Opinion
14016
March 11, 1935.
Before RAMAGE, J., Greenville, February, 1932. Modified in part, and otherwise affirmed.
Action by Corrie Henderson, administratrix of the estate of Maxy Henderson, alias Thomas, deceased, against the Life Insurance Company of Virginia and another. From an order denying plaintiff's motion to strike all the defenses from named defendant's answer, plaintiff appeals.
Defendant insurance company's answer, the order appealed from, and the exceptions thereto were as follows:
ANSWER OF LIFE INSURANCE COMPANY OF VIRGINIAThe defendant, the Life Insurance Company of Virginia, by its attorneys, expressly reserving and not waiving its right to have its motion to change the place of trial of this action, heretofore filed, heard and determined by the Court, answering the complaint herein, alleges:
For a First Defense(1) That, on information and belief, it admits Paragraph 1.
(2) That this defendant has not knowledge or information sufficient to form a belief as to the truth or verity of Paragraph 2 of said complaint, and therefore denies the same.
(3) In answer to Paragraph 3 of the said complaint, this defendant admits that it is a corporation duly organized and existing under and by virtue of the laws of the State of Virginia, engaged in the business of writing life insurance and as such is now, and has been for a number of years, duly qualified to carry on its business in the State of South Carolina; that, on information and belief, it admits that James R. Thomas is a resident of the County of Anderson, State of South Carolina, as aforesaid.
(4) In answer to Paragraph 4, this defendant alleges that, in consideration of an application therefor made, dated October 20, 1928, which was made a part of the contract and a copy of which application was attached thereto, it issued its policy of insurance, numbered 161069, on the life of one James Maxie Thomas for the face amount of $3,000.00, in which policy of insurance James R. Thomas was named the beneficiary, if living at the death of the insured, otherwise to the insured's executor, administrators, or assigns; but this defendant denies that such policy of insurance is now, or ever has been, effective or of binding force on account of the facts and things hereinafter set forth.
(5) In answer to Paragraph 5, this defendant admits that the said James R. Thomas was named as the beneficiary in the said policy of insurance and is now claiming the right to receive the amount alleged to be due under said policy, and also that he, the said James R. Thomas, is not entitled to receive or collect said insurance policy, or any part thereof, by reason of the fact that he has been since the death of the said James Maxie Thomas convicted in the Court of General Sessions for Anderson County, S.C. for having unlawfully killed the said James Maxie Thomas. In answer to the remaining allegations contained in said paragraph, this defendant denies that neither the said James R. Thomas nor the plaintiff herein have any right, interest, or claim by reason of the policy of insurance, inasmuch as the same is now, and has been since its inception, utterly null and void and of no effect. And consequently denies any rights thereunder vested by law in the plaintiff for the benefit of the heirs and distributees of the said intestate, or for any one else.
(6) This defendant denies the allegations of Paragraph 6, except so much thereof as alleges that demand has been made by the plaintiff upon this defendant for the payment of sums alleged to be due under said policy, which demand was declined and refused by reason of the facts and things hereinafter set forth.
(7) In further answer to said complaint, this defendant would respectfully show to the Court that upon the face of the policy of insurance the said James R. Thomas is the person appearing to be entitled to the benefits thereunder, and, until his rights therein have been fully declared and adjudicated by a Court of competent jurisdiction, which has not to the date of these presents been done, the plaintiff herein is not entitled to assert or claim any interest in and to said policy of insurance; that a final disposition has not been made in the criminal proceedings hereinabove referred to, and the ultimate rights of the parties cannot be determined until final order has been made and filed in said criminal action.
(8) This defendant denies each and every other allegation in said complaint contained not hereinabove admitted or denied.
For a Second Defense and by Way of Plea in Bar(1) This defendant denies each and every allegation in said complaint contained not hereinabove or hereinafter expressly admitted or explained.
(2) This defendant alleges that in the due course of business it received through the mails at its home office in the City of Richmond, State of Virginia, a written application, dated October 20, 1928, signed by James R. Thomas for insurance on the life of James Maxie Thomas, in the sum of $3,000.00, on its whole life plan with premiums payable semi-annually, and payable in the event of death to the said James R. Thomas, whose relation to the said James Maxie Thomas was given as father; that, pursuant to said application, and in consideration of the statements therein contained, and the payment of the stipulated premiums, this defendant made up and wrote its policy of insurance on the life of the said James Maxie Thomas for the face amount of $3,000.00, dated October 30, 1928, and numbered 161069, on the whole life plan, with premiums payable annually and payable in the event of the death of the insured to James R. Thomas, his alleged father, if living at his decease, otherwise to the insured's executors, administrators, or assigns, and forwarded said policy of insurance for delivery upon receipt of the first semi-annual premium thereon, which premium was paid and the policy thereafter delivered.
(3) That thereafter this defendant was notified by James R. Thomas, the designated beneficiary in the above-described policy, that the said James Maxie Thomas, the insured, had died on July 30, 1929, and formal proofs of death were furnished this defendant; that at the same time the said James R. Thomas made demand for the funds alleged to be accruing under the policy of insurance; that thereafter the plaintiff herein on October 11, 1929, through her attorneys, furnished to this defendant certified copy of the order issuing out of the Court of Probate for Anderson County, S.C. appointing her the legal administratrix of the estate of James Maxie Thomas, deceased, and claim was made in her official capacity for the benefits alleged to be due and owing under the policy of insurance; that, by reason of the facts and things hereinafter set forth, this defendant refused to accede to the request of either of the two claimants on the ground that no liability whatsoever devolved upon this defendant to make any payment thereunder.
(4) That upon receipt of the several claims for payment of the amounts alleged to be due under the policy aforesaid this defendant caused an investigation to be made as to the manner and cause of the death of the said James Maxie Thomas, and such investigation developed, and this defendant so alleges, that the said James Maxie Thomas came to his death by the willful, malicious, and criminal act of the said James R. Thomas, the duly named beneficiary in the policy aforesaid, and for which murderous, unlawful, and malicious act and crime the said James R. Thomas was arraigned, tried, and convicted in the Court of General Sessions for the County of Anderson, State of South Carolina, and upon such conviction was sentenced by such Court to the state penitentiary for the remainder of his natural life.
(5) This defendant further alleges, on information and belief, that the said James R. Thomas procured and caused to be issued on the life of James Maxie Thomas, his alleged son, the policy of insurance above mentioned, together with a number of other policies of insurance by other insurers, aggregating an amount in excess of $29,000.00, in all of which policies he is the duly designated beneficiary, with the predetermined intent to slay and murder the said James Maxie Thomas for the purpose of realizing and obtaining the proceeds of the said life insurance policies, including the policy hereinabove referred to, in which he is named the beneficiary.
