Hogben v. Metro. Life Ins. Co.

• Decision Date: 13 July 1897
• Parties: HOGBEN v. METROPOLITAN LIFE INS. CO.
• Court: Connecticut Supreme Court

38 A. 214

69 Conn. 503

HOGBEN

v. METROPOLITAN LIFE INS. CO.

Supreme Court of Errors of Connecticut.

July 13, 1897.

Appeal from superior court, New Haven county; John M. Thayer, Judge.

Action by Mary A. Hogben against the Metropolitan Life Insurance Company to recover the aggregate amount of premiums paid by the plaintiff to the defendant under a claimed mistake of law and fact. Verdict and judgment for the defendant, and appeal by the plaintiff for alleged errors in the charge of the court. Error, and new trial granted.

It appears that on May 8, 1887, one Ellen K. Cannon signed an application to the defendant insurance company for insurance on her life for the benefit of her son John M. Cannon. The insurance applied for was that known as "industrial insurance." The amount was $912, and the weekly premium $1.20. The defendant on May 30, 1887, duly executed a policy of insurance in pursuance of said application, in which the agreement of the defendant is expressed to be "in consideration of the payment to said company on or before the date hereof of the premium mentioned in said schedule, and of a weekly premium to be paid on or before each and every Monday subsequent to said date during the life of the person insured." This policy was tendered to Mrs. Cannon, and within two or three months came into the possession of the plaintiff, who paid the weekly premiums until August 19, 1894. The plaintiff's action is brought to recover the premiums so paid. The complaint alleges that the premiums were paid under a mistake; that Mrs. Cannon had refused to accept the policy had refused to pay premiums, and the policy had no legal existence as a valid policy; that the plaintiff had no interest in the life of the insured; that the defendant represented that, if the plaintiff would pay the premiums, said policy would be good in her hands, and she would be entitled to the amount due thereon in case of loss; that defendant knew such representations to be untrue; that the plaintiff believed the statements, and, acting on such belief, paid the premiums; that defendant has retained said sums, and refused to return them; that plaintiff has demanded the return of said premiums, and has returned said policy to the defendant, and defendant repudiates all liability under said policy. The answer contains two defenses. The first denies all the allegations of the complaint except that alleging the plaintiff had no interest in the life insured, which is admitted. The second defense alleges that the plaintiff, for the purpose of gambling upon the life of Ellen K. Cannon, fraudulently claimed and pretended to the defendant that plaintiff had an insurable interest in said policy and in the life of said Cannon, and also fraudulently claimed and pretended to defendant that the plaintiff had, by agreement with said Cannon and all others interested in said policy except the defendant, been substituted for and had become the beneficiary under said policy; that these claims were false, and known to the plaintiff to be false; and that all the payments mentioned in the complaint were made in reference to said wagering contract of insurance, with knowledge that she had no legal interest in said life, or under said policy.

The court (Thayer, J.) charged the jury as follows: "The plaintiff in this action sues to recover from the defendant money paid as premiums on the Cannon policy, which is in evidence, under the mistaken belief, as she says, that the policy was valid and binding on the defendant, when in fact, as she alleges, it had no legal existence as a valid policy. The claim is based upon the proposition of law that the insurance premium paid to an insurance company is a compensation for the risk run upon the insurance policy, and that if a policy is invalid at its inception, or had no real existence, the company renders no equivalent for the premiums paid, and has no right to receive the same, and, even if received, it is its duty to return them to the person paying. This is a correct statement of the law, as is also the further proposition of the plaintiff that, while the law does not allow a person to take out an insurance upon the life of another if he has no interest in that life, it is yet perfectly lawful and proper for a person to take out an insurance on his own life, and make such insurance payable to a third party, whether that party has an interest in his life or not, and this may be done as act of gratitude, or as a mere gratuity to the beneficiary. He may also take out such insurance, and have it assigned, if he sees fit, to a third party; and it is perfectly proper for such third party, under these circumstances, to pay the premiums and keep the insurance alive. The plaintiff claims that she had a perfect right to become the beneficiary under the policy of Mrs. Cannon, or the assignees of that policy from Mrs. Cannon, provided it was a valid policy legally issued to Mrs. Cannon upon her application, and had the right to pay the premiums and keep the policy alive for her own benefit. And this is true, provided the transaction was entered into in good faith, and not as a cover for a wagering or speculative contract, which the law condemns. The plaintiff claims that she was led by the defendant to believe that the Cannon policy was a valid policy, and in good faith, in that belief, paid the premiums sued for, and that she was in fact mistaken in this belief, and that the policy never had a legal existence and validity. It becomes a question, therefore, whether the...