
    Keckley et al., Executors, v. The Coshocton Glass Company. Gainor v. The Coshocton Glass Company.
    
      Life insurance policy — Not merely a contract of indemnity — Stockholder insured for benefit of corporation — Corporation has an insurable interest, when — Legal representatives of insured estopped from denying insurable interest, when — Insurer pays money into court — Claimants cannot deny insurable interest— Insured may assign instirance — Sections 9393^9396, General Code.
    
    1. A life insurance policy is not -merely a contract of indemnity. It is a contract to pay to the beneficiary a sum certain in the event of death; and if the contract was valid in its inception and so continues until its maturity, the beneficiary is entitled to the whole of the stipulated sum.
    2. Where a person is the owner of a large portion of the stock of a corporation, and by, reason of his skill and experience he is largely relied upon to make the business of the corporation a success, and when, in borrowing money of banks and in dealing with creditors, and in inducing other persons to buy stock in such corporation, he represents that he has insured his life for the benefit of the corporation and that the policies therefor are assets of the corporation, such facts disclose an insurable interest in the corporation; and such insured person and his legal representatives are estopped from claiming that such policies are not based upon an insurable interest, or that the amounts due thereon do not belong to the corporation.
    3. Where a life insurance company makes no defense and pays the amount of its policy into court to -abide the judgment of the court as between conflicting claimants,- parties claiming an interest in the fund will not be allowed to object that the beneficiary named in the policy had no insurable interest.
    4. One who has obtained a valid insurance upon his life, may dispose of it as he sees fit, in the absence of prohibitory legislation or contract stipulations. It is immaterial, in such case, that the assignee has no insurable interest. Eckel v. Renner, 41 Ohio St., 232, approved and followed.
    
      5. Revised Statutes, Section 3628 (General Code, Sections 9393, 9394, 9395 and 9396) does not prohibit a person from insuring his own life for the benefit of persons other than his wife and children.
    Nos. 12729 and 12730
    Decided June 5, 1912.
    Error to Circuit Court of Coshocton county.
    The defendant in error, The Coshocton Glass Company, is a corporation, and at the time of the issuance of the life insurance policies which are the subject of these actions, Thomas J. Gainor and two others owned the controlling interest in the corporation. Gainor was a man of extensive experience and skill in the glass manufacturing and bottle blowing business; and to him especially all others interested in the company looked for its success. In getting the company established in business it was a large borrower of money and it also sold preferred stock to raise working capital. In order to secure against loss or failure of the enterprise and to maintain the credit of the company, Gainor and his two associates, holding the common stock and the control of the corporation, each agreed to take out insurance on his own life in the sum of $10,000 for the benefit of The Coshocton Glass Company.
    On or about August 26, 1904, Gainor applied for insurance in the amount of $5,000 for the benefit of his wife, Mary M. Gainor. On that application the insurance company issued two policies of $5,000 each on the life of Gainor, naming his wife, Mary M. Gainor, as the beneficiary. When the agent of the insurance company came to deliver these policies Gainor refused to accept one of them, which is the policy involved in the case No. 12730 above named, and the agent took the policy back to his office and retained it until a later date as stated hereinafter.
    On September 13, 1904, the three men, Gainor and his associates as before stated, took out policies each on his own life in the sum of $10,000, for the benefit of The Coshocton Glass Company. Gainor inquired of the agent of the insurance company whether the $5,000 policy naming Mary M. Gainor as beneficiary and which had been refused, could not be assigned to The Coshocton Glass Company; and being informed that it could be so assigned, he thereupon made application for a policy for $5,000, naming The Coshocton Glass Company as beneficiary. Upon that application the policy involved in case No. 12729 and the one involved in case No. 12730 were both delivered to the glass company, with the agreement that the latter policy would be assigned to the glass company and that the company should be the beneficiary therein. The written assignment of the last mentioned policy was not made until November 16, 1906.
    The Coshocton Glass Company paid the first premium on each of said policies and also all subsequent premiums; and Gainor represented to creditors of the glass company and to banks from which he was seeking to and did procure loans for said company, and to persons whom he sought to induce and did induce to become purchasers of stock in said company, that both of said policies of insurance on his life belonged to and were assets of said glass company.
    
