Mutual Aid Union v. White

• Decision Date: 01 December 1924
• Docket Number: 15
• Citation: 267 S.W. 137,166 Ark. 467
• Parties: MUTUAL AID UNION v. WHITE
• Court: Arkansas Supreme Court

267 S.W. 137

166 Ark. 467

MUTUAL AID UNION v. WHITE

No. 15

Supreme Court of Arkansas

December 1, 1924

Appeal from Ashley Circuit Court; Turner Butler, Judge; affirmed.

Judgment affirmed.

Duty & Duty, for appellant.

The son-in-law had no insurable interest in the life of the mother-in-law. 148 Ark. 361; 150 Ark. 315; 132 Ark. 458; 104 U.S. 775. The issuance of a policy to one who has no insurable interest in the life of the insured who pays the premiums is invalid because it is a wagering contract and against a sound public policy. 98 Ark. 52; 15 Wall. 643; 94 U.S. 457; 104 U.S. 775. The assignment of a life insurance policy to a creditor, even though absolute, only entitles him to the amount of his debt and the premiums paid. 98 Ark. 52; 76 Ala. 183; 129 Ala. 602; 100 Ky. 606; 76 Tex. 383; 104 U.S 775.

Compere & Compere, for appellee.

The policy was valid at its inception and was not a wagering contract. 145 Ark. 335; 14 R. C. L. 924, § 101; 116 Ark 527; 25 Cyc. 706, 203 S.W. 332; 16 Am. & Eng. Enc. of Law (2d ed.) 843; 94 U.S. 457; 24 L. ed. 251; 86 Ohio St. 213; 1913D Ann. Cas. 607; 32 Hun 306; 222 U.S. 149; 56 L. ed. 133; 99 F 64; 39 C. C. A. 625; 94 U.S. 561; 24 L. ed. 251. In the absence of any controlling provision in the contract, the holder of a policy, valid at its inception, is entitled to recover the full amount of the insurance without reference to subsequent diminution or cessation of insurable interest. 25 Cyc. 712.

OPINION

WOOD, J.

The Mutual Aid Union, hereafter called appellant, is a mutual insurance association organized under the laws of Arkansas, with its principal office at Rogers, Arkansas. On the first of March, 1915, Burl J. White, hereafter called appellee, made an application to appellant for a certificate of insurance on the life of Mrs. Martha J. Denton. Appellee signed the application, and named himself as beneficiary. A certificate of insurance was issued on the life of Mrs. Denton, in which the appellee was named as beneficiary. The insured died on the 29th of September, 1922. Under the terms of the certificate the amount due thereon was $ 1,000. The appellant refused to pay this sum to the appellee, and he instituted this action against the appellant to recover same. The appellant defends the action on the ground that the appellee had no insurable interest in the life of Mrs. Denton. The appellee was not related by blood to the insured, but was her son-in-law. When the benefit certificate was issued, Mrs. Denton was indebted to the appellee in the sum of $ 200. She was living with appellee at the time the certificate was issued, and had a son about seventeen years old, who also lived with the appellee. She had a bunch of cattle, and she and her son had to be fed. She had a farm of her own, and appellee advanced her money to feed herself and boy and the cattle, and to farm her place. When appellant's agent solicited the insurance, he was informed of the circumstances in regard to appellee's mother-in-law, and that she was indebted to the appellee. Mrs. Denton repaid what she owed appellee in the fall of 1915.

The above facts are undisputed. The appellant asked the court to instruct the jury to return a verdict in its favor, and also presented other prayers for instructions, to the effect that appellee would not be entitled to recover under the policy unless, at the time of the death of the insured, she was indebted to the appellee and the appellee held the certificate as collateral security for such indebtedness; that the relation of son-in-law was not sufficient in itself to give appellee an insurable interest in the life of his mother-in- law, Mrs. Denton, and would not entitle him to recover in this action, although he had paid the assessments due on the certificates for a period of more than seven years, which payments had been accepted by the appellant; that the certificate in controversy, under the facts adduced, was a wagering or gambling contract, on which appellee could not recover anything.

The court refused to instruct the jury as prayed for by the appellant, to which ruling the appellant duly excepted. At the instance of the appellee, the court gave instructions to the effect that, if the jury found that the agent of the appellant soliciting the insurance knew at the time of taking the application that Mrs. Denton was indebted to the appellee, and was so indebted at the time of the issuance of the policy, the appellee had an insurable interest in her life, and that the policy was valid, and continued so, and was in force at the time of her death, although the insured had, in the same year after the issuance of the policy, paid her indebtedness to the appellee; that the liability of the appellant depended on whether the appellee was a creditor of the insured at the time of the application for and issuance of the policy; that the mere fact that the appellee was her son-in-law would not entitle him to recover. The appellant duly excepted to the rulings of the court in the giving of these instructions. The jury returned a verdict in favor of the appellee in the sum of $ 1,000. Judgment was entered in his favor for that sum, from which is this appeal.

The verdict of the jury settled the issue that, at the time of the taking of the application for insurance and the issuance of the policy, appellant's agent who solicited the insurance had knowledge of the fact that the insured was indebted to the appellee, and that be also knew that the insured was the mother-in-law of the appellee.

This court is thoroughly committed to the doctrine that "the issuance of a policy to one who has no insurable interest in the life of the insured, but who pays the premiums for the chance of collecting the policy, is invalid because it is a wagering contract, and against a sound public policy * * *; that the assignment of a policy of insurance to one having no insurable interest in the life of the insured, though issued to one having such insurable interest, will be ineffective and invalid if such assignment was made in pursuance of an agreement made at the time of the issuance of the policy." McRae v. Warmack, 98 Ark. 52 at 52-56, 135 S.W. 807, and cases there cited.

The appellant contends that the doctrine of the above case and cases there cited rules the case in hand. But not so. In the above case Warmack was the nephew of Boswell, and was in no way dependent on Boswell. They entered into a verbal agreement by which Boswell was to insure his life, upon which Warmack was to pay the premiums and take an assignment of the policies, one of which was to be paid to Warmack and the others to the estate of Boswell upon the latter's death. In that case the agreement between Warmack and Boswell that the former should pay the premiums and take an assignment of one of the policies at the time of the issuance of same rendered the contract void from its inception. Warmack, being the nephew of Boswell, and in no way dependent upon Boswell had no insurable interest in Boswell's life, and the issuance of a policy on the life of Boswell with Warmack as the beneficiary, or the assignment of such policy under agreement at the time that Warmack should pay the premium and receive the proceeds of the policy, was but a wagering contract, and void when made, because contrary to sound public policy. But in the above case we said: "There are a great many authorities...