Hess' Adm'r v. Segenfelter

• Court: Kentucky Court of Appeals
• Writing for the Court: CARROLL, J.
• Citation: Hess' Adm'r v. Segenfelter, 127 Ky. 348, 105 S.W. 476 (Ky. Ct. App. 1907)
• Decision Date: 26 November 1907
• Parties: HESS' ADM'R v. SEGENFELTER ET AL.

105 S.W. 476

127 Ky. 348

HESS' ADM'R v. SEGENFELTER ET AL.

Court of Appeals of Kentucky.

November 26, 1907

Appeal from Circuit Court, McCracken County.

"To be officially reported."

Controversy between Mary E. Morgan, administratrix, and James W Segenfelter and others, to determine right to the proceeds of a benefit certificate issued by the Knights of Honor. From a judgment for James Segenfelter and others, Mary E. Morgan appeals. Reversed.

Hendrick & Miller and Jas. W. Eden, for appellant.

L. D Husbands and T. B. Harrison, for appellees.

CARROLL J.

C. F Hess died in 1904, a member in good standing of the Knights of Honor, a corporation created under the laws of the state of Missouri, "to promote benevolence and charity by establishing a widows' and orphans' fund from which on satisfactory evidence of the death of a member of the order who had complied with all its lawful requirements, and who is at the time of his death in good standing according to the laws of the order, a sum not exceeding two thousand dollars shall be paid to said member or members of his family, blood relatives, or person or persons dependent on him, as he may direct or designate by name, to be paid as provided by general law; provided, however, any member desiring to have after-born children to participate in his certificate may so designate without doing so by name"--the constitution also providing that "a member desiring to change his beneficiary may at any time while in good standing surrender his benefit certificate and obtain a new one in lieu thereof, payable as he shall have directed within the limitations prescribed by the laws of the order." In 1901 Hess surrendered the certificate he then held in this order, payable to his aunt, and upon his request there was issued a certificate for $2,000 payable to the appellees, who are his first cousins. This controversy is between the appellees and the appellant, Mary E. Morgan, the only surviving sister of Hess, who asserts claim to the fund by reason of her relationship and also as administratrix of his estate. The Knights of Honor paid the money into court, and upon hearing the case the circuit court adjudged that the appellees were entitled to the fund in controversy, and a reversal of this judgment is sought.

