Langford v. National Life & Accident Insurance Company

• Decision Date: 01 February 1915
• Docket Number: 146
• Parties: LANGFORD v. NATIONAL LIFE & ACCIDENT INSURANCE COMPANY
• Court: Arkansas Supreme Court

173 S.W. 414

116 Ark. 527

LANGFORD v. NATIONAL LIFE & ACCIDENT INSURANCE COMPANY

No. 146

Supreme Court of Arkansas

February 1, 1915

Appeal from Nevada Circuit Court; Jacob M. Carter, Judge; reversed.

STATEMENT BY THE COURT.

The appellant sued the appellee on a policy of life insurance. It was alleged that appellee was liable under a contract with the Arkansas Life Insurance Company, on a policy issued by the latter on the life of one Grant Stewart on April 28 1913. Stewart died March 14, 1914. The appellant was the beneficiary in the policy. Stewart paid the premium on the policy for some time; then the policy came into the possession of the appellant and she paid the premiums continuously from November 17, 1913, until Stewart's death. After the death of Stewart appellant made proper proof of death and demanded payment, which was refused.

The application for the policy contains this provision: "I declare and warrant the answers to the above questions to be true and complete. I agree that said answers, with this declaration, shall form the basis for a contract for benefits between me and the Arkansas Life Insurance Company, of Little Rock, Arkansas, and that the policy which may be granted by this company in pursuance of this application shall be accepted subject to the conditions and agreements contained in said policy. I further agree that no obligation shall exist by said company on account of said application or any policy thereon unless the answers to the above questions and the answers made to the medical examiner are found to be complete and true."

Among the questions, Stewart was asked what was his relation to the beneficiary, and answered that she was his aunt.

There was no express provision in the application or the policy making the answers in the application warranties and making the application a part of the contract of insurance. There is a provision in the policy specifying the conditions upon which the same shall be void; but there is no provision declaring that the policy shall be void if the insured answered falsely the question as to his relationship to the beneficiary. There was a condition to the effect that the policy should be void if the insured, before the date of the policy, had been attended by a physician for any serious disease or complaint, or had, before said date, any pulmonary disease. The policy also contained this provision: "This policy is issued upon an application and contains the entire contract between the parties hereto. All statements made in the application shall, in the absence of fraud, be deemed representations and not warranties."

The appellant set up the policy, alleged the death of the assured, that all the provisions of the policy had been complied with, and that she was entitled to recover thereon.

The appellee denied that the appellant was related to Grant Stewart, and denied that she had any insurable interest, and denied that Stewart was an insurable character under the terms of the policy, and alleged that he had broken certain conditions of the application and policy which appellee alleged were warranties.

The appellant testified that her mother was a Stewart; that it was said that she and the assured were related by blood. Stewart called her Aunt Alice. He was a friend of her family and visited her house frequently. She had known him a long time, and he had lived with them. She didn't pay the first premiums on the policy, did not make the application for the policy, and did not know who did. Grant Stewart never talked to her about the policy. She knew nothing about the condition of his health in April, 1913, at the time the policy was issued. About that time he appeared to be all right; never complained about being sick. He was working at the mill. An agent of the company first showed her the policy. He had it in his possession before Stewart died. He showed her the policy and represented to her that he was collecting for the insurance company, and from that time on she paid the premiums.

There was testimony on behalf of the appellee tending to show that the insured, at the time the policy was issued, was afflicted with tuberculosis.

Among other prayers, the appellant asked the court to instruct the jury as follows:

"1. If you find from the evidence that the deceased was an insurable character at the time the policy was written and it was written in good faith and without any element of fraud on his own application, and that he paid the premiums to begin with, and that after he went away or was disabled to pay the premiums, the defendant carried the policy to the plaintiff herein, and requested her to pay the premiums and she did so in good faith in order to keep the policy in force, and if you further believe that all other provisions of the policy were complied with, you will find for the plaintiff."

"4. The jury is instructed that, although you may find that the plaintiff who is named the beneficiary in said insurance policy may not be related by blood to the deceased, this fact will not render the policy invalid if you find that he had his life insured in said company in good faith and was an insurable character under the terms of said policy at the time the insurance was written and that he paid the premiums on said policy continuously from the date of issue as long as he was able to do so, and provided you find that all conditions of the policy were complied with."

