what is termed a 'wager policy,' or a mere speculative contract upon the life of the assured, with a direct interest in its early termination."

Again, the court said:

"The assignment of a policy to a party not having an insurable interest is as objectionable as the taking out of a policy in his name. Nor is its character changed because it is for a portion merely of the insurance money. To the extent in which the assignee stipulates for the proceeds of the policy beyond the sums advanced by him, he stands in the position of one holding a wager policy. The law might be readily evaded if the policy, or an interest in it, could, in consideration of paying the premiums and assessments upon it, and the promise to pay upon the death of the assured a portion of its proceeds to his representatives, be transferred so as to entitle the assignee to retain the whole insurance money."

The court refers to and states the facts in Franklin Life Ins. Co. v. Hazzard, 41 Ind. 116, 13 Am. Rep. 313, where the assured found himself unable to pay the second premium, and therefore sold it to avoid a total loss for forfeiture to one having no insurable interest, and assigned it with the consent of the insurers, the assignees paying the unpaid premiums, and quote with approyal the judgment of the Indiana court that the assignment was void because

"all the objections against the issuing of a policy to one upon the life of another, in whose life he has no insurable interest, exist against holding such a policy by mere purchase and assignment. That in either case the holder of such a policy is interested in the death rather than the life of the party assured."

Justice Field also refers to the decisions of the New York Court of Appeals as opposed to the Indiana case, saying:

"They hold that a valid policy of insurance effected by a person upon his own life is assignable like an ordinary chose in action, and that the assignee is entitled, upon the death of the assured, to the full sum payable, without regard to the consideration given by him for the assignment, or to his possession of any insurable interest in the life of the assured. St. John v. American Mutual Life Insurance Company, 13 N. Y. 31, 64 Am. Dec. 529; Valton v. National Loan Fund Life Assurance Company, 20 N. Y. 32. In the opinion in the first case the court cite Ashley v. Ashley (3 Sim. 149) in support of its conclusions; and it must be admitted that they are sustained by many other adjudications. But if there be any sound reason for holding a policy invalid when taken out by a party who had no interest in the life of the assured, it is difficult to see why that reason is not as cogent and operative against a party taking an assignment of a policy upon the life of a person in which he has no interest. The same ground which invalidates the one should invalidate the other-so far, at least, as to restrict the right of the assignee to the sums actually advanced by him. In the conflict of decisions upon this subject we are free to follow those which seem more fully in accord with the general policy of the law against speculative contracts upon human life.

"In this conclusion we are supported by the decision in Cammack v. Lewis, 15 Wall. 643, 21 L. Ed. 244. There a policy of life insurance for $3.000, procured by a debtor at the suggestion of a creditor to whom he owed $70, was assigned to the latter, to secure the debt, upon his promise to pay the premiums, and, in case of the death of the assured, one-third of the proceeds to his widow. On the death of the assured, the assignee collected the money from the insurance company, and paid the widow $950 as her portion, after deducting certain payments made. The widow, as administratrix of the deceased's estate, subsequently sued for the balance of the money collected, and recovered judgment. The case being brought to this court, it was held that the transaction, so far as the creditor was concerned, for the excess beyond the debt owing to him, was a wagering policy, and that the creditor, in equity

and good conscience, should hold it only as security for what the debtor owed him when it was assigned, and for such advances as he might have afterwards made on account of it; and that the assignment was.valid only to that extent. This decision is in harmony with the views expressed in this opinion."

It is impossible, with due respect for that tribunal, to treat this opinion as mere dictum. To do so would be simply to say that the court did not decide the case that was before them, but another and nonexistent case.

*

In Crotty v. Union Mutual Ins. Co., 144 U. S. 621, 12 Sup. Ct. 749, 36 L. Ed. 566, the policy was payable to O'Brien on January 15, 1841, "or if said O'Brien shall die before that time to pay said sums * * to Michael Crotty, his creditor, if living, if not then to said O'Brien's executors, administrators or assigns." There was evidence that O'Brien was largely indebted to Crotty at the inception of the policy. O'Brien died in 1883, and Crotty made proof of death and sued, averring that "he had otherwise performed all of the conditions of the contract." The answer denied that the assured was ever indebted to Crotty, or that he had performed the conditions except by furnishing proof of death. On the trial there was no other evidence of the interest of the plaintiff in the policy than that afforded by the policy itself, and an averment in the proofs of death that he claimed "as creditor of the deceased and beneficiary named in the policy. The court upon this state of the case instructed a verdict for the insurer, and this judgment was affirmed. The question of public policy in respect of the necessity of an insurable interest to sustain a policy of life insurance was referred to in these words by Justice Brewer, who announced the opinion of the court:

"It is the settled law of this court that a claimant under a life insurance policy must have an insurable interest in the life of the insured. Wagering contracts in insurance have been repeatedly denounced. Cammack v. Lewis, 15 Wall. 643, 21 L. Ed. 244, in which a policy of $3,000, taken out to secure a debt of $70, was declared 'a sheer wagering policy.' Connecticut Mutual Life Insurance Co. v. Schaefer, 94 U. S. 457, 461, 24 L. Ed. 251, in which it was said: 'In cases where the insurance is effected merely by way of indemnity, as where a creditor insures the life of his debtor, for the purpose of securing his debt, the amount of insurable interest is the amount of the debt.' Warnock v. Davis, 104 U. S. 775, 26 L. Ed. 924."

