Helmetag's Adm'r v. Miller

SOMERVILLE, J. — No principle of the law of life-insurance is at this day better settled, than the doctrine, that a policy taken out by one person upon the life of another, in which he has no insurable interest, is illegal and void, as repugnant to public policy. — 3 Kent’s Com. (11th Ed.) 462-63. Such contracts are aptly termed “ wager policies,” and are entitled to no higher dignity, in the eye of the law, than gambling speculations, or idle bets as to the probable duration of human life. There is no limit to the insurable interest which a man may have in his ovni life; but there are forcible reasons why a mere stranger should not be permitted to speculate upon the life of one whose continued existence would bring to him no expectation of possible benefit or advantage. All wagers, at common law, were not illegal, but only such as-were contrary to good morals or sound policy. — Chitty. Contr. 468. The statutes of this State makes all contracts by way of gaming or wagering void. — Code, 1876, § 2131 ; Hawley v. Bibb, 69 Ala. 52. However this may be, wager policies, or such as are procured by a person who has no interest in the subject of insurance, are undoubtedly most pernicious in their tendencies, because in the nature of premiums upon the clandestine taking of human life. As observed in Ruse v. The Mutual Benefit Ins. Co., 23 N. Y. 516, “such policies, if valid, not only afford facilities for a demoralizing system of gaming, but furnish strong temptations to the party interested to bring about, if possible, the event [187] insured against.” It lias been said by another .court, in a comparatively recent case, that of “ all wagering contracts, those concerning the lives of human beings should receive the strongest, the most emphatic, and the most persistent condemnation.” — Missouri Valley Life Ins. Co. v. Sturges, 26 Amer. Rep. 761 ; s. c., 18 Kans. 93. What will constitute an insurable interest in the life of another, such as will rescue such contracts from the imputation of being regarded as wager policies, it is not easy to define by a general rule It has been held, in some cases, that the interest must be, in some sense, a pecuniary one, not predicated merely upon the fact of existing relationship.— Guardian Mut. Life Ins. Co. v. Hogan, 80 Ill. 35; s. c., 22 Amer. Rep. 180; Missouri Val. life Ins. Co. v. Sturges, supra. In other cases, a contrary view has been intimated, which does not, however, seem to be sustained by the weight of authority.— Warnock v. Davis, 104 U. S. 775; Continental Life Ins. Co. v. Volger, 89 Ind. 572; s. c., 46 Amer. Rep. 185; May on Ins. § 107; Lord v. Dall, 12 Mass. 115 ; s. c., 7 Amer. Dec. 38, and Note, p. 42. This contrariety of view, however, is of no importánce here, as it is not denied that the appellee, Miller, had an insurable interest in the life of Ilelmetag, the decedent, to the extent of the value which he paid for the policy claimed to have been purchased by him. The bill recognizes this interest, and offers to refund to him this amount, estimated at about seven hundred and fifty dollars, with lawful interest. The point of contention is, that, admitting the assignment of the policy to Miller to be an absolute purchase, and not a collateral security, it was nevertheless void in his hands for the excess over and above the amount which he paid for it. It is urged, in reply, that a policy taken out by a party on his own life, and thus valid in its inception, can not become a wager policy by the mere fact of its assignment. It is true that there are cases which sustain this view, but they do not, in our opinion, either accord with sound reason, or harmonize with the weight of authority. The reason of the law which vitiates w-ager policies, is the pecuniary interest which the holder has in procuring the death of the subject of insurance, thus opening a wide door by which a constant temptation is created to commit for profit the most atrocious of crimes. This reason applies, with exactly the same force, to holding a policy by purchase, or assignment, as to holding one originally by direct issue from the insurance company. Otherwise the law would permit that to be done by indirection, which it prohibits from being done directly, and thé end sought to be accomplished could practically be evaded with both facility and impunity, The evil of wager .policies would rather be aggra [188] vated than otherwise by such a rule, because speculators, desiring to indulge this species of gambling in human life, could more easily purchase from embarrassed policy-holders than procure the issue of such policies directly to themselves upon the lives of strangers. “ In either case,” as observed by a recent author in treating of this subject, “the holder of such policy is interested in the death, rather than the life of the insured.” — May on Insurance, § 398. This view is fully supported by the authorities, which, being directly in point, we cite without any attempt to discuss them. — Missouri Valley Life Ins. Co. v. Sturges, 18 Kans. 93 ; s. c., 26 Amer. Rep. 761; Franklin Fire Ins. Co. v. Hazzard, 41 Ind. 116 ; s. c., 13 Amer. Rep. 313; Stevens v. Warren, 101 Mass 564; Warnock v. Davis, 104 U. S. 775; May on Insur. § 398. A policy which is purchased for any specific sum can be considered a wager policy, under these principles, only for the excess of the amount realized on it by the purchaser over and above the purchase-money, with interest. To this extent, the holder has an insurable interest, and thus far a court of equity will protect him. So far as concerns the surplus, the policy is just as much a contract of wager as if it covered only this particular excess. In Warnock v. Davis, 104 U. S. 775, this principle was decided; Mr. Justice Field observing, that “ to the extent in which the assignee stipulates for the proceeds of the policy beyond the sums advanced by him, he stands in the position of one.holding a wager policy.” The assignment, he said, was “ only invalid as a transfer of the proceeds of the policy beyond what was required to refund those sums, with interest. To hold it valid for the whole proceeds, would be to sustain speculative risks in human life, and encourage the evils for which wager policies are condemned.” The same rule had been previously announced in Cammack v. Lewis, 15 Wall. 643. It is also fully indorsed by the Supreme Court of Illinois in the case of Guardian Mutual Life Ins. Co. v. Hogan, 80 Ill. 35 ; s. c., 22 Amer. Rep. 180. It is immaterial, in this aspect of the law, whether the policy of insurance on the life of Hehnetag was assigned to Miller as collateral security for the amount admitted to be due, or whether it was assigned by absolute sale. The result is exactly the same in either case. Kquity will regard it, in legal effect, as collateral security in the one case, as well as in the other. The facts stated in the bill entitled the complainant to relief under the general prayer; and these facts are fully sustained by the proof. The chancellor erred in dismissing the bill; and his decree is reversed, and the cause remanded.