The court refused these and other instructions requested by the appellant, and instructed the jury that, "the plaintiff is not entitled to recover, taking all she has said as true and direct you, therefore, to return a verdict for the defendant." From a judgment in favor of the appellee this appeal has been duly prosecuted.

Judgment reversed and cause remanded.

H. B McKenzie, for appellant.

1. The policy was valid in its inception. If so, only fraud or collusion could invalidate it, and that was a question for the jury. A person may take out insurance on his own life and designate the beneficiary. 127 S.W. 490; 127 Ky. 348; 57 Vt. 496; 135 Am. Rep. 135; 152 Mich. 266; 15 A. & E. Ann. Cas. 232, and note; 101 Mich. 250; 65 Am. St. 693; 77 Ark. 63; 98 Ark. 343; 27 N.Y. 282; May on Ins., §§ 115, 116.

The case of McRae v. Warmack, 98 Ark. 52, was a case of mere wager, and does not apply; nor does 104 U.S. 775. The instructions asked should have been given.

Horace E. Rouse, for appellee.

1. The policy was a wagering contract and void. 77 Ark. 63; 152 Mich. 226, 15 A. & E. Ann. Cas. 232; 98 Ark. 343. The beneficiary had no insurable interest, and Stewart warranted she was his aunt. This also avoided the policy. 25 Cyc. 705; 98 Ark. 57.

2. A breach of warranty renders the policy void. 53 Ore. 102; 17 A. & E. Cas. 1202; 121 F. 664; 46 A. 426; 45 Id. 774; 72 Ark. 662; 56 N.E. 909; 95 N.Y.S. 587; 88 P. 401; 64 N.Y.S. 183.

3. Where the testimony is uncontradicted, the court should direct a verdict. 89 Ark. 29; 102 Id. 170; 104 Id. 268.

OPINION

WOOD, J., (after stating the facts).

The appellee contends that the judgment was correct for two reasons: First, because the policy was a wagering contract and void; second, because the uncontradicted evidence showed that Stewart, the insured, violated the conditions of the contract.

I. Conceding that appellant had no insurable interest in the life of Stewart, it does not follow that the policy was void as a wagering contract. In McRae v. Warmack, 98 Ark. 52, 135 S.W. 807, one Boswell had policies of insurance issued on his life under an agreement with one Warmack that Boswell should apply for insurance and that when the policies were issued he should immediately assign the same to Warmack, Warmack agreeing to pay the first and second premiums. The reason for the agreement was that Boswell was unable to pay the premium for insurance on his life, and in order to have Warmack pay the premiums, Boswell agreed to assign both policies to him when the same were issued, upon the understanding that Warmack should receive the proceeds of one of the policies at the death of Boswell.

In the above case we held that the assignment was invalid because the policies of insurance issued upon such an agreement were void, being wagering contracts. In that case it appeared that Warmack was the uncle of Boswell, but was in no way dependent upon the latter, and Warmack had no insurable interest in the life of Boswell.

The appellee relies upon the above case to sustain its contention that the policy in suit is a wagering contract. But the facts of the Warmack case clearly distinguish it from the instant case. In the Warmack case the policies of insurance and the assignment of those policies were void because before any policies were issued it was agreed between Boswell and Warmack that when the policies were issued they should be assigned to Warmack and that he should pay the premiums in consideration of the assignment to him of the policies. This assignment and the policies applied for and issued in pursuance of the agreement were invalid from their inception for the reason that Warmack had no insurable interest in the life of Boswell, and the execution of the contract between them was tantamount to Warmack having the policies of insurance issued upon the life of one in whom he had no insurable interest, which rendered such policies of insurance void as wagering contracts. But here Stewart, the insured, had the policy issued on his own life payable to the appellant, but without any knowledge upon her part, at the time the same was issued that she was made the beneficiary in the policy, and there was no contract or agreement between the appellant and Stewart, that he should have his life insured for her benefit and that she should pay the...