Mut. Life Ins. Co. Of N.Y. v. Bd.

• Decision Date: 15 January 1914
• Citation: 80 S.E. 565,115 Va. 836
• Court: Virginia Supreme Court
• Parties: MUTUAL LIFE INS. CO. OF NEW YORK v. BOARD, ARMSTRONG & CO. CORPORATION.

80 S.E. 565

115 Va. 836

MUTUAL LIFE INS. CO. OF NEW YORK

v.BOARD, ARMSTRONG & CO. CORPORATION.

Supreme Court of Appeals of Virginia.

Jan. 15, 1914.

1. Corporations (§ 447*)—Ultra Vires Contracts.

Where the president, general manager, and principal incorporator of a corporation, to protect it and its creditors, procured a policy of insurance on his life for the benefit of the corporation which paid the premium, the contract of insurance was not an ultra vires act on the part of the corporation.

[Ed. Note.—For other cases, see Corporations, Cent. Dig. §§ 1786, 1788, 1807; Dec. Dig. § 447.*]

2. Insurance (§ 116*)—"Insurable Interest"—Corporation's Interest in Officer's Life.

A corporation had an insurable interest in the life of its president, general manager, and principal incorporator, whose relation to and knowledge of its financial and manufacturing interests was such that his death could not fail to result in serious and substantial loss to its creditors, and others interested in its prosperity.and hence, where a policy on his life for its benefit was a bona fide transaction, consummated with the honest purpose of protecting the corporation against loss in the event of his death, it was not obnoxious to public policy.

[Ed. Note.—For other cases, see Insurance, Cent. Dig. §§ 158-162; Dec. Dig. & 116.*

For other definitions, see Words and Phrases, vol. 4, pp. 3670-3674; vol. 8, p. 7690.]

Error to Circuit Court of City of Alexandria.

Action by the Board, Armstrong & Co. Corporation against the Mutual Life Insurance Company of New York. Judgment for plaintiff, and defendant brings error. Affirmed.

John M. Johnson, of Alexandria, for plaintiff in error.

S. G. Brent, of Alexandria, Chas. E. Plummer, of Petersburg, and C. E. Nicol and Gardner L. Boothe, both of Alexandria, for defendant in error.

HARRISON, J. This action was brought by the plaintiff corporation to recover of the defendant life insurance company the amount of a policy issued by it for the benefit of the plaintiff upon the life of B. F. Board, its president and general manager. There was a verdict and judgment in favor of the plaintiff, to which this writ of error was awarded.

The record shows that the plaintiff was a Virginia corporation, with B. F. Board, its principal incorporator, as president and general manager; that, in order to protect the corporation and its creditors from any loss by reason of his death, he approached the agent of the defendant insurance company and stated that he desired to have his life insured for the benefit of the corporation; that the insurance had been solicited by the agents of other companies, and asked if the defendant wrote insurance of that kind He was informed by the agent that the defendant company did issue such policies, and would be glad to write the policy for him. Thereupon the policy was, in due course, issued upon the life of B. F. Board for the benefit of the plaintiff; the premium, $234.25, being paid by it. Both the application and the policy state that the interest of the beneficiary in the insured was "loss of services in the event of death."

It clearly appears that the insurance company, with full knowledge of all the facts, wrote and delivered the policy sued on, and that both parties were acting in good faith in making the contract.

We are of opinion that the demurrer to the plaintiff's declaration was properly overruled. We are further of opinion that this contract of insurance effected by the plaintiff was not an ultra vires act on its part, and that the "loss of services in the event of death, " as stated in the policy, was a sufficient interest to maintain the policy in favor of the beneficiary. The principal ground upon which the defendant seeks to avoid this policy is that the plaintiff had no insurable interest in the life of B. F. Board. The deceased was the president and manager of the corporation, and had been since its organization. His relation to and knowledge of the financial and manufacturing interests of the plaintiff was such that his death could not fail to result in serious and substantial loss to its creditors and all others interested in its prosperity. Although it is well known that the leading insurance companies of the country solicit and carry the class of insurance here involved, we have been unable to find any decision directly in point. The principles, however, announced by the decisions and stated by the text-writers we think clearly show that the plaintiff had an insurable interest in the life of B. F. Board, its president and general manager.

In the case of Mechanics' National Bank v. Comins, 72 N. H. 12, 55 Atl. 191, 101 Am. St. Rep. 650, it was held that any reasonable expectation of pecuniary benefit or advantage, either directly or indirectly, from the continued life of another creates an insurable interest in such life, though there may be no claim upon the person whose life is insured that can be recognized in law or in equity. The opinion says in part: "It is hardly necessary to say that the success of a corporate enterprise may be so interwoven with the personality of its manager that its stock is taken, and money is loaned to carry it on, as much in reliance upon that personality as upon the intrinsic...