
    Drake v. Stone et al.
    
    
      Bill in Equity to determine who were Beneficiaries under Policy of Life Insurance, and to subject amount due on Policy to Debts of Assured.
    
    
      1.Policy of life assurance; construed. — An ordinary life policy, payable on the death of the assured, in consideration of the annual premiums paid and to be paid by the assured while in life, for the benefit of the assured’s wife and his children by her, bound the insurance company to pay the sum insured, upon the death of the party assured during the existence of the policy, “to the above named parties, to whose benefit this insurance shall enure, whenever the same becomes due, their executors, administrators, &c.” When the policy was delivered, assured’s wife was living and had several children by her marriage with him. Between the delivery of the policy and the death of the assured, the wife and some of the children died. Held:
    
    1. The wife and all her children by the assured, who were in life when the policy was taken out, or their personal representatives, are entitled to share in the insurance.
    2. What would be the rights of a child of the assured, born after the delivery of the policy, is not decided.
    3. Under an ordinary life policy an interest vests in the person for whose benefit it is taken out, when the policy is delivered, subject to be divested or forfeited on non-payment of the premium, as the policy may prescribe; and on the death of the beneficiary, either before or after the death of the assured, the insurance money goes by bequest or succession, as other personal assets of the beneficiary.
    Appeal from Chancery Court of Mobile.
    Heard before Hon. Hueiosco Austell.
    The original bill in this cause was filed on the 28th day of October, 1873, by John H. Stone, Joseph R. Edwards, executor of William J. Matthews, and J. L. Pringle, who were creditors of William B. Drake, against The Knickerbocker Life Insurance Company, The Continental Life Insurance Company, Charles E. Waller, administrator of the estates of William B. and Catherine G. Drake, deceased, William H. Drake, Mary L. French, Alpheus C. French, Samuel 0. Sheppard, James E. Webb, administrator of the estate of Lucy T. Sheppard, deceased, William C. Garrett, administrator of the estate of Alpheus B. Drake,deceased, adults; Ida B. Casey, William Walton Drake and William Lanier, minors; and sought to subject the amount due on policies issued by the two insurance companies on the life of W. B. Drake to the claims of complainants as his creditors.
    The case made by the bill, so far as necessary to the decision in this case was this: In 1868 the Knickerbocker Life Insurance Company executed and delivered to William B. Drake, a policy of assurance on bis life. Catherine G. was the wife of William B., and was living when the policy of assurance was delivered, but died before her husband. At the date of the delivery of said policy, said Wm. B. and Catherine Gr. had the following children living: Alpheus B. Drake, who died before either his father or mother, Lucy T. Sheppard, who also died before either of her parents, Mary L. French and William H. Drake, who are still living. The policy of assurance recites that “ The Knickerbocker Life Insurance Company, in consideration of the premium of five hundred and seventy-eight dollars and forty cents to them in hand paid by William B. Drake, and of the annual premium of a like sum to be paid on or before the twenty-first day of November, at noon, in each year during the continuance of this policy, do assure the life of William B. Drake, of Hale county, in the State of Alabama, in the amount of ten thous- and dollars, for the term of his natural life, for the benefit of his wife, Catherine Gr. Drake, and her children by the assured. And the said company do hereby promise and agree well and truly to pay, or cause to be paid, at their office, the said sum insured to the above named parties, to whose benefit this insurance shall enure, whenever the same becomes due, their executors, administrators or assigns, within three months after due notice and satisfactory proof of the death of the party whose life is hereby insured, during the continuation and before the termination of this policy.”
    The insurance company having answered, admitting its liability under the policy, it was ordered to pay the money due thereon into court, and having done so was discharged. The claims of complainants, as creditors of the assured, were adjusted, and the chancellor thereupon decreed that under this policy, Catherine G. Drake, the wife of the assured, and her children by him, living at the time of the delivery of the policy, took an equal interest in the same; that such interest vested in them at the date of the delivery, and was such an interest as passed to their legal representatives, and decreed distribution accordingly. From this decree this appeal is prosecuted by the appellant, William H. Drake, who is a child of William B. and Catherine G. Drake, living at the time of the death of the assured.
    Thokas R. Roulhac, for appellant.
    The contract of insurance is a contingent one, contingent between the insurer and insured, and therefore of necessity contingent as to every one else, and can not possibly confer any vested rights. — See 50 Mo. 49; 12 Wis. 233; 23 Wis. .113. One thing is certain, 
      tbat whatever may be tbe nature of tbe contract, it is not intended as a bounty from tbe insured to tbe beneficiaries, and if tbis is to furnish any criterion to tbe construction of it, it would seem equally certain tbat tbe insured did not intend to give bounty to strangers or even to creditors of children. See 28 N. J. Eq. 167; 28 La. An. 137 ; lb. 938; 4 Yroom. 488; 100 Mass. 503 ; 23 N. Y. 521; 44 N. Y. 281; 12 East. 183 ; 59 N. Y. 587; 37 Maine, 350; 34 Conn. 305. All these decisions show conclusively tbat tbe beneficiaries acquire no vested interest, under the policy, before the death of the assured.
    JAMES E. Webb, and Chas. E. Wallee, contra.
    
