National Life Ins. Co. of Montpelier, Vt. v. Hood's Adm'r

• Decision Date: 18 February 1936
• Citation: 94 S.W.2d 1022,264 Ky. 516
• Parties: NATIONAL LIFE INS. CO. OF MONTPELIER, VT., v. HOOD'S ADM'R.
• Court: Kentucky Court of Appeals

94 S.W.2d 1022

264 Ky. 516

NATIONAL LIFE INS. CO. OF MONTPELIER, VT., v. HOOD'S ADM'R.

Court of Appeals of Kentucky

February 18, 1936

As Modified on Denial of Rehearing June 9, 1936.

Appeal from Circuit Court, Monroe County.

Suit by Lawrence & Carter against the National Life Insurance Company of Montpelier, Vermont, wherein Gilbert Hood's administrator and others also claimed the proceeds of the life insurance policies involved. From a judgment for Gilbert Hood's administrator, the defendant appeals.

Affirmed.

Bruce &amp Bullitt, Wm. Marshall Bullitt, and Robert L. Blackwell, all of Louisville, and C. C. Crabtree, of Tompkinsville, for appellant.

Geo. J Ellis, Jr., of Glasgow, and A. J. Thompson, of Edmonton, for appellee.

STANLEY Commissioner.

The appellant insured the life of Gilbert Hood by two identical policies of $1,000, issued January 1, 1925. His wife, Irlie Hood, was designated as the beneficiary in each. She and one Elmore killed him in July, 1933, and were convicted of the crime. On August 1, 1933, Irlie Hood assigned her interest in the insurance to Lawrence & Carter, attorneys. Flossie Elmore sued her for alienation of affections and caused the insurance company to be served as garnishee. In this suit brought by Lawrence & Carter to recover under the policies not only Flossie Elmore, but the administrator of Gilbert Hood's estate and his five children as his heirs, claimed the right to the proceeds. The insurance company denied liability in excess of $246.18, the cash surrender value of the policies, plus $100 "reversionary additions" thereto, less $109.65 indebtedness against the insurance, or a net amount of $233.24. Irlie Hood by answer confirmed her assignment to Lawrence & Carter and joined their efforts to collect. The court, with the Honorable E. H. Smith presiding as a special judge, rendered judgment for the administrator and dismissed the claims of the other parties. The appeal is brought only by the insurance company against the administrator. The others have not appealed.

The contention of the appellant is in the main twofold, namely: (1) That the death of the insured at the hands of the beneficiary was not a risk covered by the policy, the exclusion being by implication; and (2) that the estate cannot recover the face value because the beneficiary receives a portion of it as a distributee.

We have not had a case of this character. There is no difference of opinion among the courts that a beneficiary cannot recover the insurance when he feloniously kills the insured, irrespective of the purpose. It would be abhorrent to justice for the law to aid a malefactor to enrich himself by the commission of murder. 14 R.C.L. 1228; 37 C.J. 576; Couch, Cyclopedia of Insurance Law, § 342; Cooley, Briefs on Insurance, p. 5227; Johnston v. Metropolitan Life Insurance Co., 85 W.Va. 70, 100 S.E. 865, 7 A.L.R. 823; Slocum v. Metropolitan Life Insurance Co., 245 Mass. 565, 139 N.E. 816, 27 A.L.R. 1517; Smith v. Todd, 155 S.C. 323, 152 S.E. 506, 70 A.L.R. 1529; State of West Virginia v. Phoenix Mutual Life Insurance Company, 114 W.Va. 109, 170 S.E. 909, 91 A.L.R. 1482; Mutual Life Insurance Company v. Armstrong, 117 U.S. 591, 6 S.Ct. 877, 29 L.Ed. 997. The assignee of such a beneficiary has no better claim. Equitable Life Assurance Society v. Weightman, 61 Okl. 106, 160 P. 629, L.R.A.1917B, 1210; Johnston v. Metropolitan Life Insurance Company, supra; Annotation, 91 A.L.R. 1487. One undertaking to subject the proceeds to the payment of an obligation of the beneficiary stands in the same capacity.

