44 C.J.S., Insurance, Sec. 203 (a), pp. 903, 904. See also Burbage v. Windley, 108 N.C. 357, 12 S.E. 839; Trinity College v. Ins. Co., 113 N.C. 244, 18 S.E. 175; Hinton v. Ins. Co., 135 N.C. 314, 47 S.E. 474; Slade v. Ins. Co., 202 N.C. 315, 162 S.E. 734; Crump v. Ins. Co., 204 N.C. 439, 168 S.E. 514; Wharton v. Ins. Co., 206 N.C. 254, 173 S.E. 338; Appleman, Insurance Laws and Practice, Vol. 2, Sec. 762. It is noted that the statute, Sec. 2 1/2, Chapter 283, Session Laws of 1951, now codified as G.S. 58-204.3, declaring the trustee of a pension plan to have an insurable interest in the lives of the persons covered by the pension plan, was not enacted until after the death of the insured in the instant case.
Whether platonic or otherwise, it would be going far afield to say that in view of the conceded facts, it would furnish a reasonable basis upon which to found an insurable interest in the life of Heflin. This view is fortified by the decision in Slade v. Life, etc., Ins. Co., 202 N.C. 315, 162 S.E. 734, in which the following quotation from Trinity College v. Travelers' Ins. Co., 113 N.C. 244, 18 S.E. 175, 22 L.R.A. 291, is approved: "* * * except in cases where there are ties of blood or marriage, the expectation of advantage from the continuance of the life of the insured, in order to be reasonable, as the law counts reasonableness, must be founded in the existence of some contract between the person whose life is insured and the beneficiary, the fulfillment of which the death will prevent.
In Howell v. Ins. Co., 189 N.C. 212, 126 S.E. 603, citing Vance on Insurance, 147, insurable interest is defined as follows: "An insurable interest in the life of another has been defined to be `such an interest, arising from the relation of the party obtaining the insurance, either as creditor of or surety for the assured, or from ties of blood or marriage, to him as will justify a reasonable expectation of advantage or benefit from the continuance of his life.'" May on Ins., sec. 102a; Trinity College v. Ins. Co., 113 N.C. 244, 18 S.E. 175; Hinton v. Ins. Co., 135 N.C. 314, 47 S.E. 474; Slade v. Ins. Co., 202 N.C. 315, 162 S.E. 734. The authorities from other jurisdictions where the point has been decided are not in harmony.
A policy of insurance on the life of another issued to the beneficiary, who has no insurable interest in the life insured, is void, as against good morals and sound public policy, where the premiums are paid by the beneficiary. Slade v. Ins. Co., 202 N.C. 315, 162 S.E. 734; Hinton v. Ins. Co., 135 N.C. 314, 47 S.E. 474; College v. Ins. Co., 113 N.C. 244, 18 S.E. 175. This action should be dismissed. To that end the judgment is
To permit it to do so would violate the long established public policy of this State which prevents one who lacks a legally recognized insurable interest in the life of another from taking out and enforcing for his own benefit a policy of insurance on such other person's life. Wharton v. Insurance Co., 206 N.C. 254, 173 S.E. 338; Slade v. Insurance Co., 202 N.C. 315, 162 S.E. 734. [2, 3] Payment of the debt to GMAC and the termination of its insurable interest in the life of its debtor effected thereby did not, however, terminate defendant insurance company's liability under its policy of insurance.