(6) This defendant alleges that, because of and on account of the commission of the crime by the said James R. Thomas, of which he has been duly convicted and sentenced by a Court of competent jurisdiction as aforesaid, neither the said James R. Thomas, as beneficiary under the policy of insurance above mentioned, nor any one in his behalf or otherwise, is qualified to claim or demand any benefit, right, title, or interest under said policy under the laws of the State of South Carolina.
(7) This defendant further alleges that, for as much as the procurement of the policy herein concerned was the first step in a predetermined and foreordained plan and design, formulated, promoted, and effectuated by the said James R. Thomas with the intent of cheating, defrauding, and swindling this defendant, against the contemplation and terms of the contract in question and in contravention of the state and national laws now obtaining and violative of the public policy as announced, declared and maintained by the United States and the State of South Carolina, the said policy of insurance never became, and is not now, effective, binding, or of legal force, and the plaintiff, Corrie Henderson, as administratrix of the estate of James Maxie Thomas, is not entitled to enforce or assert any rights or benefit thereunder, the said policy being utterly void at its inception.
(8) Moreover, this defendant also alleges, on information and belief, that to promote and effectuate his fraudulent scheme and design the said James R. Thomas paid, or caused to be paid, all premiums accruing and becoming due under the said policy, and alleges that the said James Maxie Thomas did not pay, or cause the said premium to be paid, and was but the unfortunate dupe and victim of his alleged father's depraved and malicious plot.
For a Third Defense(1) This defendant denies each and every allegation of the complaint not hereinabove expressly admitted, denied, or explained.
(2) That the said policy of insurance hereinabove referred to was issued and delivered in consideration of the application made therefor by the said James R. Thomas, which application was attached to and made a part of the said policy; that in said application the said James R. Thomas, as a part of the fraudulent, predetermined scheme and plan aforesaid, represented and declared:
(a) That the said James R. Thomas was the father of the said James Maxie Thomas, whereas this defendant alleges that, on information and belief, the said James R. Thomas is not the father of James Maxie Thomas, and there is no blood relation between them.
(b) That the mother of the said James Maxie Thomas died at the age of 52, whereas this defendant alleges, on information and belief, that the mother of the said James Maxie Thomas is the plaintiff herein and is now living.
(c) That the said James Maxie Thomas had three living sisters, whereas this defendant alleges, on information and belief, that the said James Maxie Thomas has and had no brothers and sisters.
(3) That the said James R. Thomas further declared and represented to this company in said application that the amount of insurance then in force on the life of the said James Maxie Thomas aggregated $2,000.00, being policies for $1,000.00 each, issued in this defendant, whereas this defendant alleges that at the time said application was made, the following policies of insurance were of full force and effect on the life of the said James Maxie Thomas:
Policy No. 5392797-A, dated June 25, 1928, issued by Metropolitan Life Insurance Company in the sum of $2,000.00.
Two policies Nos. 1358975 and 1358976, dated July 30, 1928, issued by the Mutual Benefit Life Insurance Company, in the face amount of $2,000.00 each.
Policy No. 15241, dated August 10, 1928, issued by Pioneer Life Insurance Company, in the face amount of $2,000.00.
Policy No. 507299, dated September 15, 1928, issued by Liberty Life Insurance Company, in the face amount of $3,000.00.
Policy No. S-7164725, dated October 15, 1928, issued by Life Casualty Insurance Company of Tennessee, in the face amount of $700.00.
(4) That the said James R. Thomas, in and by said application and in continuance thereof, stated and declared over his signature as follows: "I hereby declare for myself, the Applicant, and all parties interested, or who may become interested, in any Policy which may be issued under this Application, that I am of temperate habits and that all the statements and answers to the above questions, as well as those made or to be made to the Company's Medical Examiner, are full, complete and true, whether written by my hand or not." That this defendant, believing in the truth and verity of the statements and declarations in said application contained, issued and delivered the policy herein described.
(5) That, on information and belief, the said statements, declarations, and representations in said application were false, fraudulent, and untrue, and known by the said James R. Thomas to be false, fraudulent, and untrue; that the said James R. Thomas misrepresented to this defendant his relationship to the insured, the identity of the insured's mother, the amount of insurance then in force on the life of the insured, and failed utterly and entirely to give to this defendant the information to which it was entitled under the written stipulations of the application and medical examination aforesaid, but nevertheless this defendant, without knowledge or notice of the facts and things herein referred to, believed, relied, and acted on the truth as contained in the application and medical examination, and wrote up and issued the policy of insurance. This defendant further alleges that all of said facts were material to the risk, and it would not have issued and delivered the said policy had it known the truth in respect to the matters and things herein referred to which should have been disclosed to it.
(6) It is further alleged that the said policy did not take effect upon its issuance and is not effective at this time, and should be set aside by this Court and declared rescinded by order thereof on account of the matters and things hereinabove set forth and alleged.
For a Fourth Defense(1) This defendant denies each and every allegation of the complaint contained not hereinabove expressly admitted, denied, or explained.
(2) This defendant alleges that, if said application was in fact signed by the insured, James Maxie Thomas, who was a minor 15 years of age, the same was done at the instance and request of the said James R. Thomas.
(3) That, on information and belief, the said James R. Thomas had no insurable interest in the life of the said James Maxie Thomas and the said contract of insurance accordingly was wagering, speculative, violative of public policy, and therefore unenforceable and void.
(4) This defendant has been and is now desirous of making tender and return of all premiums collected on said policy of insurance, but does not know to whom such moneys should be paid, and does therefore hereby tender and bring into Court the sum of $27.99, representing all premiums paid on said policy, together with interest thereon at the rate of 7 per centum per annum from the date of payment. same to be paid to the person declared entitled thereto by this Court.
Wherefore, this defendant prays that the complaint be dismissed, that it be permitted to pay the above sum into Court, and be discharged from all further liability, and that the said policy be surrendered up and rescinded and declared null and void by order of this Court, and for the costs of this action.
ORDER REFUSING PLAINTIFF'S MOTION TO STRIKE AND FOR JUDGMENT ON THE PLEADINGS AND OVERRULING DEFENDANT'S MOTION FOR CONSOLIDATION OF CLAUSESThis matter comes before me, pursuant to notice duly given, upon motion of the attorneys for the plaintiff for an order striking out certain portions of the answers filed on behalf of the defendant insurance company, and upon such order being granted for an additional order requiring the said defendant to pay the amounts alleged to be due under said policies into Court, to be held by it for disbursement under the further orders thereof.