So far as we are aware, no insurer has been relieved of its contract obligation to pay those who were entitled to the insurance money upon the failure of the named beneficiary to recover. It is commonly stated that the basis for this conclusion is public policy. It is one of the law's fundamental maxims that: "No one shall be permitted to profit by his own fraud, or to take advantage of his own wrong, or to found any claim upon his own iniquity, or to acquire property by his own crime." The cases have looked toward the beneficiary. The appellant directs our thought toward the insurer, and argues that the true basis of decision is that the law implies a provision in the policy exempting that cause of death from the risk assumed. But that path of approach brings us to the same goal. The terms of the policy--drawn perhaps without exception by the insurer--measure the obligations and rights of the parties, subject only to the terms of the common law or the statutes pertaining thereto. These policies at bar contain an unconditional and unqualified promise to pay to the beneficiary specified the sum insured, less any indebtedness due the company upon receipt of proofs of death. This promise is fortified by stipulations that the policy and application "constitute the entire contract between the parties," and that it "shall be incontestable," after it shall have been in force two years, except for nonpayment of premiums. Of some pertinence on this point is the provision that upon the predecease of the beneficiary her interest "shall vest in the insured unless otherwise provided by" the policy. The undertaking was to pay the indemnity for death, however caused. The contract was in force and was for the benefit of somebody; manifestly, it cannot be for the benefit of the insurance company. We know of no law that authorizes a court writing into it the exemption contended for. The contract might have contained it, but did not. Annotation, 91 A.L.R. 1490.

Appellant rests its point upon analogous law. It cites cases with their reasoning which relieve insurers from liability where the insured committed suicide while sane, or was legally executed for the commission of a crime, or in a fire risk where the insured willfully burned the property. It may be observed, parenthetically, that the courts are by no means agreed that an insurer is relieved of liability where the insured was legally executed. Annotations, 35 A.L.R. 1482, 36 A.L.R. 1250. The analogy is only in the principle sometimes enunciated that such an exemption is an implied condition and outside the contemplation of either party to the contract that the company should be liable upon its promise to pay at the option of the insured to bring about the occurrence upon which payment would be made, or that the insured himself might precipitate the event upon the happening of which liability arose. It appears this point of implied exemption was made and denied in State of West Virginia v. Phoenix Mutual Life Insurance Company, supra. Generally, the decisions of this class are rested upon the broader ground of public policy in two aspects. One already adverted to is that which prevents the beneficiary from recovering where he has wrongfully killed the insured, namely, profiting by his own violent act; and the other upon principles of good morals and injury to the public. The law would not sanction a provision that a beneficiary may collect even though he killed the insured, this upon the plain principles of public policy. Ritter v. Mutual Life Insurance Co., 169 U.S. 139, 18. S.Ct. 300, 42 L.Ed. 693; Burt v. Union Central Life Insurance Co., 187 U.S. 362, 23 S.Ct. 139, 47 L.Ed. 216.

The analogy between the cases fails in an important particular. The wrong, with the consequent acceleration of liability, was not committed by the insured person--not by one of the parties to the contract. Thus if incendiarism was by some one else without the consent or connivance of the insured, recovery is not barred. Weiner v. St. Paul F. & M. Ins. Co., 124 Misc. 153, 207 N.Y.S. 279. The contract was with Gilbert Hood, the husband. He did no wrong. He kept his covenants, express and implied. Death by a murderous assault was an accident so far as the insured was concerned. 14 R.C.L. 1260; American Acc. Co. v. Carson, 99 Ky. 441, 36 S.W. 169, 18 Ky.Law Rep. 308, 34 L.R.A. 301, 59 Am.St.Rep. 473; Kascoutas v. Federal Life Insurance Co., 193 Iowa 343, 185 N.W. 125, 22 A.L.R. 294. The policy provided that the "right to change the beneficiary has been reserved." A beneficiary has no vested right in the policy before the insured's death. Slocum v. Metropolitan Life Insurance Co., supra; Smith v. Todd, supra; Farley v. First National Bank, 250 Ky. 150, 61 S.W.2d 1059. As is suggested in Equitable Life Assurance Society v. Weightman, supra, the insured had rights under these policies which could not be obliterated without his consent or fault. We do not conceive the law to be that those rights could be diminished or destroyed by the action of another, even though she be named as a revocable beneficiary.

As stated earlier, the appellant concedes liability for the value of the policy at the time of Hood's death, which was $346.18, less the amount borrowed. The only authority cited in support of this conception is Thacker's Adm'r v. Metropolitan Life Insurance Company ^[1] in the United States District Court for the Western District of Kentucky, in which it appears the beneficiary had murdered the insured. The opinion, according to the statements in the brief, rests upon the idea that the insured's untimely death worked a legal surrender of the policy; that all the property he had in it was the surrender value; and that the act of the beneficiary should not be allowed to destroy that right passing to his estate. We can hardly follow the reasoning. The terms of the contracts, as we have said, measure the rights of the parties. As stated in Supreme Lodge, K. & L. of H. v. Menkhausen, 209 Ill. 277, 70 N.E. 567, 568, 65 L.R.A. 508, 101 Am.St.Rep. 239: "In the absence of a contract to that effect, public policy will not permit the society to appropriate unto itself the fund which it has agreed to pay,...