that the property will descend to him, has no insurable interest (12). And where a husband has no right in his wife's property, even though it is morally certain that she will continue to allow him to use it there is no insurable interest. Nor has a mere creditor an insurable interest in the property of his debtor, since he has no direct right in that property (13). But if the debtor is deceased, or a bankrupt, so that the creditor may proceed directly against the estate, then an insurable interest exists. And similarly, a husband, who has by law a right in his wife's property, has an insurable interest (14). § 11. Same (continued). A somewhat different aspect of the same principle is seen in the rule, that, where there is a legal liability which may be incurred by fire, there is an insurable interest. Thus a carrier or other person to whom are entrusted the goods of another person, in such a way that he is responsible for their safekeeping and would be liable to the owner if they were destroyed by fire, has an insurable interest in those goods (15). It is not necessary that the insurable interest shall be in existence at the time when the policy is taken out. It is sufficient if the policy is taken out to cover an interest intended to be obtained, and which is in fact held by the insured at the time of the loss. This is the case with floating policies to cover future acquired goods (16). On the same principle, a policy intended to cover the interest of another (12) Baldwin v. Insurance Co., 60 Ia. 497. person is sufficient, if that other person ratifies the taking out of the policy, even after the loss has occurred. The same general principles apply in marine insurance, as have been already stated with reference to fire insurance. § 12. Life insurance: Legal obligation between parties. A person has an insurable interest in the life of another person when, either because of a legal obligation or because of blood relation or marriage, there is a reasonable expectation of pecuniary advantage or gain from the continuance of the life. Illustrations of insurable interest resting on legal liability are as follows: A contracts with B to supply him with food and money for mining, and B is to give A one-half of the gains. A has an insurable interest in B's life (17). A creditor has an insurable interest in the life of his debtor, but the sum insured must bear some reasonable relation to the amount of the debt, present or expected; if the policy is for too large an amount it is void as being a gambling policy. The following insurance by creditors was held not to be too large: $10,000 on a $6,000 debt with expectancy of lending more (18); $2,000 on a $700 debt; and $3,000 on a $700 debt. On the other hand, $15,000 insurance on a $1,200 debt is bad as a gambling policy. On the same general principles, a woman has an insurable interest in the life of the man to whom she is engaged (19). In the fraternal orders, the rules of the order generally require the policies to be issued in favor of either relatives or persons dependent on the member. It (17) Morrell v. Insurance Co., 10 Cush. (Mass.) 282. (18) Curtis v. Insurance Co., 90 Cal. 245. (19) Chisholm v. Insurance Company, 52 Mo. 213. has been held that a fiancee may be brought within the category of dependent persons (20). § 13. Same: Relation of blood or marriage. Illustra tions of the second kind of insurable interest in lives are husband and wife, and a sister supported or helped by her brother (21). Whether mere close blood relation, as a brother and sister, with no hope of pecuniary gain is a sufficient insurable interest is not agreed upon by the courts. The majority holds that it is not enough. It is sometimes held that the fact that a person has expended money in the support of another gives him an insurable interest in the life of that other, even though there is no obligation to pay back the sum thus expended (22). This, however, would seem bad as a matter of public policy, since it does not properly come within the test of insurable interest as defined above. § 14. Same: Expectation of advantage. It is generally held that the mere expectation of advantage, not based on any contract right or blood relation is not sufficient to give an insurable interest. Thus, a college which had been liberally benefited by the gifts of its founder, and which had strong expectations of future gifts, was held to have no insurable interest in his life (23). On the other hand, where a child was brought up by foster parents, although they did not adopt it so as to incur any legal obligation in regard to it, the child was held to have an insurable interest in the life of its foster father (24); and (22) Insurance Co. v. Kane, 81 Pa. 154. (23) Trinity College v. Insurance Co., 113 N. C. 244. (24) Carpenter v. Insurance Co., 161 Pa. 9. a man married to a woman, who had, unknown to him, another husband still living from whom she had not been divorced, so that the second marriage was in reality a nullity, was nevertheless held to have an insurable interest in the life of the woman he believed to be his wife (25). The same general doctrine of insurable interest exists in accident as in life insurance. SECTION 4. ASSIGNEES AND BENEFICIARIES. § 15. Fire insurance: Assignees. If A, having a policy of insurance on his house, sells the house to B, this will not carry the policy to B, for insurance is a personal 'contract and is not regarded as an incident to the property, so as to pass with the transfer of it. This is one of the oldest principles in insurance law (26). Hence, if there is a fire after the sale by A to B, there can be no recovery on the policy. On the other hand, however, A may, when he sells the property to B, also assign the policy to B. Should the assignment require the consent of the company (27), there is really a new contract between B and the company, which is now based on B's insurable interest, and any subsequent act by A, is, so far as B's rights are concerned, immaterial. Thus, in a late case involving this principle, A's policy provided that if the insured without the consent of the company should mortgage the property, the policy should become void. A (25) Insurance Co. v. Paterson, 41 Ga. 338. (26) Lynch v. Dalzell, 4 Bro. P. C. 431. (27) The New York Standard and most other policies specifically require the consent of the company to an assignment. See Appendix E, line 59. mortgaged without the consent of the company, and later sold the premises to B and assigned the policy to B with the consent of the company; later there was a fire, and, when B sued the company, the company set up the existence of the mortgage made by A without its consent. This was held to be no defense, for the policy was forfeited only if the insured should mortgage, and B, the present insured, never had mortgaged, and what A did could not affect B's rights on what was substantially a new policy (28). On the other hand, where, on exactly the same facts, the policy had a clause that if the property is encumbered, the policy shall be void, it was held that B could not recover since that clause specifically applied to the condition of the property at the inception of the policy (29). § 16. Same: Assignment to mortgagee. It is possible for A still to retain the ownership of the property and at the same time assign the policy, in the sense of making it payable to B. This is frequently done to secure a mortgage. If the company consents, B now has a vested interest in the policy, and the company cannot, in the event of loss, pay the face of the policy to A without rendering itself liable to B (30). But the policy still rests on A's insurable interest and consequently, if anything is done by A which forfeits the policy, B has no right to recover (31). The principles discussed in this subsection and the preceding one are both illustrated by this case: A owned (28) Insurance Co. v. Munns, 120 Ind. 30. (29) (30) Ellis v. Insurance Co., 32 Fed. 646. Hathaway v. Insurance Co., 134 N. Y. 409. (31) App. E, 11. 36-74. |