It appears that the plaintiff instituted the four actions above captioned in the Courts of Richland County, S.C. against the defendants for the recovery of sums alleged to be due under five policies of insurance issued by the defendant the Life Insurance Company of Virginia on the life of one James Maxie Thomas, then deceased. The plaintiff herein, as the mother of the insured, James Maxie Thomas, and the duly appointed administratrix of his estate, claims the insurance on the ground that the beneficiary designated in said policies, the defendant James R. Thomas, had been duly convicted of the crime of murdering the insured, James Maxie Thomas, and as a consequence thereof, both under the State statute (33 St. at Large, p. 1188), and the common law, has forfeited his rights to such insurance, and the same has become a part of the assets of the estate of the insured.
The defendant insurance company, by its several answers, admitted the execution and delivery of the five policies of insurance on the life of the said James Maxie Thomas, but denied any liability thereunder either to the plaintiff or to the said James R. Thomas, its co-defendant and the person designated as the beneficiary therein, on the ground that such alleged contracts were void at their inception, and never became of legal force and effect. The basis of the plaintiff's motion is that the presence of the incontestable clauses in the alleged contracts preclude the defendant from contesting the validity thereof on any ground, and accordingly testimony tending to establish defendant's defenses would not be admissible. For the purpose of this motion, the allegations of the answers must be considered as true. For this reason the facts in the case need not be detailed, but one set of the pleadings will be adopted as a part of this order.
The pivotal question for decision herein is whether the insurer is estopped by the incontestable clause from defending the suits on any grounds. It is admitted that the premiums were paid on the policies for a period beyond the date of the insured's death.
The defendant, by its answers, asserts that the policies in question were procured on the life of James Maxie Thomas by James R. Thomas, his foster father, with the predetermined intent and design to murder the said James Maxie Thomas and obtain the insurance, and thus cheat and defraud the insurer; and that in consummation of such wicked plan the said James R. Thomas did actually murder and slay the said James Maxie Thomas, for which crime he was thereafter duly convicted in the Court of General Sessions for Anderson County, S.C. and was sentenced to life imprisonment. It also asserts that, while the said James R. Thomas represented himself to be the father of the said James Maxie Thomas, he was not in fact. and there was no blood relationship between them; it being further alleged that the said James R. Thomas did not have an insurable interest in the life of the said James Maxie Thomas. The defendant contends that by reason of these facts the said contracts of insurance were void ab initio as violative of public policy, and that no rights could accrue in favor of any person thereunder. The insurance company, in its answers, enumerated numerous misrepresentations of material facts which would render the policies voidable at the election of the insurer.
The plaintiff takes the position that, even if the policies in question were procured by the said James R. Thomas with the predetermined intent of killing the insured and thus receive the proceeds of the contracts, and even if the said James R. Thomas did not have an insurable interest in the life of the said Maxie Thomas, that the policies have been violated by the passing of the contestable period, and that no contest can now be made thereunder by the insurer.
The Court is not inclined to concur in this reasoning. While it is generally stated by the Courts and text-writers that an insurer is precluded from contesting a policy after the period of contestability has expired, on any ground not excepted therein, it must also be remembered that there is another equally well-established principle of law — that a Court will not lend its aid to enforce a contract void as against public policy. Whenever these two principles become opposed, the interest of society requires that the latter doctrine shall prevail.
Conceding the facts stated in the answers to be true, as we must, the Court must inevitably hold that the contracts were void at their inception. This being true, no subsequent event could vitalize the contracts, not even the solemn agreement of the parties themselves. The issues here raised are of novel impression in this State, but they appear to have had the consideration of other Courts of respectable authority. The weight and reasoning of these decisions are ample authority to support the conclusion reached herein.
In the case of Mutual Life Insurance Company v. Armstrong, 117 U.S. 591, 6 S.Ct., 877, 881, 29 L.Ed., 997, the United States Supreme Court, in an analogous case, held that evidence tending to show that the insurance was obtained for the purpose of defeating the company was admissible. In so holding the Court said: "The evidence offered that Hunter obtained insurances in other companies on the life of Armstrong at or near the same time, was, under these authorities, clearly admissible. It tended to establish the theory of the defendant that the insurance in this case was obtained by Hunter upon the premeditated purpose to cheat and defraud the company. Especially would it have had that effect if followed by proof of the manner of the death of Armstrong."
In a note reported in 70 A.L.R., 1544, it is said: "But if the beneficiary procures insurance with the intention on his part to murder the insured, neither the beneficiary nor the estate of the insured can recover on the policy, Goldstein v. New York Life Ins. Co., 133 Misc., 106, 231 N.Y.S., 161, Id., 225 App. Div., 642, 234 N.Y.S., 250; Hewitt v. Equitable Life Assur. Soc. (C.C.A.), 8 F.2d 706; Mutual Life Ins. Co. v. Armstrong, 117 U.S. 591, 29 L.Ed., 997, 6 S.Ct., 877."
In the case of Hewitt v. Equitable Life Assur. Soc., 8 F.2d 706, 707, cited above and decided by the Circuit Court of Appeals for the Ninth Circuit, the Court said: "But an insurance company is absolved from liability in a case where the beneficiary himself procures and obtains the insurance with the intent to murder the insured, and thus cheat and defraud the insurer."
The insurance company, by its answers, alleges that the procurement of the policies herein concerned was the first step in a predetermined and foreordained plan and design, formulated, promoted, and effectuated by the said James R. Thomas, with the intent of cheating and defrauding it, against the contemplation of the terms of the contracts in question and in contravention of the state and national laws now obtaining, and in violation of the public policy as announced and maintained by the United States and the State of South Carolina. Suffice it to say, a contract entered into under these circumstances is undoubtedly void as against public policy. This Court can conceive of no iniquitous and heinous undertaking which would be more against the social order of any civilized country. The public policy of this State and of the United States condemns such malicious and wicked designs, and its Courts will not be made a party thereto by undertaking to enforce contracts having their basis therein. The parties cannot by a stipulation between themselves circumvent this rule of law and society; and the principle of estoppel is without application.
Neither will the contestable clause estop the insurance company from establishing a lack of insurable interest. It has been uniformly held that a wagering contract of insurance is contrary to public policy and void. In the case of Bromley's Administrator v. Washington Life Insurance Company, 122 Ky., 402, 92 S.W. 17, 5 L.R.A. (N.S.), 747, 121 Am. St. Rep., 467, 12 Ann. Cas., 685, the Court said: "The law does not allow one who has no insurable interest in the life of another, to insure it for his benefit, for the reason that it is a mere wager and holds out a temptation to fraud, the insurer having no interest in the life of the assured and having a direct interest in his death. Basye v. Adams, 81 Ky., 368; Warnock v. Davis, 104 U.S. [775], 779, 26 L.Ed., 924; Keystone [ Mut. Ben.] Association v. Norris, 115 Pa., 446, 8 A., 638, 2 Am. St. Rep., 572; Steinback v. Diepenbrock, 158 N.Y., 24, 52 N.E., 662; 44 L.R.A., 417; 70 Am. St. Rep., 424. In the latter case the Court said: `The insured, instead of taking out a policy payable to a person having no insurable interest in his life, can take it out to himself, and at once assign it to such person. But such an attempt would not prove successful, for a policy issued and assigned under such circumstances, would be none the less a wagering policy, because of the form of it. The intention of the parties procuring the policy would determine its character, which the Court would unhesitatingly declare in accordance with the facts, reading the policy and the assignment together, as forming part of one transaction.'"
