University of Virginia Library

CHAPTER XXI.

THE LIFE INSURANCE POLICIES.

The question of the liability of the life insurance companies for the
payment of the policies issued upon the life of J. Samuel McCue, ex-Mayor
of Charlottesville, who is now under sentence of death for the
murder of his wife, is one of great consequence and of considerable
interest to all. Diligent search of all authorities on life insurance and
of all adjudicated cases fail to reveal a case of a similar nature in Virginia
or in any other State.

In all of the works of authority on life insurance it is laid down as
certain that no policy can be enforced where the insured was put to
death by due process of law, and this conclusion is based upon very
sound reasoning.

May on Insurance, Sec. 326, p. 696. Death by the hands of justice.—
"Usually associated with the exception of liability by suicide is that of
`death by the hands of justice.' This is defined by Tindal, C. J., as
dying in consequence of a felony previously committed.' It is death
under and by virtue of a judicial sentence for some crime, and not
merely a rightful killing. An exception of liability in case of `death
by the hands of justice' has been held to be unnecessary, as it is against
public policy to insure against the consequences of a capital felony;
and such risk could not be covered by the policy even if expressly agreed
upon. As the law will not permit an express stipulation that a man
shall derive pecuniary benefit upon his dying by the hands of public
justice, as against public policy, it will not imply any such stipulation.
Death, therefore, at the hands of public justice works a forfeiture of all
right to indemnity under a policy, whether it does or does not contain
such stipulation."

In Vance on Insurance, p. 524, one of the latest authorities upon the
subject, is found much the same doctrine as in May on Insurance.

As stated before, there can be found no case exactly similar to the
McCue case as to particulars, both as to the murder and as to the
issuance of the policies, their beneficiaries, &c., but the great principle
involved, as to whether or not these policies are enforceable, remains

in the McCue case the same, as in the adjudicated cases to be given below,
which are the only ones bearing at all directly upon the question
involved.

In 1830 a case was decided in the House of Lords in England, (reported
in 4 Bligh N. S., 194, 211) in which a man was convicted and
hanged for forgery. Lord Chancellor Lyndhurst, in delivering the
opinion of the court, said, "It appears to me that this resolves itself into
a very plain and simple consideration. Suppose that in the policy itself
this risk has been insured against; that is, that the party insuring
had agreed to pay a sum of money year by year, upon condition, that
in the event of his committing a capital felony, and being tried, convicted
and executed for that felony, his assignees shall receive a certain
sum of money—is it impossible that such a contract could be sustained?
Is it not void upon the plainest principle of public policy? Would not
such a contract (if available) take away one of those restraints operating
on the minds of men against the commission of crimes—namely,
the interest we have in the welfare and prosperity of our connexions?
Now, if a policy of that description with such a form of conditions inserted
in it in express terms, cannot on grounds of public policy, be
sustained, how is it to be contended that in a policy expressed in such
terms as the present, and after the events which have happened, that
we can sustain such a claim? Can we, in considering this policy, give
to it the effect of that insertion, which if expressed in terms would
have rendered the policy, as far as that condition went, at least, altogether
void."

The only case which can be found in any of the American reports
which bears anywise directly upon the one which is now before the
public mind, is the one reported in a recent report of the United States
Supreme Court.

It is the case of Burt v. Union Central Life Insurance Co., reported
in 187 U. S. 362, 23 Sup. Ct. 139.

This was an action to recover on a policy of life insurance, and was
commenced in the District Court of Travis County, Texas, and removed
to the Circuit Court of the United States for the Western District of
Texas. The policy was issued August 1st, 1894, and Wm. E. Burt was
the insured. The policy, in case of death, was payable to Anna M.
Burt, wife of the insured, if living, otherwise to his executors, administrators
or assigns. On September 10, 1895, the beneficiary Anna M.
Burt, and her husband, assigned one-half interest to the plaintiffs to
secure them as creditors of the assignors. On July 24, 1896, the beneficiary,
Anna M. Burt, died intestate, as did also the only children of
the beneficiary and the insured. On February 4, 1897, the insured, Wm.
E. Burt, conveyed to the plaintiffs the remaining interest in the policy,

making them the sole owners of it. They are also his sole heirs, and as
such are entitled to the full benefits of the policy, there being no administrator
on his estate and no necessity for one. On November 7, 1896,
the insured, having been indicted for the murder of his wife, the
beneficiary, was tried and convicted in the District Court of Travis
County, Texas, was sentenced to be put to death, and on May 27, 1898,
was hanged pursuant to such sentence.