As to the insurable interest of a creditor in the life of his debtor, the court said:

"If a policy of insurance be taken out by a debtor on his own life, naming a creditor as beneficiary, or with a subsequent assignment to a creditor, the general doctrine is that on payment of the debt the creditor loses all interest therein, and the policy becomes one for the benefit of the insured, and collectible by his executors or administrators. In 2 May on Insurance (3d Ed.) 459a, the author says: 'A creditor's claim upon the proceeds of insurance intended to secure the debt should go no further than indemnity, and all beyond the debt, premiums, and expenses should go to the debtor and his representatives, or remain with the company, according as the insurance is upon life or on property.'

Referring to the terms of this policy and the facts of the particular case, the learned Justice said:

"Still, again, not only does justice between the parties, but also that public policy which denounces wagering contracts, require that the proof of indebtedness should be distinct and satisfactory. It would tend to a successful

consummation of wagering contracts in insurance if the mere recital in the policy was held sufficient to sustain a recovery in favor of the alleged creditor, no matter how long after the date of the policy the death of the insured happened. Admissions, whether direct or incidental, should never be carried beyond their actual extent or the reasonable inferences therefrom, and should not be invoked to work injustice to parties litigant or thwart the demands of sound public policy."

This review of the decisions and opinions of the Supreme Court leads us to the conclusion that an insurable interest is absolutely essential to the support of a policy of insurance upon the life of a third person. Without such an interest the beneficiary has no interest in the continuance of the life of the assured, but rather an interest in its early termination. The field of doubt is as to what is an insurable interest. That one has such an interest in his own life is clear. That he has also such an interest in the life of a close relative by blood or marriage, such as parent and child, husband and wife, there is no dispute. When we pass beyond those relations where there is both a legal and a moral responsibility for support and maintenance, we approach the debatable line. It may be safely said that when a recognized legal dependency does not exist, nor the relation of creditor and debtor, an insurable interest must involve some reasonable expectation of pecuniary benefit or advantage from the continuance of the life of the assured. In Kentucky Life Ins. Co. v. Hamilton, 63 Fed. 93. 11 C. C. A. 42, we had occasion to refer to the fact that one may have an insurable interest by reason of expectations or advantages dependent upon the continuance of the life of the assured independent of those blood or marital relations usually deemed essential. In Warnock v. Davis, 101 U. S. 775, 779, 26 L. Ed. 924, the court upon this subject say:

"It is not easy to define with precision what will in all cases constitute an insurable interest, so as to take the contract out of the class of wager policies. It may be stated generally, however, to be such an interest, arising from the relations of the party obtaining the insurance, either as creditor of or surety for the assured, or from the ties of blood or marriage to him, as will justify a reasonable expectation of advantage or benefit from the continuance of his life. It is not necessary that the expectation of advantage or benefit should be always capable of pecuniary estimation; for a parent has an insurable interest in the life of his child, and a child in the life of the parent, a husband in the life of his wife, and a wife in the life of her husband. The natural affection in cases of this kind is considered as more powerful-as operating more efficaciously-to protect the life of the assured than any other consideration. But in all cases there must be a reasonable ground, founded upon the relations of the parties to each other, either pecuniary or of blood or affinity, to expect some benefit or advantage from the continuance of the life of the assured. Otherwise the contract is a mere wager, by which the party taking the policy is directly interested in the early death of the assured. Such policies have a tendency to create a desire for the event. They are, therefore, independently of any statute on the subject, condemned, as being against public policy."

The courts are not agreed as to the extent of the insurable interest of a creditor or of one standing in an equivalent business relation, such as that of partner, joint adventurer, master, or servant.