In this case the beneficiary sought to show that an incontestable clause in the policy precluded the defense of lack of insurable interest, but in holding that such was not the case the Court said: "It is also insisted for the plaintiff that as the policies contain a clause to the effect that they are incontestable after one year, the company cannot rely upon this defense. But the incontestable clause is no less a part of the contract than any other provision of it. If the contract is against public policy the Court will not lend its aid to its enforcement. The defense need not be pleaded. If at any time it appears in the process of the action that the contract sued upon is one which the law forbids, the Court will refuse relief. The parties to an illegal contract cannot by stipulating that it shall be incontestable, tie the hands of the Court and compel it to enforce contracts which are illegal and void. If this were allowed, the law might be evaded in all cases and the aid of the Court might be secured in aid of its infraction. In Hall v. Coppell, 7 Wall. [542, 558], 559, 19 L.Ed., 244, the United States Supreme Court said: `The defense is allowed, not for the sake of the defendant, but of the law itself. The principle is indispensable to the purity of its administration. It will not enforce what it has forbidden and renounced. The maxim, " Ex dolo malo non oritur actio," is limited by no such qualification. The proposition to the contrary strikes us as hardly worthy of serious refutation. Whenever the illegality appears, whether the evidence comes from one side or the other, the disclosure is fatal to the case. No consent of the defendant can neutralize its effect. A stipulation in the most solemn form to waive the objection, would be tainted with the vice of the original contract, and void for the same reasons. Wherever the contamination reaches, it destroys. The principle to be extracted from all the cases is, that the law will not lend its support to a claim founded upon its violation.'"
To the same effect is the case of Home Life Insurance Company v. Masterson, 180 Ark. 170, 21 S.W.2d 414, 417, decided by the Supreme Court of Arkansas. In that case the Court said: "It is next insisted that the policy became incontestable after one year from the date of its issuance. Reliance is placed by counsel upon the case of Missouri State Life Ins. Co. v. Cranford, 161 Ark. 602, 257 S.W. 66, 31 A.L.R., 93, where it was held that a life insurance policy containing a provision that it shall be incontestable after a stipulated time cannot be contested by the insurer on any ground not excepted in that provision. We do not think that case, however, is applicable under the present facts. There the Court was talking about provisions inserted in the policy for the benefit of the insurer, such as false representations and other matters of that sort, which the company might waive. The Court said that the parties to a contract may provide for a shorter statute of limitations thereon than that fixed by law, and that such an agreement is in accord with the policy of statutes of that character. Wager insurance policies, however, are void on the ground of public policy. The rule of law which avoids such contracts is not in the interest of the insurer, but has its foundation in sound public policy. The insurer cannot by an agreement change the policy of the law. Since it is the law which, upon grounds of public policy, pronounces the policy to be void, the principle of estoppel has no application. Anctil v. Manufacturer's Life Ins. Co., A.C., 604, affirming Can. S.C. 103."
In the case of Collins v. Metropolitan Life Insurance Company, 232 Ill., 37, 83 N.E., 542, 14 L.R.A. (N.S.), 356, 122 Am. St. Rep., 54, 13 Ann. Cas., 129, decided by the Supreme Court of Illinois, it was held that an incontestable clause is of no importance in determining whether a contract is contra bonos mores. This principle was expounded by the Supreme Court of Louisiana in the case of Bernier v. Pacific Mutual Life Insurance Company, 173 La., 1078, 139 So., 629, 632, 88 A.L.R., 765, in the following language: "Of course, a contract that is invalid because of its being violative of public policy or good morals cannot be made valid by the agreement of the parties that it shall be incontestable after a stated time."
The decisions of our Supreme Court have uniformly held that wagering policies are void and unenforceable on the ground of public policy. See Rogers v. Atlantic Life Insurance Company, 135 S.C. 89, 133 S.E., 215, 217, 45 A.L.R., 1172; Crosswell v. Conn., etc., Ass'n, 51 S.C. 103, 28 S.E., 200, and Westbury v. Simmons, 57 S.C. 467, 35 S.E., 764.
In the Rogers case, supra, the Court cites with approval from 14 R.C.L., p. 919, the following: "The essential thing is that the policy shall be obtained in good faith, and not for the purpose of speculating on the hazard of a life in which the insurer has no interest."
Couch, in his recent work on Insurance, at Section 298, states that it is generally held that an incontestable clause does not exclude the defense of lack of insurable interest. This is said to be in keeping with the rule that the Court will not lend its aid to the enforcement of a contract which is against public policy. The author states further that, if at any time it appears in the course of the action that the contract sued upon is one which the law prohibits, relief will be refused, and that an incontestable clause in an insurance policy does not preclude the insurer from availing itself of the invalidity of a policy, void as a wagering contract at its inception because of a lack of insurable interest.
The doctrine to be deduced from the aforementioned cases is that the incontestable clause does not constitute a bar to the defense that the insurance was procured with the express purpose of murdering the insured and thus derive the benefits thereunder, or the defense that a contract was wagering. Both of these circumstances make the contract void as against public policy, and no rights in favor of any one can accrue thereunder. As one Court pointedly said, the incontestable clause is no more a part of the contract than any of its other provisions, and, when the contract falls, it brings with it all of its constituent parts. The incontestable clause, as well as the statute, has application only to those matters of defense which the company itself may have waived. The rule of law which voids such contracts is not in the interest of the insurer, but has its foundation in public policy and good morals. The plaintiff asserts that the public policy as declared and maintained in this State does not relieve the insurer of liability where the insurer is murdered by the beneficiary, and in support thereof cites the cases of Weeks v. New York Life Insurance Company, 128 S.C. 223, 122 S.E., 586, 35 A.L.R., 1482, and its companion case, Sandel v. Philadelphia Life Insurance Company, 128 S.C. 239, 122 S.E., 591. She also asserts that previous decisions of this Court have held that an insurer can estop itself by an incontestable clause from defending a policy on the ground that it was procured by fraudulent representations, and cites the cases of Philadelphia Life Insurance Company v. Arnold, 97 S.C. 418, 81 S.E., 964, Ann. Cas., 1916-C, 706, and McKendree v. Southern States Life Ins. Co., 112 S.C. 335, 99 S.E., 806.
