Hoyt v. New York Life Insurance — 16 N.Y. Super. Ct. 440

Majority

p. 440

Hoyt, Plaintiff and Respondent, v. The New York Life Insurance Company, Defendants and Appellants.

Headnote

1. It is not essential to the validity of a policy of life insurance, issued to one person on the life of another, that the person obtaining such policy be a creditor of the one whose life is insured..

21 It is enough that according to the ordinary course of events, pecuniary 1 loss or disadvantage will naturally and probably result from the death of the |one whose life is insured, to the person obtaining the policy.

3. On such a policy, the sum insured is the measure of the insurer’s liability.

(Before JBoswobth, Hoffman and Pierrepont, J. J.)

Heard, June 16;

Decided, July 3, 1858.

This is an appeal by the defendants, (The New Yorlc Life Insurance Company) from a judgment entered against them (February 9, 1858) in favor of the plaintiff, (Oliver Hoyt,) on the report of B. W. Bonney, Esq., as referee.

The action is on a policy of insurance, dated the 22d of May, 1849, effected by one Anson W. Francis, with the defendants, in the sum of $1,000, for the term of three years, on the life of Thomas F. Castle. Castle died, and proof of his death satisfactory to the company, was served on or before the 1st of May, 1850. On the 3d of June, 1856, Francis assigned to the plaintiff the said policy, and all claims and demands by reason of the issuing thereof, and of the death of Castle.

The defendants refused to pay on the ground that Francis had no insurable interest in the life of Castle, and that the policy was "therefore void; or that if he had an insurable interest it was nominal- merely, and therefore only nominal damages could be recovered. The appeal presents no other substantial questions.

' The facts in relation to the question whether Francis had an insurable interest in the life of Castle, are briefly these:

Prior to the issuing of the policy, an association was formed of persons desirous of going to California and engaging, for their joint benefit and at their joint expense, in mining pursuits, under the name of The Brothers’ Mining and Trading Company of Kew Haven. Francis was a member of that association, and

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paid Ms share ($200), as a member, m conformity with the 23d article.

The vessel first purchased by the association proved unseaworthy ; another was purchased, and Francis advanced his proportion of its cost, (the amount of which,, the case does not disclose.)

It was agreed between Francis and Castle, that Francis should, and he did, assign his interest m the association to Castle; and thus, Castle became a member of the association in place of Francis; and Castle, as a consideration for such conveyance and the moneys advanced, assigned to Francis one-half of all his right and mterest in and to the funds, assets and profits of the company, which Castle then had, or should afterwards acquire.

The eleventh, of the articles of association provides, that all the members of it “shall share equally m the profits of the enterprise.”

The twelfth, that at the end of three months after the association shall have commenced operations in California, “ the net profits of the third month, except a reservation of 15 per cent thereon, shall be divided equally among the members,” that a like division be made at the end of each succeeding month, and that upon its dissolution, all its funds and assets “shall be equally distributed among those who shall be members at the time of such dissolution."

The thirteenth, that any member may “ sell any portion of Ms share of the net earnings and profits of the company;” it prescribes the form of the transaction and the mode of making payment to the purchaser; to wMch form the transfer from Castle to Francis conformed.

The sixteenth, that on the death of a member, an inventory of the effects of the deceased, “ and of his interest in the funds of the association,” shall be taken, and the amount remitted to Ms legal representatives.

This state of facts existed when the policy was issued, and continued up to the time of Castle’s death.

The referee found that Francis had an msurable interest in the life of Castle; and that the plaintiff was entitled to recover the sum insured and interest from the time the loss was payable, in all $1,531.41.

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The defendants excepted to each of these conclusions, and from the judgment entered on the referee’s report, this appeal is taken.

John F. Develin, for appellants.

I. An insurance effected by a party on the life of another, in which the assured has no interest, is void.

1. It is against public policy; it holds out a temptation to the assured to put an end to the life. (Angelí on Ins., § 295.)

The recent case of Palmer, of Rugby, in Englandj is in point. On Ms trial for murder, it appeared that the motive for his committing the crime was to obtain the insurance which he had effected on the life of the murdered man.

' 2. It is a wager policy, and as such void by the statute. (2 R. S., p. 72, 4th ed.; Howard v. The Albany Ins. Co., 3 Denio, 301 ; Angell on Ins., chap. 4.)

3. It is contrary to the first principle of the contract of insurance which is one of indemnity against loss, that where there is no interest there can be no loss; where there is no loss there cannot be indemnity. (Park on Ins.; Phillips on Ins., §§ 3 to 5; Angell on Ins., § 305; Stainbank v. Fenning, 11 Com. B. R., 51; Parson’s Mer. Law, 408.)

