McCue v. Northwestern Mut. Life Ins.

DAYTON, District Judge

(after stating the facts as above). We cannot refrain from expressing our admiration for the learning, research, and ability displayed by counsel on both sides, in both oral arguments and in the briefs filed by them. It is not our purpose to discuss in detail all the points raised. To do so would consume too much time and space. On behalf of the defendant company it is insisted that “there can be no recovery on a life insurance policy where the insured is legally executed, the policy being silent on the subject.” First. Because death on the gallows was not one of the risks against which decedent was insured. Second. Even if it had been a risk specially contracted for, a recovery under such circumstances would be contrary to public policy. On the other hand, it is contended: riirst. Thai this company, incorporated by special statute of Wisconsin. was expressly given "the right “to insure the lives of its respective members and to make all and every insurance appertaining to or connected with life risks,” and, having this power, admitted McCue into membership, therebj7 giving him a vested interest in the corporation, and bound itself to pay the policy “upon receipt and approval of proofs of the fact and cause of his death,” without any condition against such death occurring by the mandate of the law. Second. That the obligation of this contract is controlled by the law of Wisconsin. that public policy affecting ordinary business transactions between citizens is determined by state laws, and the special statute of that state has settled the question of public policy adverse to the general rale relied on by the company. Third. That, if this were not so, the peculiar facts and conditions arising in this case take it outside of die application of this rule of public policy. In reply, it is insisted ¡íiat this insurance policy in this court must be construed under the rides of general commercial law, and not under local state statutes.

We need have little trouble in disposing of the first ground of defense, to the effect that death by the mandate of the law was not one of the risks insured against by decedent’s policy. It is well understood that the insurance companies generally have adopted a policy of incorporating into their policies exceptions to risks not desired to he undertaken by them. E'or instance, in this policy in controversy the company required McCue to agree that if he should “pass south of the Tropic of Cancer, or be previously engaged in blasting, mining, or submarine operations, or in the production of highly inflammable or explosive substances, or in electrical employment where the voltage is o\er six hundred, or in switching or coupling or uncoupling cars, or be employed in any capacity on the trains of a railroad, except as passenger or sleeping car conductor, mail agent, express messenger or baggage-master, or in ocean navigation, or shall enter or be engaged in any military or naval service (except in time of peace) without "the written consent of said company, or shall within one year from the «late of said policy, whether sane or insane, die by my (his) own hand,” then the policy should he null and void. When it is remembered that tins company was expressly authorized by its charter to “insure the *438lives of its respective members and to make all and every insurance appertaining to or connected with life risks”; that no exception for death by mandate of the law was incorporated among these many other exceptions; that the company’s general state agent allowed the decedent, after commission of the crime and when in custody to answer therefor, to pay the note executed by him for the 18 months’ premium due — we are not prepared to hold that this risk was not one contemplated by the company when it executed this contract.

The case therefore resolves itself, in practical effect, to a solution of the question whether the contract, by reason of the manner of the death, was made absolutely void through considerations of public policy. And here we are involved in very -eat doubt and perplexity by reason of the conflict that exists in the decisions of many of the state courts themselves, and between those of many of these state courts and of the 'federal courts as to what constitutes the public policy touching cases of this kind and others involving similar principles.

Counsel for the company, in support of their position confidently rely upon these four cases: Amicable Society v. Boland, 4 Bligh (N. S.) 194; Burt v. Union Central Ins. Co., 187 U. S. 362, 23 Sup. Ct. 139, 47 L. Ed. 216; Ritter v. Mutual Life Ins. Co., 169 U. S. 139, 18 Sup. Ct. 300, 42 L. Ed. 693; Collins v. Met. Life Ins. Co., 27 Pa. Super. Ct. 353.