However, all of these cases are easily distinguishable from the cases at bar, and the principles therein announced have no application here. In these cases there was no attempt to show that the contracts at their inception were illegal and prohibited by law; and there was no attack made on the good faith of the parties at the time the insurance was applied for. Neither was there an attempt to show that the policies had been procured with the predetermined intent to murder another and suffer the consequences imposed by society or take one's own life and thus unduly accelerate the maturity of the contracts. Had such motives been clearly established, our Supreme Court would undoubtedly have declared the policies void on the high ground of public policy. I may say it seems as if the case of McKendree v. Southern States Life Ins. Co., 112 S.C. 335, at page 337, 99 S.E., 806, is rather against the position I am taking in this case, but each case stands on its own bottoms, and, to quote the opinion of the eminent jurist who wrote the opinion in the case just mentioned, "The facts made the law."
It seems apparent on its face that a bald statement of the matter ought to be sufficient: Can a man, with malice aforethought, insure the life of an unfortunate boy, and then murder him and coolly collect the insurance? Stripped of all verbiage, and with all surplusage removed, that is about what the matter in issue comes to. But it is said that the insurance company and the statute law of the State fixes the matter. Judge Gage said in the McKendree case that there is a presumption that a man will not take his own life. I may add as a further presumption that no man will commit murder. Also that when an insurance company makes a contract they ought not to be charged with taking the risk that the man who takes out the policy will murder the insured. In fact, the very opposite presumption is raised — that insured will not be murdered by the one taking out the policy.
Justice Harlan in Ritter v. Mutual Life Insurance Company, 169 U.S. 139, 18 S.Ct., 300, 304, 42 L.Ed., 693, 697, says: "But is it not an implied condition of such a policy that the assured will not purposely, when in sound mind, take his own life, but will leave the event of his death to depend upon some cause other than willful, deliberate self-destruction? Looking at the nature and object of life insurance, can it be supposed to be within the contemplation of either party to the contract that the company shall be liable upon its promise to pay, where the assured, in sound mind, by destroying his own life intentionally precipitates the event upon the happening of which such liability was to arise?" I quote from Reagan v. Union Mutual Life Insurance Company, 189 Mass. 555, 76 N.E., 217, 218, 2 L.R.A. (N.S.), 821, 109 Am. St. Rep., 659, at page 661, 4 Ann. Cas., 362:
"Will the Court enforce an agreement never to set up fraud in defense to a contract, when the contract is made in reliance upon material representations that may be true or false? This question has been considered in its application to contracts of insurance. In Wheelton v. Hardisty, 8 El. Bl., 232-283, Lord Campbell interpreted a provision that a contract should be indefensible, as meaning indisputable. `Subject to an implied exception of personal fraud, which will vitiate every contract.' In Mass. Ben. Life Ass'n v. Robinson, 104 Ga. 256, 30 S.E., 918, 42 L.R.A., 261, the Court said: `A policy providing generally that it shall be indisputable from its date, while silent on the subject of defending upon grounds originating in fraud, would still be a valid contract. The waiver of the right to defend on the ground of fraud not being the subject of express stipulation, the law would imply that the insurer intended to reserve to himself the right to defend upon that ground. If, however, the policy stipulated that it should be incontestable from its date and the insurer should not be allowed any defense, whether originating in fraud or otherwise, or if it were clear from the terms of the contract that it was the intention of the parties that fraud should not be a defense, then such a contract would be void as being opposed to the policy of the law.'
"In Welch v. Union Central Life Ins. Co., 108 Iowa, 224-230, 78 N.W., 853, 50 L.R.A., 774, substantially the same doctrine is clearly stated. To the same effect is Bliss on Ins. (1st Ed.) § 247; Id. (2d Ed.) §§ 254-255. * * *
"In Ritter v. Mutual Ins. Co., 169 U.S. 139, 18 S.Ct., 300, 42 L.Ed., 693, it was held that a contract to insure one against suicide would be against public policy. Mr. Justice Harlan, in the opinion said: `A contract, the tendency of which is to endanger the public interests or injuriously affect the public good, or which is subversive of sound morality, ought never to receive the sanction of a Court of justice, or be made the foundation of its judgment.' * * * In Hatch v. Mutual Life Ins. Co., 120 Mass. 550, 21 Am. Rep., 541, this Court held that there could be no recovery under a policy of life insurance when the insured knowingly and voluntarily exposed her life by submitting to a criminal operation which proved fatal. For similar decisions, see Amicable Society v. Bolland, 4 Bligh (N.S.), 194, and Burt v. Union Central Life Ins. Co., 187 U.S. 362, 23 S.Ct., 139, 47 L.Ed., 216."
I also cite the case of AEtna Life Ins. Co. v. Conway, 11 Ga. App., 557, 75 S.E., 915. In N.W. Mutual Life Ins. Co. v. Montgomery, 116 Ga. 799, 43 S.E., 79, it was held that in a three-year limitation the defendant could set up actual fraud after a lapse of three years.
In Williston on Contracts, Vol. 3, p. 3055, we find: "Even though a contract does not directly require any unlawful or improper act for its performance, if the tendency of the act is to encourage or hold out a reward for a result that can be brought about only by an unlawful act, the contract is opposed to public policy. Illustrations of this have already been given with reference to secure legislation but the principle is a general one."
In Sage v. Hampe, 235 U.S. 99, 35 S.Ct., 94, 59 L.Ed., 147, the Court held invalid a contract which tended either to induce an Indian landowner to deprive himself of rights which the law sought to protect or to induce improper influence of government officials. The fact that statutes permitted a conveyance with the approval of the Secretary of the Interior, was held not to validate the contract, since its tendency was to induce the contractor to bring to bear improper influence or attempts to influence on the Secretary of the Interior or to mislead him as to the welfare of the Indian.
See Shipman v. Protected Home Circle, 174 N.Y., 398, 67 N.E., 83, 63 L.R.A., 347; Plunkett v. Supreme Conclave, 105 Va., 643, 55 S.E., 9.
"Because of its tendency to promote illegal acts, a contract to save the * * * harmless from the consequences of an act which is necessarily unlawful is itself invalid." Williston on Contracts, Vol. 3, p. 3056. A contract, though in itself neither unlawful in what it promises nor in the consideration for the promise, may be obnoxious or part of a general scheme to bring about an unlawful result. There is no doubt on the first assumption the contract is unlawful. Id. It is ordered:
(1) That the plaintiff's motion to strike certain portions of the defendant's answers be, and the same hereby is, refused, and that the said cause proceed to a trial on their merits.
(2) It is further ordered that the motion of the defendant insurance company to consolidate the cause be, and the same hereby is, refused.
