Prudential Life Ins. Co. of America v. Fuller

COOK, J. Frank R. Fuller, a minor, of eighteen years of age, took out several policies of insurance in the plaintiff company, he paying all the premiums, some of them being upon his own life for the benefit of his brothers and sisters who were also minors younger than himself, and some of them upon the lives of his brothers and sisters, for his own benefit. His father and mother were dead, and being the eldest child, he looked after the interests of his brothers and sisters. Young Fuller becoming dissatisfied with his contract of insurance, repudiated the same and demanded of the company that it pay back to him the amount of premiums that he had paid, running over a period of about three years and amounting to $100, on the ground that he was a minor when he made the contract and paid the premiums. This the company refused to do. No fraud is claimed. The principal errors assigned are, that the court erred in overruling the demurrer to the petition and in directing a verdict for plaintiff below for the full amount of his claim. These grounds of error raise but the one .question and that is: May a minor repudiate his contract of insurance and recover back the premiums paid and, if so, must he de [418] duct the expenses incurred for carrying the .risk during the time the insurance continued before such repudiation? It should be stated that plaintiff below tendered back to the insurance company ail the policies of insurance issued, and deposited the same in court for its benefit'. The first claim made on behalf of the company is, that, the brothers and sisters having an interest in the contract and policies or at least in some of them, and not being parties to the action, the contract cannot be repudiated and the policies canceled, in this action or in any other action, without their consent. It is no doubt true that generally the beneficiary has a vested interest and that nothing can be done to prejudice such interest without the consent of the beneficiary, except in cases where the policy or the rules of the company provide otherwise; but that principle does not apply to a ease of this character. These beneficiaries are mere volunteers. They paid nothing. They and the company knew that the contract was voidable at the option of the minor at any time before or at the time he attained his majority. The claim of the plaintiff in error that the company is still liable to these beneficiaries after the repudiation by the minor making the contract is therefore, we think, wholly untenable. Counsel in their exhaustive brief have furnished us no authority to that effect and the claim is against principle and reason. Furthermore the guardian has tendered to the company all of the policies and deposited them in court for the company, presumably with the consent of the beneficiaries, so far as the beneficiaries, who are all minors, could give their consent. It is again claimed that the company, in the absence of fraud, has a right to retain from the amount of premiums paid by the infant the necessary expense of carrying the risks and that the plaintiff below is only entitled to the excess; and this claim has some support in the adjudicated cases. The solution of the question turns on what are the rights of the infant who has lost or squandered what he has received as the consideration for his contract. Must he return what he has not the power to return, or- must he permit the other contracting party to retain that which has proved of no benefit to him or has been wasted? If so, the shield of infancy would be of little value. This claim is no doubt in accord with the English rule and has some countenance in the decisions of some of the states. The case of Johnson v. Insurance Co. 56 Minn. 365 [59 N. W. Rep. 992; 26 L. R. A. 187; 45 Am. St. Rep. 473], is the leading case holding to this rule. In that case it was held: [419] “Where the personal contract of an infant is fair and reasonable, and free from any fraud, overreaching, or undue influence by the other party, and has been wholly or partly executed on both sides, so that the infant has enjoyed the benefits of it, but has parted with what he received, or the benefits received are of such a nature that he cannot restore them, he cannot recover back what he has paid.” In accordance with that holding the infant in that case was ordered to account for the current annual risk assumed by the company under its policy. The case of Simpson v. Insurance Co. 184 Mass. 348 [68 N. E. Rep. 673; 63 L. R. A. 741; 100 Am. St. Rep. 560], is directly in conflict with Johnson v. Insurance Co. 56 Minn. 365 [59 N. W. Rep. 992; 26 L. R. A. 187; 45 Am. St. Rep. 473]. In that case it was held: (1) “An infant may avoid a contract of life insurance and recover the money paid by him as premiums, however reasonable and prudent it may have been for him to take out the policy. >' (2) “In this commonwealth an infant, in order to avoid a contract, is not obliged to put the other party in statu quo. Thus an infant may recover money paid by him as premiums under a policy of life insurance without any deduction for the expenses incurred'by the insurer in keeping the policy in force.” In the opinion it is said, page 349: “The defendant contends that the contract having been executed in part at least the plaintiff cannot recover without making the defendant whole for the expense to which it has been subjected. But that would be compelling the plaintiff to carry out to that extent a contract which is not binding on her and which she may avoid. Morse v. Ely, 154 Mass. 458 [28 N. E. Rep. 577; 26 Am. St. Rep. 263]. This decision seems to be in accord with the adjudications in most of the states. 16 Am. & Eng. Enc. Law 293 where the decisions are collated. The case of Lemmon v. Beeman, 45 Ohio St. 505 [15 N. E. Rep 476], would seem also to be in accordance with the case of Simpson v. Insurance Co. supra, and, if so, is determinative. We might add that, while we have passed upon the question, it is doubtful if it is raised by the. pleadings, as the answer makes no claim for anything for the expenses of carrying the risks. Judgment affirmed.