The cases of Cammack v. Lewis, Warnock v. Davis, and Crotty v. Union Mutual Insurance Co. strongly tend to show that the Supreme Court of the United States regard, the insurable interest of

one in the relation of creditor as measured by the extent of the debt or business obligation. When the debt is paid, or the business relation terminated, the interest ceases, and the claim of such a beneficiary is cut off, both as to the insurer and the assured, or those representing him. There is, moreover, a marked difference between the consequences resulting from a policy taken out by one having no insurable interest and the subsequent assignment of a policy issued to one upon his own life and afterwards assigned to one having no interest in the continuance of the life assured. In the first case the contract of insurance is invalid, in the other it is valid and the assignment invalid. In the first case the insurer has never become liable upon the contract; in the other the liability of the insurer to somebody is unaffected by the assignment, in the absence of some term in the insurance contract avoiding it if assigned. The British act of 14 Geo. III, c. 48, deals alone with the validity of the contract of insurance itself. In Warnock v. Davis, cited above, the contract of insurance was not affected because it had been assigned, although the agreement for such assignment antedated the policy. The same is to be said of the contracts in every one of the cases decided by the Supreme Court of the United States. Undoubtedly the contract of insurance in the case at bar was valid. The only question is as to the legal effect of its subsequent assignment. The invalidity of that need not in any way affect the liability of the insurer to the representatives of the assured. Hence it is that the payment by the insurer of the amount of the policy into court has no consequence upon the legal or equitable rights of the rival claimants to the proceeds. The company was liable in any event to somebody, unless some term of the contract made the claim uncollectible at all in case of an assignment. That is not the case here, for the clause making the claim of an assignee subject to proof of interest would only limit the recovery of the assignee to a sum measured by his interest, and leave the company liable to the representatives of the assured for the rest. What, after all, is the moral or legal distinction between an assignment by an assured to one having no interest in his life, made with or without some antepolicy agreement for such assignment? There is undoubtedly a sharp conflict between the decided cases, as we have already noticed. What is the attitude of the Supreme Court upon the question of public policy? Upon this question we must hold that the Supreme Court of the United States recognizes no such distinction. To quote from Warnock v. Davis:

*

"The assignment of a policy to a party having no insurable interest is as objectionable as the taking out of a policy in his name. * If there be any sound reason for holding a policy invalid when taken out by a party who has no interest in the life of the assured, it is difficult to see why that reason is not as cogent and operative against a party taking an assignment of a policy upon the life of a person in which he has no interest. The same grounds which invalidate the one should invalidate the other—so far, at least, as to restrict the rights of the assignee to the sums actually advanced by him. In the conflict of decisions on this subject we are free to follow those which seem more fully in accord with the general policy of the law against speculative contracts upon human life."

Coming to the case for decision, Grigsby had confessedly no insurable interest in the life of Burchard. Under all the cases, if he had been named as beneficiary in the policy under an agreement to pay the premiums, or had an agreement for its assignment when issued, the assignee to pay the premiums, the policy in the one case and the assignment in the other would be illegal and unenforceable. The reason for this result, and the only reason, would be found in the fact that such a beneficiary or assignee would have no interest in the continuance of Burchard's life, but an interest in his speedy death. This speculative interest in human life is obviously contrary to sound public policy. The case we have differs from the one just stated only in the fact that Grigsby was not the appointee in the policy, and did not become an assignee by an arrangement antedating the policy. Burchard found himself unable to pay the third premium, and in need of $100 to obtain a surgical operation of a serious character. Grigsby agreed to give him the $100 needed in this extremity, pay the pastdue premium and all other premiums which should thereafter fall due, and take an assignment of the policy. Can one imagine a more purely speculative transaction in which human life was the stake? Burchard might not survive the very operation which he was immediately to undergo. If this should prove the case, for one premium and $100 he would at once realize $10,000. When each recurring premium came due, a like problem was presented to the assignee. "If I pay this, he may die before I have to pay again," would be his natural reflection. He took the chance twice, and before he was required to take another Burchard died. Plainly the transaction was a gambling or wagering bargain, and Grigsby had an interest against, and not an interest in, the continuance of Burchard's life. The evil inseparable from such a bargain is undoubtedly mitigated when the whole of the premiums has been paid once for all, or when the assured is to keep the policy alive. The cost of carrying the policy would not rest upon the assignee, and to that extent his interest in the early termination of the life of the assured would be lessened. Among the authorities which regard this circumstance as in a large degree affecting the validity of such contracts are: May on Insurance, § 112; Foster v. Insurance Co. (C. C.) 125 Fed. 536; Gordon v. Ware Nat. Bank, 132 Fed. 444, 447, 65 C. C. A. 580, 67 L. R. A. 550; Heinlein v. Imperial Life Ins. Co., 101 Mich. 250, 254, 59 N. W. 615, 25 L. R. A. 627, 45 Am. St. Rep. 409; Scott v. Dickson, 108 Pa. 6, 56 Am. Rep. 192; and Campbell v. Insurance Co., 98 Mass. 381. Where, as in this case, the assignee undertook himself to pay the recurring premiums, we are unable to see why the contract of assignment is not as much a gambling contract as if the policy had been issued under an agreement that it should be assigned. The argument against such a conclusion is bottomed upon the commercial idea that considerations of public policy which restrain the assignability of such contracts are not enough in this commercial age to justify the disadvantages to follow from the full right of an assured to do as he will with a contract in which he is the payee. Nowhere is this view of the subject more clearly stated than by Judge Sanborn, in speaking for the Circuit Court of Appeals