The Boland Case was decided by the House of Rords in England in 1830. There, Eauntleroy, insured, was guilty of forgery, then a. capital offense, declared bankrupt, and his insurance policy with other effects was assigned to Boland and others as trustees. He was tried upon the forgery charge, convicted, and hung. His assignees sought to recover upon his insurance policy. The lower court gave judgment, but the House of Rords reversed it, and held that to allow recovery would be against public policy. It is insisted, by counsel for appellants that this decision was determined largely by reason of the law of attainder then in force in England, but that since the abolition of this law with its attendant forfeiture of goods and corruption of blood, by 33 Victoria, in 1870, the principle of public policy set forth in this Boland Case has been greatly modified, if not reversed, by the May-brick Case (Cleaver v. Mutual, etc., Rife Association, 1 Q. B. D. 147), where it was held that although Mrs. Maybrick, who had poisoned her husband and been convicted, could not directly take the proceeds of her wrong, yet if, by a reasonable construction of the contract resulting in the avoidance of forfeiture, even if such construction resulted in establishing a trust fund for the benefit, in part, of Mrs. Maybrick, yet this could furnish no defense to the insurance company. In this case the Master of Rolls, all the other judges concurring, says:

“When people vouched that rule (of public policy) to excuse themselves from the performance of a contract in respect to which they had received the full consideration, and when all that remains to be done under the contract is for them to pay money, the application of the rule ought to be narrowly watched, and ought not to he carried a step further than the protection of the public requires.”

Again, in Moore v. Woolsey, 4 E. & B. Q. B. 243 (82 C. C. L.), where the policy itself stipulated death by dueling, by suicide, or by *439the hands of justice should be void as to the executors or administrators of the decedent, and remain in force only to the extent of any previous interest which may have been acquired by any other person under an actual assignment by deed, for a valuable consideration, etc., and when decedent was a suicide, I,ord Campbell, C. J., says;

“Where a mail insures his own life, we can discover no illegality in a stiiralaiion that if the policy should afterwards be assigned bona fide for a valuable consideration, or a lien upon it should afterwards be acquired bona fide for a valuable consideration, it might be enforced for the benefit of others, whatever may be the means by which death is occasioned. No authority has been cited in support of the position that such a condition is illegal; and the frequent introduction of it into life policies indicates the general opinion that it is unobjectionable. The supposed inducement to commit suicide under such circumstances cannot vitiate the condition more than the inducement which the lessor may he supposed to have to commit murder should render invalid a beneficial lease granted for lives. When we are called upon to nullify a contract oxi the ground of public policy, we must take care that we do not lay down a rule which may interfere with the innocent and useful transactions of mankind. That the condition under discussion may promote evil by leadixxg to suicide is a very remote and improbable contingency; and it may frequently be very beneficial by rendering a life policy a safe security in the hands of an assignee.” '

Whether or not the law of. attainder had a controlling influence in the determination of the Boland Case is immaterial, for certain it is it should have no influence here, as we in this country have never recognized this law, and its operation has been expressly prohibited by our national Constitution and by those of most of the states, and by an act (Act April 10, 1790, c. 9, § 24, 1 Stat. 117) of Congress.

Turning now to the decisions of our state courts, we find:

(a) By the great majority of the state decisions it has been held that suicide is not excepted from the risks assumed by the insurer, unless the policy was taken out with intention to commit suicide and defraud the insurer. Patterson v. Ins. Co., 100 Wis. 118, 75 N. W. 980, 42 L. R. A. 253, 69 Am. St. Rep. 899; Supreme Conclave, etc., v. Miles, 92 Md. 613, 48 Atl. 845, 84 Am. St. Rep. 528; .Eastabrook v. Ins. Co., 54 Me. 224, 89 Am. Dec. 743; Grand Lodge, etc., v. Wieting, 168 Ill. 408, 48 N. E. 59, 61 Am. St. Rep. 123; Kerr v. Association, 39 Minn. 174, 39 N. W. 312,12 Am. St. Rep. 631; Schultz v. Ins. Co., 40 Ohio St. 217, 48 Am. Rep. 676; John Hancock Co. v. Moore, 34 Mich. 46 ; Conn. Mut. Life Ins. Co. v. Groom, 86 Pa. 92, 27 Am. Rep. 689; Darrow v. Society, 116 N. Y. 537, 22 N. E. 1093, 6 L. R. A. 495, 15 Am. St. Rep. 430. 1 f this be true, then it necessarily follows that, if McCue in this case, after killing his wife, actuated by the remorse and terror that follows such a deed, had taken his own life, then there could be no question but what, under these decisions, his infant children could derive the benefit of this insurance; and the application of the doctrine of public policy in this case must be enforceable only because he did not go a step farther and commit th two crimes of murder, and self-destruction instead of the one alone.

