Case XVI: Restitution in the Case of an Insurance Agent

Case.—Cajus, a reckless young man, is induced by a solicitor of an insurance company to take a $2,000 insurance policy on an endowment plan ten years straight—that is, he has to make ten annual payments, after which he is entitled to $2,000. If he fails to make the second payment when it becomes due, and dies, his estate is entitled to nothing. If he fails to make the third payment when it becomes due, supposing he has made the second payment, his estate gets $400. The young man, a dissipated character, is not inclined to make the second payment. The solicitor, however, by extraordinary efforts, prevails upon him to make the second payment. The third payment he refuses absolutely. Shortly after the refusal he dies. Some time before his death the insurance company inaugurated an automatic extension plan, by which Cajus would be entitled for a period of eight years to the full amount of the policy—$2,000. Cajus and the solicitor, however, had no knowledge of this new arrangement.

If his death had occurred after the eight years he would be entitled to $400—always on the supposition that he made the second payment—which he did. As Cajus died before the expiration of the eight years, the company sends check of $2,000 to the solicitor to be paid to the estate of the deceased. The solicitor, believing himself entitled to a special remuneration for his extraordinary efforts to induce Cajus to make a second payment, gives $800 to the estate of Cajus and retains $1,200 for himself. The estate is highly gratified, thinking itself entitled only to $400, according to the original contract, and not being aware of the automatic extension clause. Now the solicitor is tormented by scruples and reveals to the manager of the insurance company his transactions with the estate of Cajus. The management tells him to keep the amount of $1,200, since the estate of Cajus received double the amount of the original contract. Nevertheless, the solicitor is in doubt whether he may accept the answer of the management and honestly retain the $1,200, and now seeks a theological solution of the difficulty.

Solution.—The solution of the above case depends upon the right application of the ordinary principles laid down by all moral theologians. No one has a right to claim as his own that which belongs to another. The only point, therefore, to be decided is, who is the actual master of the money in question? Is the agent the owner, or are the heirs the owners? The agent claims it as his own, on the grounds that had he not prevailed upon the insured to continue as a member of the company, by the payment of the second annual premium, his policy would have lapsed, and his heirs would have received nothing; that is, he claims that he earned this excess sum ex industria. Secondly, his claim is based on the permission of the company, who told him to keep the twelve hundred dollars. Thirdly, he considers the sum his, for the reason that the heirs received even more than they had expected, and were satisfied with that amount.

Now as to the first argument, we hold that it has no force. It is true that had the agent not persuaded the insured to keep up his policy it would have lapsed; but it is likewise true that in so doing, said agent was acting for the interests of the company, and in no sense as the agent of the insured, even though the insured profited by the industry of the company’s employee. Since, then, the agent was acting as the employee of the company, he must look to the company for compensation for any extra labor involved in the protection of their interests. Nor does the fact that the insured profited by the industry of the agent change in the least this conclusion. For it is equally true that the insured profited by the industry of the agent when he first took out the insurance policy, though the agent did not, at that time, expect any compensation from the party insured. When the deceased renewed his policy, he entered into a contract with the company, which agreed to turn over to his heirs all moneys covered by that contract. Now, the money in question was covered by that contract and must therefore be turned over to the heirs of the insured, as it is their lawful property. Had the agent not prevailed upon the insured the heirs would not be entitled to one cent. Why? Because then there would have been no contract. But a non-existing contract can never change the status of an existing contract.

The second argument is absolutely valueless. The company ceases to be the owner of the money at the death of the insured. Hence, it cannot give to the agent that over which it has no power, and hence cannot in justice deprive the heirs of the money belonging to them.

The third reason assigned is, that the heirs were satisfied with the amount received, for they did not expect to receive so much. But this reason is fallacious in assuming that they would have been satisfied had they known the exact condition of affairs. Had they known that they were entitled to $2,000 they never would have been satisfied with $800. Their ignorance does not alienate their acquired right; nor does it vest that right in the person of the agent. There is only one thing to be done, the agent must restore the ill-gotten money to its lawful owner, viz., to the heirs of the deceased policyholder.