C.J. RAMAGE,
Judge Presiding, Thirteenth Judicial Circuit.
February 8, 1934.
Within due time notice of intention to appeal was filed by the plaintiff, and the appeal perfected upon the following
EXCEPTIONSThe appellant, Corrie Henderson, administratrix, excepts to the order of the Hon. C.J. Ramage of February 8, 1934, upon the grounds:
(1) Our Legislature having provided (33 St. at Large, p. 1188, 1932 Code, § 8874) for the transfer of the proceeds of insurance where the beneficiary is convicted of murdering the insured, it was error for the trial Court to refuse to strike out the first defense of the Life Insurance Company of Virginia; the error being that he should have held that the facts stated in the first answer did not constitute a defense.
(2) The testimony before the Court showing in the case of policies Nos. 161069, 156864, 4670338 and 156625 that the policies were more than a year old on the date of the death of the insured, and that policy No. 5313392 was more than a year old on the date of the filing of the answer by the Life Insurance Company of Virginia, the Court erred in refusing to strike out the first defense of the Life Insurance Company; the error being that, the period of contestability having expired, the Court should have held that this defense was not available to the insurance company.
(3) The testimony before the Court, showing that in the case of policies Nos. 161069, 156864, 4670338 and 156625 that the policies were more than a year old on the date of the death of the insured, and that policy No. 5313392 was more than a year old on the date of the filing of the answer by the Life Insurance Company of Virginia, the Court erred in refusing to strike out the second defense of the Life Insurance Company of Virginia; the error being that, the period of contestability having expired, the Court should have held that this defense was not available to the insurance company.
(4) The testimony before the Court showing that in the case of policies Nos. 161069, 156864, 4670338 and 156625 that the policies were more than a year old on the date of the death of the insured, and that policy No. 5313392 was more than a year old on the date of the filing of the answer by the Life Insurance Company of Virginia, the Court erred in refusing to strike out the third defense of the Life Insurance Company of Virginia; the error being that, the period of contestability having expired, the Court should have held that this defense was not available to the insurance company.
(5) The testimony showing that the premiums had been received by the insurance company for a period of two years on policies No. 161069, 156864, 4670338 and 156625, it was error for the Court to refuse to strike out this defense under the provisions of the Code of 1932, § 7986.
(6) The testimony before the Court showing in the case of policies Nos. 161069, 156864, 4670338 and 156625 that the policies were more than a year old on the date of the death of the insured, and that policy No. 5313392 was more than a year old on the date of the filing of the answer by the Life Insurance Company of Virginia, the Court erred in refusing to strike out the fourth defense of the Life Insurance Company of Virginia; the error being that, the period of contestability having expired, the Court should have held this defense was not available to the insurance company.
(7) That his Honor erred in failing to strike out all of the defenses of the Life Insurance Company of Virginia and in refusing to grant judgment against the insurance company on the motions; the error being that, the period of contestability having expired, these answers did not constitute defenses on the part of the Life Insurance Company of Virginia, and judgment should have been given against it, requiring them to pay the money into Court to await the outcome of the contest between Corrie Henderson, administratrix, and the executor of the estate of James R. Thomas.
Messrs. W.E. Bowen, Jos. R. Bryson and Robinson Robinson, for appellant, Corrie Henderson, administratrix, cite: Rights where beneficiary murders insured: Section 8874, Code 1932; 155 S.C. 323; 152 S.E., 506; 70 A.L.R. 1529; 159 S.C. 520; 157 S.E., 834; 37 C. J., 576: 14 R.C.L., 1228; 28 A.L.R., 823; 2 P.2d 456; 176 N.E., 490; 38 Ohio, 454. Incontestable clause: 27 C.J., 543; 293 Fed., 496; 68 L.Ed., 524; 37 Fed. 2d 92; 11 F.2d 70; 41 F.2d 12; 144 N.E., 825; 36 A.L.R., 1239; 237 P., 938; 41 A.L.R., 1100; 31 A.L.R., 78; 97 S.C. 418; 112 S.C. 335; 104 S.C. 45; 254 U.S. 95; 65 L.Ed., 155; 255 U.S. 559. Waiver: 135 S.C. 89; 150 S.C. 326; 51 S.C. 103; 28 S.E., 200; 104 S.C. 45; 88 S.E., 285; 97 S.C. 218; 84 S.C. 253; 128 S.C. 223.
Messrs. Blythe Bonham and H.C. Miller, for W.D. Thomas, executor of James R. Thomas.
Messrs. Thomas, Lumpkin Cain and Morgan Cothran, for respondent, Life Insurance Company of Virginia, cite: Contracts against public policy: 215 S.W. 90; 124 N.E., 168; 12 A.L.R., 1270; 104 A., 717; 182 S.W., 220; 6 L.R.A. (N.S.), 524; 61 S.E., 648; 16 L.R.A. (N.S.), 102. Lack of insurable interest: 135 S.C. 89; 133 S.E., 215; 37 C.J., 385; 14 R.C.L., 919; 51 S.C. 114; 28 S.E., 200; 57 S.C. 467; 35 S.E., 764.
March 11, 1935. The opinion of the Court was delivered by
By reference to the order of the Circuit Judge, from which this appeal emanates, it will be noted that plaintiff-appellant sought to strike from the answer of the defendant insurance company all of its defenses, and that such motion was refused in toto. Let the order below, the exceptions thereto, and the answer of the insurer be reported.
The exceptions, properly applied to the facts pleaded, raise these questions:
(1) In an action upon a life insurance policy, is a provision that the policy shall be incontestable after one year from its date, except for non-payment of premiums, affected by the death of the insured within the year?
(2) In such action, is the defense of fraud and misrepresentation in the application available to the insurer after the expiration of the period of contestability?
(3) Is such defense available to the insurer after it has received the premium on such policy for the space of two years?
(4) Is a policy of life insurance which is procured by the beneficiary thereof, on the life of one in which he has no insurable interest, a valid contract?
(5) Is an insurer, after the expiration of the period of contestability fixed by an incontestable clause, precluded from contesting a policy upon the ground that the beneficiary, who procured the issuance thereof, had no insurable interest in the life of the insured?
(6) In an action upon a policy of life insurance, is it a valid defense thereto, if pleaded and proved, that the beneficiary procured the issuance of such policy with the predetermined intent to murder the insured, and did thereafter murder the insured?
(7) Is an insurer, after the expiration of the period of contestability as fixed by an incontestable clause, precluded from contesting a policy upon the grounds that it was procured by the beneficiary with the intent to murder the insured, and that such intent was consummated?