      In January, 1906, Gainor sold all of his stock and interest in The Coshocton Glass Company, but continued in its employ until September 1, 1906, when he resigned, and from that time he had no connection whatever with the company. Gainor died testate on April 11, 1908. The insurance company refused payment on account of conflicting claimants; and The Coshocton Glass Company having brought suits to enforce payment of the policies to it, the insurance company was permitted to pay the full amount of each policy into court and be discharged. These suits, therefore, remained as between The Coshocton Glass Company and the other defendants, to determine the respective rights of the glass company and the executors of Thomas J. Gainor to the $5,000 paid into court on the one policy, and the respective rights of the glass company and Mary M. Gainor to the $5,000 paid into court on the other policy. In case No. 12730, the circuit court, in its findings of fact, also found: “That at the time said Mary M. Gainor executed the assignment of November 16, 1906, there were no false or fraudulent representations made to said defendant, Mary M. Gainor, by either Hippolyt Liewer, Charles A. Liewer or the plaintiff, or by anyone representing them or either of them, and that in executing said assignment, said defendant, Mary M. Gainor, did not rely upon false or fraudulent representations made either by said Liewers or said plaintiff, or anyone representing them, or either of them.”
    The facts above stated were found by the court of common pleas in case No. 12729, and by the circuit court in case No. 12730; and judgment was rendered against the executors of Thomas J. Gainor and Mary M. Gainor in both the court of common pleas and the circuit court. These proceedings are to reverse the judgments below.
    
      Messrs. Flory & Flory, for plaintiffs in error.
    Passing, as immaterial in the present inquiry, the question of the validity of a policy taken out by a corporation on' the life of one of its servants while in its employ, we insist that if the finding of the court is correct — that these policies were to secure the company against any loss that might result to it by reason of the loss of services of Gainor by his death, that this fact, as with a policy taken out or assigned for the benefit of a creditor, gave the glass company only such interest in the policies as would indemnify it against any loss it might sustain by reason of the death of Gainor while in its employ, and that as soon as he ceased to be in its employ, its interest in the policies ceased to exist, except as to the amount necessary to repay said company for any premiums it may have paid on said policies — the balance to go to Mrs. Gainor as the beneficiary named in one policy and to Gainor’s estate under the other policy. Ryan v. Rothweiler, 50 Ohio St., 595; Manhattan Life Ins. Co. v. Smith, 44 Ohio St., 157; Fraternal Mut. Ins. Co. v. Applegate, 7 Ohio St., 292.
