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AETNA LIFE INS. CO. v. MESSIER

April 14, 1959

AETNA LIFE INSURANCE COMPANY, Plaintiff,
v.
Violet H. MESSIER, Grace E. Messier, Thelma M. Messier, Individually and as Administratrix of the Estate of Linwood Joseph Messier, deceased, Defendants



The opinion of the court was delivered by: MURPHY

Plaintiff, a Connecticut corporation, filed an action of interpleader, 28 U.S.C.A. 1335, 1397, 2361, F.R.Civil Proc.Rule 22, 28 U.S.C.A., to determine which of three claimants, all residents of this district, *fn1" is entitled to the proceeds *fn2" of Group Certificate No. 2842, {F. Supp. 93issued} by plaintiff, an insurer, to Linwood Joseph Messier, since deceased, as an employee of Slater System, Inc., the policyholder, under Group Policy No. 53169.

April 18, 1937, Messier married Grace Elizabeth Boote at Wilmington, Delaware. Thelma M. Messier was born of that marriage. After separating from his first wife, without obtaining a divorce, Messier on January 3, 1957, under authority of a Virginia marriage license, in a church ceremony, in the presence of witnesses, married Violet H. Messier. Thereafter they lived together as man and wife and were, until the time of his death on November 21, 1957, so known among their friends and acquaintances. Upon the death of the insured, Thelma M. Messier, his daughter, was named administratrix of his estate.

 For some time prior to April 1, 1953, up until the time of his death, Messier was employed by Slater System Inc. April 1, 1953, Slater as an employer applied and, upon agreeing to pay all premiums monthly in advance, received, from Aetna, Group Policy No. 56139 -- one year term renewable -- insuring its employees *fn3" upon a non-contributory and contributory basis, *fn4" Aetna agreeing to issue to Slater for delivery to each insured employee a certificate containing a statement as to the insurance protection to which he was entitled and to whom it was payable. Slater's application, the group policy, and each individual certificate provided that each insured employee may designate the beneficiary to receive the sum payable upon the death of the insured, and that the insured may change such designation as often as he desired. *fn5" Before such certificate could be prepared each individual employee had to designate the beneficiary of his insurance or, in the event of a change of beneficiary, to file the requisite written request. Any sum becoming due on account of the death of an insured employee was payable to the beneficiary last designated. 'If no beneficiary has been designated, such sum shall be payable to the employee's widow * * *. If none survives * * * to the employee's executors or administrators.'

 April 1, 1953, Group Insurance Certificate No. 2842 was issued to Linwood Messier, stating that by Group Policy No. 53169 Aetna had insured certain employees of Slater; that under and subject to the terms of the group policy 'Linwood Messier', an employee, was insured for $ 5000, and that he had designated 'Grace E. -- Wife' as the beneficiary to receive such benefits as are payable under the group policy in the event of his death.

 January 7, 1957, Messier by written request revoked the previous designation of 'Grace E. -- Wife' as his beneficiary and in its stead designated 'Violet H. Messier, wife' as his beneficiary. A new Certificate No. 2842 was issued and delivered to Messier as above, stating that 'L. Joseph Messier', an employee, was insured for $ 10,000 and that he had designated 'Violet H. Messier, wife' as his beneficiary. *fn6" It was agreed that Grace E. Messier held the first certificate; that Violet H. Messier held the second.

 There is nothing in either certificate to show whether the insurance as to Messier was on a contributory or non-contributory basis. It was agreed that Slater paid all premiums on the first $ 5000; that Messier paid by payroll deductions his share of the premiums for the second $ 5000. The certificate of April 1, 1953, was therefore issued on a non-contributory basis; that of January 7, 1957, one-half on a non-contributory, one-half on a contributory basis. *fn7"

 Violet H. Messier claims the proceeds as the last designated beneficiary. See Smith v. Metropolitan Life Ins. Co., 1908, 222 Pa. 226, 229, 230, 71 A. 11, 20 L.R.A.,N.S., 928. Grace Messier points (1) to the illegality of the second marriage: Stewart v. Shenandoah Life Ins. Co. Inc., 1941, 144 Pa.Super. 549, 555, 20 A.2d 246, and contends that Violet was not as a matter of law 'Violet H. Messier' or 'wife' of the insured; (2) to § 412 of the Insurance Company Law of 1921 -- May 17, P.L. 682, Art. IV as amended, 40 P.S. § 512 -- which provides that '* * * no person shall cause to be insured the life of another, unless the beneficiary named * * * whether himself or a third person, has an insurable interest in the life of the insured * * *', defining 'insurable interest' as meaning 'in the case of persons related by blood or law, an interest engendered by love and affection, and, in the case of other persons, a lawful economic interest in having the life of the insured continue, as distinguished from an interest which would arise only upon the death of the insured'; and argues that it was Slater that caused the life of Messier to be insured and that neither Slater nor Violet H. Messier had an insurable interest in the life of the insured. Absent a legally designated beneficiary she, as the surviving widow, claims the proceeds. Thelma M. Messier asserts that since the named beneficiary is not eligible and the insurer has paid the proceeds into court, they should be awarded to her as administratrix of the decedent's estate. *fn8"

 All operative facts occurred in Pennsylvania. We therefore look to Pennsylvania law to determine the substantive rights of the parties. Solomon v. Neisner Bros. Inc., 1950, D.C.M.D.Pa., 93 F.Supp. 310, at page 312, affirmed 3 Cir., 1951, 187 F.2d 735; First National Bank of McKeesport, Pa. v. Gable, D.C.W.D.Pa.1951, 98 F.Supp. 632, at page 633; Harry L. Sheinman & Sons Inc. v. Scranton Life Ins. Co., 3 Cir., 1942, 125 F.2d 442, 444.

