CAMMACK
v.
LEWIS
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In a dispute over a life insurance policy taken out by Lewis for $3,000 to secure a debt of only $70 owed to Cammack, the Supreme Court held that the policy constituted a wagering contract and probable fraud on the insurance company, and therefore Cammack could hold the policy only as security for the actual debt and advances made, not the full policy amount. The Court affirmed that Lewis's administratrix was not bound by her earlier receipt of one-third of the insurance proceeds, as she had acted in ignorance of her full rights and the receipt predated formal administration of the estate.
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Mr. Justice MILLER delivered the opinion of the court.
If the transaction as set up by Cammack be true, then, so far as he was concerned, it was a sheer wagering policy, and probably a fraud on the insurance company. To procure a policy for $3000 to cover a debt of $70 is of itself a mere wager. The disproportion between the real interest of the creditor and the amount to be received by him deprives it of all pretence to be a bond fide effort to secure the debt, and the strength of this proposition is not diminished by the fact that Cammack was only to get $2000 out of the $3000; nor is it weakened by the fact that the policy was taken out in the name of Lewis and assigned by him to Cammack. This view of the subject receives confirmation from the note executed by Lewis to Cammack for the precise amount of the risk in the policy, which, if Cammack’s account be true, was without consideration, and could only have been intended for some purpose of deception; probably to impose on the insurance company.
Under these circumstances, we think that Cammack could, in equity and good conscience, only hold the policy as security for what Lewis owed him when it was assigned, and such advances as he might afterwards make on account of it, and that the assignment of the policy to him was only valid to that extent.
Whether Lewis was a participant in the fraud, does not fully appear. Such conversations of his as are proved tend to show that he looked upon Cammack as a friend, to whom he was willing to trust the policy assigned, and that he never supposed more would be claimed by Cammack than what he owed him. It is also probable that he believed he would survive the life of the policy, and with the single exception of the note for $3000, given by him without consideration, there is nothing proved against him inconsistent with that view of the matter, and with his fair dealing. At all évents, we do not see such evidence on his part of a corrupt transaction, as to forbid the court from doing justice between his administratrix and Cammack, after the amount secured by the policy has been paid by the company to the latter. The receipt of the one-third of the insurance money by the complainant does not, we think, under all the circumstances of the case, conclude her as a settlement of the matter in dispute. It is obvious that she was ignorant of the full extent.of her rights; that she acted hastily and without due consideration, and was largely influenced by the advice of Mr. Chandlee, who had been her husband’s friend and adviser, and who was prompted to do what he did by Cammack, while in ignorance of many of the facts of the case.
Besides, the bill in this case, as appears on its face, is brought by her as administratrix, and the receipt by her of the one-third paid on the policy was before any administrator had been appointed. If she has a right to recover all the $3000 as administratrix, it could not be defeated by her receipt of $1000, paid to her in her own right before any administration had been taken out on Lewis’s estate.
On the whole, we are of opinion that the decree of the Supreme Court should be affirmed, and it is
So ORDERED.
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Grigsby v. Russell, 222 U.S. 149 (U.S. 1911)
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Warnock v. Davis, 104 U.S. 775 (U.S. 1881)…lict of decisions on this subject we are free to follow those which seem more fully in accord with the general policy of the law against speculative contracts upon human life. In this conclusion we are supported by the decision in Cammack v. Lewis, 15 Wall. 643. There a policy of life insurance for $3,000, procured by a debtor at the suggestion of a creditor to whom he owed $70, was assigned to the latter to secure the debt, upon his promise to pay the'premiums, and, in case of the death of the assured, on…
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Crotty v. Union Mut. Life Ins. Co., 144 U.S. 621 (U.S. 1892)…s interest in the policy. It is the settled law of this court that a claimant under a life insurance policy must have an insurable interest in the life of the insured. Wagering contracts in insurance have been repeatedly denounced. Cammack v. Lewis, 15 Wall. 643, in which a policy of $3000, taken out to secure a debt of $70, was declared “ a sheer wagering policy.” Connecticut Mutual Life Insurance Co. v. Schaefer, 94 U. S. 457, 461, in which it was said: “ In cases where the insurance is effected merely by…
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