Scott v. Dickson , 108 Pa. 6 ( 1885 )

Mr. Justice Paxson

delivered the opinion of the court, January 5th, 1885.

While this record does not disclose with certainty the grounds on which the learned judge below ruled the case, we presume from the couz’se of the argument here, that he regarded it as coming within the pi'inciple of Gilbert v. Moose, 3 Out. 74, which was an admitted case of a wagering policy. We do not, however, regard this as within the authority of Gilbert v. Moose, for the reason that there is nothing in the facts as set forth in the case stated from which the deduction can fairly be dz’awn that this was a wagering policy. On the contrary thez-e is ezzough to show that John F. Scott, the defendant below, had an insurable interest in the life of Archibald Dickson. In the case stated, we find, inter alia, the following facts: “John F. Scott was not in any manner related to Archibald Dickson by blood or marriage, nor was he at aziy time a creditor of Archibald Dickson. Said Scott had been, for some years a surety upon Dickson’s official bond, but the latter had, to the time of his death, ■faithfully fulfilled the conditions of said bond, and neither principal nor surety was liable thereon.”

It appears to have been assumed that because there had been no breach of the official bozzd, and the suz’eties had never been called upon for payment, that Scott had no insurable interest in the life of Dickson. This was a mistake. The insurable interest is that which existed at the time the insurance was effected, not that which may exist at the time of the death of the assured. There was a time when life insurance was treated as a contract of indemnity znerely, and it was held that the interest must continue to the time of death. It was so held by Lord Elubneoroug-h in Goodsall v. Boldero, 9 East 72. But that case was overruled by Dalby v. The Life Insurance Company, 15 C. B. 365, where it was said by Baron Parkb, in construing the statute of 14 George III., which provides that “no insurance shall be made on the life or lives wherein the assured shall have no interest or by way of gaining or wagering,” and “ that in all cases whereizz the assured hath interest in such life, &c., no greater suzn shall be recovered than the aznount or value of such interest,” that the word “ hath ” must be construed as ziecessarily referring to the time of effecting the izisurance, and not to the time of the death. “As thus interpreted,” Justice Bradley says in Conn. Life Ins. Co. v. Schaefer, 94 U. S. R. 457, “ we might almost regard the English statute as declaratory of the original common law, and as indicating the proper rule to be observed in this country where that law furnishes the only rule of decision.” In that case the policy was taken by husband and wife upon their joint lives, payable to the survivor on the death of either. Subsequently they were divorced a vinculo matrimonii, and the wife having paid the premium up to the time of her former husband’s death, brought suit on the policy. It was held that the policy, being valid at its inception, the subsequent cessation of her interest in the life insured-did not affect her claim, the court saying: “The essential thing is, that the policy shall be obtained in good faith, and not for the purpose of speculating upon the hazard of a life in which the assured' has no interest.” This case expressly rules that the policy does not fall with the cessation of the interest.

It requires but a moment’s reflection to see that this rule is based upon sound principles. It treats a contract of life insurance, not as a contract of indemnity, as in the case of fire or marine insurance, but as a contract to pay a certain sum of money in the event of death. And if the policy fell with the cessation of insurable interest it would lead to this result. A. is a creditor of B. to the extent of $1,000 and insures his life to that amount. He continues the policy until he has paid in premiums say $1,100. B. then pays the debt. If the policy ceases as soon as the debt is paid, A. loses all he has paid, and in reality is out of pocket $100, although he has received his debt in full.

Applying these .principles to.the case in hand, when Mr. Scott became 'Dickson’s bail on his official bond, he had an interest in liis life which he could have protected by taking out a policy directly thereon. That he was never called upon for payment upon this bond is not to the purpose; he might have been; he was liable for any breach of it, and this liability constituted an interest in the life of Dickson, and this interest existed at the time of the alleged assignment of the policy. Hence I have no doubt if the assignment was effectual to pass the title to the policy, Scott would be entitled to hold it and receive the insurance money.

