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risks on human life, and encourage the evils for which wager policies are condemned.
The decisions of the New York Court of Appeals are, we are aware, opposed to this view. They hold that a valid policy of insurance effected by a person upon his own life, is assignable like an ordinary chose in action, and that the assignee is entitled, upon the death of the assured, to the full sum payable without regard to the consideration given by bim for the assignment, or to his possession of any insurable interest in the life of the assured. St. John v. American Mutual Life Insurance Company, 13 N. Y. 31; Vulton v. National Loan Fund Life Assurance Company, 20 Id. 32. In the opinion in the first case the court cite Ashley v. Ashley, 3 Simons, 149, in support of its conclusions ; and it must be admitted that they are sustained by many other adjudiIcations. But if there be any sound reason for holding a policy invalid when taken out by a party who has no interest in the life of the assured, it is difficult to see why that reason is not as cogent and operative against a party taking an assignment of a policy upon the life of a person in which he has no interest. The same ground which invalidates the one should invalidate the other, — so far, at least, as to restrict the right of the assignee to the sums actually advanced by him. In the conflict of decisions on this subject we are free to follow those which seem more fully in accord with the general policy of the law against speculative contracts upon human life.
In this conclusion we are supported by the decision in Cammack v. Lewis, 15 Wall. 643. There a policy of life insurance for $3,000, procured by a debtor at the suggestion of a creditor to whom he owed $70, was assigned to the latter to secure the debt, upon his promise to pay the premiums, and, in case of the death of the assured, one third of the proceeds to his widow. On the death of the assured, the assignee collected the money from the insurance company and paid to the widow $950 as her proportion after deducting certain payments made. The widow, as administratrix of the deceased's estate, subsequently şued for the balance of the money collected, and recovered judgment. The case being brought to this court, it was held that the transaction, so far as the creditor was concerned, for the excess beyond the debt owing to him, was a wagering policy, and that the creditor, in equity and good conscience, should hold it only as security for what the debtor owed him when it was assigned, and for such advances as he might have afterwards made on account of it; and that the assignment was valid only to that extent. This decision is in harmony with the views expressed in this opinion.
The judgment of the court below will, therefore, be reversed, and the cause remanded with direction to enter a judgment for the plaintiff for the amount collected from the insurance company, with interest, after deducting the sum already paid to the widow, and the several sums advanced by the defendants; and it is
MUTUAL INSURANCE COMPANY V. ALLEN.
(Reported 138 Mass. 24.) BILL OF INTERPLEADER, filed October 22, 1881, by a corporation organized under the laws of the State of New York, against George Allen and Catherine Fellows, to determine which of the defendants was entitled to the proceeds of a policy of insurance, issued by the plaintiff on July 25, 1855, upon the life of Israel Fellows, in the sum of $2,000. The bill alleged the following facts :
By the terms of the policy it was issued “ for the sole use of Catherine Fellows,” and the plaintiff promised and agreed “ to and with the said assured, her executors, administrators, and assigns, well and truly to pay, or cause to be paid, the said sum insured to the said assured, her executors, administrators, or assigns, for her sole use, within sixty dars after due notice and proof of the death of the said Israel Fellows. And, in case of the death of the said Catherine Fellows before the decease of the said I. Fellows, the amount of the said insurance shall be payable after her death to her children, for their use, or to their guardian, if under age, within sixty days after due notice and proof of the death of the said I. Fellows, as aforesaid.” The policy also contained this clause : “N. B. If assigned, notice to be given to this company."
On Jan. 1, 1881, Israel Fellows, Catherine Fellows, and their two children, who were then of age, by two instruments in writing under their hands and seals, duly executed and delivered in this Commonwealth, assigned and transferred the policy of insurance to the defendant Allen, together with all their respective claims and demands under the same.
On March 7, 1881, Israel Fellows died, leaving his widow, Catherine Fellows, surviving him. Proof of his death was duly made. His widow made a demand upon the plaintiff for the payment of the policy, and brought an action upon the policy in the Supreme Court in New York.