    The whole subject of insurance, embracing the organization and powers of insurance companies and right of contract concerning insurance and for whose benefit insurance may be taken out, is prescribed and regulated by statute in Ohio, and this section of the statute was enacted to give the power therein prescribed and no greater.. The limitation in Section 3628 as to whose benefit insurance may be effected is no broader than the limitation contained in Section 3630, and under this latter section it has been repeatedly held that insurance cannot be taken out or assigned to persons other than members of the insured’s family. National Mut. Aid Assn. v. Gonser, 43 Ohio St., 1; State, ex rel., v. Peoples’, etc., Assn., 42 Ohio St., 579.
    As Gainor had severed all connection with the glass company long before his death, the only interest it had in the policies was to receive out of the money the amounts it paid for premiums, and interest thereon. This makes the company whole and free from loss and gives to Gainor’s wife and estate what belongs to them as their loss and which they are entitled to under the statute allowing the taking out of insurance in their favor. In the meantime — while the insurable interest existed, and while the company could have lost by Gainor’s death — it had full protection.
    This is the rule laid down in cases cited in this brief. It is just, and avoids what would amount to a gambling speculation on Gainor’s life. The law on these points is definitely settled. Evans v. Moore, 28 C. C., 1; Schott & Sons Co. v. Insurance Co., 7 N. P., N. S., 548; Security Mut. Life Ins. Co. v. Schott, 11 C. C., N. S., 401, 30 C. C., 656; Warnock v. Davis, 104 U. S., 775; Crotty v. Insurance Co., 144 U. S., 621; Mut. Life Ins. Co. v. Lane, 151 Fed. Rep., 276; Mut. Life Ins. Co. v. Richards, 99 Mo. App., 88, 72 S. W. Rep., 487; 
      Strode v. Meyers Bros. Drug Co., 101 Mo. App., 627, 74 S. W. Rep., 379; Quinn v. Catholic Knights, 99 Tenn., 80, 41 S. W. Rep., 343; Norris v. Georgia Loan Co., 109 Ga., 12, 34 S. E. Rep., 378; Roller v. Moore, 86 Va., 512; Tate v. Building Assn., 97 Va., 74, 33 S. E. Rep., 382; Trinity College v. Insurance Co., 113 N. Car., 244, 18 S. E. Rep., 175; Widaman v. Hubbard, 88 Fed. Rep., 806; Cammack v. Lewis, 15 Wall., 643; Cheeves v. Anders, 87 Tex., 287, 28 S. W. Rep., 274; Mayher v. Manhattan Life Ins. Co., 87 Tex., 169, 27 S. W. Rep., 124; Mut. Life Ins. Co. v. Blodgett, 8 Tex. Civ. App., 45, 27 S. W. Rep., 286; Weigelman v. Bronger, 96 Ky., 132, 28 S. W. Rep., 334; Beard v. Sharp, 100 Ky., 606, 38 S. W. Rep., 1057; Riner v. Riner, 166 Pa. St., 617, 31 Atl. Rep., 347; Exchange Bank v. Loh, 104 Ga., 446, 31 S. E. Rep., 459; Irons v, U. S. Life Ins. Co., 33 Ky. L. Rep., 46, 108 S. W. Rep., 904; Bendet v. Ellis, 120 Tenn., 277, 111 S. W. Rep., 795; Dugger v. Insurance Co., 81 S. W. Rep., 335; Bramblett v. Hargis Exrx., 29 Ky. L. Rep., 610, 94 S. W. Rep., 20; Wilton v. Insurance Co., 34 Tex. Civ. App., 156, 78 S. W. Rep., 403; 1 Cooley Briefs on Insurance, 270, 274, 278, 298, 300, 301, 302, 308, 309, 315.
    The questions here involved are: Who had the beneficial interest in the continuance of the life of Thomas J. Gainor at the time that the assignments were made and at his death, so as to be entitled to receive the money in compensation for the loss of that life? And what was the extent of such interest in each party? This distinction is the basis of the leading cases of: Lanouette v. Laplante, 67 N. H., 118, 36 Atl. Rep., 981; Smith v. Agnew 137 Ky., 83, 122 S. W. Rep., 231.
    
