Story Case

Mr. Robert Lance, of Peoria, Illinois, was en route to his wedding accompanied by his sister, when the taxicab in which they were riding was driven into an open ditch, killing the driver and Mr. Lance. The sister escaped with her life. Two weeks later three suits against as many insurance companies were filed in the county court. The suits were all on insurance policies, and each policy was for insurance against the death of Mr. Robert Lance. The first policy had been taken out by Mr. William Travers, chief creditor of Mr. Lance; the second ran to the benefit of Miss Trout, Lance's fiancee, and the last to his sister, who had always lived with her brother and depended entirely upon him for support. Will any of these suits prove successful?

Ruling Court Case No. 1. Curtis Vs. Aetna Life Insurance Company, Volume 90 California Reports, Page 245

Esther Curtis procured insurance upon the life of one Tucker, in the sum of $10,000. At the time the policy was issued, Tucker was indebted to Esther Curtis in the sum of $4,000, and Esther was under a contract to loan additional amounts to Tucker, not to exceed $10,000. Tucker died, without having repaid any of the money borrowed. This was an action by Esther upon this policy. The company urged that she had no insurable interest in the life of Tucker.

Mr. Chief Justice Beatty said: "So far then as the complaint is concerned, it clearly shows an indebtedness from Tucker to Mrs. Curtis, at the date of the policy, amounting to $4,500, exclusive of interest, and to that extent there can be no question that it shows her to have had an insurable interest in his life." Judgment was given for Mrs. Curtis.

Ruling Court Case No. 2. Harriet Chisholm Vs. National Capitol Life Insurance Company, Volume 52 Missouri Reports, Page 213

Robert Peel Clark was engaged to be married to Harriet Chisholm. She procured insurance upon his life in the sum of $5,000 from the defendant insurance company. The first premium was paid by her, and while the policy was still in force, and before the contemplated marriage was solemnized, Robert Clark died. This action was brought by Harriet to recover the amount due under the policy. It was urged by the company that the policy was void from the beginning, because she had had, at no time during its continuance, an insurable interest in the life of Clark.

Mr. Justice Wagner said: "The plaintiff - Harriet Chisholm - had an interest in the life of Clark, a valid contract of marriage was subsisting between them. Had he lived and violated the contract, she would have had her action for damages. Had he observed and kept the same, then as his wife she would have been entitled to support. In my opinion she had such an interest, as was entirely sufficient to render the contract valid." Judgment was given for Harriet Chisholm.

Ruling Court Case No. 3. Nancy Lord Vs. William Dale Company, Volume 12 Massachusetts Reports, Page 115

William Dale, engaged in the life insurance business, issued a policy to Nancy Lord upon the life of her brother Jabez Lord for $5,000. At this time, her brother was thirty-three years of age, and was then preparing to sail for a long voyage. He was the sole male relative on whom she could depend for support and education. Jabez died on the coast of Africa. This was an action brought upon this policy by Nancy Lord. It was contended by the company that the policy was void and no recovery should be permitted, because Nancy Lord had no insurable interest in the life of her brother.

Mr. Chief Justice Barker said: "It is said the interest must be pecuniary, legal interest to make the contract valid; one that can be noticed and protected by the law, such as the interest which a creditor has in the life of his debtor, a child in that of his parent. The former case, that of creditor, would have no room for doubt, but with respect to a child for whose benefit a policy may be affected on the life of the parent, the interest, except the insurable one which may result from the legal obligation of the parent to save the child from public charity, is as precarious as that of a sister in the life of an affectionate brother, for if the brother may withdraw all support, so may the father, except as before stated. And yet a policy affected by a child upon the life of a father, who depended on some fund terminable by his death to support the child, would never be questioned, although much more should be secured than the legal interest which the child had in the protection of his father. Indeed, we are well satisfied that the interest of the plaintiff in the life of her brother is of a nature to entitle her to insure it." Judgment was given for Nancy Lord.

Ruling Law. Story Case Answer

The Supreme Court of the United States has thus denned insurable interest in life: It is well settled that a man has an insurable interest in his own life, and in that of his wife and children; a woman in the life of her husband; and a creditor in the life of his debtor. Any reasonable expectation of pecuniary benefit or advantage from the continued life of another, creates an insurable interest in such life. Since the creditor had no lien upon the property of his debtor, it is obvious that the only security which the creditor has, is in the continued existence of the debtor. For that reason, it is held that the creditor has an insurable interest in the life of his debtor. But it is generally held that there must be a reasonable relation between the amount of the debt and the amount of the insurance taken out on the life of the debtor.

Between persons betrothed there is a legally binding contract. If the man refused to carry the contract into effect, the woman may sue him for breach of promise and recover damages. If he does fulfill his obligation to her by marriage, she is then entitled to all the rights and privileges of any married woman. Consequently, the law gives to her an insurable interest in his life.

A sister has an insurable interest in the life of a brother, if she is entirely dependent upon him, and may reasonably expect pecuniary aid from him. As a general rule, the mere fact of the blood relation between brother and sister does not give either an insurable interest in the life of the former; but if to the blood relation there is added the further fact that one is dependent upon the other and reasonably expects pecuniary aid from the other, an insurable interest exists. The same principle holds true between grandparent and grandchild, uncle and nephew, and as between cousins.

Insurable interest existed in each instance of the Story Case and recovery can be had on all the policies.