    The contract of insurance was complete on the delivery of the policy, and creates in the beneficiaries vested interests, subject to be defeated by the non-payment of premiums in the future; and tbis vested interest passes to their legal representatives in case of their death before the death of the assured. The interest vested in them can not be defeated, except by tbe failure to do some thing which the contract of insurance itself expressly stipulates shall work a forfeiture of tbe policy.— See 3 Otto, 30; 19 Am. Eep. 530; 7 Metcalf, 363 ; 40 Conn. 343; 26 N. Y. 9; 5 Metcalf, 328; 2 Phil. Ch. 535; May on Ins. 477, § 392; Bliss on Life Ins. 528, 530, 534, 535.
   STONE, J.

The Knickerbocker Life Insurance Company of New York assured tbe life of Wm. B. Brake, in an ordinary life policy of ten thousand dollars, payable after his death. The annual premium, paid and to be paid by Wm. B. Brake, was five hundred and seventy-eight 40-100 dollars, to be paid annually on a given day during the life of said Wm. B. Brake, and tbe policy affirms, in its face, tbat it is “for the benefit of his [said W. B. Brake’s] wife, Catherine Gr. Brake, and her children by the assured.” Tbe policy recites that the premiums were to be paid by Wm. B. I)rake, and contains the following clause: “And tbe said company do hereby promise and agree well and truly to pay, or cause to be paid, at their office, the said sum insured to the above named parties, to whose benefit this insurance shall inure, whenever the same becomes due, their executors, administrators or assigns, within three months after due notice and satisfactory proof of the death of the said party whose life is hereby insured, during the continuance and before the termination of this policy.” There are no clauses or terms in the policy which give any other or different direction to the sum assured, or which vary the manner of the payment of the death loss. At the time the policy was issued and delivered, Mrs, Oath-arine G- Drake was living, and sbe bad tben in life several children, offspring of tbe assured. Between that time and the death of ffm. B. Drake, Mrs. Catharine G. Drake and some of the said children died. The question presented for our decision is, whether the money paid on this death loss is to be divided only between the children who survived Wm. B. and Catharine G. Drake, one or both, (it matters not which event, in this case; for no child died between the respective deaths of their parents;) or whether the widow and all the children who were in life when the policy was taken out, or their legal representatives, are to share in it. The chancellor, by his decree, affirmed the latter of these alternate propositions, and held that the personal representatives of Mrs. Drake, and of the children who died between the time of the delivery of the policy and the death of Mr. Drake, took equally with the surviving children. The question then is, whether the interests of the beneficiaries attached, and became what is called vested at the delivery of the policy, or, whether it was contingent, until the death of the assured during the continued vitality of the policy,

Life insurance, as an investment, or, as an economic enterprise, has increased vastly during the last score of years. It can not be classed with" any other established or known adventure, and hence much contrariety of opinion obtains as to its true designation. By some it is claimed that, like fire insurance, it is a contract for a year, with a superadded agreement for renewal from year to year, at the pleasure of the person by whom the policy is taken out. And, based on this theory, it is contended that the receipt of the ultimate death loss depends on a contingency which may never happen ; and, hence, the sum to be paid at the death has no such value, as that it may be the subject of a vested interest, but is like an estate dependent on a contingency that may never happen. We think it'partakes somewhat of the qualities of a saving investment, but there are some differences. In Piedmont & Arlington Life Insurance Co. v. Young, at the present term, we said: “ Its tendency is to equalize and adjust the burden of domestic sustentation, so as to provide for the families of the short lived, at the expense of those who live longer. The annual premiums paid by the assured, are graduated by the average length of human life ; so that the families of those who are cut down before they reach the average age, share in the surplus paid in by those who are spared beyond that period.”

