Langdon v. Union Mut. Life Ins. Co.

• Citation: 14 F. 272
• Parties: LANGDON v. UNION MUTUAL LIFE INS. CO.
• Decision Date: 05 June 1882
• Court: U.S. District Court — Eastern District of Michigan

14 F. 272

LANGDON v. UNION MUTUAL LIFE INS. CO.

United States Circuit Court, E.D. Michigan.

June 5, 1882

This was an action upon a policy of life insurance upon the life of Augustus E. Baker, 'for the sole and separate use and benefit of his brother-in-law, William W. Langdon. But in case of his previous death to revert to the insured. ' The facts in relation to this policy were substantially as follows: The agent of the defendant solicited Langdon, the plaintiff, to insure his life in his company. This application plaintiff declined, but said to the agent that he might go to his brother-in-law, Baker, and get him to make an application for a policy, and the plaintiff would pay the premiums. Baker was the plaintiff's brother-in-law, but he had no other interest in his life. The court left it to the jury to say whether the policy was taken out in good faith by Baker, with a designation of the plaintiff as a person to receive the money, or whether it was intended by the plaintiff as a wagering contract upon Baker's life. The jury returned a verdict for the amount of the policy.

Motion was made for a new trial upon the ground of misdirection upon this and other points stated in the opinion.

Moore &amp Canfield, for plaintiff.

H. M Duffield, for defendant.

BROWN D.J.

The policy in this case purported upon its face to be taken out by the insured upon his own life, but the evidence shows that it was taken at the suggestion of his brother-in-law, who sent the agent of the company to Baker, and paid all the premiums upon the policy. It was made payable to the plaintiff in case he survived Baker. Baker's life had previously been insured in other companies for plaintiff's benefit to the amount of $6,000. He had also made application to the Massachusetts Mutual Life Insurance Company for a policy of $3,000, which was rejected. Upon the trial, the question was left to the jury to say whether the policy was obtained in good faith, and not for the purpose of speculation in the hazard of a life in which the plaintiff had no legal interest. It was thought that the fact that the policy provided in express terms that in case of the previous death of the plaintiff it should revert to the insured, and hence that the plaintiff's interest was contingent upon his surviving Baker, was some evidence to go to the jury that the policy was taken out in good faith. It was certainly consistent with an understanding that the plaintiff wished to hold the policy during his life as security for the premiums with a resulting trust in favor of Baker's wife, who was his own sister.

It is now well settled in the federal courts that a party cannot take out an insurance upon his own life and assign the policy, either contemporaneously with its execution or subsequently, to a person having no legal interest in his life, although the decisions of the state courts upon this point are conflicting. Warnock v. Davis, 104 U.S. 775; Cammack v. Lewis, 15 Wall. 643.

But there is no case, to my knowledge, which holds that a party may not insure his own life and make the policy payable to any one he may select, though such person have no legal interest in his life. This point was first held in the case of Campbell v. New England Mut. Life Ins. Co. 98 Mass. 381. The policy in this case was taken out by Campbell upon his life, payable to him, his executors, etc., for the benefit of the plaintiff, in very nearly the same terms as are contained in the policy under consideration. The only substantial difference in the two cases is that the premium in this case was paid by the assured, and not by the beneficiary. So in the Provident Life Ins. Co. v. Baum, 29 Ind. 236, it was said to be 'beyond question that a person has an insurable interest in his own life, and that he may effect such insurance, and appoint any one to receive the money, in case of his death during the existence of such policy. ' This was an accident policy in similar terms. Although this exact question has not often been decided, the intimations of the courts are uniformly in the same direction. Lemon v. Phoenix Mut. Life Ins. Co. 38 Conn. 294, 302; Guardian Mut. Life Ins. Co. v. Hogan, 80 Ill. 35; American L. & H. Ins. Co. v. Robertshaw, 26 Pa.St. 189; Fairfield v. N.E. Mut. Life Ass'n, 51 Vt. 624; Olmstead v. Keyes, 11 Ins.Law J. 55.

Hence the production of the policy, proof of payment of premiums, and of the insured's death, were sufficient to make a prima facie case for the plaintiff without evidence of interest in him. The facts, however, that the policy was taken out by Baker at the plaintiff's instigation, and that the premiums were paid by plaintiff, taken in connection with Baker's position in life, his total want of means, and the further fact that the plaintiff had obtained policies upon his life to the amount of $6,000 in addition to this, were strong evidence to show that the transaction was a mere wager upon his life, notwithstanding the fact of Baker's reversionary interest. The case was submitted to the jury in supposed conformity to the opinion of the supreme court in Conn. Mutual Life Ins. Co. v. Shaffer, 94 U.S. 67. See, also, Aetna Life Ins. Co. v. France, Id. 561; Brockway v. Mut. Benefit Life Ins. Co. 10 Ins.Law J. 763-769; Wainwright v. Bland, 1 Moody & R. 481; Swick v. Home Life Ins. Co. 2 Dill. 160. The mere payment of the premiums by plaintiff is not conclusive evidence that the policy was taken out by him. Tuston v. Hardey, 14 Beav. 232; Armstrong v. Mut. Life Ins. Co. 13 Reporter, 711. Were it an original question, I should be disposed to say that a policy taken out by one person for the benefit of another could not more be supported without evidence of legal interest in the beneficiary, than a policy assigned to one having no interest in the life. But a...