on the life of a minor whom I had never seen and in whom I had no interest at all. I had extended into the purchase of policies until it had developed into a business. I was speculating, incidentally, the speculative feature was incidental; I bought principally for the cash surrender value which was definite and certain, if I were to have any interest in it at all I wanted the whole thing. * * * I also took into consideration that the child might die when I purchased the policy, I paid the Metz for that." The policy contains this provision:

" Change Of Beneficiary. The insured may at any time during the continuance of the policy, provided it be not then assigned, change the beneficiary or the beneficiaries, by written request on the Company's form, which must be sent to the Company at the home office, accompanied by this policy, such change to take effect when so endorsed on the policy by the Company."

It is conceded that no written request of the insured for change of beneficiary was ever made, as required by the above provision of the policy, hence no consent to the change was ever indorsed on the policy by the company. The company claims that it had no knowledge of the assignment.

The complaint alleged the issuance of the policy; the assignment thereof by Frances B. Metz to plaintiff; the death of the insured; the refusal of Frances B. Metz to co-operate with plaintiff as she had contracted to do, in collecting the insurance, by refusing to indorse the check for the death benefit which had been made payable to her, which caused the company to retain the check; that notice of the assignment had been given to the agent of the company and it became the duty of the company to pay to the plaintiff the benefits due under the policy, which it refused to do. The prayer was for the sum of $250 and interest.

The action was originally brought against Mrs. Metz, and B. T. and J. E. Leppard. The two last named were eliminated at the trial, and Mrs. Metz has not appealed, therefore, we are concerned only with the answer of the company. This sets up that it was willing to deliver the check for the death claim to the named beneficiary upon surrender of the policy; that it never assented to the change of beneficiary, nor to the assignment of the policy; that the plaintiff has no insurable interest in the life of James C. Metz; and that the transaction is a wagering contract, which is unconscionable, speculative, is against good morals and public policy, and is in the nature of a gambling contract on the life of a person in whom plaintiff has no insurable interest; that the company is ready and willing to pay the face of the policy to Frances B. Metz upon the surrender and receipt of the policy and the execution of a proper release.

It is needless to recite in detail the issues made by the several exceptions. The questions presented by them for determination by this court are these:

Has the plaintiff an insurable interest in the life of James C. Metz by reason of the assignment of the policy to him which entitles him to maintain this action?

Is the company estopped by the incontestable clause of the policy from contesting liability?

Has the company waived its right to contest liability to the plaintiff?

Is the transaction by which plaintiff acquired the assignment of the policy from the beneficiary a wagering contract, speculative in its nature, which is against good morals and public policy?

Certain specific challenges of the charge.

It is not claimed on behalf of plaintiff that he had originally an insurable interest in the life of James C. Metz, but it is claimed that Frances B. Metz has such an interest, and as to her the contract of insurance was valid, and that the assignment by her to plaintiff was valid because it carried all of her rights under the policy.

It is said in Joyce on Insurance (2d Ed.) § 872, that: "A person can have no insurable interest where his only right arises under a contract which he had no authority to make."

From the same authority, § 2905D, we quote: "It has been broadly stated that insurance taken out on the life of another, without the latter's consent is against public policy and void."

The exception to the rule, to wit, that a parent may insure the life of his infant child for the parent's benefit, is recognized in most jurisdictions, including this, although it is denied, or governed by statute, in others. It is patent then that the policy on the life of James C. Metz in favor of his mother is valid. It is equally plain that a policy on the life of the infant, James C. Metz, in favor of the plaintiff N. A. Hack, who is in nowise related to James C. Metz, and has no insurable interest in his life, would be invalid.

Can the assignment by the mother of James C. Metz, who is the beneficiary named in the policy in this case, convey to plaintiff an interest which will enable him to collect the policy on the death of the insured?

What is the nature of the interest of Frances B. Metz in this policy?

The policy contains a provision that the insured may change the beneficiary when he pleases, if he does so in the manner prescribed by the terms of the policy.

It has been repeatedly held that the beneficiary in such policy as this has only a contingent interest, the assignment of which, without the consent of the insured, carries no interest to the assignee; and it has been held that an assignment of the policy is a change or an attempt to change the beneficiary.

"The case last named [ Barron v. Ins. Co., 131 S.C. 441, 128 S.E. 414] is in exact parallel with the case at bar, and it is there held that the assignment was in effect a change of the beneficiary, what our court practically held in the Deal Case [87 S.C. 395, 69 S.E. 886, Ann. Cas. 1912B, 1142]." Antley v. N.Y. Life Ins. Co., 139 S.C. 23, 137 S.E. 199, 202, 60 A. L. R. 184.

In the Antley Case it is distinctly held that: "Where the right to change beneficiary in a policy of life insurance, named beneficiary obtains merely an inchoate right dependent entirely upon the will of the insured during his lifetime."...