Wurzburg v. New York Life Ins. Co.

• Decision Date: 11 May 1918
• Citation: 203 S.W. 332,140 Tenn. 59
• Parties: WURZBURG v. NEW YORK LIFE INS. CO. ET AL.
• Court: Tennessee Supreme Court

203 S.W. 332

140 Tenn. 59

WURZBURG v. NEW YORK LIFE INS. CO. ET AL.

Supreme Court of Tennessee.

May 11, 1918

Appeal from Chancery Court, Shelby County; F. H. Heiskell Chancellor.

Suit by H. Wurzburg, as administrator of the estate of Seymour Wurzburg, deceased, against the New York Life Insurance Company and the Specialty Manufacturing Company to recover the proceeds of an insurance policy on deceased's life. The defendant insurance company paid the proceeds into court and from a decree awarding them to the manufacturing company the plaintiff appeals. Decree affirmed.

R. E King, of Memphis, for appellant.

Harsh & Harsh, of Memphis, for appellees.

GREEN J.

This case presents a controversy between the administrator of Seymour Wurzburg, deceased, and the Specialty Manufacturing Company, a corporation organized under the laws of Tennessee, over the proceeds of a policy of insurance issued on the life of Wurzburg.

The insurance company was made a defendant to the suit, and has paid into court the amount due on the policy.

It appears from the bill of the administrator that the deceased, Seymour Wurzburg, was the general manager of the Specialty Manufacturing Company, "and in truth and in fact largely carried on the business and managed the same and was its guiding spirit, and while he was connected with the business, the defendant the New York Life Insurance Company issued a policy of insurance upon his life in the sum of $10,000, payable to the defendant the Specialty Manufacturing Company, and this policy was secured for the benefit of the said Specialty Manufacturing Company while said Seymour Wurzburg was connected with it and carrying on and managing its business."

The policy was issued February 5, 1913, and the manufacturing company paid the premiums thereon up to the death of Wurzburg which occurred in October, 1917.

It is charged in the bill that, after others interested in the corporation became acquainted with the details of the business, they reduced the salary of Wurzburg and thereby forced him to sever his connection with the manufacturing company, which he did in October, 1915. It is not intimated that such an event was contemplated when the policy was issued.

The deceased left a wife and several children, and his administrator seeks to recover the proceeds of this policy for them, except such a sum as would be necessary to reimburse the manufacturing company for the amount of premiums paid by it on the policy and interest upon such payments. It is said that after Wurzburg severed his connection with the manufacturing company, the said company had no further insurable interest in his life and that, as to the company, the policy of insurance became a mere wagering contract and the company was only entitled to be reimbursed out of the proceeds its actual outlay for premiums.

The chancellor rendered a decree in favor of the manufacturing company for the entire amount of the policy, and from this decree the administrator has appealed. We think the chancellor was correct.

At the time this policy was issued the manufacturing company undoubtedly had an insurable interest in the life of Wurzburg. He was, as appears from the administrator's bill, familiar with the business in which the company was engaged, managed the same, and was "its guiding spirit," in the language of the bill.

In Lane v. Lane, 99 Tenn. 639, 42 S.W. 1058, this court adopted from the Supreme Court of the United States the following:

"It is not easy to define with precision what will in all cases constitute an insurable interest so as to take the contract out of the class of wager policies. It may be stated generally, however, to be such an interest, arising from the relation of the party obtaining the insurance, either as creditor or surety of the assured, or from the ties of blood or marriage to him, as will justify a reasonable expectation of advantage or benefit from the continuance of his life. * * * But in all cases there must be a reasonable ground, founded upon the relation of the parties to each other, either pecuniary or of blood or affinity, to expect some benefit or advantage from the continuance of the life insured, otherwise the contract is a mere wager, by which the party taking the policy is directly interested in the early death of assured." Warnock, Adm'r, v. Davis, 104 U.S. 775, 26 L.Ed. 924.

The Supreme Court of Ohio has held in a case quite similar to the one before us that a corporation has an insurable interest in the life of a large stockholder whose services were of value to the corporation by reason of his skill and experience in the business. Keckley v. Coshocton Glass Co., 86 Ohio St. 213, 99 N.E. 299, Ann. Cas. 1913D, 607.

The Supreme Court of Virginia has reached the same conclusion in a case where the corporation effected insurance on the life of its president, whose death would have resulted in a serious and substantial loss to the creditors of the corporation and all others interested in its prosperity. Mutual L. Ins. Co. v. Board Armstrong & Co., 115 Va. 836, 80 S.E. 565, L. R. A. 1915F, 979.

We think both these cases are sound. A corporation is often quite dependent upon the services of particular officers for its prosperity. Under such circumstances a corporation has an insurable interest in the life of such an officer as the term "insurable interest" is defined in Warnock v. Davis, supra, and Lane v. Lane, supra.

Since this contract was valid when made, it did not become subsequently invalid when Wurzburg's connection with the manufacturing company ceased.

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