Manhattan Life Insurance Company of New York v. Cohen/Opinion of the Court
Upon the pleadings which we have just stated and the facts stipulated, the trial court gave judgment for the plaintiff, Cohen, against the defendant company for the amount of the policies, less the sums which had been loaned thereon by the company, with interest, and with the statutory penalties and attorneys' fees claimed.

To recapitulate, it suffices to say that the assignments of error made by the company in the court below for the purpose of the appeal by it taken but expressed the defenses resulting from its answer and the stipulated facts which we have stated. That is to say, reliance was placed (1) upon the proposition that, in any event, the recourse of the plaintiff was against Hilsman, and not against the company; (2) that the transfer of the policies to Hilsman was a Georgia contract, and valid under the law of that state because the existence of insurable interest at the time of the transfer, although necessary under the Texas law, was not necessary under the Georgia law; (3) that as, in any event, the transaction out of which the assignment of the policies from Cohen to Hilsman grew was admittedly a gambling one, the court would not allow the executor of Cohen to derive any rights from assailing that transaction, but would leave the parties where their illegal contract had placed them; that is, let the assignment to Hilsman stand, and hence leave no right in Cohen, executor, to recover; (4) that the court erred in giving judgment for the statutory penalties and damages because, under the circumstances stated, the liability to pay them was not embraced by the statute under which they were imposed, and that if the statute, as construed, imposed the damages and attorney's fee which were allowed, it was in violation of § 1 of the 14th Amendment.

In an elaborate opinion the court disposed of all these contentions. It held that the suit need not be brought against Hilsman, but that it could be brought directly against the company. It decided that the contract of assignment was a Texas contract, and for want of insurable interest in Hilsman was invalid under the laws of that state, although it was in substance admitted that it would have been valid, so far as the question of insurable interest was concerned, if it had been a Georgia contract. Coming to consider the fact that both parties had conceded that the transaction out of which the assignment of the policies grew was purely of a gambling nature, and that that fact had been stipulated, the court refused to sustain the following proposition which was insisted upon by the defendant company: 'When an insurance policy is assigned as part of a gaming transaction, the law will give no relief to either party, or to their heirs, executors, or assigns, regardless of all other questions, but will leave the parties where they have voluntarily placed themselves.' [--Tex. Civ. App. --, 139 S. W. 58.] On the contrary, the court, relying upon the Texas law upon that subject, the Georgia law on the same subject, and the principles of general law applicable thereto, held that instead of leaving the assignment growing out of the gambling transaction enforceable in the hands of Hilsman, it would, in consequence of the illegality, strike down the whole transaction, and therefore leave the policy in the hands of Cohen, the insured, to whom it belonged before the assignment had been made. And for this reason also the court decided that the sum paid by Hilsman for the transfer need not be repaid by Cohen in order to recover. On the subject of the penalties the court, referring to the cases of Fidelity Mut. Life Asso. v. Mettler, 185 U.S. 308, 46 L. ed. 922, 22 Sup. Ct. Rep. 662, and Farmers' & M. Ins. Co. v. Dobney, 189 U.S. 301, 47 L. ed. 821, 23 Sup. Ct. Rep. 565, held that the statute under which they were imposed was not repugnant to the 14th Amendment, and said: 'The action of the insurance company in paying the money due on the policies was not, as in South-western Ins. Co. v. Woods Nat. Bank, —Tex. Civ. App. --, 107 S. W. 119, an offer of the insurance company to pay to the one of the two real claimants when it should be determined who he was, but a voluntary payment to the rival claimant, who had no right whatever to the amount due on the policy. The company has indemnified itself against its act in paying the money due on the policy to one who was not entitled to receive it; now let it resort to its indemnity.'

