State Of West Va. v. Phoenix Mut. Life Ins. Co.

Citation114 W.Va. 109
Decision Date26 September 1933
Docket Number(CC 475)
PartiesState of West Virginia v. Phoenix Mutual Life InsuranceCompany, a corporation, et al.
CourtSupreme Court of West Virginia
1. Insurance

The pure contractual rights arising out of an insurance policy are ordinarily determined by its provisions, but it is a basic rule of construction that all general legal principles affecting contracts enter by implication into and form a part of every contract as fully as if specifically expressed therein.

2. Trusts

It is a fundamental rule of the common law that no man shall be permitted to profit by his own wrong, and it is a settled expedient of equity to impress a constructive trust on whoever acquires property rights by the commission of a wrong to hold the same as a trustee for the one equitably entitled thereto.

3. Trusts

A resulting trust is raised by a court of equity only to remedy the position of one having an equitable interest in the trust property.

4. Insurance

"Where the beneficiary in a life insurance policy murders the insured, the doctrine of public policy will extend no further than to denying to such beneficiary the right to recover. Johnston Adm'r. v. Ins, Co., 85 W. Va. 70, 100 ©. E. 865.

5. Escheat

Upon the murder of an insured by the beneficiary of a life insurance policy, the beneficiary being the sole distributee of the insured, the State may not escheat the sum named in the policy as derelict.

Case Certified from the Circuit Court, Kanawha County.

Suit by State of West Virginia against Phoenix Mutual Life Insurance Company and others. Sufficiency of original and amended bills certified to Supreme Court of Appeals after Circuit Court had sustained them on demurrers.

Reversed.

L. 8. Trotter and John T. Copenhaver, for the state.

Brown, Jackson & Knight and Geo. 8. Couch, for defendant Insurance Company.

Hatcher, Judge:

This suit involves the right of the State of West Virginia to escheat the proceeds of an insurance policy as derelict and without a rightful owner (bona vacantia).

The State by T. C. Townsend, tax commissioner, filed bills (original and amended) which contain the following allegations: In April, 1926, Albert F. 0 'Dell secured an insurance policy on his life for the sum of $5,000 from the defendant, the Phoanix Mutual Life Insurance Company; the beneficiary in the policy was O'Dell's wife, Elsie, with the right reserved to him to change the beneficiary; in September, 1926, (while the policy was in full force) Mrs. O'Dell feloniously killed her husband and two days afterwards took her own life; O'Dell died intestate and M. M. Wickline was appointed his administrator; Mrs. 0 'Dell left a will naming B. J. Pettigrew as executor; Wickline as administrator prosecuted a suit against the insurance company to recover the proceeds of the policy but was denied recovery by this Court in Wickline, Adm'r. v. Ins. Co., 106 W. Va. 424, 145 S. E. 743; O'Dell left no blood relatives, and his wife was his sole distributee; there are no unpaid creditors of his estate; the heirs of Mrs. O'Dell are not entitled to the insurance (because of her crime), the insurance company is not entitled to keep it, it is without rightful owner, and is accordingly escheated to the State.

Upon demurrers of the insurance company the circuit court sustained the bills and certified their sufficiency to this Court.

The insurance company makes the point that murder of the insured by the beneficiary is a risk impliedly excepted from the policy. As I am not in accord with my brethren on this point Judge Maxwell has very kindly furnished a statement of the position of the Court thereon, as follows:

"In a life insurance policy, the insurer insures the insured against death for the benefit of a named beneficiary or beneficiaries or the estate of the insured. The undertaking of the insurer is against death from any cause, whether disease, accident or homicide. But there is usually a stipulation in modern policies of standard life insurance that there shall be no liability in case of suicide of the insured within a designated period, ordinarily one or two years, except, as is sometimes stipulated, the company will pay to the beneficiary a sum equal to the premiums which have been paid on the policy prior to the time of the suicide. And, on the basis of public policy the law precludes a beneficiary who has murdered the insured from receiving the benefits of the policy. Subject to these exceptions, namely, suicide of the assured within a limited time specified in the policy, and the deprivation of the right of recovery by a homicidal beneficiary, and possibly where the insured forfeits his life by law (Scarborough v. Ins. Co., 171 N. C. 353, 88 S. B. 482), the broad liability of the insurer stands paramount and unqualified with respect to creditors and distributees of the estate of the assured.