For appellant it is urged that appellees had no insurable interest in the life of Hess, and therefore are not entitled to the insurance upon his life under the certificate issued to him by this fraternal organization. The appellees contend that, being blood relatives of Hess, he had the right under the provisions of the charter before quoted to designate them as the beneficiaries of the fund, and the circuit court properly adjudged them entitled to it. Whether or not a member of a fraternal or benevolent organization who obtains insurance upon his own life and himself pays the premiums can designate as a beneficiary a person who has not what is generally known as an insurable interest in his life, but who is permitted to be made a beneficiary by the charter of the order, presents a most interesting question, and one that has attracted a great deal of attention from courts as well as text-writers. If we did not feel constrained to follow the provisions of the statute that will be hereafter noticed, we would announce the principle that the question of insurable interest was not involved, when a member of a fraternal or benevolent association in good faith obtained insurance upon his own life, and himself paid the premium, and there was no fact or circumstance connected with the transaction tending to show that it had any of the elements of a wagering or speculative contract, and that a person obtaining such insurance might designate any person as a beneficiary within the limits prescribed by the rules of the order. All the courts of last resort, with possibly one exception, and the text-writers on insurance generally, are agreed that a person may take out insurance upon his own life and designate whom he pleases as the beneficiary. This doctrine is based upon the sound and sensible theory that it is not reasonable to suppose that a person will insure his own life for the purpose of speculation, or be tempted to take his own life in order to secure the payment of money to another, or designate as the beneficiary a person interested in the destruction and not in the continuance of his own life. Vance on Insurance, § 49; Heinlein v. Imperial Ins. Co., 101 Mich. 250, 59 N.W. 615, 25 L.R.A. 627, 45 Am.St.Rep. 409; Morrell v. Trenton Mutual Life Ins. Co., 10 Cush. 282, 57 Am.Dec. 92; Connecticut Mutual Life Ins. Co. v. Schaefer, 94 U.S. 457, 24 L.Ed. 251; May on Insurance, § 112; Bliss on Insurance, § 76; Bacon on Insurance, § 729; Beach on Insurance, § 861; Joyce on Insurance, § 729; Bloomington Mutual Benefit Association v. Blue, 120 Ill. 121, 11 N.E. 331, 60 Am.Rep. 558; Union Fraternal League v. Walton, 109 Ga. 1, 34 S.E. 317, 46 L.R.A. 424, 77 Am.St.Rep. 350; Prudential Ins. Co. v. Hunn, 21 Ind.App. 525, 52 N.E. 772, 69 Am.St.Rep. 380; N.W. Masonic Aid Ass'n v. Jones, 154 Pa. 99, 26 A. 253, 35 Am.St.Rep. 810; Albert v. Mutual Life Ins. Co., 122 N.C. 92, 30 S.E. 327, 65 Am.St.Rep. 693. On the other hand, what is known as "wagering or gambling insurance" is universally condemned, and our court, in harmony with the doctrine generally prevailing, is strongly committed to the principle that a person cannot himself procure insurance upon a life in which he has not an insurable interest, growing out of kinship, dependency, or the relation of debtor and creditor, nor obtain an assignment of such insurance; nor will a person be permitted to insure his own life for the benefit of another, if that other induces him to procure the insurance and pays the premiums thereon, or there is any evidence tending to show that the insurance was obtained with a view to avoid or evade the law against speculative insurance. Griffin's Adm'r v. Equitable Assurance Society, 84 S.W. 1164, 27 Ky. Law Rep. 313; Brombley v. Washington Life Ins. Co., 92 S.W. 17, 28 Ky. Law Rep. 1300, 5 L.R.A. (N. S.) 747; Beard v. Sharp, 100 Ky. 606, 38 S.W. 1057; New York Life Ins. Co. v. Brown, 66 S.W. 613, 23 Ky. Law Rep. 2070; Baldwin v. Haydon, 70 S.W. 300, 24 Ky. Law Rep. 900; Wrather v. Stacey, 82 S.W. 420, 26 Ky. Law Rep. 683; Lee v. Mutual Life Insurance Company, 82 S.W. 258, 26 Ky. Law Rep. 577; Barbour v. Larue, 106 Ky. 546, 51 S.W. 5; Basye v. Adams, 81 Ky. 363; Lockett v. Lockett, 80 S.W. 1152, 26 Ky. Law Rep. 300; Scott v. Scott, 77 S.W. 1122, 25 Ky. Law Rep. 1356; Adams v. Reed, 38 S.W. 420, 18 Ky. Law Rep. 853, 35 L.R.A. 692; Bramblet v. Hargis, 94 S.W. 20, 29 Ky. Law Rep. 610. Such insurance has a tendency to create a desire to destroy the life of the insured to obtain the insurance, there being no tie of blood, or kindred, or interest, to wish its prolongation; and a person who procures for his benefit insurance upon the life of another, when he is not connected with that life by ties of kindred or dependency, or interested in its continuance from business motives, may be actuated solely by a purpose to derive profit from its destruction, and be rewarded by wagering against the amount payable at his death the sums expected in premiums during his life.

In subdivision 3, art. 4, c. 32, of the Kentucky Statutes of 1903, relating to assessment and co-operative life insurance companies, it is provided, in section 678, that "no corporation doing business under this law shall issue a certificate or policy upon the life of any person more than sixty years of age, nor upon any life in which the beneficiary named has no interest." And, by section 680 an insurance company organized under the laws of any other state for the purpose of furnishing life or accident insurance upon the assessment plan shall not be authorized to do business in this state until it has filed with the commissioner of insurance a certificate showing, among other...