(b) It has been held that for the beneficiary in an insurance policy to feloniously kill the insured in order to reap the benefit of such insurance will clearly defeat the contract so far as he or any one holding through him is concerned, upon the clearest principle of public'policy. *440But on the other hand, it has been, held in the Maybrick Case, as w¡e-have shown, that if the proceeds of the policy go not direct to the guilty. beneficiary, but to a trust fund constituted, in part, for his benefit,then public policy will not intervene and defend the insurer from the enforcement of his contract.

(c) “Statutes of descent have generally been held not to exclude an heir or devisee from the benefits of these statutes on the ground that the heir or devisee had feloniously and intentionally destroyed the life of the person from whom the legacy or inheritance was expected.”. Collins v. Life Ins. Co., 232 Ill. 37, 83 N. E. 542, 14 L. R. A. (N. S.) 356, 122 Am. St. Rep. 54; Shellenberger v. Ransom, 41 Neb. 641, 59 N. W. 935, 25 L. R. A. 564; Owens v. Owens, 100 N. C. 240, 6 S. E. 794; Carpenter’s Estate, 170 Pa. 203, 32 Atl. 637, 29 L. R. A. 145; 50 Am. St. Rep. 765. From this principle it is clear that, if these, infant children of McCue had killed their father instead of his killing their mother and getting hanged for it, thereby leaving them innocently without the support of either, then this policy made payable to his personal representatives could have been collected and made to inure to their benefit.

(d) It goes without saying that under constitutional and statutory prohibition no vested property rights of one dying at the hands of justice can be forfeited, no matter .how heinous his crime, nor, for that reason, can the obligations of those wh.o by ordinary contracts have dealt with him be avoided.

Therefore, if this insurance company had been a joint-stock company instead of a mutual one, and had contracted with McCue, for a valuable consideration, to deliver over to his personal representatives, say, $5,000 of its capital stock, the day after his death, no one would deny that it would have to comply with its contract.

But with great force it is argued that the question is no longer an open one in the federal courts, and that, notwithstanding the decisions of courts of last resort in the states to the contrary, the Supreme Court of the United States in Ritter v. Mutual Life Ins. Co., 169 U. S. 139, 18 Sup. Ct. 300, 42 L. Ed. 693, has held that a life insurance policy taken out by the insured’ for the benefit of his estate was avoided when he, in sound mind, intentionally took his own life, and this irrespective of the question whether there was a stipulation in the policy to that effect or not, and that the same court in Burt v. Union Central Ins. Co., 187 U. S. 362, 23 Sup. Ct. 139, 47 L. Ed. 216, has decided the exact question in controversy here to the effect that a policy of life insurance does not insure against the legal execution of the insured for crime. Touching the first case little need be said, and it is cite.d only as illustrating how jealously this great court has adhered to and applied this doctrine of public policy to these insurance contracts. That its ruling is not in accord with those of the courts of last res.ort in many of the states we have already pointed out, and in some of these states the contrary view has so impressed the legislative mind that special statutes, expressly nullifying the principle of this decision, have been enacted. In passing upon such a statute the Supreme Court, speaking through the same learned justice who rendered the opinion in the Ritter Case, says;

