Wilke v. Finn

• Decision Date: 10 June 1931
• Docket Number: No. 1184-5515.,1184-5515.
• Citation: 39 S.W.2d 836
• Parties: WILKE v. FINN et al.
• Court: Texas Supreme Court

39 S.W.2d 836

WILKE v. FINN et al.

No. 1184-5515.

Commission of Appeals of Texas, Section B.

June 10, 1931.

Error to Court of Civil Appeals of Ninth Supreme Judicial District.

Action by H. B. Finn, Jr., administrator, and others against Fred Wilke and the Metropolitan Life Insurance Company, in which the Metropolitan Life Insurance Company filed allegations of interpleader. A judgment in favor of Fred Wilke and the Metropolitan Life Insurance Company, was reversed as to Fred Wilke and affirmed as to the

Metropolitan Life Insurance Company by the Court of Civil Appeals [16 S.W.(2d) 922], and defendant Fred Wilke brings error, and plaintiff assigns cross-error.

Affirmed.

Wagner & Wagner and Tamp W. Grobe, all of Houston, for plaintiff in error.

Vinson, Elkins, Sweeton & Weems, Samuel Schwartz, Heidingsfelder & Kahn, and Hunt & Hunt, all of Houston, for defendants in error.

RYAN, J.

The Metropolitan Life Insurance Company, on December 31, 1923, issued to Herman Finn a policy of life insurance in the sum of $1,500, in which Fred Wilke was named the beneficiary.

Wilke was not related to Finn, the insured, either by blood or marriage; neither was he a creditor of the insured.

Finn died on February 15, 1927, having theretofore regularly paid the premiums on the policy; Wilke, the beneficiary, never paid any of such premiums or part thereof, and did not know that the policy had issued until some time during the year 1925.

H. B. Finn, Jr. (a cousin of the insured), was appointed and qualified as administrator of the latter's estate, and on June 6, 1927, brought this suit for the proceeds of the policy against the insurance company and Wilke, the named beneficiary.

The insurance company admitted liability, deposited $1,500 in the court's registry, and, on allegations of interpleader because of conflicting claims to such proceeds, prayed for its costs, including attorney's fees.

Fred Wilke claimed the proceeds of the policy as the beneficiary named therein.

Upon trial before the court, without a jury, judgment was rendered against the administrator and in favor of Wilke for $1,350, proceeds of the policy, after allowing the insurance company the sum of $150 for its costs, including attorney's fees; the insurance company was discharged from all further liability, and all costs of court were adjudged against the administrator.

The Court of Civil Appeals reversed the judgment in favor of Wilke, and rendered judgment in favor of the administrator for the proceeds of the policy, as tendered into court, less the amount of the attorney's fee awarded to the insurance company, and affirmed the judgment in favor of the company. 16 S.W.(2d) 922.

The case is now before us, (a) on complaint of Wilke that the Court of Civil Appeals erred in rendering judgment for the administrator, his contention being that the deceased had an insurable interest in his own life, which he could legally insure for the benefit of any person whom he saw fit to name as beneficiary; and (b) on complaint of the administrator that the Court of Civil Appeals erred in sustaining the judgment of the court below in allowing the insurance company to recover its attorney's fees and costs out of the proceeds of the policy, and in refusing to tax such attorney's fees and costs against said Wilke, or allow a recovery over against him therefor.

In some jurisdictions it is held that every person has an insurable interest in his own life, and that he may insure it for the benefit of any person whom he sees fit to name as beneficiary, irrespective of whether such beneficiary has an insurable interest in his life or not (14 R. C. L. p. 920), and it was so contended in Equitable Life Ins. Co. v. Hazlewood, 75 Tex. 338, 12 S. W. 621, 625, 7 L. R. A. 217, 16 Am. St. Rep. 893, but this is not the rule in this state. Our courts have uniformly held that it is against the public policy of this state to allow one to be the owner of a policy of insurance upon the life of a human being in whom he has no insurable interest.