      Messrs. Pomerene & Pomerene, for defendant in error.
    Is an insurable interest necessary where one causes his life to be insured for the benefit of a stranger? By' “stranger” we mean one who neither by blood nor contractual relations has a legal insurable interest in the life of the insured. We do not think or admit that the glass company was a stranger to Mr. Gainor.
    The general rule is that, although a person without legal insurable interest in the life of another may not procure insurance upon such life, yet the person insured, if there is no fraud practiced and the transaction is not for the purpose of covering a wager or gamble, may himself contract directly with the insurer and have the policy made payable to whomsoever he will, regardless of the party’s insurable interest. Ryan v. Rothweiler, 50 Ohio St., 601; 1 May on Insurance (4 ed.), Sec. 75&; Bloomington Mut. Life Ben. Assn. v. Blue, 120 Ill., 121, 11 N. E. Rep., 331; Martin v. Stubbings, 126. Ill., 387, 9 Am. St. Rep., 620; Kerr on Insurance (1902), 679, 680.
    There is no reason of public policy why one who procures insurance on his own life should not make the benefit payable to another,, without regard to whether the latter has any insurable interest. Milner v. Bowman, 119 Ind., 448, 21 N. E. Rep., 1094; Langford v. Freeman, 60 Ind., 46; Campbell v. New Eng. Mut. Life Ins. Co., 98 Mass., 381; Scott v. Dickson, 108 Pa. St., 6, 56 Am. Rep., 192; Hill v. United Life Ins. Assn., 154 Pa. St., 29, 35 Am. St., 807; Fairchild v. Northeastern Mut. Life Assn., 51 Vt., 613; Aetna Life Ins. Co. v. France, 94 U. S., 561.
    In the absence of bad faith or fraud, the policy may be made payable to anyone without regard to insurable interest, and recovery may be had on the policy in an action brought by the beneficiary without proof of insurable interest. Allen v. Hartford Life Ins. Co., 72 Conn., 693, 45 Atl. Rep., 955; Albert v. Mut. Life Ins. Co., 122 N. Car., 92, 65 Am. St., 693; Van Cleve v. Union Cas. & S. Co., 82 Mo. App., 668; Ashford v. Met. Life Ins. Co., 80 Mo. App., 638; Croswell v. Conn. Indem. Assn., 51 S. Car., 103, 28 S. E. Rep., 200; Goodrich v. Treat, 3 Col., 408; Classey v. Met. Life Ins. Co., 84 Hun, 350; Tucker v. Mut. Ben. Life Ins. Co., 50 Hun, 50, 121 N. Y., 718, 24 N. E. Rep., 1102; Prudential Ins. Co. v. Hunn, 21 Ind. App., 525, 69 Am. St., 380; Olmstead v. Keyes, 85 N. Y., 593; Hess’ Admr. v. Sengenfelter, 32 Ky. L. Rep., 225, 105 S. W. Rep., 476; Vance on Insurance, Sec. 49; Heinlein v. Imperial Life Ins. Co., 101 Mich., 250, 45 Am. St., 409; Morrell v. Trenton Mut., etc., Ins. Co., 10 Cush., 282, 57 Am. Dec., 92; Conn. Mut. Life Ins. Co. v. Schaefer, 94 U. S., 457; 1 May on Insurance (4 ed.), Sec. 112; Bliss on Life Insurance, Sec. 76; 2 Beach on Insurance, Sec. 861; 2 Joyce on Insurance, Sec. 729; Union Fraternal League v. Walton, 109 Ga., 1, 77 Am. St., 350; N. W. Masonic Aid Assn. v. Jones, 154 Pa. St., 99, 35 Am. St., 810; 
      Rupp v. Western Life Indem. Co., 138 Ky., 18, 29 L. R. A., N. S., 675.
    Did the glass company have an insurable interest in the life of Gainor at the time the policy was issued? This question involves the right of a corporation to insure the life of an officer or employe in whose life it has a special and valuable interest. As we contend, the question is one of fact as well as of law, and that the right of a corporation to insure the life of an officer of the corporation or an employe in its service depends upon conditions and the good faith of the transaction by which the insurance was obtained. Elliott on Insurance, Sec. 57; Warnock v. Davis, 104 U. S., 775; Bliss on Life Insurance, Sec. 21; Trenton, etc., Ins. Co. v. Johnson, 24 N. J. L. (4 Zab.), 586; State v. Willett, 171 Ind., 296, 86 N. E. Rep., 68; Appeal of Corson’s Exr., 113 Pa. St., 446.
    Was the interest of the glass company an insurable one? Mechanicks Nat. Bank v. Comins, 72 N. H., 12, 101 Am. St, 650, 55 Atl. Rep., 191.
    If the glass company had an insurable interest in Gainor’s life at the time the policy was issued, did its interest therein lapse when the insurable interest ceased. We, of course, concede that when Mr. Gainor left the service of the glass company on September 1, 1906, the legal insurable interest of the company in his life terminated. But the policy having been valid at its issue and the interest of the glass company vesting at that time, did the interest of the company lapse when Gainor left the service? Elliott on Insurance, Sec. 19; 1 Joyce on Insurance, Secs. 25, 26; Nye v. Grand Lodge, 9 Ind. App., 131, 36 N. E. Rep., 429; Mut. 
      
