Wharton v. Home Security Life Insurance

CoNNOR, J. Neither Elbert Sprinkle, the original beneficiary, nor the plaintiff, the substituted beneficiary, in the policy of insurance sued on in this action, had an insurable interest in the life of Grace Love, the insured, by reason of their relationship to her, as nephew and niece, respectively. In Hardy v. Ins. Co., 152 N. C., 286, 67 S. E., 767, it is said that it is very generally held that the relationship of uncle and nephew does not of itself create an insurable interest in favor of either. This principle is manifestly applicable to the relationship of aunt and nephew and of aunt and niece. See 37 C. J., 394. There was no evidence at the trial of this action tending to show any facts on which it could be held that the original beneficiary, at the time the policy was issued, or that the substituted beneficiary, at the time the beneficiary was changed by the endorsement on the policy, had any pecuniary interest in the continuance of the life of the insured. It is well settled as the law in this and other jurisdictions that a person cannot take out a valid and enforceable policy of insurance for his own benefit on the life of a person in which he has no insurable interest; such a policy or contract of insurance is void and unenforceable on grounds of public policy, it being merely a wagering contract. 37 O. J., 385, and cases cited in support of the text. Conceding this to be the law in this State with respect to the validity of the policy of insurance sued on in this action, it is contended on behalf of the plaintiff, that the principle is not applicable because of the presence in the policy of the incontestable clause. This contention cannot be *257 sustained. The parties to a contract which is void because in contravention of a well settled public policy, cannot bind themselves by such contract, and thus deprive the courts of the power to enforce the public policy of the State by their judgments. In Bromley v. Ins. Co. (Ky.), 92 S. W., 17, 5 L. R. A. N. S., 747, it is well said: “It is also insisted for the plaintiff that as the policies contain a clause to the effect that they are incontestable after one year, the company cannot1 rely upon this defense. But the incontestable clause is no less a part of the contract than any other provision of it. If the contract is against public policy, the Court will not lend its aid to its enforcement. The defense need not be pleaded. If at any time it appears in the process of the action that the contract sued upon is one which the law forbids, the Court will refuse relief.” In the instant case, there was error in the refusal of the trial court to dismiss the action at the close of all the evidence. The judgment of the Superior Court, affirming the judgment of the county court, is for that reason Beversed.