Let man not say, "I will eat, I will drink, I will enjoy the good and not trouble myself and Heaven will be merciful."
MIDRASH TANHUMA, VA-YEẒEI 13
I. Double Compensation for a Single Loss
1. The Question
One of the many issues surveyed by Rabbi Menachem Slae in his valuable work dealing with insurance-related questions, Ha-Bituaḥ be-Halakhah (Tel Aviv, 5740), is whether or not an individual who is insured against loss in case of fire or the like is also entitled to compensation from the person who has destroyed or damaged his property. Actually, the question arises in at least four distinct contexts:
1) The least complex question pertains to situations in which coverage is in the form of liability insurance. Liability insurance, as its name suggests, is payable precisely because the insured is indeed liable; the insurance company does no more than pay the obligation incurred by the insured. Liability insurance for motor vehicle accidents is the most familiar, but by no means the only, form of insurance of this genre. Whether the insurance company pays the claimant directly or reimburses the insured for damages charged to him is immaterial. In either event, the insurance is designed to obviate financial loss to the insured. Accordingly, even when the insurance company pays the claimant directly it does so on behalf of the insured with the result that the injured party has no further claim upon the insured. There is indeed no discussion in rabbinic literature of the right of a victim of a tort who has been compensated for his loss by the tortfeasor's liability carrier to seek additional indemnification from the tortfeasor himself. Presumably, the answer is too obvious to merit discussion in rabbinic sources.
2) A similar question—but one to which the answer is far less obvious—arises with regard to insurance designed to indemnify against loss of property, e.g., fire insurance or automobile collision (as distinct from liability) insurance. Insurance of such nature is designed to indemnify the insured for loss of property and is usually payable even though some other party may be at fault. Generally, when another person is at fault, e.g., when loss results from an automobile accident attributable to the negligence of the other driver, the insured will be able to demand payment from his own insurance company on the basis of his own collision coverage and, on the basis of a right of subrogation, the insurance company acquires the right to seek reimbursement from the negligent party.1Even in the absence of a contractual provision or legislative act that explicitly sets forth a right of subrogation, an insurer may be entitled to seek subrogation on the basis of a judicially created right. The principle of “legal subrogation” is born of two considerations: 1) Benefits received by a claimant from sources independent of a wrongdoer do not diminish the liability of a wrongdoer; and 2) possible social detriment that may arise if the insured is permitted more than full indemnification. See Robert E. Keeton and Alan I. Widiss, Insurance Law: A Guide to Fundamental Principles, Legal Doctrines, and Commercial Practices (St. Paul, 1988), p. 220. The insurance company, in effect, sues on the claim of its insured who, in return for immediate compensation, is deemed by operation of law to have assigned his interest in the claim to the insurance company.2Under the rules of common law the claim must be asserted in the name of the insured. In a court of equity or under some state codes the claim may be asserted by the insurer in his own name. See William R. Vance and Buist M. Anderson, Vance on Insurance, 3rd ed. (St. Paul, 1951), p. 792. Although the insured has direct recourse against his own insurance company, in situations in which fault lies with another party the role of the carrier is essentially that of a surety who assumes primary responsibility in guaranteeing that the insured will suffer no loss. That role is analogous to the function of an arev kablan in Jewish law. Assuming, however, that, for some technical reason, the insurance company does not enjoy the right of subrogation or that it chooses not to pursue its claim, does Halakhah recognize the right of the injured party who has already been compensated by his own insurance company to claim tort damages from the tortfeasor as well? Or, to put the matter a bit differently, can the victim maintain a claim against the tortfeasor who has caused him harm and contend that any claim the insurance company may have with regard to funds paid by the tortfeasor to the victim by virtue of a right of subrogation is strictly between the victim himself and the insurance company and hence of no concern to the tortfeasor? Or, since the victim has already received insurance compensation to redress his loss, can the tortfeasor disclaim liability on the grounds that there remains no out of pocket loss to the victim? It is this question which has captured the attention of rabbinic scholars.
3) A similar question arises with regard to the liability of a bailee in a situation in which the bailor has insured his property against the loss for which the bailee is ordinarily responsible. May the bailor recover his loss from the bailee or can the bailee claim that since compensation has been paid by the insurance company there is, in fact, no loss?
