NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY v. McCUE, ET AL.

CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR THE FOURTH CIRCUIT.

No. 138. Argued December 20, 21, 1911.—Decided February 19, 1912.

The obligation of a contract depends upon the law of the State where made.

A life insurance policy which by its terms does not become a completed contract until delivery on payment of first premium is to be construed as a contract made in the State where the first premium is paid and the policy delivered, notwithstanding a recital that it is to be construed as though made in another State. Equitable Life Society v. Clements, 140 U. S. 226.

In this case, held, that a policy issued by a Wisconsin company on the life of a resident of Virginia, to whom it was delivered in that State on payment of the first premium, is a Virginia contract.

Even though a policy in a mutual life insurance company be a property right, it is the measure of rights of every one thereunder, and if the owner thereof cannot recover because it would be against public policy to permit a recovery, neither can the innocent heirs of that person recover.

A policy of life insurance, silent on the point, does not cover death by the hand of the law. This is consonant with the rulings of the Virginia courts.

Quare: Whether in a case of this nature this court would have to yield to the determination of what a state court has declared to be its public policy.

Quare: What the public policy of the State of Wisconsin is on the liability of an insurance company for death of the insured by the hand of the law.

167 Fed. Rep. 435, reversed.

THE facts, which involve the liability of a life insurance company on a policy on the life of one who came to his death by hanging after conviction and sentence for mur

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Argument for Petitioner.

der, and the construction of the policy itself, as well as by what law it is to be construed, are stated in the opinion.

Mr. William H. White, Jr., and Mr. William H. White, with whom Mr. George H. Noyes and Mr. John R. Dyer were on the brief, for petitioner:

The policy was not a Wisconsin contract but a Virginia contract, because the application was made, the premium paid, and the policy delivered in Virginia. Equitable Life Assur. Soc. v. Clements, 140 U. S. 226; Mutual Life Ins. Co. of New York v. Cohen, 179 U. S. 262; Northwestern Life Ins. Co. v. Elliott, 5 Fed. Rep. 225, 228. See also Knights of Pythias v. Meyer, 198 U. S. 508; Ritter v. Mut. Life Ins. Co., 169 U. S. 139.

The business of insurance is not commerce, and the making of a contract of insurance is a mere incident of commercial intercourse in which there is no difference whatever between insurance against fire, insurance against the perils of the sea, or insurance of life. New York Life Ins. Co. v. Cravens, 178 U. S. 389; St. Johns v. The Amer. Mut. Life Ins. Co., 13 N. Y. 31–38; Rosenplanter v. Prov. Sav. Life Assur. Soc., 96 Fed. Rep. 721; Mutual Life v. Cohen, 179 U. S. 262; Hicks v. National Life Ins. Co., 60 Fed. Rep. 690; 25 Cyc. 748; Minor on the Conflict of Laws, 399; and see Cravins v. N. Y. Life Ins. Co., 148 Missouri, 600; Wall v. Equitable Life Assur. Soc., 32 Fed. Rep. 273; Mutual Life Ins. Co. v. Robinson, 54 Fed. Rep. 580; Equitable Life Ins. Co. v. Winning, 58 Fed. Rep. 541; McMaster v. N. Y. &c. Co., 78 Fed. Rep. 33, 37; Assurance Society v. Clements, 140 U. S. 226.

The contract is one to be construed by the general commercial law of the country as enforced by the Federal Courts regardless of that of the State where it was made. Swift v. Tyson, 16 Pet. 1, 18; Oates v. First Nat. Bank, 100 U. S. 239, 246; Railroad Co. v. Lockwood, 17 Wall. 357; Manhattan Life Ins. Co. v. Boughton, 109 U. S. 121;

Argument for Respondents.

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Pleasant Township v. Etna Life Insurance Co., 138 U. S. 67; Lake Shore &c. R. R. Co. v. Prentice, 147 U. S. 101, 106.

A policy of insurance is a contract, the construction of which should come within the general commercial law. Carpenter v. The Providence Ins. Co., 16 Pet. 495, 511; Washburn & Moen Mfg. Co. v. Reliance Marine Ins. Co., 106 Fed. Rep. 116–7; aff'd 179 U. S. 1; The Barnstable, 181 U. S. 464, 470; Northwestern Nat'l Life Ins. Co. v. Riggs, 203 U. S. 255.

The laws of Wisconsin do not authorize a recovery in this case: Patterson v. Natural Premium &c. Ins. Co., 100 Wisconsin, 118; McCoy v. Northwestern Relief Ass'n, 92 Wisconsin, 577; Whitfield v. Etna Life Ins. Co., 205 U. S.

489.

There can be no recovery on a life insurance policy where the insured is legally executed, the policy being silent on the subject. Amicable Society v. Bolland, 4 Bligh (N. S.), 194; Burt v. Union Central Ins. Co., 187 U. S. 362, 365; Ritter v. Mutual Life Ins. Co., 169 U. S. 139.