      Life Ins. Co. v. Allen, 138 Mass., 24; Rawls v. Am. Mut. Life Ins. Co., 27 N. Y., 282, 84 Am, Dec., 280; Sides v. Knickerbocker Life Ins. Co., 16 Fed. Rep., 650.
    The rule stated in general terms may be said to be that if a policy is valid at its inception, because based on an adequate insurable interest, the existence of such an interest at the maturity of the policy is unnecessary. While there are some courts holding differently, yet this rule has been endorsed by a large majority of them. 1 Cooley Briefs on Insurance, 311; 25 Cyc., 711; 2 Joyce on Insurance, Sec. 902; Elliott on Insurance, Sec. 60; Rawls v. Am. Mut. Life Ins. Co., 36 Barb., 357.
    A beneficiary in a life policy may recover after the death of the assured, though he has no pecuniary interest in the assured’s life. Am. Employers’ Liability Ins. Co. v. Barr, 68 Fed. Rep., 873, 32 U. S. App., 444; Langdon v. Union Mut. Life Ins. Co., 14 Fed. Rep., 272; Robinson v. U. S. Mut. Acc. Assn., 68 Fed. Rep., 825; Provident Life Ins. & Inv. Co. v. Baum, 29 Ind., 236; Pac. Mut. Life Ins. Co. v. Williams, 79 Tex., 633; Elliott on Insurance, Sec. 63.
    Can the executors of Gainor’s estate raise the question of lack of insurable interest if the insurance company does not? The authorities are not uniform in their holdings on this question, but a careful investigation of the authorities inclines us to the view that no one but the insurer is entitled to interpose the defense of lack of insurable interest in the beneficiary named in the policy. Chicago Title & Trust Co. v. Haxtun, 129 Ill. App., 626; Standard Life & Acci. Ins. Co. v. Catlin, 106 Mich., 138, 63 N. W. Rep., 897; Johnson v. Van Epps, 110 Ill., 552; Hosmer v. Welch, 107 Mich., 470, 65 N. W. Rep., 280; Groff v. Mut. Life Ins. Co., 92 Ill. App., 207; Diffenbach v. N. Y. Life Ins. Co., 61 Md., 370.
    Is an insurable interest necessary in the assignee of a valid life policy? Our investigation impresses us with the view that it is no longer necessary. The early adjudicated cases held that it was, the later ones hold that it is not. The tendency in business life has been to liberalize the rules governing life insurance and thus to broaden its scope. Elliott on Insurance, Sec. 63.
    This doctrine has been distinctly recognized in Ohio and in plain language. Eckel v. Renner, 41 Ohio St, 232; St. John v. Am. Mut. Life Ins. Co., 13 N. Y., 31, 64 Am. Dec., 529; Dixon v. Nat. Life Ins. Co., 168 Mass., 48, 46 N. E. Rep., 430; Clark v. Allen, 11 R. I., 439, 23 Am. Rep., 496.
    That a policy of life insurance issued to a person insured is a proper subject of sale and transfer, and is enforceable in the hands of an assignee, though he had no insurable interest in the life of the payee is distinctly held in Steinback v. Diepenbrock, 37 N. Y. Supp., 279, and supported by the following cases: Valton v. Assurance Co., 20 N. Y., 32; Hogle v. Guardian Life Ins. Co., 29 N. Y. Sup. Ct., 567; Palmer v. Merrill, 6 Cush., 282; Tateum v. Ross, 150 Mass., 440; Brown v. Greenfeld Life Assn., 172 Mass., 498; King v. Cram, 185 Mass., 103; Rittler v. Smith, 70 Md., 261, 16 Atl. Rep., 890; Souder v. Home Friendly Soc., 72 Md., 511, 20. Atl. Rep., 137; Robinson v. Hurst, 78 Md., 67, 44 Am. St., 266; Clogg v. 
      McDaniel, 89 Md., 416, 43 Atl. Rep., 795; Bursinger v. Bank, 67 Wis., 75, 30 N. W. Rep., 290; Foster v. Gile, 50 Wis., 603, 7 N. W. Rep., 555, 8 N. W. Rep., 217; Amick v. Butler, 111 Ind., 578, 12 N. E. Rep., 518; Fitzgerald v. Flartford Life & Acc. Ins. Co., 56 Conn., 116, 7 Am. St., 288; Bowen v. Nat. Life Assn., 63 Conn., 460, 27 Atl. Rep., 1060; Farmers’ & Traders’ Bank v. Johnson, 118 la., 282, 91 N. W. Rep., 1074; Chamberlain v. Butler, 61 Neb., 730, 87 Am. St., 478.
   Davis, C. J.