In N. Y. Life Ins. Co. v. Statham, 3 Otto, 24-30, the Supreme Court of the United States decided “ that the contract [of life insurance] is not an assurance for a single year, with a privilege of renewal from year to year by paying tbe annual premium, but tbat it is an entire contract of assurance for life, subject to discontinuance and forfeiture for non-payment of any of tbe stipulated premiums. Sucb is tbe form of tbe contract, and sucb is its character. It bas been contended tbat tbe payment of eacb premium is tbe consideration for insurance during tbe nest following year, as in fire policies. But tbe position is untenable. It often happens tbat tbe assured pays tbe entire premium in advance, or, in five, ten, or twenty annual instalments. Sucb instalments are clearly not intended as tbe consideration for the respective years in which they are paid; for after they are all paid, tbe policy stands good for the balance of tbe life insured, without any further payment. Eacb instalment is, in fact, part consideration of tbe entire insurance for life. . . Tbe value of assurance for one year of a man’s life when be is young, strong and healthy, is manifestly not tbe same as when be is old and decrepit. . . Tbe annual premiums are an annuity, tbe present value of which is calculated to correspond with tbe present value of the amount assured, a reasonable per centage being added to tbe premiums to cover expenses and contingencies. Tbe whole premiums are balanced against tbe whole insurance.” Tbe whole court was unanimous, apparently, on tbe principles announced above, except Mr. Justice Strong dissenting.

It is said in May on Life Insurance, § 392, tbat where tbe policy was for tbe sole benefit of children, tbe father could not devise tbe proceeds to bis executors in trust for other purposes. The children in sucb case became vested immediately upon tbe delivery of tbe policy with tbe entire beneficial interest, and it is then beyond tbe control of tbe insured.” Sucb cases are said to “proceed upon tbe ground tbat when tbe policy is issued tbe rights are vested, and can not be devested without tbe consent of those to whom they are secured.” So, in Bliss on Life Insurance, § 316, it is said, “ if tbe policy, when issued, expressly designates a person as entitled to receive tbe insurance money, sucb designation is conclusive, unless some question arises as to tbe rights of tbe creditors of tbe person who paid tbe premiums, and procured tbe insurance. — See, also, §§ 333, 338, 339.

In Continental Life Insurance Co. v. Palmer, 42 Conn. 60, a wife bad insured the life of her husband, tbe amount payable to herself, if living, if not to their children. She died before her husband, and one of tbe children died before him, leaving a child. It was “ held, tbat a transmissible interest vested in tbe children upon tbe issuing of tbe policy, and tbat tbe child of tbe deceased child took by descent tbe interest of its parent, and was entitled to tbe portion of the fund which the parent would have received, if living.” — See, also, Chapin v. Fellows, 36 Conn. 132; Keller v. Gaylor, 40 Conn. 343; Conn. Mut. Life Ins. Co. v. Burroughs, 34 Conn. 305. The same doctrine is asserted in Hutson v. Menifield, 51 Ind. 24; Mut. Protection Ins. Co. v. Hamilton, 5 Sneed, (Tenn.) 269. See, also, N. Y. Life Ins. Co. v. Flack, 3 Md. 341; Swan v. Snow, 11 Allen, 224; Barry v. Equitable Life Assurance Soc. 59 N. Y. 589; Libby v. Libby, 37 Maine, 359.

A few courts hold the contrary of these views, but we decline to follow them. — See Gambs v. Con. Mut. Life Ins. Co. 50 Mo. 44; Clark v. Durand, 12 Wis. 223; Kernan v. Howard, 23 Wis. 108.

We hold that under an ordinary life policy, an interest vests in the person for whose benefit it is taken out when the policy is delivered, subject to be devested or forfeited upon nonpayment of the premium, as the policy may prescribe; and that on the death of the beneficiary, either before or after the death of the assured, the fund arising therefrom goes by bequest or by succession, as other personal assets of the beneficiary. We concur with the chancellor in his views, and hold that Mrs. Drake and her children by the assured, living at the time the policy was delivered, share equally as beneficiaries. Whether, if there had been children of the marriage born after the delivery of the policy, such children would have shared in the benefits, we need not inquire. The present record does not raise that question.

In the case of Continental Life Ins. Co. v. Webb, 54 Ala. 688, the language of the policy was entirely different from that found in the policy we are construing. And, in that case, much importance was attached to the fact, manifest in that policy, that the contracting parties referred, and intended to conform, to our statutes on the subject. The Knickerbocker Life Insurance policy contains no reference whatever to the statute, and makes no discrimination in the beneficial rights it secures, between the wife and children. We think that case does not conflict with this.

Decree of the chancellor affirmed.  