*441“Thnt tho sí Ante is a legitimate exertion of power by the state cannot he successfully disputed. Indeed, the contrary is not asserted in this case, although it is suggested that tho statute ‘seemingly encourages suicide, and offers a bounty therefor, payable, not out of the public funds of the state, but out of the funds of insurance companies.’ There is some foundation for this Krg'wsiUon in a former decision of this court, in which it was held that public policy, even in the absence of prohibitory statute, forbade a recovery upon a life policy, silent as to suicide, where the insured, when in sound mind, willfully and deliberately took his own life. Ritter v. Mutual L. Ins. Co., 169 U. S. 139, 18 Sup. Ct. 300, 42 L. Ed. 693.
'“But tlie determination of the present case depends upon other considerations than those involved in the Ritter Case. An insurance company is not bound to make a contract which is attended by the results indicated by the .--t.otate in question. If it does business at all in the slate, it must do so subject to such valid regulations as the state may choose to adopt. Even IT the statute in question could be fairly regarded by the court as inconsistent with public policy or sound morality* it cannot, for that reason aie-re, be disregarded; for it is the province of the state, by its Legislature, to adopt; such a policy as it deems best, provided it does not, in so doing, come into conflict with the Constitution of the state or the Constitution of the United States.” Whitfield v. Ætna Life Ins. Co., 205 U. S. 489, 27 Sup. Ct. 578, 51 L. Ed. 895.

By this decision it seems to us we reach bed rock in this matter. It would seem very clear that touching general contracts of insurance, governed by the rules of commercial law, the federal courts in obedience to the ruling in the Ritter Case must hold, regardless of state decisions, that no recovery can be had bn a policy of insurance on the life of one who willfully and deliberately, while in sound mind, took his own life. And we must go a step further and say thnt, in the case of such contracts general in character and governed by the rules of commercial law, we must, regardless of state decisions, in view of the decision of the Supreme Court in the Burt Case, hold that a policy of life insurance “does not insure against the legal execution of the insured for crime.” But in special contracts not governed by the rules <n commercial law, but provided for by special legislation of a state, conferring special rights and vested interests enforceable alone under :-ucb stale legislation, we must, under the ruling in the Whitfield Case, he governed by the law of that state touching the application of this doctrine of public policy, for, under such circumstances, the state has a right to adopt the view entertained by the Supreme Court or to reject it. In other words, the state by its own legislation and the decisions of its own courts can establish its own public policy, “provided it docs not, in doing so, come into conflict with the Constitution of the state or the (.’'institution of the United States,” although such policy, so established, may be, in the opinion of the federal courts, “inconsistent with public policy or sound morality.”

“Tl'lie courts, of the United States adopt and follow the decisions of the hismost court of a state in questions which concern merely the Constitution (y laws of that state; also where a course of those decisions, whether founded on. statutes or not, have become rules of property within the state; also in regard to rules of evidence in actions at law; and. also in reference n the common law of the state, and its laws and customs of a local cha racier, when established by repeated decisions.” Bucher v. Cheshire R. R. Co., 125 U. S. 555, 8 Sup. Ct. 974, 31 L. Ed. 795.

