Grant's Administrators v. Kline , 19 W.N.C. 260 ( 1887 )

Mr. Justice Paxson

delivered the opinion of the court, March 21st, 1887.

The second assignment presents the controlling point in this case. It alleges that the court below erred in not affirming the plaintiffs’ first point. The point was as follows : The disproportion of the debts of $214 alleged to have been owing by Grantto Kline at the time of the insurance, and the amount of the insurance, viz.: $3,000, is so great as to make it merely a wagering policy, and such policy being void in law, the defendant is not entitled to hold the proceeds of the policy, and the verdict must be for the plaintiffs for the amount received by the defendant, less the assessments paid and the debt proved.

This point assumes the amount of the debts due Kline from Grant, but as the plaintiffs’ fourth point, which is free from this objection and was also declined, raises the same question, we will consider it as if no such defect existed.

It is very clear, if the testimony in the case is to be believed, that the policy in question was taken out by Mr. Grant and assigned to Kline in entire good faith. There is nothing to cast suspicion upon the integrity of the transaction. I will refer to the disproportion of the debt to the amount insured hereafter. I am now alluding to the good faith of the parties as distinguished from the gambling policies in Gilbert v. Moose, 104 Penna., 74, and that line of cases. Kline and Grant were brothers-in-law, and it appears that Kline had befriended Grant in various ways, and had from time to time loaned him money. The latter said when he applied for the policy that hé was greatly indebted to Mr. Kline; that he had favored him considerably. Also that Grant said: Jacob Kline was a brother-in-law of his, and he owed him a debt, a considerable amount of a debt, and he said he wanted to pay him and this was the only way, the only remedy which he had, otherwise he could never pay him. For this reason he took out the policy in favor of Mr. Kline to pay his debt. In the testimony of Joseph Deysher, another witness, John Zerbe, also stated that. Grant told him that Kline was the best friend he ever had; had never refused him any favors whatever; had given him considerable money; that he (Grant) had given Kline a policy of insurance on his life, etc. After the death of Mr. Grant the company paid over the money to Mr. Kline and this suit was brought by the administrator of Grant to recover it back, less the amount of the actual debt, and the premiums paid on this policy by Kline. There was no evidence to submit to the jury that the policy was given as collateral security ; the premiums were all paid by Kline; hence if the plaintiffs can recover at all it can onlj. be because the policy in question is a gambling or wagering policy.

It was not .disputed at the trial below that there was a bona fide indebtedness of Grant to Kline at the time the policy was taken out of something over $300. It was also in evidence that one or more policies had been taken out on Grant’s life for Kline’s benefit prior to the policy in question. These policies had been abandoned because of the insolvency of the companies or other sufficient reason. Kline had paid in premiums thereon several hundred dollars. While the money thus fruitlessly paid in premiums may not have amounted to an insurable interest in the life of Grant, for the reason that such payments, did not make him a creditor for their amount, we think they show good faith in the transaction. This case is to be determined upon the facts as they existed at the time the last policy was taken out, and if both Grant and Kline saw proper • to treat the premiums paid as an insurable interest, Grant’s administrators have bo standing to say they were not. The company could have defended upon this ground but it did not. It paid the money over to Kline without question.

This brings us to the main question, Was the amount of insurance so disproportioned to Kline’s interest in the life of Grant as .to make this a wagering policy ? We approach this question with caution, the more so that this court has not yet laid down a rule upon this subject. That we shall be compelled some day to do so is possible. We have said that the sum insured must not be disproportioned to the interest the holder of the policy has in the life insured. To take out a policy of |5,000 to secure a debt of five dollars would be such a palpable wager that no court would hesitate to declare it so as a matter of law. Care must be taken also that a debt shall not be collusively contracted for the mere purpose of creating an insurable interest. Mr. Dickens, in his inimitable “ Pickwick Papers,” has shown how a debt may be created for the purpose of lodging the debtor in prison by collusion with the creditor. Speaking for myself, it may be that a policy taken out by a creditor on the life of his debtor ought to be limited to the amount of the debt with interest, and the amount of premiums with interest thereon during the expectancy of life, as shown by the Carlisle tables. This view, however, has never yet been adopted by this court in any adjudicated case, nor do we feel compelled to define the disproportion now in view of the particular facts of the case in hand. We do not regard it as either immoral or wagering for Kline to attempt to secure the sums he had already fruitlessly paid in premiums on Grant’s life, and if Grant had no objection thereto, and assisted him therein, I do not see that any one could object to this but the company. Again, we have the declarations of Grant that he owed Kline a considerable sum of money, the precise amount not stated — that Kline had aided him in various ways ; had never refused him a favor, etc. In view of their connection by marriage, and of their admitted relations, it is at least probable that Kline had aided him at many times and in various ways pecuniarily that are not represented by any evidences of debt. And if the sum insured was regarded by Grant as a reasonable amount to indemnify Kline, with what grace can Grant’s administrators come in and allege that it was not? They have no possible equity; Grant never paid one dollar of the premium, and if they are allowed now to recover, it is not by virtue of any equity, but by force of an inexorable rule of public policy which treats it as a wagering policy, and declares the policy holder a trustee for the person insured as to the entire proceeds save only the money actually loaned, with the premiums paid.

Assuming then that Kline might with Grant’s consent, and as against his administrators, lawfully seek to indemnify himself for the premiums paid and lost, we have the sum of $743.56 as the amount which Kline was out of pocket. We do not know what Grant’s expectation of life was when the policy was taken out, and there is nothing before us upon which we could base any reliable opinion. But it appears he was sixty-five years of age, and was an unusually good risk. While we do not know what the amount of the annual premium was, we do know that it must have been a considerable sum on $3,000 for a man of sixty-five years, and with the annual interest would roll up rapidly. That Grant died within a year is not to-the purpose ; he might have lived long enough for the debt and premiums at compound interest to have exceeded the amount of the policy. Surely, in such case, we cannot say as a matter of law that the disproportion was so great as to make it. a wagering policy.

■We see no error in refusing to affirm the point referred to in the sixth assignment. We do not think the declarations of Grant embodied in the point are conclusive that the policy was intended as collateral security merely, and that the amount of the policy, less debt and premiums, was to be paid over to Grant. On the contrary; they would not have justified such finding by the jury. Everything in the case indicated that this was intended as a creditor’s policy in which Grant had no interest. As before observed, the latter paid no premiums.

The evidence referred to in the seventh assignment was properly admitted. If for no other reason, to show good faith. But, as has been already said, it was eompétent to show these payments of premiums for other purposes.

Judgment affirmed.