At the threshold we must dispose of a motion to dismiss. It is apparent from the statement of the case that the only express assertion of Federal right had reference to the statutory penalty and the attorney's fee. The assignments of error, however, assert violations of rights under the Constitution in many particulars, but more especially with reference to the action of the court in treating the sales of the policies as Texas contracts, and refusing to apply the Georgia law, which admittedly differed fundamentally from that of Texas. It is elementary that a Federal question may not be imported into a record for the first time by way of assignments of error made for the purposes of review by this court. Moreover, as a general rule, it is true that for the purposes of review by this court rights under the full faith and credit clause, § 1, article 4 of the Constitution, come within that class which are required to be expressly set up and claimed in the court below. Johnson v. New York L. Ins. Co. 187 U.S. 491, 47 L. ed. 273, 23 Sup. Ct. Rep. 194; El Paso & S. W. R. Co. v. Eichel, 226 U.S. 590, 597, 57 L. ed. 369, 373, 33 Sup. Ct. Rep. 179; Chicago, I. & L. R. Co. v. Hackett, 228 U.S. 559, 565, 57 L. ed. 966, 968, 33 Sup. Ct. Rep. 581. Let it be conceded, as we think it must be, where the record leaves no doubt that rights under the full faith and credit clause were essentially involved and were necessarily passed upon, there would be jurisdiction to review even although such rights had not been expressly asserted below (see Tilt v. Kelsey, 207 U.S. 43, 51, 52 L. ed. 95, 99, 28 Sup. Ct. Rep. 1); the right to review under such condition being in effect but a result of the elementary rule that it is irrelevant to inquire how and when a Federal question was raised in a court below when it appears that such question was actually considered and decided. But these concessions are irrelevant, even although it be further conceded that the ruling of the court below as to the necessity for an insurable interest, and its governing the case by the law of Texas instead of by the law of Georgia, bring this case within the doctrines just stated. We say this because of the existence of another and fundamental question which causes the concessions stated to be immaterial. Both parties, as we have seen, wholly independent of the existence of an insurable interest, affirmed the illegality of the transaction out of which the assignments of the policies grew because of the alleged gambling nature of the transaction, and the admitted facts without dispute established that situation. There being thus an admission by both parties, and no dispute concerning the illegality of the transaction, and a difference only as to the consequences to arise from such illegality, it follows that the case reduces itself to a consideration of that subject. But, on coming to its consideration, it is plain that no question concerning the full faith and credit clause was involved in any contention made below by the plaintiff in error in that regard, since the rights deduced from the admitted illegality of the transaction were placed solely on considerations of the local law of the state of Texas and of the state of Georgia, deemed to be applicable to such condition of things, or upon what was deemed to be the controlling principles of general law on the subject. Indeed, so absolutely is this the case that, as we have seen, the company itself insisted on the illegality and based rights upon it. And it was only on behalf of the defendant in error that considerations involving the full faith and credit clause were suggested as controlling the results in consequence of the admitted illegality of the transaction as a gambling one. A condition which is illustrated by the fact that the reply petition of the plaintiff, while accepting and reiterating the averment of illegality made in the answer of the defendant company, in addition specially alleged that the illegality resulting from the gambling transaction caused the assignment of the policies to be void under the law of New York, where the company was organized, and under the law of Texas, as well as under the law of Georgia. And it was for this reason that the proof which was offered as to the statute law of Georgia on the subject of gambling transactions and the decision or decisions of that state, which it was deemed made the statute applicable, were tendered on behalf of the plaintiff, and not by the defendant company. It would be indeed anomalous when the parties had both relied upon the illegality of the transaction upon grounds wholly independent of any Federal right, and the case had been decided upon that ground, which, in and of itself, is sufficient to sustain the action of the court below, to permit one of the parties, because of his dissatisfaction with the application of such principles, to assert the existence of jurisdiction because the case rested on a Federal issue. It becomes, hence, obvious that the assignments of error outside of the one referring to the repugnancy to the 14th Amendment of the statute imposing damages and penalties affords not the slightest pretext for the exercise of jurisdiction, and they therefore may be put out of view.

Coming to consider the latter subject, it may not be doubted that the nonrepugnancy of the assailed statute to the Constitution of the United States has been directly determined by this court in the cases upon which the lower court based its ruling. Fidelity Mut. Life Asso. v. Mettler, 185 U.S. 308, 46 L. ed. 922, 22 Sup. Ct. Rep. 662; Farmers' & M. Ins. Co. v. Dobney, 189 U.S. 301, 47 L. ed. 821, 23 Sup. Ct. Rep. 565. But it is said that, as previously upheld, the statute, as construed by the state court, contemplated a liability for the penalties or damages and attorneys' fees only in case there was a wilful refusal to pay, and therefore those decisions have no application here, since the statute, as applied in this case, enforces a liability against the company in spite of its action in the utmost good faith, taken solely for the purpose of determining to whom it must pay the sum due, liability as to which was frankly conceded. But the deduction simply disregards the basis upon which the court below rested its conclusion, and invites us upon a conception of injustice to commit a wrong by reviewing a matter of purely local concern which is not within our cognizance. We say this because clearly the court below rested its conclusion as to liability for the penalty and damages not upon the construction of the statute suggested, but upon the premise that the payment to Hilsman by the insurance company of the sum of the policies under the circumstances stated was a payment which took it out of the category of a mere stakeholder seeking to discharge his duty in good faith, and placed it in the position of a person espousing the cause of one as against the other, and thereby subjecting himself to the legal consequences arising from such action. And the considerations which we have stated also dispose of the contention concerning the wrong which it was insisted was done in declaring the assignment of the policies void because of the gambling nature of the contract, and yet permitting the assignor to hold on to the price paid for such assignment. That question was involved in and controlled by the court's ruling concerning the illegal nature of the transaction and the principles applicable thereto, and therefore it is beyond our competency to review.

As the repugnancy of the statute concerning the damages and attorney's fee was the only semblance of ground for invoking our jurisdiction, and as that ground was conclusively established to be without merit when the writ of error was sued out, it follows that there is nothing upon which to base jurisdiction, and the writ of error must be dismissed.

Dismissed for want of jurisdiction. 

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