H. The interest above mentioned, viz., an insurable interest, arises and exists only in cases where the happening of an event, as fire, shipwreck or death, produces as a necessary consequence, some loss or injury to the person or property of the assured. ( Angelí on Ins., §§ 297, 298.)

HI. The death of Thomas Castle did not necessarily produce any loss or injury to the person or property of Francis.

I. Castle was not indebted to Francis, and had no property of the latter.

2. Castle was a partner in the Brothers’ Trading and Mining Association, and had assigned to Francis one-half of his share of the profits of such association, as profits and this constituted the entire relation between them, and made them as between each other, partners. (Collyer on Partnership, § 3; Valton, &c., v. Nat. L. F. L. Co., 22 Barb. S. C. R., 9.) And so far as'the testimony shows there were not any profits.

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IV. In actions on a life policy issued to one party on the life of another, the assured if he have an insurable interest, can recover only the value of that interest at the time of the death, and such value must be shown on the trial. (Angell on Ins., §§ 193, 305, and note tti'latter section; Ellis on Ins., pp. 136, 137 ; Phillips on Ins., §§ 2018 to 2022; Greenl. on Ev., vol. 2, §§ 378, 381.)

1. In this action such value was not shown.

2. The absence of all proof of any profits of the Brothers’ Trading and Mining Company is presumptive evidence that there were no such profits.

3. The interest of Francis, therefore, in the life insured, was of only nominal value, and the recovery cannot exceed it.

V. This is not a valued policy.

1. A policy is a valued one only where the insurer and assured agree as to the value of the property insured. (Phillips on Ins., § 1178; Angelí on Ins., § 253.)

2. That the policy is a valued one, must appear on the face of the instrument. (Phillips on Ins., § 1180; Angell on Ins., § 5 of Intro), and § 253; Harris v. The Eagle Fire Co., 5 Johns. R., 368.)

3. In order that two parties may agree upon the value of an interest, it is necessary that each party should be made acquainted with its nature; in this action there was no evidence that appellants were ever made aware of the relations between Francis and Castle.

4. The value of Francis’ interest, or the fact that this was or was not intended to be a valued policy, does not appear on the face of the instrument.

Being deficient in these two essentials, it is not a valued policy.

VI. When profits are insured in an open policy as they may be, and the event insured against occurs, the assured can recover only the amount of profits which he proves, on the trial, he would, but for the happening of the event, have realized. (Parson’s Mer. Law, 410; Hodgson v. Glover, 6 East. R., 316; Eyre v. Glover, 16 id., 218.)

The judgment should, therefore, be reversed, and a new trial ordered.

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E. Seeley, for respondents.

I. Castle, as a member of the association, was entitled to his proportionate share of all the funds, assets and profits of the enterprise then existing or thereafter to accrue; and Francis was entitled to one-half of that share. The company itself, as well as Castle, were bound to account to Francis. The death of Castle, by article 16, of the association, would put an end to all future interest and benefit on which the members relied. Here then was an interest on the part of Francis, in the life of Castle.

H. A contract of life insurance is a mere contract to pay a certain sum of money upon the death of a person, in1 consideration of the due payment of certain annual premiums during his life. It is not a contract of indemnity. (Dolby v. The India and London Life Assurance Company, 15 Com. B. R., 365 ; S. C., 34 Eng. L. and Eq. R., 116; Bunyon Life Assurance, 1; De Morgan’s Essay on Probabilities, 244; Law v. The London Indisputable Life Policy Company, 1 Kay and John., 223.)

A party may insure his own life to any amount, and the question of interest can arise only when he insures the life of another person. A policy without interest in the life or death of the person insured, is now void by 1 Revised Statutes, 662, and in England by 14 George HI, chapter 48, section 1. (Ellis on Life Ins., 132.)

III. In marine insurance the interest is not necessarily that of an owner; nor in life insurance on the life of another, that of a creditor.

As to the general nature of the contract of insurance, Laurence, J., in Lucena v. Crawford (2 Bos. & Pull. N. R., 301,) says, “it (the contract of insurance) is applicable to protect men against uncertain events, which may in any case, be of disadvantage to them; not only those persons to whom positive loss may arise by such events occasioning the deprivation of that which they possess, but those also who, in consequence of such events, may have intercepted from them, the advantage or profit, which, but for such events, they would acquire, according to the ordinary and probable course of things.

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Hence profits, freights and commissions may be insured. (3 Kent Com., 271; Ellis on Life Ins., 103.)