4) A closely related yet somewhat different question arises with regard to an accident victim who accepts reimbursement for medical expenses on the basis of a health-care policy and also claims reimbursement for the same costs from the person responsible for causing the injury.3The right of the beneficiary of a life insurance policy also to recover damages for wrongful death is not enumerated as a separate issue because life insurance is in the nature of an investment (with an element of statistical opportunity for a windfall profit) rather than as compensation for a loss. The same is true with regard to accident insurance in which the amount payable by the insurer is fixed by the terms of the contract rather than by assessment of the actual loss suffered by the insured. See Vance on Insurance, pp. 796–797 and Keeton and Widiss, pp. 227–228. Such a situation is different from one involving duplicate claims for property damage in that, typically, under the terms of the insurance contract and applicable secular law, there is no subrogation with regard to health-care claims and it is entirely legal for the claimant to collect twice.4Courts have generally regarded medical coverage as a form of “personal insurance.” Personal insurance is regarded as a form of investment imposing on the insurer an absolute duty to pay if the named condition occurs rather than as a contract of indemnity. As a result, courts have not recognized implied rights of subrogation in the area of personal insurance. See, for example, Frost v. Porter Leasing Corp., 386 Mass. 425, 436 N.E.2d 387 (1982) and Rixmann v. Somerset Public Schools, St. Croix County, 83 Wis.2d 571, 266 N.W.2d 326 (1978). Cf., however, Spencer L. Kimball and Don A. Davis, “The Extension of Insurance Subrogation,” Michigan Law Review, vol. 60, no. 7 (May, 1962), pp. 860–868 and John G. Fleming, “The Collateral Source Rule and Loss Allocation in Tort Law,” California Law Review, vol. 54, no. 4 (October, 1966), pp. 1481–1484. Other courts have argued that subrogation arises only in favor of one who pays the debt of another but not in favor of one who pays a debt in performance of his own covenants and hence, the right of subrogation does not follow an actual primary liability. Accordingly, since medical coverage is purchased with the understanding that such care will be furnished whenever needed, the insurance company has a primary obligation to provide service in accordance with the terms of its contract. See Michigan Hospital Service v. Sharpe, 339 Mich. 357, p. 373, 63 N.W.2d 638, p. 641 (1954). Implicit in these decisions is the notion that the public policy concerns that give rise to the principle of legal subrogation are not compelling in the case of medical insurance. Thus, in Frost the court wrote that “isolation of medical expenses is artificial, and the accident victim’s position should be viewed as a whole…. When the insured’s losses are viewed in their entirety, duplicative compensation is both uncertain and unlikely.” See Frost, 386 Mass. at 430, 436 N.W.2d at 390–391. See also William F. Meyer, Life and Health Insurance Law (Rochester, 1972), pp. 603–607.
Moreover, some courts have held express subrogation provisions in medical and hospitalization policies to be invalid because of statutory or common law prohibitions against assignment of causes of action for personal injuries. See Keeton & Widiss, pp. 229–231. Does Halakhah similarly recognize such a right? The question also arises in a variant form in the case of a person covered by duplicate health-care policies neither of which contains a provision for coordination of benefits. May the insured legitimately submit duplicate claims to both insurance companies?
2. The Conflicting Rulings
The various responsa dealing with the question of double compensation for a single loss are devoted to a discussion of situations involving loss due to fire. A person causes a fire that destroys a house covered by fire insurance. Upon securing payment from his insurance company, the homeowner seeks identical damages from the person responsible for setting the fire. R. Aryeh Leibush Horowitz, Harei Besamim, Mahadura Tinyana, no. 245, and R. Chaim Wollstein, Teshuvot Divrei Hayyim, no. 49, both rule that the victim is not entitled to further compensation. In effect, those authorities argue that since, according to the terms of the insurance policy, the homeowner is compensated for fire damage, the person who set the fire has caused the homeowner no actual loss. Hence they conclude that, as between the homeowner and the tortfeasor, the homeowner has no claim. However, Harei Besamim observes that, if the insurance company and the insured negotiate a settlement representing less than the actual damages, the homeowner may properly seek recovery of the balance from the person who set the fire.
