Life insurance lawyers will see fights over who is entitled to life insurance proceeds. One of the fights is over whether or not the named beneficiary had an insurable interest in the life of the insured.
In the Drane case, Harry E. Ezell, Jr. was named as the beneficiary under two policies insuring the life of Dorothy A. Drane. Hugh Drane, the executor of Dorothy’s estate filed a lawsuit seeking to prevent Ezell from recovering the money and for the money to go to Dorothy’s estate.
The relevant issue in this case is whether Harry had an insurable interest in the life of Dorothy.
Although not related by blood or marriage to Harry, nor indebted to him in any way, Dorothy named his as beneficiary in two life insurance policies totaling $10,510 and providing for double indemnity in the event of accidental death. Drane contends that Harry is not entitled to the money because he had no insurable interest in her life. If this contention is correct it would be contrary to public policy to allow Harry to recover.
Under Texas law, those held to have an insurable interest in the life of another fall into three general classes: 1) one so closely related by blood or affinity that he wants the other to continue to live, irrespective of monetary considerations, 2) a creditor, 3) one having a reasonable expectation of pecuniary benefit or advantage from the continued life of another.
Since, Harry was in no way related to Dorothy and was not her creditor, the Court looked only to the third class of person. Bluntly expressed, insurable interest under the third classification, is determined by monetary considerations, viewed from the point of the beneficiary. Would he regard himself as better off from the standpoint of money, would he enjoy more substantial economic returns should the insured continue to live; or would he have more, in the form of the proceeds of the policy, should she die. Therefore it is said that if the situation is such that he might be led to conclude that he would profit by his death, the policy contract is void as to him since the public has a controlling concern that no person have an interest in the early death of another, an interest that may give rise to a temptation to destroy her life.
The record shows, without dispute, that for some fifteen years the deceased bought clothes for the beneficiary from one department store in Dallas, beginning very early in his life. “Every spring and fall” she went to that store and bought spring and fall clothing — a suit “and whatever else he needed.” As he grew older, more and more clothing was thus provided for him. To illustrate, on January 26, 1937, the year of her death, the deceased bought for him an overcoat, a pair of slacks and a sweater; on January 29, an overcoat; on February 27, a shirt, a pair of hose and two collars; on March 21, a suit, a pair of slacks and two pairs of suspenders; on April 14, four ties; on July 9, three shirts; and on September 14, a tuxedo. The total cost of this clothing so bought at one store, during less than eight months, was $277.30. An employee of a drug store in Corsicana testified that from 1930 up to the time of Miss Drane’s death Ezell, Jr., had the benefit of her charge account there, that they sold him what he wanted, charging the same to her account, and that he often paid the account with a check signed by her. The record further discloses, without dispute, that in 1930, he sustained an eye injury, which necessitated many visits to a specialist in Dallas over a period of two years. There was a trip every day “for months,” then every other day, then about twice a week, then once a week, and finally once a month. Young Ezell’s mother testified that these trips were made in Miss Drane’s car, Miss Drane driving them up from Corsicana. The record further shows, without dispute, that from 1931 to 1934, his mother was afflicted with tuberculosis; that during that period she spent five months in San Angelo, seven months in San Angelo and Los Angles, fifteen months in El Paso and four months in Los Angeles, to restore her health, a total of thirty-one months; that during these absences the boy took all his clothes and his other personal effects and lived in the home of Miss Drane as one of the family, because under that arrangement, as his mother said, “he would feel as little as possible his mother’s absence.” On one occasion she gave him a “set of furniture.” During his three years in high school she went almost daily in her car to take him home. She frequently took him to Sunday school and church. She took him to California to see S.M.U. play in the Rose Bowl game. In the year of her death she took him on another trip to the west coast and into Canada, which lasted six weeks. When she met her death she was on her way to see him at College Station, where he was a freshman student at A. M., and was taking him a radio, a cap and an apple pie.
The explanation for all this interest in young Ezell lies in the fact that he was born in the Drane home and that Dorothy Drane was in the house at the time of his birth; that she was his godmother when he was christened; and that affection came so early and grew so warm that he had caller her “Auntie” all his life. This devotion was reciprocal and unwavering.
In determining insurable interest, each case must generally depend for its solution upon its own particular facts. In the light of the facts of this case, the Court thought it would be unreasonable to say that young Harry could have no reasonable expectation of pecuniary benefit and advantage from Dorothy’s continued life. For thirty-one months she had mothered him while his mother was fighting tuberculosis. For at least fifteen of his seventeen years of his life she had provided him with perhaps more clothes than the average boy has. For months she had taken him in her car from Corsicana to Dallas to have his injured eye treated. After he got old enough better to understand what he saw, she had taken him on two extended trips, which doubtless were expensive to her but educational to him. And it is tragically significant that she was killed while on her way to see him and to take him articles both pleasing and necessary. Under such circumstances could this youth reasonable expect that her contributions to his pecuniary benefit and advantage would continue? The evidence shows that when Dorothy Drane was killed “his temporal affairs, his just hopes and well-grounded expectations of support, of patronage, and advantage in life” were impaired. It is inconceivable, under the facts of this record, that he would ever have been tempted to destroy her life in order to collect the proceeds of the two policies in suit. Consequently, the Court held that he had an insurable interest in her life