Sides v. Knickerbocker Life Ins. Co.

• Decision Date: 26 May 1883
• Citation: 16 F. 650
• Parties: SIDES v. KNICKERBOCKER LIFE INS. CO.
• Court: U.S. District Court — Western District of Tennessee

16 F. 650

SIDES v. KNICKERBOCKER LIFE INS. CO.

United States Circuit Court, W.D. Tennessee.

May 26, 1883

Action upon a policy of life insurance for $2,000, insuring the life of W. D. Dunn 'for the benefit of William Sides,' who is the plaintiff. The life-assured was, under his father's will, the owner of certain real property in Memphis to the extent, however, of only a life estate, the remainder interest belonging to his children. He leased the lot for 15 years to Sides by an ordinary lease, which did not, in terms, authorize the removal of any improvements the lessee might make, or contain any covenants in respect to improvements, except such as bound the lessee to pay the ground rents and taxes, and secured their payment. Dunn died within about 11 months of the expiration of the lease, and Sides surrendered the property, including improvements which had cost him $4,600, and were proved to be worth about $2,300, if they had been removed, which could have been done without injury to the soil, being ordinary frame dwelling-houses.

At the time of the execution of the lease, fearing Dunn might die and terminate it, Sides procured this policy of insurance on his life, which, in form, purports to be taken out by Dunn for the benefit of Sides, who, in fact, paid the premiums although the receipts appear to have been made as if the money had been paid by Dunn. The agents of the company knew all the facts as to the lease, the beneficial interest of Sides, that he really paid the premiums, and that the contract was made with him. Sides paid the premiums for 15 years, amounting to nearly $1,400, the last premium being made in ignorance of the fact that Dunn had died three or four days before it became due.

The defense made was that Sides had no insurable interest in Dunn's life, except for the one year's rental value between the death of Dunn and the expiration of the lease which was proven to be $660, and as Sides owed the company $680 for deferred one-half premium notes, nothing was due on the policy. The court charged the jury--

'That if Sides' insurable interest depended solely on the question made about his right to remove or not to remove the improvements under the contract of lease, it might be that he was not entitled to recover anything except the rental value for the one year of the term remaining at Dunn's death but in the view the court took of the case that question was immaterial; and if the jury concluded from the proof that the money value of the leasehold was as much as $2,000 at the time the contract of insurance was made, the plaintiff would be entitled to recover the whole amount, as the question of insurable interest was to be determined as of the date of the policy, and not as of the date of Dunn's death; that perhaps the law would hold the company to pay the face of the policy according to the contract, be the insurable interest at that time more or less, if there were a substantial insurable interest in the assured life, of which there could be no doubt in this case. But if the jury found the leasehold of sufficient value, at the date of the policy, to make the $2,000, it would not be necessary to decide that point, and the court would leave that question to the jury, instructing them, for the purposes of this case, that Sides could recover no more than the value of his leasehold at the date of the policy, with interest from maturity, from which should be taken the deferred premium notes; that Sides was entitled to recover the value of his leasehold, at the date of his policy, up to $2,000, no matter whether Dunn died before or after the expiration of the lease, now how long after. If Sides paid the premiums he could recover to the extent already mentioned whenever Dunn should die,-- the expiration of the lease, or the efflux of the term, not affecting the company's obligation to pay, there being no stipulation in the policy itself to require this, as there might have been if the parties had chosen to make that kind of a contract; that the policy was not subject to any mutations or changes in Sides' interest between the date of the policy and Dunn's death; and that if his interest had ceased altogether at Dunn's death, he might, nevertheless, recover the insurable value to him of Dunn's life at the date of the policy, and he was not to be confined to the insurable interest he might happen to have at the death of the life-assured.'

There was a verdict and judgment for the plaintiff for $1,847.57, and the defendant moved for a new trial.

J. J. Dubose, for plaintiff.

E. L. Belcher, (W. H. Carroll with him,) for defendant.

HAMMOND J.

The court is now satisfied that it should have charged the jury, on the facts of this case, to find a verdict for the plaintiff for the amount of the policy less the deferred premium notes, and this without regard to the value of the leasehold, either at the date of the policy or the death of the life-assured. Recognizing the immense difference between that immeasurable and enduring insurable interest which a wife or child may have in the life-assured, and that computable interest of a creditor, or other like stranger, the court hesitated at the trial to apply to this case the principle in its fullest extent of the case of the Connecticut Mut. Life Ins. Co. v. Schaefer, 94 U.S. 457, and took the most favorable view of the law that was possible for the defendant company. But it was an error of which the defendant cannot complain; and since, on the proof, the jury found the value of the leasehold at the date of the policy to have been as much or more than the $2,000 called for by the policy, it was an immaterial error to the plaintiff. If, however, the jury had found the leasehold of less value, thereby reducing the plaintiff's recovery, I should, in the view now taken of the law, grant the plaintiff a new trial.

There is no fundamental difference in principle, but one of only an immaterial degree, great as that degree may be, between the case referred to and this. The supreme court had previously in the case of Ins. Co. v....