A diametrically opposed view is expressed by R. Shalom Mordecai Schwadron, Teshuvot Maharsham, IV, no. 7, with regard to a case of arson in which the property owner's loss was covered by insurance. In what is apparently an attempt to dispel the contention that the property owner has suffered no out of pocket loss, Maharsham remarks that "… at the time that he burned the house he became liable for compensation. And if the householder profited in accepting insurance what [import] is there to [the arsonist] in this?" Maharsham adds that since arson is a crime and moreover (as Maharsham correctly or incorrectly believed), since failure to inform the authorities of the identity of the arsonist is itself a culpable offense, it is clear that the insurance company did not intend its payment to be construed as being proffered on behalf of the arsonist. In terms of contemporary practice, it is perfectly clear that the insurance company does not intend its payment to exonerate even a merely negligent person who has committed no crime. Indeed, the insurance company will generally seek recovery from the tortfeasor. Maharsham's crucial point is that the tortious act did indeed cause financial loss in its commission; subsequent compensation by a third party does not nullify an already existing obligation unless such payment is proffered on behalf of the primary obligee.5See also R. Abraham David Horowitz, Teshuvot Kinyan Torah be-Halakhah, V (Jerusalem, 5748), no. 154.
In a further comment Maharsham offers a somewhat different perspective in arguing that logic (sevarah) dictates that there is nothing to prevent the insured from retaining the right to proceed against the person who set the fire. Maharsham categorizes an insurance policy as a commercial enterprise (misḥar) and hence he depicts the insurance proceeds as the profit of a commercial enterprise.6The matter is similarly described by R. Zevi Pesach Frank, Ha-Pardes, Tevet 5719. This material is reprinted with additions in Rabbi Frank’s commentary on Tur Shulḥan Arukh, Har Ẓevi, Ḥoshen Mishpat 238. That commentary is published as an appendix to the El ha-Mekorot edition of Tur Shulḥan Arukh (Jerusalem, 5718). Accordingly, contends Maharsham, no one other than the homeowner is entitled to share in the proceeds of that enterprise.
Moreover, contends Maharsham, the owner of the property certainly has standing to sue the arsonist even if the property owner must turn over any recovery for damages to the insurance company. Shulḥan Arukh, Hoshen Mishpat 294:6, records a similar rule with regard to a bailee. A gratuitous bailer who pleads that the bailment was stolen is required to substantiate his plea by taking an oath, but is not held liable. Nevertheless, if the thief is discovered, the bailer may sue the thief and the latter cannot challenge the bailer's standing to sue on the grounds that the bailee, who has already taken an oath and has been exonerated, does not stand to suffer any loss. Similarly, argues Maharsham, the victim of the fire has standing to sue the arsonist. Disposal of any recovery is then a matter entirely between the insured and his insurance company.7Cf., R. Zevi Pesach Frank, Har Ẓevi, Ḥoshen Mishpat 238, s.v. od yesh la-dun, who fails to take notice of this point.
A further issue that must be addressed is whether the insurance company is also entitled to claim damages from the tortfeasor in the event that it cannot recover its payment to the insured. See R. Aryeh Leib Baron, Ha-Pardes, Iyar 5719, reprinted in idem, Birkat Yehudah (New York, 5721), no. 20, who considers the possibility of the tortfeasor’s liability to the insurance company on the basis of garmi, i.e., loss that is definite and certain, albeit indirect. This writer is at a loss to understand how the loss in question can be considered certain and definite since payment by the tortfeasor to the insured serves to relieve the insurance company of any liability. Thus, in setting the fire, it is not at all clear that the tortfeasor has performed an act as a result of which the insurance company will suffer any loss since, if a claim is first made by the victim against the tortfeasor or if the insurance company is later able to recoup its payment from the insured, there is no loss to the insurance company.
3. An Analytic Examination
The conflicting opinions of Harei Besamim and Maharsham with regard to what was certainly a novel question were disseminated at roughly the same time. That disagreement elicited a response by R. Yo'av Yehoshu'a Weingarten of Kintzk (Konskie), renowned in rabbinic circles as the author of Helkat Yo'av. That response appeared in one of the leading Torah journals of the day, Sha'arei Torah, vol. IX, no. 5 (Adar 5678).8All issues of Sha‘arei Torah, originally published in Warsaw, were reprinted New York, 5724, in five volumes by E. Grossman’s Publishing House. The article cited herein appears in that edition, V, 71–72.