*442That this position has from the beginning, and uniformly since, been held by the Supreme Court, cannot be more strikingly illustrated than by its decisions touching indefinite charitable bequests and devises. In 1819, Chief Justice Marshall rendered his opinion in Baptist Association v. Hart, 4 Wheat. 1, 4 L. Ed. 499, in which he held such could not be established by a court of equity, independent of the statute, 43 Eliz. The case came from Virginia, where the public sentiment was distinct and very bitter against these indefinite charities, especially to church organizations. Judge Story subsequently published a concurring opinion in this case. 3 Pet. 481, 497, 7 L. Ed. 749. Subsequently he changed his mind and wrote the opinion in Vidal v. Girard’s Ex’r, 2 How. 127,11 L. Ed. 205, upholding such a bequest. See, also, Fontain v. Ravenel, 17 How. 369, 15 L. Ed. 80. The Virginia public policy, however, became firmly established in accord with the ruling in Association v. Hart against the validity of such indefinite charities. See Gallego’s Ex’rs v. Attorney General, 3 Leigh (Va.) 450. In consequence, in Wheeler v. Smith, 9 How. 55, 13 L. Ed. 44, 24 Am. Dec. 650, and again in Kain v. Gibboney, 101 U. S. 362, 25 L. Ed. 813, both Virginia cases, the case of Association v. Hart was followed, and such indefinite charitable bequests were held void, solely because the rule of public policy in Virginia, as determined by the decisions of its courts, demanded it, and this, too, notwithstanding the fact that it was clear that Chief* Justice Marshall had been mistaken in saying that such charities in England could not be established by a court of equity independent of the statute of 43 Eliz., and the further fact that the Supreme Court in the Girard Case, and in other cases arising from other states where no such rule of public policy prevailed, had upheld such charities. In fact, in Russell v. Allen, 107 U. S. 167, 2 Sup. Ct. 331, 27 L. Ed. 397, Mr. Justice Gray says:

“And the only cases in which this court has followed the decision in Baptist Association v. Hart have, like it, arisen in the state of Virginia, by the decisions of whose higher court charities, except in certain eases specified by statute, are not upheld to any greater extent than other trusts.”

It would seem clear, therefore, that the Supreme Court by this line of decisions, so uniformly upheld for so many years, notwithstanding we be in entire accord with it as to what constitutes the true principle of public policy based upon sound morals in the premises, has directed us if the state has, by its statutes or the decisions of its highest court, established a contrary rule not contrary to constitutional inhibition, to follow such rule in the enforcement of contracts arising under the laws of that state and not otherwise.

It therefore becomes important for us to determine, first, whether this insurance policy was a Wisconsin contract or simply a commercial one, and, second, whether the rule of public policy in Wisconsin, if there be any, is contrary to that enunciated by the Supreme Court.

As to the first: The defendant company is a Wisconsin corporation. It owes its life to a special act of the Legislature of that state (Priv. Laws Wis. 1857, p. 195, c. 129), which distinctly defines its power and obligations. This act, amended by some nine other legislative acts, enacted from time to time since 1857, expressly provides *4431 hat those “who shall hereafter insure with the said corporation, and also their heirs, executors, administrators and assigns * * * ‘.hall thereby become members thereof during the period they shall remain insured.” It gives to them, under conditions expressly set forth, the right to vote for and elect its trustees and officers; to become such trustees and officers; to sue said corporation and to be sued by it touching their rights and obligations as such members; and it goes to the extent of expressly defining the rule of evidence as to disqualification of witnesses in any such suits; it provides for stated dividends to be ascertained and paid to them from the profits of the company, and other provisions are made, all of which clearly disclose that persons holding these policies become members of the corporation and acquire rights under and by virtue of these laws not set forth in the policy and not attaching to the ordinary policies issued by stock companies. In addition to this, the policy on its face shows it was executed at the office of the company in Wisconsin, and by its express terms was made payable there. This being true, the conclusion is inevitable: This contract must be held to be a Wisconsin one, to be construed according to its laws.

As to the second question: The legislative act of Wisconsin gave to this company the unlimited power to “insure the lives of its respective members and to make all and every insurance appertaining to or connected with life risks.”

“Tliis court can know nothing of public policy except from the Constitution and the taws and the course of administration and decision. It has no legislative powers. It, cannot, amend or modify any legislative acts. It cannot examine questions as expedient or inexpedient, as politic or impolitic. Considerations of That sort: must, in general, be addressed to the Legislature. Questions of policy determined there are concluded here.” License Tax Cases, 5 Wall. 462, 469, 18 L. Ed. 675.

