Rylander v. Allen

Decision Date28 March 1906
PartiesRYLANDER et al. v. ALLEN.
CourtGeorgia Supreme Court

Syllabus by the Court.

One has the right to procure insurance on his own life and assign the policy to another, who has no insurable interest in the life insured, provided it be not done by way of cover for a wager policy.

Error from Superior Court, Sumter County; Z. A. Littlejohn, Judge.

Action by Hattie Allen, administratrix of Thomas M. Allen, against Hattie Rylander and the Travelers' Insurance Company. Judgment for plaintiff, and defendants bring error. Reversed.

Lane & Maynard, for plaintiffs in error.

W. A Dodson, for defendant in error.

FISH C.J. (after stating the facts).

Where one has procured insurance on his own life, in good faith, is an assignment of the policy by him to one who has no insurable interest in his life valid, when the assignment is not made by way of cover for a wager policy? This exact question has never been decided by this court. There is a contrariety of judicial opinion on the subject in other jurisdictions. "An insurance upon life is a contract by which the insurer, for a stipulated sum, engages to pay a certain amount of money if another dies within the time limited by the policy. The life may be that of the assured or of another in whose continuance the assured has an interest." Civ. Code 1895, § 2114. "The assured may direct the money to be paid to his personal representative or to his widow, or to his children, or to his assignee; and upon such direction, given and assented to by the insurer, no other person can defeat the same. But the assignment is good without such assent." Id. § 2116. A policy of life insurance, even before the death of the assured, is a chose in action, arising upon contract, and therefore may be assigned. Steele v. Gatlin, 115 Ga. 929, 42 S.E. 253, 59 L.R.A. 129. As will be seen, Civ. Code 1895, § 2114, limits the life that may be insured to that of the person taking out the insurance, or to that of another in the continuance of whose life he has an interest; but section 2116, in declaring that the assured may direct the money to be paid to his assignee, does not prescribe that such assignee must have an insurable interest in the life of the insured. In Union Fraternal League v. Walton, 109 Ga. 1, 34 S.E. 317, 46 L.R.A. 424, 77 Am.St.Rep. 350, Pughsly, a member of the league, procured from it a membership certificate of insurance on his own life, in which Mrs. Walton was named as beneficiary. At his own expense he kept the insurance in force. After his death, Mrs. Walton sued the league to recover the amount of the certificate. On the trial it was admitted that she had no insurable interest in the life of the insured. The sole question for adjudication was whether the certificate of insurance, being in favor of one who had no insurable interest in the life of the insured, was for that reason a wagering policy and void. It was held: "While a valid contract of insurance cannot lawfully be taken on the life of another by one who has no insurable interest therein, because it contravenes public policy, yet, as one has an insurable interest in his own life, he may lawfully procure insurance thereon for the benefit of any other person whose interest he desires to promote. Such a contract cannot be defeated because of the want of insurable interest in the beneficiary, when it appears that the person whose life was insured acted for himself, at his own expense and in good faith, to promote the interest of the beneficiary, in taking out the policy. A contract so entered into is in no sense a wagering or speculative one. Lumpkin, P.J., dissenting." In delivering the opinion for the majority of the court, Mr. Justice Little said: "By section 2116 of the Civil Code 1895, it is provided that the assured may direct the money to be paid to his personal representative, or to his widow, or to his children, or to his assignee; and it is further provided that when the insured gives such directions, no other person can defeat the same, and that the assignment is good without such assent [the assent of the assurer]. We are aware that there is seemingly irreconcilable conflict between the adjudicated cases as to whether the assignee of a life policy takes anything under the assignment unless he has an insurable interest in the life insured. But it will be noted that, under the provisions of our Code, no such qualifications are made essential to the validity of the assignment, nor do we think under sound reasoning any can exist. The rule which restricts the execution of a valid contract of insurance on the life of another to one who has an insurable interest in that life is founded alone upon public policy, and it may be stated in general terms that where one has an interest in a life that interest is insurable. Beyond all controversy a man has an insurable interest in his own life, and we fail to see, when having that interest he enters into a contract with an insurer by which, for a stipulated sum which he periodically pays, the insurer becomes liable to pay a given sum of money at the death of the insured, why he who is most interested, whether actuated by ties of relationship, motives of friendship, gratitude, sympathy, or love, may not make the object of his consideration the recipient of his own bounty. If it be replied that a temptation is extended to the beneficiary by improper means to hasten the time when he should receive the amount of the policy (and it is for this reason that such contracts will only be upheld when the idea of temptation is rebutted by the natural ties of blood or affinity), we might well ask ourselves why executory devises, bequests, provisions for support and maintenance provided for friends and even strangers are not subject to the same inhibition, as being against public policy. But while, as we have before said, many adjudicated cases, frequently contrary to natural justice, clearly hold that unless the beneficiary or assignee has an insurable interest in the life of the insured the policy or assignment is void, we shall undertake to show by authority that such is not the rule of the law." The learned justice then cites and comments upon many authorities which abundantly sustain the position taken by the majority of the court. It will be noted that he treats the beneficiary without insurable interest in the life of the insured and an assignee without such interest as in the same category; indeed, he seems to argue that as, under the provisions of our Code, the assured may direct the policy to be paid to an assignee who has no insurable interest in the life of the insured, it follows that the insured may insure his life for the benefit of one who has no interest in its continuance.