The author of Helkat Yo'av asserts that neither of his predecessors had properly defined the focal issue. Incisively, he notes that the nature of tort damages must be examined in an analytic manner. Are such damages designed to redress the damage in order to make the victim whole? Or is liability simply a consequence of the tortious act?9If so, liability is presumably a form of punishment and the damages may be either compensatory and punitive at one and the same time or, in the absence of actual loss, merely punitive. For a brief argument demonstrating that torts are not merely actionable but that tortious acts are biblically forbidden see Ḥiddushei R. Ḥayyim ha-Levi al ha-Shas (mi-Pi ha-Shemu‘ah) (1953), p. 85; Ḥiddushei ha-Graḥ (bound stencil, n.d.), p. 226; and Ḥiddushei ha-Graḥ al ha-Shas (Jersualem, 5729), pp. 170–171. Rabbenu Yonah, commentary on Avot 1:1, regards the prohibition as subsumed in the prohibition against theft. Yad Ramah, Bava Batra 26a, declares that causing pecuniary damage to another is prohibited by virtue of “You shall love your neighbor as yourself” (Leviticus 19:18) and the commandment “You shall not place a stumbling-block before the blind” (Leviticus 19:14). See also Teshuvot ha-Rosh, no. 108; Bi’ur ha-Gra, Ḥoshen Mishpat 155:8; Teshuvot Ḥatam Sofer, Ḥoshen Mishpat, no. 261; Birkat Shmu’el, Bava Kamma, no. 2; and Kehillot Ya‘akov, Bava Kamma, no. 1. (Although, to be sure, if no damage occurs, there is no tort and hence no liability. As will be shown, the crucial difference is in a case of damage to the pecuniary value of an object but no resultant loss to the owner.)
R. Yo'av Yehoshu'a of Kintzk marshals significant evidence demonstrating that damage to the object, not loss to the owner, is the crucial factor in establishing tort liability.10Apart from its application in the insurance dilemma, R. Yo’av Yehoshu’a presents another hypothetical question whose resolution depends upon which theory is correct. Imagine the following fact pattern: A Jew borrows money from a non-Jew against a pledge. The non-Jew deposits the pledge with a third party, a Jew. The Jew holding the pledge loses it. Assume that under applicable civil law the Jew with whom the pledge has been deposited has no liability to the bailor but would not be exonerated under Jewish law. The Jewish debtor need not repay his loan to the non-Jewish creditor since his pledge will not be returned. Thus, non-return of the pledge has caused him no out of pocket financial loss. Does the Jewish owner of the pledged item have a claim against the Jew with whom it was subsequently deposited? In this situation as well, an object of value has been lost but the owner suffers no out of pocket loss as a result. The Gemara, Bava Kamma 26b, discusses the question of liability of a tortfeasor who breaks a vessel in the course of its fall from a roof. The considerations formulated by the Gemara in its analysis of both sides of the question are extraneous to this discussion. Of significance is the fact that the situation that is the subject of that analysis involves damage to chattel but, since the vessel would in any event have shattered upon landing, the tortfeasor causes no loss to the owner. The fact that the Gemara considers the issue of liability in such circumstances and analyzes the matter on the basis of other considerations indicates that loss to the owner is not a necessary condition of liability.