The petition in this case alleged that, notwithstanding such conviction,
sentence and execution, the insured, Wm. E. Burt, did not in fact
commit the crime of murder, nor participate therein, but that if he
did the policy was not avoided thereby, because he was at the time
insane.

Mr. Justice Brewer delivered the opinion of the court, which is in
part as follows: "There is nothing in the policy which in terms covers
the contingency here presented, the extracts therefrom given in the
preceding statement being all that even remotely, by suggestion or inference
can have any bearing."

The question therefore is whether an ordinary life policy, containing
no applicable special provisions, is a binding contract to insure
again legal execution for crime.

The petitioners, would distinguish between cases in which the insured
is justly convicted and executed and those in which he is unjustly convicted.

The allegation here is that, notwithstanding his conviction and execution,
he was not in fact guilty, that he did not participate in the killing
of his wife and that if he did he was insane at the time and therefore
not responsible for his actions.

Accepting the division made by counsel as one facilitating a just conclusion
concerning the rights of the parties hereto, it is asked:

First—whether a policy of life insurance is a contract, binding the insurer
to pay to the beneficiary the amount of the policy in case the insured
is legally and justly executed for crime. In other words, do
insurance companies insure against crime? Is that a risk which enters
into and becomes a part of the contract?

Mr. Justice Brewer here refers to the English case quoted above quite
fully, and he incorporates part of that opinion in his own. He then
says, "Public policy forbids the insertion in a contract of a condition
which would tend to induce crime, and as it forbids the introduction of
such a stipulation it also forbids the enforcement of a contract under
circumstances which cannot be lawfully stipulated for."

He refers again to Supreme Commandery &c. v. Ainsworth, 71 Ala.,
436-446, in which the court says, "Death, the risk of life insurance, the
event upon which the insurance money is payable, is certain of occurence;

the uncertainty of the time of its occurrence is the material
element and consideration of the contract. It cannot be in contemplation
of the parties, that the assured, by his own criminal act, shall
deprive the contract of its material element; shall vary and enlarge the
risk, and hasten the day of payment of the insurance money. The fair
and just interpretation of a contract of life insurance, made with the
assured, is that the risk of death proceeding from other causes than
the voluntary act of the assured, producing or intended to produce."

It seems immaterial to the question involved whether or not the
policies are assigned to any one other than the original beneficiary,
or whether they are payable to the insured's estate. Assignment of the
policies as in the case of Burt vs. Union Central Ins. Co. cannot, it
seems, alter the principle laid down in these two decisions. That principle
is that it is contrary to public policy to pay the life insurance of a
man who is executed by due process of law.

The fact of any benefit accruing to the insured by an assignment of
his policies seems never to have been dwelt upon by the courts in either
of the decisions mentioned; and the fact that McCue had made no
assignment of his policies and could not have secured any pecuniary
benefit therefrom, seems to fail to alter the sound conclusion based upon
these decisions that the courts will not enforce the payment of these
policies upon the life of the accused.

What the companies will do in another matter. The settlement of
the policies seems to be entirely with them.

It looks as if the companies will certainly have to pay the "cash
surrender value" of the policies up to the time of execution. Another
view seems to be that the companies may return the premiums paid
in, together with six per cent. interest. Whatever the legal status of the
question may be, it is remarkable then, that of all legal executions in
America, none have carried life insurance but Burt, in the case referred
to, and if any have carried insurance then what have the companies
done?