Hendricks v. Reeves

Opinion by Willard, J., This was an action in the court below by the executrices of Eleanor Hendricks, deceased, upon a policy of life insurance issued by the Penn Mutual Life Insurance Company upon the life of Eleanor Hendricks, expressly made payable by its terms to Jos. M. Hendricks, her husband, his executors, administrators and assigns, within sixty (60) days after due notice and proof of death of the said Eleanor Hendricks. Just why the executrices of Eleanor Hendricks had a right of action upon a contract expressly payable to Jos. M. Hendricks, we are at a loss to understand. If there had been no assignment of the policy, the right of action would certainly have been in the legal representatives of Jos. M. Hendricks. That this whole transaction was eminently fair to all the parties and without fraud or pretense of undue advantage is not denied. The husband desired a loan of money equal to one half the amount of two life insurance policies. The wife solicited the loan in his behalf and was willing to join her husband in an assignment of the policy on her own life, payable by its terms to her husband or his assigns, as security for the loan without other pledge or security (except the trifling item of merchandise) ; the loan was made, the policies assigned, and for fourteen years premiums were paid by the appellants on the one and for thirty-three .years on the other. No interest was paid on the loan. On what principle or for what reason judgment was entered by the learned judge of the court below for want of a sufficient affidavit of defense the record does not disclose. It is admitted here that the appellants were entitled to all moneys paid for premiums on the policies with interest thereon, but were not entitled to any part of the original loan made in consideration of the assignment of the policy in question. Why not? Had it been paid? If so, another question would [549] present itself discussed and decided in Corson’s App., 113 Pa. 438. It is not contended that the appellants have been paid. This policy upon the life of the wife for the benefit of the husband, when it was issued in 1850, was unquestioned, but it is urged, when it was assigned by and at the solicitation of the wife as security for the loan to the husband, the appellants having no insurable interest in the life of the wife, she not being their debtor, from that time, as to the appellants, it became a wagering contract. What interest in the policy in question had Mrs. Hendricks to assign? She was the person whose life was insured. The amount named in the policy was payable to her husband, his executors, administrators and assigns. He had a perfect right to assign it without the intervention of his wife, and her act in joining in the assignment was 'surplusage on her part as she had no interest to assign. Had the policy been upon the husband’s life payable to the wife, the appellees might present their argument with more force. Under the facts in this case the wife had no more to assign than her executrices had to support their action against the appellees. We are aware that it is stated that this policy had been previously assigned by Mr. Hendricks and his wife to one Rachael Harris to secure her the payment of a debt due her from the husband, with a proviso, first, for the payment of the debt; second, to pay the residue, if any, to Joseph M. Hendricks for his sole and separate use; that, subsequently, Rachael Harris reassigned this policy to Mrs. Hendricks. The assignment and reassignment to and by Rachael Harris, it is alleged, were lost. The averments in the affidavit of defense allege that the policy was upon the life of the wife, payable to the husband, and that by the terms of the Harris assignments any amount over and above a sufficient sum necessary to pay the debt secured was to be for the sole use and benefit of Jos. M. Hendricks. A fair construction of the affidavit of defense leads to but one conclusion — the policy when assigned to the appellants was upon the life of the wife, payable to the husband, his executors, administrators and assigns. • It is urged, however, that through these various transfers the policy at the date of assignment to the appellants was upon the life of the wife, payable to her, her executors, administrators and [550] assigns; in other words, that it was her property. Conceding this position as the correct one, what policy of the law prevented her from selling this policy to the appellants, or pledging it to them as security for the loan made to the husband at her solicitation. Of the many decisions of our Supreme Court, Bond v. Bunting, 78 Pa. 210, and Dando’s Appeal, 94 Pa. 76, are conclusive on this subject. She had the right to and did assign the policy as security for the payment of the loan, and the appellants had a right to the proceeds of the same until the loan and every part thereof was repaid. It is further contended that the assignment of the policy to the appellants, as to them, became a wagering transaction from the date of the assignment: be it so, then the question remains, how far are they protected in their venture without violating that principle resting on public policy which forbids gambling on human life. In Downey v. Hoffer, 110 Pa. 109, one Boas took out a policy on his own life, paid the admission fee, the annual .dues and assessments thereon, amounting to $185.20, the interest thereon amounting, at the time of his assignment, to $68.06. Being unable or disinclined to pay further, he sold and assigned his policy to Downey for the sum of $65.00. Downey subsequently paid all dues and assessments to the death of Boas, amounting to $558.80, the interest thereon being $69.43. Downey was neither a relative nor a creditor of Boas. At the death of Boas, his administrator claimed the proceeds of the policy, and in a case stated between the administrator and Downey upon the above facts, the court below decided -that the purchase of the policy was for the purpose of speculation, and of the fund in court, was entitled to take out the sum of $65.00 paid at- the time of the assignment in consideration thereof with interest thereon, together with the amount of $558.80 paid for dues and assessments with interest thereon, in all amounting to $715.53, the balance of the policy to be paid to the administrator. In the Supreme Court the judgment was affirmed and a per curiam opinion rendered, which is here inserted as it is the basis of our judgment in this case : “ It must be conceded that on principles of law applicable to contracts generally, this judgment would be wrong. The rule, however, applicable to this class of cases appears to rest on public policy which forbids gambling on the [551] duration of human life. It is not sufficient that the sale and purchase of the policy may have been in good faith and with correct motives. The mischief resulting from a sale of the policy for the purposes of speculating on human life is so contrary to the policy of the law, and so in conflict with the just principles of life insurance, that it is unsafe to relax the rule that the holder of the policy must have some pecuniary interest in the life of the person insured. Permitting the assignee to retain the sum he has paid to the person insured and to the company, with interest thereon, so far protected the assignee and enforced the rule based on public policy, as to give no just reason to complain.” We have carefully examined all the authorities submitted and contained in the paper-books. None of them is in conflict with Downey v. Hoffer, supra. As the proceeds of the policy in question added to the payments previously made did not amount to a sum sufficient to reimburse the appellants for the amount of the loan,, assessments paid and interest thereon, we are of the opinion that the affidavit of defense was sufficient. The assignments of error are sustained, the judgment reversed and a procedendo awarded.