That principle also underlies a question posed by the Gemara, Bava Mezi'a 34a. A bailee whose bailment has been stolen from him and who has been exonerated by his oath to that effect is treated by Halakhah as the owner of the bailment and hence, if the thief is apprehended, the bailee is entitled to receive the fine levied upon the thief.11This principle was cited by R. Zevi Pesach Frank to explain a ruling that seemingly contradicts the thesis herein cited. Shitah Mekubbeẓet, Bava Kamma 14a, rules that if a cow is gored as a result of negligence on the part of the bailee, the bailee is liable but may recover damages from the owner of the goring ox. On the theory that a person need not suffer out of pocket loss in order to recover damages, the owner of the cow should logically be able to recover tort damages from the owner of the ox and additional damages from his bailee for loss resulting from the latter’s negligence. R. Zevi Pesach Frank is quoted in Birkat Yehudah, no. 20, as stating that, in this case as well, the bailee, upon payment of damages, is regarded as having acquired title to the cow retroactively and hence the bailor has no further claim upon the tortfeasor. Cf., Rabbi Baron’s discussion in Birkat Yehudah, no. 20. The Gemara even questions why the bailee should not similarly be entitled to claim wool grown by the stolen animal or young that are foaled. There seems to be no question that the bailee is indeed entitled to any increment in the value of the animal. In that case as well, the thief has caused no loss to the bailee who has been completely exonerated but who is nevertheless considered to be the victim. Apparently, the thief is required to pay compensation for the value of the object stolen even if the theft causes no actual loss to the victim.
The identical principle is reflected in the rule formulated by the Gemara, Gittin 42b, with regard to a slave who has suffered bodily harm at the hands of his master of a nature such that the master is obligated to free him but who has not yet received a bill of manumission. The Gemara declares that if, in that interim period, the slave is the victim of battery at the hands of another person, damages are paid to the master. That is so despite the fact that, since the master is no longer entitled to the service of the slave and must emancipate him, the master has sustained no loss as a result of the battery. Once again it is evident that damage, even if unattended by financial loss, is sufficient to engender tort liability.
The application of this principle to the insurance situation is obvious. Even if it is conceded that damage to insured property does not constitute a loss to the proprietor, that concession is irrelevant. The tortfeasor is liable, not because he causes loss, but because he has destroyed or damaged an object of value. Hence he remains liable even if the victim suffers no out of pocket damages.12R. Yo’av Yehoshu’a also advances another argument echoing Maharsham’s contention that insurance is a commercial enterprise. R. Yo’av Yehoshu’a argues a) that the owner of the policy need not be the owner of the insured property and b) a person may have multiple insurance policies with multiple companies. Those facts serve to demonstrate that insurance compensation is divorced from tort compensation. As a legal matter, at least in Britain and the United States, insurance coverage can be provided only for an “insurable interest” with the result that fire or theft insurance cannot be written other than for the owner of the insured property. See generally, Keeton and Widiss, pp. 135–136 and 142–149 as well as Meyer, pp. 88–91. Similarly, for reasons of public policy, the law does not allow multiple recovery.
The concern is that if a property owner obtains insurance policies from two or more insurers in a total amount that exceeds the property’s value, the insured may have an inducement to destroy the property in order to collect the insurance. See Keeton and Widiss, p. 255. However, since Halakhah does not place such restrictions upon insurance, the strictures of a civil system of law do not mitigate the cogency of the argument.
Despite the cogency of his own analysis, R. Yo'av Yehoshu'a requested the readers of Sha'arei Torah to communicate their views to him and to supply references to any applicable sources that might shed light on the question. Later, complaining of a lack of response, he republished the identical article with a similar plea in Degel ha-Torah, an anthology edited by R. Menachem Mendel Kasher (Warsaw, 5681-5682), no. 13.
4. Bailments as Distinct from Torts
The related but somewhat different question of a bailee's obligation for loss otherwise covered by insurance is addressed by R. Meir Simchah of Dvinsk in his novellae on Rambam's Mishneh Torah, Or Sameaḥ, Hilkhot Sekhirut 7:1. A person entered into a leasehold agreement and explicitly assumed liability for loss due to fire. Subsequently, the lessor arranged for fire insurance on his property. Although a claim for fire damage was honored by the insurance company, the landlord sought to recover his loss from the tenant as well. Or Sameaḥ apparently takes it for granted that a loss has occurred for which the bailee is intrinsically liable and that a claim that the loss is negated by insurance compensation is spurious. The point that he does consider is based upon the fact that, unlike tort liability, the obligations of a bailee are the product of a bilateral contract. Since the bailee is liable only because he has assumed responsibility for loss due to fire, may he plead that he had no intention to assume liability for losses that are compensated by insurance?