As said by Judge Henry in Equitable Life Ins. Co. v. Hazlewood, supra:

"The doctrine is well settled by the weight of authority that a person not having an insurable interest in the life of another cannot take and hold by an assignment a policy upon the life of such other person, and that a creditor can only take and hold such a policy, by assignment, to an extent sufficient to secure his debt. Cammack v. Lewis, 15 Wall. 643 ; Warnock v. Davis, 104 U. S. 782 ; Price v. Knights of Honor, 68 Tex. 361, 4 S. W. 633.

"It is contended by appellee that every person has an insurable interest in his own life, and that when he is the actor he may take out an unlimited amount of insurance upon his own life, and make it payable to whoever he may please, as beneficiary, without regard to such person's having an insurable interest in his life. * * *

"The only distinction we can see in any case between the assignment of a policy taken by a person on his own life to one having no insurable interest, and the designating such person, without insurable interest, in the original transaction as the beneficiary, is that the insurer may not know of the assignment, but would necessarily be aware of the designation in the policy.

"So far as the question of public policy is concerned, we can see no substantial distinction between the two proceedings; and, if one is invalid, it seems to us the other ought to be held equally so.

"An assignment of a valid policy to one having no insurable interest in the life insured does not invalidate the policy. The assignee may collect and apply the proceeds, if he is a creditor, to the extinguishment of his own debt, and such sums as he may have disbursed for the purpose of keeping the policy alive; and the surplus may be collected for the benefit of the heirs of the person whose life was insured.

"We see no reason why the same rule may not be applied to a person designated in the policy as the beneficiary, treating him, when he has no insurable interest, as an assignee, appointee, or trustee, to receive the proceeds for whoever may be lawfully entitled to enjoy them. The insurer will then be required to pay the sum it has promised to pay, and the money cannot be appropriated by anybody not having a legitimate right to it."

Judge Gaines, in Goldbaum v. Blum, 79 Tex. 638, 15 S. W. 564, 565, said:

"In order to make a valid contract of insurance upon the life of one person for the benefit of another the beneficiary must have an interest in the life insured. When the person for whose benefit the policy is issued has no insurable interest, the contract is held illegal, upon two grounds: First, because it is against public policy to enforce a contract which makes it to the interest of one person to bring about the death of another; and, second, because it is in the nature of a wager.

"As to the ground of the illegality, however, the courts are not in accord. Some place it upon the one ground, and some upon the other. There is a conflict of authority as to application of the doctrine of the invalidity of contracts of insurance for want of an insurable interest, and this conflict probably arises from the difference of opinion as to the underlying principle. All agree that A., having no insurable interest, may not take out a policy on the life of B. Some courts even hold that B. may not insure his own life and make the policy payable to A. But, the weight of authority, at least in this country, being the other way, this court has adopted the contrary doctrine. Insurance Co. v. Williams, 79 Tex. 633, 15 S. W. 478.

"But if B. may insure his own life, and make the policy payable to A., so that A. may recover of the insurer, it does not follow that A. may retain the money as against the legal representatives of the insured. Without deciding the question it is sufficient for our purpose to say in this connection that the recent decisions of this court tend to support the negative. Price v. Knights of Honor, 68 Tex. 361, 4 S. W. 633; Schonfield v. Turner, 75 Tex. 324, 12 S. W. 626, 7 L. R. A. 189; Ins. Co. v. Hazlewood, 75 Tex. 338, 12 S. W. 621, 7 L. R. A. 217, 16 Am. St. Rep. 893; Lewy v. Gilliard, 76 Tex. 400, 13 S. W. 304."

Judge Brown, in Cheeves v. Anders, 87 Tex. 287, 28 S. W. 274, 275, 47 Am. St. Rep. 107, announced the following principles:

"It is against the public policy of this state to allow any one who has no insurable interest to be the owner of a policy of insurance upon the life of a human being. Price v. Knights of Honor, 68 Tex. 361, 4 S. W. 633; Schonfield v. Turner, 75 Tex. 329, 12 S. W. 626, 7 L. R. A. 189; Ins. Co. v. Hazlewood, 75 Tex. 351, 12 S. W. 621, 7 L. R. A. 217, 16 Am. St. Rep. 893.

"In some states it is held that an element of wagering likewise enters into such contracts, which has led, as we believe, to inconsistencies in the decisions in some of the courts. Our court has placed the inhibition against such contracts upon the higher and sounder ground that the public, independent of the...