In August, 1881, Allen also brought an action on the policy in this Commonwealth, in the name of Catherine Fellows, for his own benefit.
The answer of Allen admitted the allegations of the bill; and averred that Allen bought the policy for a good and valuable consideration.
The answer of Mrs. Fellows admitted the allegations of the bill; and averred that the assignment was invalid under the laws of the State of New York, and that Allen had no insurable interest in the life of Israel Fellows.
The case was heard by Holmes, J., who reported it for the consideration of the full court, in substance as follows:
The plaintiff paid the money into court. The policy was delivered by the plaintiff in this Commonwealth. At that time, and when the assignment was made, the law of New York was as set forth in the Laws of 1840, c. 80, and in the cases of Eadie v. Slimmon, 26 N. Y.1, and Barry v. Equitable Assur. Society, 59 N. Y. 587.
“ The amount of premium annually paid upon the policy did not exceed $300. There was some evidence that the defendant Fellows did not expect that her assignment, although absolute in form, was to be used, except as security for a loan of $1,000 to her husband ; but there was no evidence which satisfied me that there was any restriction upon his power to deliver it as an absolute transfer; and I found that the policy was assigned in Massachusetts to the defendant Allen by the defendant Fellows (both being then residents of Massachusetts), in consideration of $1,000 paid to her husband by said Allen, and the discharge of certain notes beld by said Allen amounting to $470.79. If the transfer was valid in manner and form as agreed, Allen ceased from that moment to have an insurable interest in the life of said Fellows as a creditor, and he had no other.”
The judge ruled that, so far as the present question was concerned, the transfer was governed by the law of Massachusetts, and that, by the law of Massachusetts, it was not void for want of an insurable interest in the transferee ; and found for Allen.
J. F. Colby, for Allen.
W. ALLEN, J. The contract of insurance was made and was to be performed in this State, and the money due upon it has been paid into court here; and the contract of assignment was made in this State between parties domiciled here. The validity and effect of the assignment, and the capacity of the parties to it, must be governed by the laws of this State. The only question which requires discussion is, whether, by that law, the assignment is void for want of interest of the assignee in the life insured.
The policy, in consideration of an annual premium to be paid by Mrs. Fellows, assured the life of her husband for her sole use, and for her children if she should not survive her husband. The promise was to the assured, her executors, administrators, and assigns. The policy contained no reference to an assignment except the following: “N. B. If assigned, notice to be given to this company.” The policy was issued in 1855. In 1881, an assignment in the words following, signed by Mrs. Fellows, her husband, and children (who were all of age), was indorsed upon the policy : “I hereby assign, transfer, and set over unto George Allen, of Boston, all my right, title, and interest in and to the within policy of life insurance, and all right that msy at any time be coming to me thereon.”
A more formal instrument of assignment, with a power of attorney to receive “ all sums of money that may at any time hereafter be or become due and payable to us, or either of us, by the terms of said policy," was also executed by the same parties. The policy and assignments were delivered to the defendant Allen, and notice thereof given to the plaintiff. The consideration of the assignment was the payment of a sum of money by the assignee, and the discharge of certain notes held by him against Mr. Fellows. It is to be assumed, on the report, that the transaction was not, in the intention of the parties, a wagering contract, but an honest and bona fide sale of the equitable interest in the policy. The defendant Allen had no insurable interest in the life of Mr. Fellows except as his creditor, and that interest ceased when he ceased to be a creditor by accepting the assigninent in satisfaction of his debt, so that he is in the position of a bona fide assignee of the policy for valuable consideration without interest in the life insured, and the question between him and the assignor is which has the equitable interest in the policy.