(8) If it be established that the beneficiary procured the issuance of such policy with the predetermined intent to murder the insured, and thereafter did so, is the policy wholly void and unenforceable, or will the proceeds thereof be adjudged to be payable to the estate of the insured?
1. The overwhelming weight of authority is to the effect that the death of the insured does not affect the running of the period fixed by a clause in a life insurance policy making it incontestable after a specified time. Humpston v. State Mutual Life Assurance Company, 148 Tenn., 439, 256 S.W. 438, 31 A.L.R., 78; Missouri State Life Ins. Co. v. Cranford, 161 Ark. 602, 257 S.W., 66, 31 A.L.R., 93; Mutual Life Ins. Co. v. Hurni Packing Company, 263 U.S. 167, 44 S.Ct., 90, 68 L.Ed., 235, 31 A.L.R., 102, and annotation thereof at page 109.
1-a. And, when the insured dies within the period named in such clause, the running of the period therein fixed is terminated only by a legal contest within the time prescribed by the incontestable clause. If the insured's beneficiary, or his personal representative, does not institute an action before the expiration of the period of incontestability, then the insurer, in order to avail himself thereof, must, before its expiration, contest the policy by some proceeding in Court. Priest v. Kansas City Life Ins. Co., 119 Kan., 23, 237 P., 938, 41 A.L.R., 1100; Vance on Insurance 2d 818, 819, 826. This view does not, in our opinion, conflict with the decision of this Court in New York Life Insurance Company v. Greer, 170 S.C. 151, 169 S.E., 837.
2. The defense of fraud and misrepresentation in the application is not available to the insurer after the expiration of the period fixed in the incontestable clause, unless, perhaps, such defense is specifically reserved to the insurer in that clause. Metropolitan Life Ins. Co. v. Peeler, 71 Okla. 238, 176 P., 939, 6 A.L.R., 441, and particularly the annotation at pages 448, 450-452; United Order of the Golden Cross v. Overton, 203 Ala., 335, 83 So., 59, 13 A.L.R., 672, annotation at pages 674, 675; 55 A.L.R., 549, note; Phila. Life Ins. Co. v. Arnold, 97 S.C. 418, 81 S.E., 964, Ann. Cas., 1916-C, 706; McKendree v. Sou. States Life Ins. Co., 112 S.C. 335, 99 S.E., 806; Beard v. North State Life Ins. Co., 104 S.C. 45, 88 S.E., 285; Weeks v. N.Y. Life Ins. Co., 128 S.C. 223, 122 S.E., 586, 35 A.L.R., 1482.
3. By the specific provisions of Section 7986, Code of 1932, and the decisions of this Court thereunder cited, fraud and misrepresentation in the application are not available to the insurer after two premiums have been paid.
4. The authorities are unanimous in holding that the beneficiary under a life insurance policy, who procures insurance upon another, must have some kind of interest in the continuance of the life of the insured, and that a person cannot take out a valid and enforceable contract of insurance for his own benefit upon the life of one in whom he has no insurable interest — such a policy contract is void and unenforceable as being a mere wagering contract and contrary to public policy. Crosswell v. Association, 51 S.C. 103, 114, 28 S.E., 200, 201; Rogers v. Atlantic Life Ins. Co., 135 S.C. 89, 133 S.E., 215, 45 A.L.R., 1172; 37 C.J., 385.
5. But appellant argues that "lack of insurability" may be waived, citing as authority therefor the Crosswell and Rogers cases, supra, and Roberts v. Nat'l Benefit Life Ins. Co., 150 S.C. 326, 330, 148 S.E., 179 (4); and that, as a consequence thereof, the defense that the beneficiary had no insurable interest in the life of the insured is not available to the insurer after the period of contestability has run.
These cases are not authority for the principle that an insurer can waive "lack of insurability" When the beneficiary procures the issuance of the policy contract, and has no insurable interest in the life of the insured, In Crosswell's case the insurance was procured by the insured, not by the beneficiary, and all that this Court held was that one who procures insurance on his own life may name any one as the beneficiary, provided the transaction is bona fide, and not a mere cover to evade the law against wager policies; that the interest which insured has in his own life supports the policy, and prevents its condemnation as a wagering contract. The principle actually announced is analogous to the principle that one may devise all of his property to a stranger. No more complete answer to the contention of appellant can be presented than the language used by this Court: "It is firmly established that insurance procured by one person on the life of another, in which the party effecting the insurance has no interest, is void as a wager contract against public policy, which condemns gambling speculation upon human life. But it is also well settled that a person may insure his own life, and make the policy payable to whomsoever he chooses, even though the beneficiary has no insurable interest in his life, provided the transaction is bona fide, and not a mere cover to evade the law against wager policies. * * * In such case the interest which the insured has in his own life supports the policy, and prevents it from being condemned as a wager contract." (Italics ours.)
The facts of that case were wholly different from those alleged here, and there is no intimation, insinuation, or assertion by way of obiter dicta that, when a policy contract is procured by a beneficiary who has no insurable interest in the life of the insured, the insurer may waive the "lack of insurability." On the contrary, the Court even goes so far as to declare that, although one may procure insurance on his own life and name whomsoever he chooses as beneficiary, such a transaction must be bona fide, and not a mere scheme to circumvent the law against wagering contracts. In sustaining the lower Court, which had overruled a demurrer to the complaint, this Court narrated the facts upon which it based its decision as follows: "It is therefore alleged in the complaint substantially that Susan A. Crosswell procured a policy of insurance on her own life, in consideration of the payment by her of the annual premiums, and made the same payable to her daughter Mary E. Crawford, if living, otherwise to the executors, administrators, or assigns of Susan A. Crosswell; and it further appears that the policy was assigned to the son of the insured by both the beneficiary and the insured, with the consent of the insurer."
Moreover, both daughter and son had an insurable interest in the life of their mother. 37 C.J., 393, note 92.
In Rogers' case, as in Crosswell's case, the insurance policy was actually procured by the insured, not by the beneficiary, since the policy was made payable to the insured's estate. After delivery, insured assigned the policy to his brother. Upon the death of the insured, defendant company denied liability upon the ground of fraud and misrepresentation in the application, and upon the further ground that insured had the fatal and malignant disease of cancer, which fact he concealed from the insurer by his answers. At the close of plaintiff's evidence, defendant was permitted to interpose the additional defense of the brother's "lack of insurable interest." This case is no authority for the contention that "lack of insurable interest may be waived by the insurer," for three reasons: (1) The insurance was procured by the insured upon his own life, not by the beneficiary; (2) it was held that the brother to whom the policy was assigned actually had an insurable interest in the life of the insured because of the natural feelings of one brother for another, and because their relations "were characterized by brotherly affection and reciprocal aid and help"; (3) the policy having been procured by the insured, and the assignee thereof having an insurable interest in the life of insured, so much of the opinion as intimates that "lack of insurability" may be waived by the insurer is mere obiter dicta. Moreover, such dicta is predicated upon the authority of Crosswell's case, supra, which, as indicated, is no authority for the principle contended for.
