Vanderbilt Law Review

First Page



The Sixth Circuit Court of Appeals' in 1959 reversed a tax court holding that a life insurance contract taken out by a corporation to insure an employee's life was a wagering contract because neither the corporation nor the beneficiary possessed an insurable interest in the employee's life and that the proceeds were thus not excludible as an amount received "under a life insurance contract." In 1964 the Fifth Circuit Court of Appeals affirmed a federal district court's judgment entered on a jury's verdict that a corporation, which was both owner and the beneficiary of a life insurance policy, had no insurable interest in the employee's life and consequently could not exclude under section 101 (a)4 the proceeds which it had received from the insurance company. In both cases the insurance companies had paid the proceeds without asserting a lack of insurable interest as a defense to payment.