Interstate Life & Accident Co. v. Cook

• Decision Date: 13 July 1935
• Citation: 86 S.W.2d 887
• Parties: INTERSTATE LIFE & ACCIDENT CO. v. COOK.
• Court: Tennessee Supreme Court

Page 887

86 S.W.2d 887

INTERSTATE LIFE & ACCIDENT CO. v. COOK.

Court of Appeals of Tennessee. Eastern Section.

July 13, 1935.

Certiorari Denied by Supreme Court October 19, 1935.

Appeal in Error from Circuit Court, Hamilton County; Oscar Yarnell, Judge.

Action by Artie Cook against the Interstate Life & Accident Company in justice court, which action was tried without jury in circuit court, wherein defendant filed a demurrer. From a judgment for plaintiff after overruling demurrer, defendant appeals in error.

Affirmed.

Finlay & Campbell and Horace E. Boydston, all of Chattanooga, for plaintiff in error.

H. M. Vaughn and M. G. L. Roberts, both of Chattanooga, for defendant in error.

FAW, Presiding Judge.

This is an appeal in the nature of a writ of error by Interstate Life & Accident Company, the defendant below, and hereinafter called defendant, from a judgment of the circuit court of Hamilton county against it and in favor of Artie Cook (formerly Artie Ware), the plaintiff below, and hereinafter called plaintiff, for $125 principal and $65.28 interest thereon, aggregating $190.28, and all costs of suit.

The action was instituted by plaintiff in the court of a justice of the peace of Hamilton county on October 14, 1932, to recover sums paid by her to the defendant throughout a period of years as premiums upon a policy purporting to insure the life of one John Stewart, colored, but which policy (the plaintiff avers and the trial courts held) was illegal and void for the reason that the plaintiff, who was named as beneficiary in the policy, had no insurable interest in the life of said John Stewart. The plaintiff's cause of action is stated in the justice's warrant as follows:

"An action for money had and received as premium on an insurance policy #210493 issued by defendant on the life of John Stewart on December 15, 1919, in whose life plaintiff had no insurable interest by relation or otherwise. Plaintiff was induced to pay the premium of 25 cents per week by defendant's authorized agent representing to her that if she were made beneficiary under the policy and paid the premium thereon she would be entitled to collect the insurance upon the death of the insured. Defendant knew or should have known that it was an illegal transaction. The transaction was a civil fraud on plaintiff. Plaintiff did not know the transaction was illegal. Plaintiff received no consideration of value for the money she paid, and sues for the full amount paid, $125.00, plus interest $65.28, total $190.28. The contract was void as to the consideration paid. (The same being under a magistrate's jurisdiction.)"

The case was tried without a jury in the circuit court, and is, therefore, triable de novo in this court, but with a presumption in favor of the correctness of the judgment of the trial court, unless the evidence preponderates against such judgment. Code, § 10622.

There are assignments of error (1) that there is no evidence to support the "verdict," and (2) that the evidence greatly preponderates against the "verdict." However, there are no conflicts in the testimony of the two witnesses (one for the plaintiff and one for the defendant) who testified at the trial below, and the real issue here is whether the trial court reached the correct legal conclusion upon the undisputed facts; and this is a proper inquiry under the assignment that there is no evidence to support the judgment of the court.

The plaintiff's proof consists of the testimony of the plaintiff herself, with certain documentary exhibits thereto. The plaintiff is an illiterate colored woman, unable to read or write. The transactions involved in this suit were initiated in the year of 1919, and at that time plaintiff was living in the city of Chattanooga (where she still lives) with her then husband, who worked at certain railroad shops in that city. Plaintiff had a "boarder" (and only one), John Stewart, a colored man, who "worked at the brick yard," from whom plaintiff received $4 per week for his "board and washing," and which sum of $4 John Stewart paid "every Saturday evening." Plaintiff also had some income from "washing and ironing" which she did for other persons.

At the solicitation of an agent of defendant company, plaintiff "took out" a policy on the life of John Stewart. An application blank was filled up and the name of John Stewart signed thereto by one of defendant's soliciting agents, H. D. Gregory. The application is dated December 1, 1919. John Stewart was not present when the application was prepared and signed, and he did not authorize plaintiff or any one else to apply for insurance on his life. Plaintiff's undisputed testimony is that "John didn't want no policy; he didn't believe in the things."

The "information" necessary to fill out the application blank was furnished to the agent by plaintiff. John Stewart had been boarding with plaintiff for several years theretofore, and plaintiff had acquired considerable information from him relative to his age, family history, previous health and illness, etc.

