INSURANCE--INSURABLE INTEREST--ASSIGNMENT OF LIFE INSURANCE POLICY AS COLLATERAL SECURITY

The insured and a revocably designated beneficiary jointly assigned a life insurance policy as collateral security for a prior indebtedness of the insured. Another policy and first deed of trust notes were also assigned as collateral by the insured. Upon the death of the insured, who obtained the policy and paid all premiums, the bank applied a proportionate amount of the proceeds from this policy to the debt and paid the remaining sum to the beneficiary. Executors of the estate of the insured seek to recover the sum paid by the bank to the beneficiary, while executors of the beneficiary counterclaim for the amount of the policy proceeds applied to the debt of the insured. The trial court held that the beneficiary had no insurable interest in the life of the insured and possessed no right to any part of the policy proceeds. Held, affirmed, two judges dissenting. Smith v. Coleman, 183 Va. 601, 32 S.E. (2d) 704 (1945)