The plaintiffs in error in both of these cases seem to have defended in the courts below, and to contend here, on the theory that a life insurance policy is merely a contract for indemnity, and therefore, upon the assumption that the policies were taken out to secure the company against loss of the services of Gainor by his death while connected with the company, if an insurable interest ever did exist in the company, it ceased when Gainor severed his connection with the company; and hence when Gainor died the proceeds of the one policy belonged to GainoCs estate and. of the other policy to Gainor’s wife, subject only to reimbursement to the glass company of ' the premiums paid thereon, with. interest. This contention seems to us to be untenable for several reasons.

In the first place, it is a misconception of the law to insist that a life insurance policy is a contract of indemnity merely. The later and better considered view is that a contract of life insurance is not a contract of indemnity, - but is a contract to pay to the beneficiary a certain sum of money in the event of death. 1 Joyce on Insurance, Sec. 26. So that, if the policy was valid in its inception and remained valid until its maturity, the beneficiary is entitled to the whole of the stipulated sum. Again, it does not appear that the purpose of the insurance was limited to indemnifying the company against loss by the death of Gainor while connected with the company. In the absence of any showing to the contrary, it may have been, and probably was in part, intended to secure the company against loss of his services at any time and in any way; and the courts below expressly find that Gainor represented that these policies belonged to, and were assets of, the company, and that he thereby obtained credit from banks and creditors and induced other persons to purchase stock in the company. From all this it may justly be inferred that such was the principal purpose to be effected by the insurance; and Gainor and his legal representatives would be estopped from claiming the contrary. And further, it thus distinctly appearing that the company had a direct pecuniary interest in the life and personal services of Gainor, the insurance for the benefit of the company was based on an insurable interest and was valid; and whether such insurable interest continued until the maturity of the policies or ceased before the maturity of the policy in the one case or ceased before the written assignment in the other case, is not material; for it has been held that the want of insurable interest is available only to the insurer, Chicago Title & Trust Co. v. Haxtun, 129 Ill. App., 626; Langford v. Freeman, 60 Ind., 55; and if that is too broad a statement of the law, there is abundant authority for holding that when the insurer has recognized the validity of the policy by paying the amount of the policy to the beneficiary, or into 'court, other parties claiming an interest in the fund cannot object on the ground that the beneficiary named in the policy had no insurable interest. Langford v. Freeman, 60 Ind., supra; Standard Life & Accident Ins. Co. v. Catlin, 106 Mich., 138; Mechanicks National Bank v., Comins, 72 N. H., 12; Hosmer v. Welch, 107 Mich., 470; Diffenbach & Roemer v. New York Life Ins. Co., 61 Md., 370; Groff v. Mutual Life Ins. Co., 92 Ill. App., 207; Johnson v. Van Epps, 110 Ill., 551; Grigsby v. Russell, 222 U. S., 149, per Holmes, J., p. 155. And see, also, Lewis v. Phoenix Mut. Life Ins. Co., 39 Conn., 100; Hurd v. Doty, 86 Wis., 1. In the cases at bar, the insurer has waived any defense and has paid the money into court.

It is earnestly contended with especial reference to case No. 12730, that the written assignment to the glass company of the policy for the benefit of Mrs. Gainor, having been made after Gainor left the service of the company, was made when no insurable interest could exist; and therefore that the company as an assignee without insurable interest could acquire no title. This contention not only ignores the fact that a policy of life insurance may. be assigned by parol and that this policy was assigned by parol, and, as found by the circuit court, without fraud or false representations on part of the assignee, Mrs. Gainor ratified the parol assignment by making the written one; but the fundamental proposition which is invoked to sustain the contention is not law in this state. In Eckel v. Renner, 41 Ohio St., 232, it was held that: “One who has obtainéd a valid insurance upon his own life may dispose of it as he may see fit in the absence of prohibitory legislation or contract stipulation. It is immaterial, in such case, that the assignee has no insurable interest.” That such is the prevailing rule, and that it is based upon sound reasons, is amply borne out by the citations in the briefs of counsel and in the opinion of the court, by Mr. Justice Holmes, in Grigsby v. Russell, 222 U. S., 149, in which case Russell v. Grigsby, 168 Fed. Rep., 577, cited on behalf of the plaintiff in error, was reversed.

We are referred to Revised Statutes, Section 3628 (now distributed in General Code, Sections 9393, 9394, 9395 and 9396) as “prohibitory legislation,” such as is referred to in Eckel v. Renner, supra. Wé do not so construe it. The right of a person to insure his own life for the benefit of persons other than his wife and children is not prohibited. The whole scope and purpose of the section is to define and protect the respective rights of the wife or widow, and children, and the creditors of the person upon whose life a policy has been issued.

For the reasons stated, it is apparent that the judgments below must be, and they accordingly are

Affirmed.

Spear, Shauck, Johnson and O’Hara, JJ., concur. Donahue, J., did not take part in the decision of these cases.  