American Insurance Union v. Manes

McCulloch, C. J. This is an action instituted on a life insurance policy or certificate of membership issued by the Home Protective Association, a domestic corporation, to Jesse Welborn, the plaintiff, J. H. Manes, being named as beneficiary. Welborn lived nearly four years after the policy was issued, and all of the premiums or assessments were paid up to his death. During his lifetime the defendant, American Insurance Union, a foreign corporation, entered into a contract with the Home Protective Association, whereby it took over all the memberships of the latter association and assumed its obligations to its members, and issued to Welborn a certificate in the form of a rider to the original benefit certificate, certifying that the obligations of the original insurer were assumed by defendant. Defendant denies liability on the ground that plaintiff, the specified beneficiary in the certificate, had no insurable interest in the life of Welborn, and that the certificate constituted a wager contract and unenforceable on grounds of public policy. This is the sole defense offered in the case. According to the evidence adduced, plaintiff was the son-in-law of Welborn at the time the latter became a member of the Home Protective Association, and was not dependent in anywise on Welborn. Welborn was solicited to join the association, and declined, but stated that he was willing for any of his children to take a policy on his life. Thereupon the agent of the Home Protective Association procured an application from Welborn, an'd plaintiff was present and signed Welborn’s name to the application. It was agreed in advance between Welborn and plaintiff that the latter should pay the assessments and all other expenses necessary to obtain and maintain the membership. This evidence establishes the fact that the contract was, under our decisions, a wager contract, and void in its inception. Langford v. National Life & Acc. Ins. Co., 116 Ark. 527; Cotton v. Mutual Aid Union, 132 Ark. 458; Home Mutual Benefit Assn. v. Keller, 148 Ark. 361. In Langford v. National Life & Acc. Ins. Co., supra, we held that “a person may take ont insurance on Ms own life, and name any one that lie pleases as beneficiary,” even though tbe beneficiary has no insurable interest at tbe time tbe policy is taken ont; but that “an agreement between tbe assured and tbe beneficiary, having no insurable interest, to the effect that the latter shall pay the premiums, and that the policy shall be taken ont in his name, * * * * and shall be assigned to the person having no insurable interest,” will render the policy void as a wagering contract. The above declaration of the law is applicable to the present policy in its inception. However, it has been ruled by this court, in line with the weight of authority, that Only the insurer can take advantage of the ineligibility of the beneficiary in such a certificate or policy of insurance. Johnson v. Knights of Honor, 53 Ark. 255; Longer v. Carter, 102 Ark. 72. Defendant is not the original insurer, but entered into a contract to perform the original contract of insurance entered into between Welborn and the Home Protective Association. This contract contains some of the elements of one for re-insurance, in which both the'original beneficiary and the insurer are interested. The contract with defendant is, in other words, one to pay the amount of the policy according to its terms, and constitutes an absolute obligation on the part of defendant which precludes inquiry as to the validity of the original contract, which the original insurer alone could question. There is great diversity among the authorities on the various phases of liability or non-liability under a wager contract, and no case similar to the one at bar has been brought to our attention; but we think that the rule that only the insurer can take advantage of the fact that the policy is invalid applies with full force to the defendant in the present case, who, having obligated itself to perform the contract, is in no attitude to take advantage of a defense which the original insurer alone could have asserted. For these reasons the judgment was correct upon the undisputed facts, and the same will be affirmed. It is so ordered.