Story Case

John Carlson insured his life for $10,000, for the benefit of his wife, in the Old Globe Insurance Company. The policy contained a clause exempting the company from liability should the insured "die as a result or in consequence of any violation of law." After the policy was issued in the year 1915, Carlson started out with friends to hunt prairie chickens during the closed season, in direct violation of a state law. The hunters began their journey into the country in an automobile. When near their destination, and while going over a grade crossing, a terrible collision occurred with a swiftly travelling train. Carlson was killed. When his wife attempted to collect on the policy, the company claimed exemption under the clause stipulated above. Can the company avoid payment on this ground?

Ruling Court Case. Travelers' Insurance Company Vs. Seaver, Volume 19 Wallace Reports (United States) Page 53

In this case, Seavers was beneficiary on a life insurance policy, which provided that the company should be free of liability should the insured die, in consequence of violation of law on his part. The insured was engaged in a horse race, in violation of law. During the race, he collided with another racer, jumped to the ground uninjured, but in attempting to secure hold of the reins, became entangled, and was dragged to his death. The company maintained that it was not liable under the circumstances.

The following is the opinion of the court: "There was a direct relation of cause and effect between the unlawful act and the death of the insured. The death of the insured followed so closely and immediately from the illegal acts of the insured, that it can be said that he died as a result of violation of the law, and the company is relieved of liability." Judgment was given for the Travelers' Insurance Company.

Ruling Law. Story Case Answer

Applications for insurance policies or the actual policies usually contain the clause that the company shall not be liable if the insured die as a result of violation of the law. This provision is frequently inserted in accident policies. The Supreme Court of Massachusetts holds that this provision covers only criminal law. New York and Indiana hold that the provision covers cases where the loss occurs, because of the violation of either criminal or civil laws. In order that the case come within the provision and defeat recovery by the beneficiary, there must have been some act by the insured in violation of the law. The mere intent to violate is not sufficient, and the loss must occur as the direct result of the wrongful act.

The Story Case is based upon the case of Harper vs. Phoenix Insurance Company, Volume 18 Missouri Reports, Page 109, and the court there held that since the insured had merely started with intent to violate the law, and had never actually committed any offense, recovery by the beneficiary was not barred under this provision.

The Story Case is different from the Ruling Court Case, where the death followed the wrongful act, instead of preceding the unlawful act. Where the death follows, it must occur as the direct effect of the act, to bar recovery on the policy.