But I more than doubt whether the assignment qua assignment was sufficient to pass the title. It was true an assignment .was made in form and lodged with the company, in accordance with its rules, but no copy of it was ever given to Scott, nor was he notified thereof, and. the policy was retained by Dickson, who continued to pay the premiums up to the time of his death, in pursuance of a request made to the company that the premium notices should be sent to him, Dickson. It was said by Chief Justice Gibson, In re Campbell’s Estate, 7 Barr 100 : “ A gift is a contract executed; and as the act of execution is the delivery of possession, it is of the essence of the title. It is the consummation of the contract which, without it, would be no more than a contract to give, and without efficacy for the want of a consideration. If made on sufficient consideration it would be a binding agreement; but then the nature of the contract would be changed, and there would still be no gift. The gift of a bond, note, or any other chattel, therefore, cannot be made by words in futuro or by words in prcesenti, unaccompanied by such delivery of possession as makes the disposal of the thing irrevocable.”

In Taylor’s Appeal, Trough’s Estate, 25 P. F. S. 115, Trough effected a life insurance, being solvent; and in consideration of $1 and love and affection for his children, he executed under seal an assignment of the policy to one I-Iicks in trust for them; put the policy and assignment into an envelope addressed to “ John W. Hicks, Plumber, Second street,” &c.; “Please send this to him at my death — H. Trough,” and placed the envelope in a safe of his own firm. He paid the premiums until his death, seven years after the assignment, but never communicated the transaction to Hicks, who knew nothing of it until after his death. It was held by this court that the assignment was invalid for want of a delivery, and the proceeds were awarded to the administrator of Trough. In Zimmerman v. Streeper, Id. 149, there was an indorsement of a gift upon a bond by the testator, with a request to his executors to deliver it after his death, but it was held invalid for want of a delivery.

In the case in hand the delivery of the assignment to the company was not the equivalent of a delivery to Scott. The whole thing was in fieri; there was no consideration, and the assignment being the voluntary act of the assured, was subject to his-power of revocation. That circumstances might have arisen which would have made the revocation a matter of some trouble and expense, is not to the purpose. The true test was the right to revoke or cancel the assignment. If that existed, nothing passed to the assignee at the time of said assignment.

There is, however, another view of the case which we think controls it. It is manifest from the case stated that this policy was intended for the benefit of Scott at the time it was taken out. The application was made by Dickson on December 80th,. 1882. On the fourth of the following Januaiy, only five days thereafter, he went to the office of the company to lift the policy, and when the policy was produced, he at once informed the company that he “ wanted to transfer it to John F. Scott, the best friend I have in the world.” Can there be a doubt that he intended the policy for his friend when he made the application ? Had it been made so in form, had he instructed the company to make the loss payable to John F. Scott in case of his death, the transaction would have been perfectly legal, and open to no objection as a wagering policy. The validity of such policies has never been doubted. What followed was the act of the company, not of Dickson. They recommended the assignment as the proper form, and Dickson executed it because it was so recommended. Yet his own conduct shows that he did not regard it as an assignment. The effect of an assignment would be 'to pass the legal title to the policy had it been perfected by delivery. The assignee thereafter would be the party to pay the premium., But E>iokson kept the assignment and continued to pay the premium himself; directed the notices to be sent to him. He evidently intended his friend to have the benefit of the policy, and bear its burdens himself. Had the company altered the policy, making the loss payable to Scott, instead of preparing an assignment they would have carried out Dickson’s precise intent. Does the form of the transaction'stand in the way? We think not. We may treat the assignment as a direction to pay the loss to Scott, given at the time the policy was issued, with the same form and effect as if written in the body of the policy. If the transfer to Scott were an afterthought it would be different, but it was not; it was a part of the original transaction, and the direction was given before the policy had been taken from the office.

Policies of this nature are in no sense wagering. It would be denying a man’s right to do what he will with his own to say that he could not in any form insure his life for the benefit of an indigent relative, or a friend to whom he felt under obligations. And the fact that he continues to pay the premium himself, and retains the control of the policy up to the time of his death, leaves no room for speculation or the improper practices which a few years ago brought such a scandal upon the life insurance business in this state.

The judgment is reversed, and judgment is now entered upon the case stated in favor of the defendant, with costs.

Gordon and Trunkey, JJ., dissented.