Plaintiff was named in the application as "beneficiary," and her relation to the purported applicant was stated therein as "cousin"; but she was not related to him as cousin or otherwise.

Pursuant to the aforesaid application, defendant company issued a policy which purported to insure the life of John Stewart, and by the terms of which policy defendant contracted to pay to the named beneficiary, Artie Ware, upon due proof of the death of John Stewart, the sum of $48.75. There was a further provision that "the death benefit shall be double the amount otherwise payable if the insured shall die as a result of accidental injury sustained while riding as a regular passenger on any public conveyance operated for the transportation of passengers."

The policy also provided that, in case of accident or sickness of the insured, the company would pay to him a weekly indemnity according to a schedule, and subject to certain conditions contained in the policy.

The aforesaid policy was delivered to the plaintiff and retained by her, and was filed by her as an exhibit to her testimony in this case. John Stewart at no time claimed any rights under the policy, and at the time of the trial below plaintiff did not know his whereabouts and had not seen him for about three years theretofore. She stated that she did not know "whether he is living or dead."

Defendant's agent, H. D. Gregory, paid the first week's premium on the policy, and thereafter plaintiff paid the premiums, at the rate of 25 cents per week, until July 8, 1929, when she ceased to pay and no further premiums were paid thereon. The sum of the premiums thus paid by plaintiff is $125, and for this sum, with interest and costs, the trial court gave her a judgment against the defendant.

Plaintiff testified that defendant's agent, H. D. Gregory, asked her to take out the insurance on John Stewart, and told her that if she would do so, and would pay the premiums, she "would get the money after he is dead."

J. W. Lancaster, "local manager" for defendant company, as a witness for defendant, filed the aforementioned application, and stated that he did not know the whereabouts of H. D. Gregory, the defendant's agent named in the application. He stated further that defendant company considered the policy as "a bona fide contract, based on the application."

Upon the facts disclosed by the record, we are of the opinion that the aforesaid policy was void from the beginning, and that no risk attached thereunder, for two reasons:

"(a) The almost universally accepted rule is that a party insuring a human life must have an insurable interest therein if the insurance is effected for his own benefit, or the policy will be void; and he must prove such interest in order to recover, since public policy does not permit one having no insurable interest to procure a policy of insurance upon the life of a human being and pay the premium as a speculation, or on a chance of collecting the insurance money. This is upon the theory that the public has an interest, independent of the consent and concurrence of the parties, that no inducement shall be offered to one man to take the life of another. The parties to a contract of insurance cannot, even by solemn agreement, override the public policy which requires the beneficiary to have an insurable interest." 1 Couch, Cyc. of Insurance Law, § 295, pp. 769, 770. See, also, Quinn v. Catholic Knights, 99 Tenn. 80, 86, 41 S. W. 343; Clement v. Insurance Co., 101 Tenn. 22, 35, 46 S. W. 561, 42 L. R. A. 247, 70 Am. St. Rep. 650; Marquet v. Insurance Co., 128 Tenn. 213, 223, 159 S. W. 733, L. R. A. 1915B, 749, Ann. Cas. 1915B, 677; Franklin, etc., Co. v. Hazzard, 41 Ind. 116, 13 Am. Rep. 313.

"(b) Irrespective of the existence of an insurable interest, a life policy procured by one without the knowledge and consent of the person whose life is insured is void as against public policy, even though the insurance company knew at the time it issued the policy that the insured did not know of it." Branson v. National Life & Accident Insurance Co., 4 Tenn. App. 576, and cases there cited; Fisher v. Metropolitan Life Insurance Co., 160 Mass. 386, 35 N. E. 849, 39 Am. St. Rep. 495; Metropolitan Life Insurance Co. v. Blesch (Ky.) 58 S. W. 436; Metropolitan Life Insurance Co. v. Monohan, 102 Ky. 13, 42 S. W. 924.

It is argued for the defendant that the policy here in question was valid and binding on the insurance company until it lapsed for nonpayment of premiums, notwithstanding the absence of an insurable interest in the named beneficiary, for the reason that it was an "industrial insurance" policy.

It has been held, notably in Kentucky, that the rule requiring an insurable interest in the beneficiary is not applicable to an industrial insurance policy which contains the "facility of payment" clause. See 1 Couch, § 296d, p. 789; Metropolitan Life Insurance Co. v. Nelson,...