In Lord v. Dali, ( 12 Mass. R., 115 ,) it was held that a young female had an insurable interest in the life of her brother who supported and educated her. The principle of that decision has ever since been recognized. (3 Kent Com., 368 ; Angel on Life Ins., sec. 299, and n.)

In Bevin v. The Connecticut Mutual Life Insurance Company, (23 Conn. R., 246,) on a policy identical with the present, held that a good insurable interest existed.

IV. Policies of insurance are of two kinds, open and valued. An open policy is one in which the amount of the insurable interest is not fixed by the policy, but is left to be ascertained by the insured in case a loss should happen. A valued policy is where the interest in the subject insured is agreed and inserted in the policy in the nature of liquidated damages. (3 Kent Com., 273.)

An insurance on life admits of no distinction between total and partial losses; the interest of the insured in every such policy, is valued at the sum insured, and by this valuation, as in a marine policy, both parties are bound. (2 Park. Ins., 493; St. John v. American Mutual Life Insurance Company, 2 Duer, 419 , affirmed on appeal, 3 Kern., 31; Irving v. Manning, 1 H. of L. Cases, 287; Thompson v. The Eagle Life and Health Company, S. C., Gren. Term, Feb. 21, 1856; Paxton v. Same, same term; Angell on Fire Ins., &c., 253.)

V. In the present case, Castle died while engaged with his associates in the business of the Brothers’ Mining and Trading Company. The defendants, in their answer, allege that the policy was obtained from them by false representations. That allegation was not attempted to be proved, and was found untrue by the referee. There was no pretence on the trial that Francis did not act in perfect good faith. The defendants, knowing all the facts, were content to receive the premium, and they are legally bound to stand the loss.

By the Court.

—The defendants refuse to pay, on the alleged ground that Francis not having had an insurable interest in the life of Castle, the policy was void, or if

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Francis had such an interest, that the value thereof which must limit the amount of recovery was merely nominal.

It is not necessary in life insurance that the one for whose benefit the life of another is insured, should be a creditor of that other. It is enough that in the ordinary course of events, loss and disadvantage will naturally and probably arise to the party in whose favor the policy is written, from the death of the person whose life is insured.

In Lord v. Dall, ( 12 Mass., 115 ,) it was held that a young girl had an insurable interest in the life of her brother about to go to sea, upon whose mere generosity she was supported.

In the case of Bevin v. The Connecticut Mutual Life Insurance Company, Judge Ellsworth delivering the opinion of the Court held, that Bevin had an insurable interest, and that the plaintiff could recover $1,000, the amount mentioned in the policy, though he had advanced but $300. That suit was upon a policy exactly like this, and the facts of the case were almost precisely the same. ( 23 Conn., 246 .)

This is a valued policy, and the value is the amount fixed by the par ties to the contract of insurance, and upon the basis of which the premium was paid. It is not a contract for mere indemnity.

In support of these views, (in addition to the foregoing authorities) I cite the following: (Lucena v. Crawford, 2 Bos. and Pull. N. R., 301; Ashley v. Ashley, 3 Sim., 149; 3 Kent Com., 369, and note, 271; St. John v. Amer. Mutual Life Ins. Co., 2 Duer, 419 ; 3 Kern., 31.)

The judgment should be affirmed, with costs.

— Without considering the question whether a policy of insurance on life, is or is not a mere contract of indemnity ; or what particular fact, or element, if any is indispensable to the existence of an insurable interest by one person in the life of another, I have no doubt that Francis had an insurable interest in the life of Castle, and that such interest was one which the parties to the policy could properly value, at the sum at which it was valued in the policy.

Francis had a pecuniary interest in the continuance of Castle’s life; as by reason of that, and through his industry and labors as- a member of the Brothers’. Mining and Trading Company of

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Hew Haven, Francis might expect not only to get back what he had advanced to Castle, but to acquire gains and profits; by reason of being entitled to one-half of Castle’s interest in and to the funds, assets, and profits of the company, which Castle had when the policy was effected, or should afterwards acquire.

Upon the facts appearing in this case, I think the value of this interest must be held to be the sum insured, and that the parties to the policy have thereby agreed upon that sum, as the value of such interest.

The case of Bevin v. Connecticut Mutual Life Insurance Com pany, (23 Conn. R., 244,) is a direct authority in support of these views, and appears to me to be correctly decided. The case of Miller v. The Eagle Life and Health Insurance Company, (2 E. D. Smith, pp. 268, 290,) is an authority in point, and the opinion of the Court delivered by Mr. Justice Woodruff, discusses in all their aspects, the questions arising in this case, and fully sustains the conclusions above stated.

I think the judgment should be affirmed.

Judgment affirmed.