This legislative act did not limit the power to assume, life risks, but expressly gave power to assume all and every such. We would simply be indulging in judicial legislation for the state of Wisconsin if we should add to this act “except those arising from suicide or hanging.” To have clothed this company with this power may have been inexpedient and unwise, but with that we can have no concern. Having been thus empowered to assume all and every risk, the company was not. thereby deprived of the power to limit its assumption by express stipulations in the contract to those it was willing and desirous to assume. If it does not, however, so limit its liability under such circumstances, it must he held to have assumed the risks, under ruling of the Supreme Court of Wisconsin in McCoy v. Northwestern Mutual Relief Association, 92 Wis. 577, 66 N. W. 697, 47 L. R. A. 681. In this case the policy provided that death by suicide was not one of the risks assumed, and would render the policy void. The charter and bylaws of the company did not exclude suicide as a risk, however. The lower court held that, by reason of the charter not so excluding death by suicide as a risk to be assumed, the suicide clause in the policy was void, and the company responsible notwithstanding. The Supreme Court reversed this ruling, and held that the policy contract could *444provide such exception, although the charter and by-laws of the company did not. Marshall, J., in this case, says: •

“It is weil settled that, if a contract for life insurance does not provide against liability in ease of death by suicide or self-destruction, then such cause of death does not constitute a defense.”

Again in Patterson v. National, etc., Ins. Co., 100 Wis. 118, 75 N. W. 980, 42 L. R. A. 253, 69 Am. St. Rep. 899, the Supreme Court of Wisconsin, after direct consideration of the Boland Case (upon which the ruling in the Burt Case is based) and the Ritter Case, says:

“Conceding the strength of the arguments upon public policy on which the Ritter Case is based, we still think, in view of the prior decisions above cited to the contrary of the rule there laid down, and the general apparent acquiescence in these decisions by the courts and by the people, that we ought to hold, in accordance with those decisions, that, in case where third persons are beneficiaries, intentional suicide of the insured while sane does not avoid the policy, in the absence of any provision in the policy to that effect.”

We are driven to the conclusion that the rule of public policy in Wisconsin as established by the legislative act creating the defendant company and defining its rights and powers and by the decisions of its highest court is directly opposite to that established by the Supreme Court in the Ritter and Burt Cases, and that, in compliance with the direction of the Supreme Court as herein set forth in such case involving public policy, we must construe this Wisconsin contract in accord with its law and its Supreme Court’s ruling.

It may be added incidentally that the case of Collins v. Met. Life Ins. Co., relied on by defendant’s counsel, as a case directly in point, decided by intermediate courts adverse to recovery in Pennsylvania (where the action was allowed to be dismissed without prejudice before final judgment, however), and in Illinois, has by the Supreme Court of the latter state, all the judges concurring, been reversed and the company held liable. 232 Ill. 37, 83 N. E. 542, 14 L. R. A. (N. S.) 356, 122 Am. St. Rep. 54.

With this view that, touching questions of public policy, the state laws and decisions must control, we find no conflict apparent with the decision in the Burt Case. The question did not aris.e there. It seems in effect to have been conceded that the insurance contract was a commercial one, to be construed by the rules of commercial law independent of state decision. This is shown by the contract itself, a copy of which is appended to the brief of the appellants. It was the ordinary nonparticipating one for '$5,000 in case of death, and contracting to pay a fixed surrender value of $2,194 upon maturity at the end of 20 years. The greater stress in the case was made upon the alleged right to show, notwithstanding the judicial conviction, that the insured was unjustly convicted and executed; that he did not in fact commit the crime of murder or participate therein, or, if he did, he was at the time insane and irresponsible.

We do not discuss or determine whether under the circumstances the children and heirs at law or the executors are entitled to recover, the determination of this question having been expressly waived by counsel.

*445The judgment, or more properly decree, of the court below, must he reversed, the cause remanded, and the defendant company held liable.

Reversed.