In Ancient Order of United Workmen v. Brown, 112 Ga. 545 37 S.E. 890, a mutual beneficiary association issued a certificate of membership on the life of Harvey, in which Miss White was named as the beneficiary. Subsequently Harvey surrendered this certificate to the order, which canceled the same, and a new certificate was issued, in which, at his direction, Mrs. Brown, who was neither related to nor in any way dependent upon him, was designated as the beneficiary; her relationship to him being stated as that of "friend." This change of the beneficiary was made by Harvey in consideration of an agreement between him and Mrs. Brown that she would take the certificate in satisfaction of four months' board; she agreeing to pay all future assessments made by the association. She received the new certificate under this agreement and paid all the future assessments made by the association upon Harvey until his death. Afterwards, in an action brought by Mrs. Brown to recover the amount due on the certificate, the order contended that as she had no insurable interest in the life of Harvey, the certificate of insurance in which she was named as beneficiary was a wagering policy and therefore void. The majority of the court held that this point was covered by the ruling made in Union Fraternal League v. Walton, 109 Ga. 1, 34 S.E. 317, 46 L.R.A. 424, 77 Am.St.Rep. 350. In the opinion delivered for the majority of the court by the writer, it was said: "It is true that in that case the assessments were kept up by the assured, while in the case in hand the assessments becoming due after the benefit fund was made payable to Mrs. Brown were to be paid by her, the beneficiary. We are unable to see, however, why that difference should alter the principle underlying the conclusion reached by the majority of the court in Union Fraternal League v. Walton. The public policy which prevents one person from insuring the life of another in whose life he has no insurable interest is based upon the presumption that a temptation would be held out to the one taking out the policy to hasten, by improper means, the time when he should receive the amount named in the policy. Such temptation would be as strong, we think, in a case where the assured took out a policy upon his own life for the benefit of one having no interest therein, and was to keep up the premiums or assessments, as it would be where the premiums or assessments were to be paid by the beneficiary. Indeed, the temptation to hasten the death of the assured might be stronger where the assessments were to be paid by him than where they were to be paid by the beneficiary, for the reason that the beneficiary could not be certain that the assured would continue to pay the assessments. But be that as it may, the temptation generally would be to hasten the time for the payment of the insurance, rather than to avoid the payment of premiums or assessments." If, where one who has in good faith procured a policy of insurance upon his own life and kept it in...

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2 cases
  • Rylander v. Allen
    • United States
    • Georgia Supreme Court
    • 28 March 1906
    ...53 S.E. 1032125 Ga. 206RYLANDER et al.v.ALLEN.Supreme Court of Georgia.March 28, 1906. Insurance — Assignment of Life Policy — Validity. One has the right to procure insurance on his own life and assign the policy to another, who has no insurable interest in the life insured, provided it be......
  • Wash. Loan & Banking Co v. Holliday, (No. 11910.)
    • United States
    • Georgia Court of Appeals
    • 11 May 1921

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