"If the insured is murdered by a stranger, there can be no question of the liability of the insurer, nor, in reason, can there be any less basis of liability of the insurer if the insured is murdered by the beneficiary. The thing insured against is the death of the insured without regard to the manner of his going. When the insured dies of natural causes or from violence, the thing insured against has transpired. The liability to pay the principal of the policy has thus become fixed. Public policy does not preclude recovery on a policy where the assured has been murdered by the beneficiary, save only as the beneficiary, or those claiming under him, would profit from such recovery. Subject to that exception, the 'trust fund' should stand for the benefit of those having equitable interest in the estate of the insured."

The "trust fund" doctrine was adopted by this Court in Johnston v. Ins. Co., 85 W. Va. 70, 100 S. E. 865, 867, which is similar in all material respects to this suit. That case held that (a) public policy would not permit a beneficiary who had murdered the insured to recover the insurance; (b) the crime of the beneficiary does not extinguish the insurance fund but "a trust results in favor of the estate of the insured"; and (c) where the beneficiary is the sole distributee of the insured, his personal representative will be denied a recovery of the insurance, in order to prevent the beneficiary securing the fund by indirection under the law of descents and distributions. The trust fund doctrine under subsection (b) seems to have radiated in the states from the case of Schmidt v. Life Ass'n., (1900) 112 Iowa 41, 83 N. W. 800. Some misgiving has arisen because of the precedents relied upon in that decision, which were the English case of Cleaver v. Mutual Ass'n., (1891) 1 Law Rep. Q. B. Div. 147, and certain state decisions. The English decision was in conformity with the Married Woman's Property Act of 1882 which provided that a policy payable to a wife (no trustee of the fund having been appointed) should vest in the assured or his legal representatives in trust for her. The several state decisions cited in...

To continue reading

Request your trial
31 cases
  • Stephenson v. Golden
    • United States
    • Supreme Court of Michigan
    • December 29, 1937
    ...Equity, p. 55; Beach on Equity, § 224; 26 R.C.L. p. 1236; 22 Central Law J. p. 393; 3 Law Mag. p. 131; State v. Phoenix Mutual Life Ins. Co., 114 W.Va. 109, 170 S.E. 909, 91 A.L.R. 1482. 3 Comp.Laws 1929, § 12972, provides: ‘The preceding sections of this chapter shall not extend to trusts ......
  • Annon v. Lucas
    • United States
    • Supreme Court of West Virginia
    • December 6, 1971
    ...of a wrong to hold the same as a trustee for the one equitably entitled thereto.' Point 2, syllabus, State v. Phoenix Mutual Life Insurance Company, 114 W.Va. 109 (170 S.E. 909). 6. A promisor in a written agreement for the sale and conveyance of land who holds money representing the purcha......
  • Zogg v. Hedges
    • United States
    • Supreme Court of West Virginia
    • February 29, 1944
    ......No. 9496. Supreme Court of Appeals of West Virginia. Feb. 29, 1944. [29 S.E.2d 871] ...Kersey, 76 W.Va. 70, 85 S.E. 22; State v. Phoenix Mut. Life Ins. Co., 114 W.Va. 109, ......
  • Zogg.. v. Hedges
    • United States
    • Supreme Court of West Virginia
    • February 29, 1944
    ...West Virginia Northern R. Co., 113 W. Va. 20, 166 S. E. 536. Kersey v. Kersey, 76 W. Va. 70, 85 S. E. 22. State v. Phoenix Mutual Life Insurance Company, 114 W. Va. 109, 170 S. E. 909. But the prayer of the bill goes beyond the equitable deserts of the plaintiffs on their own showing. They ......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT