A promise by the insurer in a policy of life insurance to pay
the amount of the policy on the death of the assured to " M. C.,
his creditor, if living," if not then to the executors, etc. of the
assured, is a promise to pay to that creditor if he continues to he
a creditor, and if not, then to the executors, etc., and in an
action on the policy by the creditor, if sufficient time elapsed
between the making of the policy and the death of the assured to
warrant an assumption that the debt may have been paid, it is
incumbent on the plaintiff to prove the continuance of the relation
and the amount of the debt.
The fact that an insurance company does not object to answers
made to questions on a blank sent out by it for securing proof of
the death of
Page 144 U. S. 622
the assured does not prevent it from challenging the truth of
any statement in such answers.
Life Insurance Company v.
Francisco, 17 Wall. 672, distinguished from this
case.
On January 31, 1883, defendant in error, defendant below,
insured the life of Michael O'Brien. The language of the policy was
this:
"Does promise Michael O'Brien, of Lockford, in the State of
California, to pay to said Michael O'Brien the sum of ten thousand
dollars (any indebtedness to the company on account of this
contract to be first deducted therefrom) at the office of the
company in Portland, Maine, on the fifteenth day of January, in the
year nineteen hundred and forty-one, or, if said Michael O'Brien
shall die before that time, to pay said sum within ninety days
after notice and satisfactory proofs of death shall have been
furnished to the company at its said office, to Michael Crotty, his
creditor, if living; if not, then to the said Michael O'Brien's
executors, administrators, or assigns, upon the following
conditions."
On January 2, 1885, plaintiff in error, plaintiff below,
commenced his action in the Circuit Court of the United States for
the Northern District of California to recover on the policy. The
complaint contained these allegations:
"Third. That plaintiff was at the time of effecting said policy
of insurance, and at the time of the death of said Michael O'Brien,
a creditor of said Michael O'Brien for various sums of money, which
this plaintiff had at various times advanced to the said Michael
O'Brien, amounting to several thousand dollars, and as such
creditor had a valuable interest in the life of said Michael
O'Brien."
"Fourth. That on the 15th day of September, 1883 at the City of
Boston, State of Massachusetts, the said Michael O'Brien died."
"Fifth. That on the 14th day of January, 1884, plaintiff
furnished the defendant with proof of the death of said Michael
O'Brien in this case, and otherwise performed all the conditions of
the said policy of insurance on his part."
The answer denied specifically that O'Brien was ever indebted to
plaintiff, and denied that plaintiff ever performed
Page 144 U. S. 623
the conditions of the policy, except by furnishing proofs of the
death of O'Brien. In the proofs of death, which were on a blank
furnished by the insurance company, were these questions and
answers: "(3) In what capacity or in what title do you make the
claim? As creditor and beneficiary named in the policy." "(17) If
the claim is made under an assignment, give the date, name of
assignor, and the consideration. The claim by me as creditor of
deceased and beneficiary named in the policy." On the trial, the
only evidence furnished by the plaintiff of his interest in the
policy was that contained in the policy itself and in these two
statements in the proofs of death. The court instructed the jury to
find a verdict for the defendant, to reverse which judgment
plaintiff sued out this writ of error.
MR. JUSTICE BREWER, after stating the facts in the foregoing
language, delivered the opinion of the Court.
Without noticing other questions discussed by counsel, it is
sufficient to consider that of plaintiff's interest in the policy.
It is the settled law of this Court that a claimant under a life
insurance policy must have an insurable interest in the life of the
insured. Wagering contracts tracts in insurance have been
repeatedly denounced.
Cammack v.
Lewis, 15 Wall. 643, in which a policy of $3,000,
taken out to secure a debt of $70, was declared "a sheer wagering
policy."
Connecticut Mutual Life Ins. Co. v. Schaefer,
94 U. S. 457,
94 U. S. 461,
in which it was said:
"In cases where the insurance is effected merely by way of
indemnity, as where a creditor insures the life of his debtor for
the purpose of securing his debt, the amount of insurable interest
is the amount of the debt."
Warnock v. Davis, 104 U. S. 775.
Confessedly plaintiff sues as a creditor of O'Brien. Within the
language quoted, the amount of his insurable interest was
Page 144 U. S. 624
the amount of his debt, and the question is whether the policy
and the proofs of death contained sufficient evidence of such
insurable interest. It is unnecessary to enter into the disputed
question as to how far a policy of insurance taken out by a
creditor on the life of his debtor is affected by a change in the
relations between debtor and creditor prior to the maturity of the
policy, for here the contract was between the insured, O'Brien, and
the company; the promise of the company was to him, and to pay to
him at the maturity of the policy, with a proviso that if the
insured died before the end of the term, payment should be made "to
Michael Crotty, his creditor, if living; if not, then to the said
Michael O'Brien's executors," etc. The words "if not" grammatically
stand in antithesis to the words immediately prior, "if living,"
and yet, considering the purpose of the contract, and the words
which follow directly thereafter, it would seem not unreasonable
that they refer to a determination of the relation of creditor, and
as though the language was, "if not a creditor, then to the said
Michael O'Brien's executors," etc. If a policy of insurance be
taken out by a debtor on his own life, naming a creditor as
beneficiary or with a subsequent assignment to a creditor, the
general doctrine is that on payment of the debt, the creditor loses
all interest therein, and the policy becomes one for the benefit of
the insured and collectible by his executors or administrators. In
2 May on Insurance (3d ed.) sec. 459a, the author says:
"A creditor's claim upon the proceeds of insurance intended to
secure the debt should go no further than indemnity, and all beyond
the debt, premiums, and expenses should go to the debtor and his
representatives, or remain with the company, according as the
insurance is upon life or on property."
Central Bank v. Hume, 128 U. S. 195,
128 U. S. 205.
But whatever doubts may exist as to the law applicable to such
cases or the rights of action on such a policy, the plaintiff in
this case put his own construction on the contract and tendered an
issue which was accepted by the company. He alleged that he was a
creditor at the time of the contract and at the time of the death.
Upon the issue thus presented the case went to trial. The
Page 144 U. S. 625
promise of the policy is to pay to Michael Crotty, his creditor,
if living, and it is contended that this is an admission on the
part of the company sufficient to justify a verdict against it. If
an admission at all, it is good only as an admission of the date at
which it was made, to-wit, the date of the policy. The relation of
debtor and creditor is not a permanent one, like that of parent and
child, but one which may vary from day to day, changing both in
fact and amount, according to the successive business transactions
between the parties. So admission or proof that the relation of
debtor and creditor existed between two parties at one date is not
admission or proof that months thereafter the same relation and to
the same amount subsisted. If it were proven that the relation of
debtor and creditor existed at the date of the issuing of the
policy, and the beneficiary died the succeeding day, it might be
that the nearness of the two dates would carry with it an inference
that the relation still subsisted; but it would not do to rest on
the same inference when many months had intervened between the date
of the policy and the time of death.
Again, the indebtedness of O'Brien to plaintiff, if any existed,
was a matter peculiarly within the knowledge of plaintiff, and if
that indebtedness is an essential factor in his right to recover,
justice requires that he should by affirmative testimony establish
both the fact and the amount.
Still again, not only does justice between the parties but also
that public policy which denounces wagering contracts require that
the proof of indebtedness should be distinct and satisfactory. It
would tend to a successful consummation of wagering contracts in
insurance if the mere recital in the policy was held sufficient to
sustain a recovery in favor of the alleged creditor, no matter how
long after the date of the policy the death of the insured
happened. Admissions, whether direct or incidental, should never be
carried beyond their actual extent or the reasonable inferences
therefrom, and should not be invoked to work injustice to parties
litigant or thwart the demands of sound public policy.
Neither can the statements of the plaintiff in his proofs of
Page 144 U. S. 626
death be considered evidence in his favor of the fact that he is
a creditor or the amount of the debt. All that there is in the
proofs of death is his own statement, and surely a plaintiff cannot
make his sworn statements at another time and place sufficient
evidence, on a trial, of the existence of an essential and disputed
fact. These statements are evidence against the claimant, and not
against the insurance company.
Insurance Co. v.
Newton, 22 Wall. 32. Nor is the fact that the
proofs of death were received by the insurance company without
question an admission on its part of the truth of all the matters
stated therein. The purpose of proofs of death in life insurance
and proofs of loss in fire insurance cases is to put the insurance
company in possession of the facts concerning the death or loss as
claimed by the beneficiary or insured, upon which it is to base its
determination as to making or refusing payment, and when it
receives such proofs without question, it is an admission on its
part that they are in form sufficient, but not that all the facts
stated therein are true.
The policy in this case called for proofs of death, and the
company by its answer admitted that satisfactory proofs had been
furnished. The fact that, in the blank it prepared and sent to be
filled out it asked may questions which were answered by the
claimant, and the proofs thus made were received without objection,
did not prevent the company from challenging in court the truth of
any fact stated therein essential to the plaintiff's right of
recovery, and did not amount to an admission on its part respecting
such fact. The case of
Life Insurance Company v.
Francisco, 17 Wall. 672, is cited by plaintiff as
authority for a contrary view. There is perhaps a sentence or two
in the opinion which, detached from the rest and considered apart
from the facts of the case, might justify the claim of plaintiff.
That was a suit on a contract of life insurance. The insured died
before the policy was actually issued. If it had been issued, it
would have contained a stipulation that "payment of the loss would
be made within ninety days after notice of the death, and due proof
of the just claim of the assured." The beneficiary was the wife of
the insured. On the trial, the plaintiff offered evidence to
Page 144 U. S. 627
prove the contract and the death of her husband, that she had
filled up in the presence of the company's agent the blank forms
which it had furnished and which were always used in making proofs
of death, and that he had received without objection and retained
them, but offered no evidence as to the contents of those papers.
She rested her case upon this testimony, and the court refused an
instruction that she could not recover. This Court held that such
instruction was properly refused. Of course, as a wife, she had an
insurable interest. Proof of the contract and of her husband's
death established the fact of her right to recover unless she had
failed to furnish due proofs of her just claims, but as the company
received them without objection, and did not return them for
correction, it was properly held that they were sufficient. All
that was in fact determined was that if the proofs were retained
without objection, the court could not declare them
insufficient.
Further, in the case before us the blank which was furnished to
the plaintiff by the company, and upon which he prepared the
statements, contained this notice:
"This blank is furnished [upon application] for the convenience
and assistance of the representatives of the insured, and the
company reserves the right to consider and determine the question
of its liability under any policy, without prejudice or presumption
by reason of the delivery hereof."
So the party had full information in advance that the company's
right to challenge its liability would not be in any manner
prejudiced by the receipt of these proofs of death, or any
statements therein.
We see no error in the ruling of the court below, and its
judgment is
Affirmed.
MR. JUSTICE GRAY was not present at the argument, and took no
part in the decision of this case.