The Mishnah, Bava Kamma 115b, describes a situation in which two donkeys belonging to separate masters are in danger of drowning. The Mishnah declares that if the owner of the less valuable donkey offers to rescue the more valuable donkey on the condition that the latter's owner compensate him by the loss of his own less valuable donkey, the rescuer's claim for such compensation is valid. The Gemara, Bava Kamma 116a, reports that Rav Kahana asked Rav whether that is so only if the rescuer's own donkey actually perishes or whether he is entitled to such compensation even if the rescuer's donkey manages to escape drowning on its own accord. The Gemara reports that Rav replied, "Heaven acted favorably toward him," i.e., the contract is enforceable. Or Sameaḥ that the ruling is obviously predicated upon rejection of the claim that the obligation was assumed by the donkey owner only because he believed that the rescuer would suffer a loss as a result of neglecting his own animal but that he had no intention of compensating the rescuer for a loss that did not actually occur.13Harei Besamim cites this talmudic discussion but maintains that the rescuer did indeed suffer a loss in abandoning his donkey in turbulent water as a result of which it became res nullius. Reclaiming his donkey afterwards, contends Harei Besamim, is, in fact, tantamount to acquisition of new title to abandoned property. Or Sameaḥ, citing the dialectic of that discussion, argues that the Gemara did not regard the donkey as res nullius. See also the discussion of this issue by R. Moshe Yonah Zweig, Ohel Mosheh, III, no. 33. That claim is impliedly dismissed on the grounds that a fortuitous "act of God" is of no relevance to the express terms of the contract. A fortiori, argues Or Sameaḥ, the lessor's own foresight in seeking insurance is of no relevance to the contract between himself and the lessee.
Or Sameaḥ further observes that, by virtue of the nature of bailment contracts, a bailee may at times receive compensation that is far in excess of the value of the bailment. The Gemara, Bava Mezi'a 35b, declares that, "At times the owner pays [the value of] many cows to the hirer!" The highly complicated fact pattern presented by the Gemara involves a situation in which a person hired a cow for a hundred days and then lent the same animal back to the owner for ninety days. The original hirer then rehired the identical cow for eighty days and again lent the animal to its owner for seventy days. The animal then died during the period in which it had been "lent" to its owner. According to the rules governing bailments, a borrower has absolute liability for loss or damage to the bailed chattel (other than damage in the form of "wear and tear" resulting from legitimate use of the borrowed object). In the hypothetical case described by the Gemara, two conflicting judgments are presented. R. Zeira ruled that since the owner "borrowed" his own animal twice he must pay his own lessee, who twice lent him back the cow, the value of two cows. Since he entered into two separate contracts for the hire of the animal he must also provide a cow for use during the unexpired rental periods to the extent that those periods were greater than the shorter periods for which the owner had borrowed back his own animal. Each time, after borrowing back his own animal for a period of time shorter than the rental period, the owner of the animal remained liable for providing the use of the animal for a period of ten days. Thus, the death of the animal left him with the responsibility for providing use of a cow for twenty days. Mar the son of Rav Ashi limited the owner's liability to one cow, since it was but a single cow that was borrowed twice, and an additional cow for use during a twenty-day period14See Rashi, ad locum, s.v. mikhdi and s.v. mi ita. Note b(1) in the Soncino translation is incorrect in stating that the owner must supply the lessee with use of an animal for a ten-day period. representing the unexpired portions of the periods of hire. According to both opinions, the hirer is entitled to fulfillment of the contract for the hire of a cow despite the fact that he is compensated by the borrower for the full value of the cow and hence sustains no out of pocket loss. The various obligations are assumed independently and each contract must be honored separately. The fact that the obligor has profited in some extraneous manner does not release the obligee from his contractual undertaking. Similarly, argues Or Sameaḥ, the fact that the property owner has profited from an insurance contract does not release the lessee from the latter's contractual undertaking.15The same point is made by R. Elchanan Wasserman, Koveẓ Shi’urim, Ketubot, no. 218, in demonstrating that payment of damages is made, not as compensation for loss, but to “the proprietor of the right of compensation,” a thesis akin to that formulated by the author of Ḥelkat Yo’av. Reb Elchanan, however, queries the principle underlying the rule that if a person steals food, but the owner does not despair of recovery, and the food is eaten by a third party, the owner may recover from either the thief or the person who consumed the food but not from both. R. Elchanan questions why the owner should not be permitted double recovery just as the hirer of the cow is permitted double recovery.
