Life Insurance Company Pays Wrong Person

Dallas Life Insurance lawyers need to know this case.
The case is styled Wilke v. Finn et al. It is a 1931, that was approved by the Texas Court of Appeals. Here is some relevant information.
The Metropolitan Life Insurance Company, on December 31, 1923, issued to Herman Finn a policy of life insurance in the sum of $1,500, in which Fred Wilke was named the beneficiary.
Wilke was not related to Finn, the insured, either by blood or marriage; neither was he a creditor of the insured.
Finn died on February 15, 1927, having theretofore regularly paid the premiums on the policy; Wilke, the beneficiary, never paid any of such premiums or part thereof, and did not know that the policy had issued until some time during the year 1925.
H. B. Finn, Jr. (a cousin of the insured), was appointed and qualified as administrator of the latter’s estate, and on June 6, 1927, brought this suit for the proceeds of the policy against the insurance company and Wilke, the named beneficiary.
The insurance company admitted liability, deposited $1,500 in the court’s registry, and, on allegations of interpleader because of conflicting claims to such proceeds, prayed for its costs, including attorney’s fees.
Fred Wilke claimed the proceeds of the policy as the beneficiary named therein.
The Court pointed out the relevant law by saying, “The doctrine is well settled by the weight of authority that a person not having an insurable interest in the life of another cannot take and hold by an assignment a policy upon the life of such other person, and that a creditor can only take and hold such a policy, by assignment, to an extent sufficient to secure his debt.”
“The only distinction we can see in any case between the assignment of a policy taken by a person on his own life to one having no insurable interest, and the designating such person, without insurable interest, in the original transaction as the beneficiary, is that the insurer may not know of the assignment, but would necessarily be aware of the designation in the policy.
“So far as the question of public policy is concerned, we can see no substantial distinction between the two proceedings; and, if one is invalid, it seems to us the other ought to be held equally so.
“An assignment of a valid policy to one having no insurable interest in the life insured does not invalidate the policy. The assignee may collect and apply the proceeds, if he is a creditor, to the extinguishment of his own debt, and such sums as he may have disbursed for the purpose of keeping the policy alive; and the surplus may be collected for the benefit of the heirs of the person whose life was insured.
“We see no reason why the same rule may not be applied to a person designated in the policy as the beneficiary, treating him, when he has no insurable interest, as an assignee, appointee, or trustee, to receive the proceeds for whoever may be lawfully entitled to enjoy them. The insurer will then be required to pay the sum it has promised to pay, and the money cannot be appropriated by anybody not having a legitimate right to it.”
“When an insurance company has issued a policy upon the life of a person, payable to one who has no insurable interest in the life insured, or when a policy has been assigned to one having no such interest, the insurance company must nevertheless pay the full amount of the policy, if otherwise liable, because it has so contracted; and it is no concern of the insurer as to who gets the proceeds, except to see that it is paid to the proper parties, under its agreement. It is simply required to perform its contract, and the law will dispose of the money according to the rights of the parties.
The company at all times admitted its liability under the policy, but did not know to whom to pay the proceeds. Wilke was the named beneficiary, and ordinarily would be entitled to collect, even though only as trustee; the administrator had served notice on the company not to pay Wilke, and both were claiming the fund.
The company was found to be clear of any wrong doing. But the named beneficiary became liable to the estate for any amount of the policy he received that was beyond any just and owing debt of the deceased.

Contact Information