Bromley's Admr. v. Washington Life Ins.

OpinioN op the Court by Chief Justice Hobson Affirming. In December, 1900, George Bromley made an arrangement with Otis Bates by which; he was to have his life insured for $1,000, and Bates was to pay the premiums and pay him $50 for the policy, which was to be assigned to Bates by Bromley. He made the application for the policy in Washington Life Insurance Company, which issued the policy on January 29, 1901, the policy being payable to his estate. Bromley and Bates then came to the office of the local agent. Bates was fixing to pay the premium and Bromley asked him if he would not take another $1,000 on the same terms. He agreed to pay the premiums and pay him $25 for another policy of like amount. Bromley then applied for another policy and the application was sent on, the agent retaining the policy which had come and Bates giving the agent a check for $127.64, the premium on the two^ policies. On February 18, 1901, Bates gave Bromley a check for $75 for the two policies as promised. The policies were assigned by Bromley to Bates. The assignment on the policies is dated March 25, 1901. The policies were never delivered to Bromley, but remained in the hands of the. insurance agent until — 404 — • the assignment was put on them and he then delivered them to Bates. When the subsequent premiums fell due on the policies they were paid by Bates; after tliis Bromley died and this suit was brought by his administrator to recover on the policies. Bates was made a defendant and by his answer set up that the policies belonged to him. The insurance company pleaded the facts above stated, insisting that the policies were a wagering contract and void. On final hearing, the court dismissed the petition of the administrator and he appeals. The proof showis clearly that Bates had no insurable interest in the life of Bromley, and while the assignment on the policies is dated March 25, 1901, the proof is clear that the policies.were taken out by Bromley for the .purpose of assigning them to Bates, under the arangement that Bates was to pay him $75 for them and pay the premiums. In other words, the arrangement was simply that Bromley was to get $75 for having his life insured for Bates’ benefit, Bates to pay the premiums on the policies. It is conceded that if the policies under this arrangement had been made payable to Bates they would have been void, as he had no insurable interest in the life of Bromley. But it is insisted that as they were made payable to Bromley’s estate and- were assigned by Mm to Bates, only the assignment is void, and that 'his administrator may recover of the insurance company. There would be force in this, if the policies had been delivered to Brqmley and the assignment to Bates had been a subsequent and independent transaction. But the proof leaves no doubt that Bromley did not contemplate insuring his life for the benefit of his estate at any time. He con — 405 — templated simply getting $75 out of the arrangement. The policies were never intended to he delivered to Bromley. Bates was to pay the premiums and get , the policies.. The policies did not become effective until the first premium was paid. Bates paid the premium upon the idea that the policies were to be assigned to him and for this reason they were left in the hands of the insurance agent until the assignment was made, the delay in closing up the matter being due to the fact that the parties had to wait for the second policy to come. To hold, such an arrangement good would be to shut our eyes to. the truth and to enforce a mere form. The law does not allow one who has no insurable interest in the life of another, to insure it for his benefit, for the reason that it is a mere wager and holds out a temptation to fraud, the insurer having no interest in the life of tlie assured and having a direct interest in his death, Basye v. Adams, 81 Ky. 368, 5 Ky. Law Rep. 91; Warnock v. Davis, 104 U. S. 779, 26 L. Ed. 924; Keystone Association v. Norris, 115 Pa. 446, 8 Atl. 638, 2 Am. St. Rep. 572; Steinback v. Diepenbrock, 158 N. Y. 24, 52 N. E. 662, 44 L. R. A. 417, 70 Am. St. Rep, 424. In the latter case the court said: ‘ ‘ The insured, instead of taking out a policy payable to a person having no insurable interest in his life, can take it out to himself, and at once assign it to such person. But such an’attempt would not prove successful, for a policy issued and assigned under such circumstances, would be none the less a wagering policy, because of the form of it. The intention of the parties procuring the • policy would determine its character, which the court would unhesitatingly declare in accordance with the facts, reading the — 406 — policy and the assignment together, as forming part of one transaction.” The cases of Prudential Life Insurance Company v. Cummins’ Adm’r, 44 S. W. 431, 19 Ky. Law Rep. 1770, New York Life Insurance Company v. Brown’s Adm’r, 66 S. W. 613, 23 Ky. Law Rep. 2070, and Griffin’s Administrator v. Equitable Assurance Society, 84 S. W. 1164, 27 Ky. Law Rep. 313, may be distinguished from this. case. In the first case, there was no assignment of the policy to the person who paid the premiums and the court simply held that the fact that a stranger paid the premiums did not- invalidate the policy. In the second case, the assignee testified that he had no interest in the policy until it was assigned to him subsequent to the delivery. In the last case the insurance company had paid the money to the persons to whom the' policies were payable and after this wag sued by the administrator of the assured. The court in deciding that the insurance company was not liable used this language: “The transaction as to each policy was clearly a speculation upon the hazard of human life, and consequently a gambling scheme, pure and simple which rendered the policies void, because against public policy; and, if void, no cause of action against appellee exists in favor of Griffin’s administrator for the recovery of the proceeds.” 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 cannot 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 — 407 — appears in the process of the action that the contract sued upon is one which the law forbids, the court will refuse relief. The parties to an illegal contract cannot by stipulating' that it shall be incontestible, tie the hands of the court and compel it to enforce contracts which are illegal and void. If this were allowed, then the law might be evaded in all cases and the aid of the court might be secured in aid of its infraction. In Hall v. Coppell, 7 Wall. 559, 19 L. Ed. 244, the United States Supreme Court said: “The defense is allowed, not for the sake of the defendant, but of the law itself. The principle is indispensable to the purity of its administration. It will not enforce what it has forbidden and denounced. The maxim, 'Ex dolo malo non oritur actio,’ is limited by no such qualification. The proposition to the contrary strikes us as hardly worthy of serious refutation. Whenever the illegality appears, whether the evidence comes from one side or the other, the disclosure is fatal to the case. No consent of the defendant can neutralize its effect. A stipulation in the most, solemn form to waive the objection, would be tainted with the vice of the original contract, and void for the same reasons. Wherever the contamination reaches, it destroys. The principle to be extracted from all the eases is, that the law will not lend its support to a claim founded upon its violation. ’ ’ Lastly it is insisted that Bates is not a competent witness. He cannot testify for himself as to any transaction had with the decedent, but he may testify for the insurance company. The administrator by making Bates a defendant to the action cannot deprive the insurance company of the benefit of his — 408 — testimony. As between the insurance company and tbe administrator Bates does not testify for himself. Dovey v. Lam, 117 Ky. 19, 77 S. W. 383, 25 Ky. Law Rep. 1157. Judgment affirmed.