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Grigsby v. Russell | 222 U.S. 149 (1911)
Typically, people obtain life-insurance policies insuring their own lives to provide financial security for loved ones or creditors. In Grigsby versus Russell, we explore whether one person can have a life-insurance policy on another person’s life.
John Burchard took out an insurance policy on his own life. He subsequently developed a need for surgery. To raise funds, Burchard sold the insurance policy to A. H. Grigsby, meaning Grigsby would receive any benefits payable upon Burchard’s death. In exchange, Grigsby paid $100 and assumed responsibility for paying the policy’s premiums.
When Burchard later died, both Grigsby and the administrators of Burchard’s estate tried to claim the policy’s proceeds. The administrators argued that Grigsby, who wasn’t related to Burchard, couldn’t hold an insurance policy on Burchard’s life because Grigsby faced no hardship in the event of Burchard’s death.
The insurance company filed a bill of interpleader in federal court, surrendering the policy proceeds to the court and naming Grigsby and the administrators as parties to the suit to compel them to litigate their competing claims without the company’s involvement.
The district court held in Grigsby’s favor. But the Sixth Circuit reversed, holding that Grigsby was entitled only to the proceeds up to the amount he had expended, namely $100 plus the premium payments. The United States Supreme Court granted cert.
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