In Roberts' case, 150 S.C. 326, 148 S.E., 179, as in Crosswell's and Rogers' cases, again the policy contract was procured by the insured, who, of her own volition, named her cousin as beneficiary. As held in Crosswell's case, so it was held in this case, that a person may insure his own life and name anyone as beneficiary, even though the beneficiary have no insurable interest in the life of the insured — just as a testator may devise his entire estate to a mere stranger — " provided the transaction is bona fide, and not a mere cover to evade the law against wager policies." It is true that the opinion in Roberts' case, as did that in Rogers' case, goes on to assert that lack of insurability may be waived, but again this is dicta, for, having held that insured had the right to procure a policy on her own life and name her cousin as beneficiary, it was unnecessary to the decision in that case to declare that lack of insurability may be waived. Such dicta in Roberts' case is rested upon the cited authority of Rogers' case, but, as pointed out, that portion of the decision in the latter cause was dicta. Appellant cites no other authority for her contention, except Wright v. Ins. Co., 118 N Y, 237, 23 N.E., 186, 6 L.R.A., 731, 16 Am. St. Rep., 749, and the policy in that case provided, in the incontestable clause, that all questions affecting its validity must be raised within two years, and during the life of the insured.
It is indisputable, therefore, that we have no binding precedents in this State in support of the proposition that "lack of insurable interest may be waived by the insurer." On the contrary, we have recently held ( Hack v. Metz, 173 S.C. 413, 176 S.E., 314) that (1) neither the doctrine of waiver nor (2) of estoppel can be invoked to make valid and enforceable a wagering and speculative contract which is illegal because it is against good morals and public policy (syllabus paragraphs Nos. 6 and 8); and such decisions as we find in other jurisdictions invariably hold that lack of insurability cannot be waived; that a policy of insurance, procured by the beneficiary thereof upon the life of one in which he has no insurable interest, is void in its inception, and is not rendered valid by a clause declaring it to be incontestable after the lapse of a specified period of time. See authorities cited in Judge Ramage's order, and 37 C.J., 386, 398; Brady v. Prudential Life Ins. Co., 5 Kulp (Pa.), 505; Clement v. Ins. Co., 101 Tenn., 22, 46 S.W., 561, 42 L.R.A., 247, 70 Am. St. Rep., 650; 6 A.L.R., 452, note. The rationale of these decisions is bottomed upon the principle that such contracts are void ab initio; that it is contrary to a sound public policy to permit one, having no interest in the continuance of the life of another, to speculate upon that other's life — and it should be added that to permit the same might tend to incite the crime of murder, or operate to cause the beneficiary to decline, in the event of accident or carelessness, to exert himself to save the life of the insured — and that the rule is enforced, and the defense permitted, not in the interest of the defendant insurer, but solely for the sake of the law, and in the interest of a sound public policy; that the contract is void in its inception; that "the incontestable clause is no less a part of the contract than any other provision of it"; and, when the contract fails, the incontestable clause necessarily fails with it.
In a day when statistics tend to establish the fact that homicides are increasing in this commonwealth and in the nation more rapidly than ever before in our history, this Court is loath to enunciate any principle which might tend to promote the inadvertent or malicious taking of human life, and, without intending our remarks as an expression of opinion upon the facts of the instant cause, we adhere to our former decisions to the effect that one cannot, by his own act, procure a valid and enforceable policy of insurance for his own benefit upon the life of another in which he has no insurable interest; that such a contract of insurance is void in its inception and unenforceable on grounds of public policy, being a mere wagering contract; and now declare that, where a beneficiary, having no insurable interest in the life of the insured, himself procures the issuance of such a policy upon his own application therefor, the insurer is not precluded, by an incontestable clause, from contesting the policy upon such grounds.
6, 7. We are satisfied, under the authorities cited in his order, with the reasoning and the conclusions reached by the Circuit Judge, upon what we have designated as the sixth and seventh questions raised by the exceptions, that a contract of insurance procured upon the life of another by the beneficiary thereof, with the predetermined intent to murder the insured, is wholly void at its inception as being repulsive to every humane instinct, repugnant to public policy, and involving such a risk as the insurer should not be charged with assuming: and that such a defense, in an action upon the policy, is not precluded by the incontestable clause, since the latter is no less a part of the policy contract than its other provisions, and, if the contract be void, the incontestable clause falls with it. It may be mentioned in this connection that no precedents contrary to the authorities cited by his Honor have been presented to us by appellant, and that we have found none in conflict therewith. If such a contract, the mere thought of which shocks the conscience and incites every decent instinct to surge in indignation and revolt, be not void as against public policy, it would be difficult to conceive of one that does contravene the public policy of this commonwealth.
8. If such facts be established upon a trial of the cause upon its merits, is the policy wholly void and unenforceable, or will the proceeds thereof become payable to the estate of the insured? It necessarily follows, as a result of the conclusions hereinbefore announced, that, in the event of the establishment of such facts, the policy will be declared to have been void in its inception, and that no one can benefit by its provisions. The authorities cited by counsel for appellant, including Smith v. Todd, 155 S.C. 323, 152 S.E., 506, 70 A.L.R., 1529, and Keels v. A.C.L.R. Co., 159 S.C. 520, 157 S.E., 834, to the effect that the murder of an insured by the beneficiary does not relieve the insurance company from liability, but merely transfers the proceeds from the beneficiary to the estate of the insured, are not in point here, having no application whatever where the policy was procured by the beneficiary and with the predetermined intent to murder the insured. The cases approving the principle contended for by appellant did not involve the question of the bona fides of the contract when it was made, and our own cases merely dealt with the question of whether or not a beneficiary, under a valid contract of insurance, forfeited his rights by murdering the insured. No contention was made, or suggested in those cases, that the beneficiary (1) either procured the insurance, or (2) had the intent, at the instant the policy was procured or issued, subsequently to murder the insured; and it may be repeated that, in the exhaustive brief submitted by counsel for appellant, no case is cited where any Court has sanctioned recovery upon a policy of insurance procured and matured under the circumstances, and with the intent alleged to have accompanied the procurement of the policies litigated upon in the instant causes.
As hereinbefore indicated, plaintiff's motion to strike from the answer of the defendant insurer the alleged defense of fraud and misrepresentation in the application should have, under the authorities cited, been granted; and to that extent the decree of the Circuit Judge is modified. In all other respects it is affirmed.
MESSRS. JUSTICES CARTER and BONHAM concur.
MR. JUSTICE STABLER concurs in result.