 There is a very definite distinction between the questions as to the insurable interest of one taking out a policy of insurance on the life of another and as to the right to take out a policy on his own life for the benefit of another: 29 Am.Jur. 355. Everyone has an insurable interest in his own life. Before a person can validly procure insurance upon the life of another he must have an insurable interest in that life. 2 Appleman Insurance Law and Procedure (1941 ed.) § 761. In Pennsylvania since Scott v. Dickson, 1884, 108 Pa. 6, a person may take out a policy of insurance on his own life, pay the premiums, and name as beneficiary whomsoever he pleases regardless of whether such beneficiary has an insurable interest: Haberfeld v. Mayer, 1917, 256 Pa. 151, 153, 100 A. 587; Stewart v. Shenandoah Life Ins. Co., 1941, 144 Pa.Super. 549, at page 556, 20 A.2d 246, and see Connecticut Mutual Life Ins. Co. v. Schaefer, 1876, 94 U.S. 457, 460, 24 L. Ed. 251, but a person cannot take out a valid and enforceable policy of insurance for his own benefit and pay the premiums thereon on a life in which he has no insurable interest. Werenzinski v. Prudential Ins. Co. of America, 1940, 339 Pa. 83, 85, 14 A.2d 279; Peoples First Nat. Bank & Trust Co. v. Christ, 1949, 361 Pa. 423, at page 426, 65 A.2d 393. Where the policy is issued for the use of one having no insurable interest, the contract is one of wagering, against public policy, and cannot be enforced. The speculative purpose is presumed, irrespective of the motive or intention of the parties. United Security Life Ins. Co. v. Brown (No. 1) 1921, 270 Pa. 264, at page 267, 113 A. 443.

 While a woman has an insurable interest in the life of her husband: Corson's Appeal, 1886, 113 Pa. 438, 447, 6 A. 213, we need not now decide whether under the circumstances Violet H. Messier had such an interest; *fn9" nor shall we stop to consider the applicability of the rule that an insurable interest need not be proved at the maturity of the policy if it was valid at its inception. *fn10" Although § 412 (40 P.S. § 512) provides that persons and corporations may insure the lives of employees without the signing of a personal application, and that any person may insure his own life for the benefit of any person or corporation, absent special conditions, traditionally, an employer having no insurable interest could not take out a valid policy of insurance on his employee naming the employer as beneficiary. *fn11"

 Keystone Mutual Benefit Ass'n v. Norris, 1886, 115 Pa. 446, 450, 8 A. 638, teaches that the insurable interest must arise from the relation of the party taking out the insurance to the insured. However, under § 412 the beneficiary need not have an insurable interest unless he or a person other than one allowed to do so in the Act caused the policy to be issued. Hall v. Metropolitan Life Ins. Co., 1925, 39 Lanc.Law Rev. 445, 446; and see Warburton v. John Hancock Mutual Life Ins. Co., 30 Del.Co.R. 279, 281; In re Szymanski's Estate, 1933, 109 Pa.Super. 555, 558, 167 A.2d 420; 29 Am.Jur. Id. § 356; 44 C.J.S. Insurance 202, § p. 902; Note 108 A.L.R. 449, at pages 455, 456; and see Metropolitan Life Ins. Co. v. Doty, etc., 35 Pa. Dist. & Co. R. 331, 334. The purpose of § 412 was to prevent wagering contracts on the life of another by one having no insurable interest therein. Pashuck v. Metropolitan Life Ins. Co., 1936, 124 Pa.Super. 406, 410, 411, 188 A. 614.

 In 1929 by the Act of April 26, P.L. 785, § 1, §§ 415 and 416 were added to the Act of 1921, supra, defining group insurance, authorizing its issuance, and setting up standard provisions *fn12" -- the policy to be issued to the employer, premiums to be paid by the employee, or by the employer and employee jointly insuring employees for the benefit of persons other than the employer.

 The present law on group insurance -- Act of 1949, Id. § 1, as amended, 40 P.S. § 532.1 -- authorizes '* * * (1) A policy issued to an employer * * * deemed the policyholder, to insure employees of the employer for the benefit of persons other than the employer.' *fn13" § 6 Id., 40 P.S. § 532.6 sets up standard policy provisions, *fn14" e.g. sub-section 6: '* * * any sum becoming due by reason of the death of the person insured shall be payable to the beneficiary designated by the person insured * * *.' *fn15"

 The obvious primary purpose of this type of insurance is to supply low cost insurance for the protection of employees. Brown v. Carnegie-Illinois Steel Corp., 1951, 168 Pa.Super. 380, at page 383, 77 A.2d 655, affirmed 1951, 368 Pa. 166, 81 A.2d 562; 1 Appleman § 41 (1959 Pocket Supp. p. 8); Couch Cyc. of Ins. Law, 29, p. 44. In procuring such insurance, obtaining applications, taking payroll deductions, and paying premiums, the employer acts as agent for the employees and for themselves: Hanaieff v. Equitable Life Assur. Soc. of the U.S., 1952, 371 Pa. 560, 564, 92 A.2d 202; McFadden v. Equitable Life Assur. Soc. of the U.S., 1945, 351 Pa. 570, 575, 41 A.2d 624, and see 1 Appleman § 43, thus rendering their employees a service and promoting industrial good will. Miller v. ...


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