To permit a recovery when death has resulted from a violation of law is contrary to public policy. Hatch v. Mutual Life, 120 Massachusetts, 550; Wells v. New Eng. Mut. Life Ins. Co., 191 Pa. St. 207; Murray v. N. Y. Life Ins. Co., 96 N. Y. 614; Bloom v. Franklin Life Ins. Co., 97 Indiana, 478.

Mr. Daniel Harmon, with whom Mr. H. W. Walsh and Mr. G. B. Sinclair were on the brief, for respondents:

The contract upon which this suit has been brought is not void as against public policy. Richardson v. Mellish, 2 Bing. 229, 252; Steamship Co. v. McGregor (1892), App. Cas. 25, 45; Ramboll v. Soojumnull, 6 Moore, P. C. 310; Printing Co. v. Sampson L. R., 19 Eq. 465; Moore v. Woolsey, 4 E. & B. Q. B. 243; Smith v. DuBose, 78 Georgia,

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Argument for Respondents.

413; Richmond v. Dubuque R. R. Co., 26 Iowa, 190; Kellogg v. Larkin, 3 Pinn. 123; S. C., 56 Am. Dec. 164, 168; Swann v. Swann, 21 Fed. Rep. 299; Equitable Life Co. v. Waring, 117 Georgia, 599; The Homestead Case, 22 Gratt. 301; License Tax Case, 5 Wall. 462; Vidal v. Girard, 2 How. 128; citing Pierce v. Randolph, 12 Texas, 200; Houlton v. Nichols, 96 Wisconsin, 393.

Courts are careful not to encroach unduly upon the liberty of contract. Contracts are not interfered with except where they clearly appear to be prejudicial to the public interest. No person can seriously believe that, if a life policy is paid in case of death by hanging, it has a tendency to encourage murder in order to mature the policy by being hung. If benefit to one's heirs by reason of death is an encouragement to crime to accomplish death, then the laws of descent, and the statutes abolishing attainder are equally incentives to crime. The benefit in heirs by execution of the ancestor cannot be said to be subversive of public interest.

There is nothing in the contract which in terms or by necessary implication amounts to an agreement to do an illegal act, or which requires the performance of such an act. If the policy were payable upon the sole condition of death by hanging, there might be some plausibility in such a contention.

There is nothing on the face of the policy which would render it void.

Where the consideration and the matter to be performed are both legal, plaintiff is not precluded from recovering by an infringement of the law not contemplated by the contract. Wethrell v. Jones, 3 Barn. and Adolph. 221; Waugh v. Morris, 42 L. J. Q. B. 57; Brier v. Dozier (Va.), 24 Gratt. 1; McDonald v. Triple Alliance, 57 Mo. App. 87; Fitch v. Ins. Co., 59 N. Y. 557; Mills v. Rebstock, 29 Minnesota, 380. The validity of this contract is to be determined by the law of Wisconsin.

Argument for Respondents.

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The law governing the obligation of this contract does not avoid it. May on Insurance, 402.

The inquiry in the Federal courts is not general, independent of any specific law, but specific as to the law of the State of the obligation.

Whether or not this contract is valid or is to be held void must be determined by the law of the State creating the obligation.

The rule that in matters of general commercial law or general jurisprudence Federal courts are not bound by state decisions does not apply to this case. Wheaton v. Peters, 8 Pet. 591; Bucher v. Cheshire R. R. Co., 125 U. S. 555; Hudson Furniture Co. v. Harding, 17 C. C. A. 203; Chi., M. & St. P. Ry. Co. v. Solan (1897), 169 U. S. 133; Gatton v. Chi., R. I. & P. Ry. Co. (Iowa), 28 L. R. A. 556; Transportation Co. v. Parkersburg, 107 U. S. 691; McClaine v. Prov. L. Ins. Soc., 49 C. C. A. 31; Burgess v. Seligman, 107 U. S. 20.

In the enforcement of statutes or the construction of statutes, the Federal courts make no extrinsic inquiry. William v. Gaylord, 186 U. S. 157; Flash v. Connecticut, 109 U. S. 37; Whitfield v. Ætna Life Ins. Co., 205 U. S. 489.

In questions of policy, the statutes and decisions of the state courts are controlling. Vidal v. Girard, 2 How. 127; License Tax Case, 5 Wall. 462; N. Y. Life Ins. Co. v. Craven, 178 U. S. 389.

In determining the public policy of a State as affecting an obligation arising in that State, the Federal courts not only give great consideration to the decisions on the question by state tribunals, but they are constrained to adopt those rulings as definitive of the policy of the State.

The law of this obligation is the law of Wisconsin, the place of execution of the contract, of payment of the first premium, and of performance.

Where the application is made is immaterial unless that is the place where the final contract was closed. Masneger