The policy is a common form of what is called life insurance, and is a contract by which the insurer, in consideration of an annual payment to be made by the assured, promises to pay to her a certain sum upon the death of the person whose life is insured. To prevent this from being void, as a mere wager upon the continuance of a life in which the parties have no interest except that created by the wager itself, it is necessary that the assured should have some pecuniary interest in the continuance of the life insured. It is not a contract of indemnity for actual loss, but a promise to pay a certain sum on the happening of a future event from which loss or detriment may ensue, and if made in good faith for the purpose of providing against a possible loss, and not as a cloak for a wager, is sustained by any interest existing at the time
and Forbes V. American Ins. Co., 15 Gray, 249. Mrs. Fellows had an insurable interest in the life of her husband, and the policy to her was a valid contract to pay the sum insured to her upon the event of bis death. This contract was a chose in action assignable by her. Palmer v. Merrill, 6 Cush. 282.
The policy was not negotiable, and her assignment could not, in this State, pass the legal, but only the equitable, interest in the contract. The assignment was a contract between her and her assignee, to which the insurer was not a party. It purported to give to the assignee only the equitable interest of the assignor in the contract, — the right to recover in the name of the assignor the sum which should become due to her under the contract.
The direction in the policy, that notice of an assignment of it should be given to the insurer, had no effect upon the character of the assignment, however its operation might have been limited had notice not been given. The assent of the insurer to the assignment would not make a new contract of insurance. Its only effect would be to enable the assignee to enforce in his own name, instead of the name of the assignor, the rights she held under the contract. McCluskey v. Providence Washington Ins. Co., 126 Mass. 306.
This distinction between the assignment of the interest of the insured in a policy, which is a contract between the assignor and the assignee only, and the transfer or renewal to a third person of a policy, which is a contract to which the insurer is a party, is illustrated in the case of fire insurance. Tbat is strictly a personal contract of indemnity to the assured, and he, or his assigns in bis name, can recover only an indemnity for actual loss to him. If he has no interest in the property insured at the time of the loss, he can recover nothing, and if he parts with his interest before a loss, he becomes incapacitated to recover upon the policy, and it ceases to insure anything and becomes void. Wilson v. Hill, 3 Met. 66. It follows that, where a purchaser of insured property would have the benefit of an unexpired term of insurance, it must be by a new contract with the insurer, and not by assignment from the insured. This is usually provided for in the policy, so that by its terms an assignment by the insured with the assent of the insurer will continue the policy to the purchaser ; but in such a case there is a new contract of insurance with the purchaser upon his newly acquired interest, and he becomes the assured. But the assured in a fire policy can, while his insurance continues, assign his rights under the policy in the same manner as the insured in a life policy can do. In Fogg v. Middlesex Ins. Co., 10 Cush. 337, Chief Justice Shaw says, after referring to the kind of transfer just mentioned : “ But there is another species of assignment, or transfer it may be called, in the nature of an assignment of a chose in action, it is this : “In case of loss, pay the amount to A. B.' It is a contingent order or assignment of the money, should the event happen upon which money will become due on the contract. If the insurer assents to it, and the event happens, such assignee may maintain an action in his own name, because, upon notice of the assignment, the insurer has agreed to pay the assignee instead of the assignor. But the original contract remains ; the assignment and assent to it form a new and derivative contract out of the original. But the contract remains as a contract of guaranty to the original assured ; he must have an insurable interest in the property, and the property must be his at the time of the loss. The assignee has no insurable interest, prima facie, in the property burnt, and does not recover as the party insured, but as the assignee of a party who has an insurable interest and a right to recover, which right he has transferred to the assignee, with the consent of the insurers." See also Phillips v. Merrimack Ins. Co., 10 Cush. 350.
If Mrs. Fellows had surrendered or forfeited her policy, and the contract between her and the insurer had become null, a new contract, by which the defendant Allen should have become the assured instead of Mrs. Fellows, might have required an insurable interest in him, though in the form of an assignment and a renewal or revival of the original policy. But the original policy has not been surrendered or forfeited, nor the contract in any way changed. Mrs. Fellows is still the assured, and the policy is supported by her interest in the life, and is in form