It appears to this writer that the answer lies in the distinction between tort and contract. Contract liability flows from the agreement between the parties with the result that a single object can be the subject of multiple agreements each giving rise to separate liability whereas tort liability flows from damage caused to the property (albeit not necessarily out-of-pocket loss). Hence, although tortfeasors may be liable jointly and severally, they are not subject to double liability. The obligation of a thief for damage to stolen property, it may be argued, is not the result of a voluntary undertaking but is akin to that of tort liability and, accordingly, the owner is not entitled to double recovery. Cf., Teshuvot Minḥat Yiẓḥak, III, no. 126, sec. 6.
An even clearer example of compensation unrelated to loss is presented by R. Zevi Pesach Frank, in an article published in Ha-Pardes, Tevet 5719, and included in his commentary on Tur Shulḥan Arukh, Har Ẓevi, Hoshen Mishpat 238, as well as by R. Yitzchak Ya'akov Weisz, Teshuvot Minḥat Yizḥak, III, no. 126. The rules governing bailment provide that a hirer is not liable for unavoidable damage whereas a borrower is liable even for damage attributable to force majeure. Accordingly, the Mishnah, Bava Mezi'a 35b, declares that, if a man hires a cow and lends it to another and the cow then dies a natural death, the hirer is not liable to the owner but the borrower must pay the hirer the full value of the cow. This is so despite the fact that, had the animal been returned to him, the hirer would have had to restore the cow to the owner. Thus, the hirer has suffered no pecuniary loss but is nevertheless entitled to compensation.16The conflicting opinion of R. Yosi recorded in the Mishnah does not challenge the basic principle. R. Yosi expresses his disagreement in the words, “How can one do business with his friend’s cow?” and declares that the value of the cow must be returned to the owner. R. Yosi’s disagreement reflects either a consideration of unjust enrichment or, as is the opinion of Tosafot, ad locum, a challenge to the vesting of a proprietary interest in the borrower; it does not reflect the notion that the hirer is not entitled to recovery because he has not suffered a loss. See Teshuvot Shevut Ya‘akov, III, no. 148 and the earlier cited article by R. Yo’av Yehoshu’a of Kintzk.
Both authorities maintain that the Mishnah demonstrates only that a bailor may be obligated to pay compensation even in the absence of actual loss but that it fails to demonstrate that this is true with regard to tortfeasors. The bailee's obligation flows from the bailment contract into which he has entered.17See Tosafot, Ketubot 56b, s.v. harei zu mekudeshet. The borrower has obliged himself to deliver the cow or its value to his bailor and has not limited his liability by stipulating that he will deliver the value of the cow only in case of actual pecuniary loss. The tortfeasor is obligated by virtue of statutory law which may well require actual loss as a condition of liability.
Hence, it is arguable that Or Sameaḥ was entirely correct in ruling that the lessee of real estate who assumes such liability is responsible for fire damage even though the homeowner has been compensated by insurance while Harei Besamim was equally correct in ruling that an arsonist could not be held liable in similar circumstances.
5. The Case of a Borrowed Automobile
A variation of this question occurs in the case of a person who borrows an insured motor vehicle and is subsequently involved in an accident. The owner, who is compensated for damages to his automobile by his own insurance company, suffers no loss. May he nevertheless claim damages from the borrower? That question is addressed by Minḥat Yizḥak, III, no. 126.18Minḥat Yiẓḥak contends that potential liability on the part of the borrower exists only if the borrower deviated from the agreement between the parties concerning use of the automobile; otherwise a borrower is not held liable for damages arising from ordinary use of the bailment. Minḥat Yiẓḥak would presumably agree that, since a borrower is liable for negligence, the selfsame issue presents itself in situations in which the accident is the result of negligence on the part of the borrower. However, it seems to this writer that a borrower is liable in all circumstances for damages sustained in a motor vehicle accident. A borrower is not liable for damage that occurs in the course of ordinary use of the bailment. Such depreciation in value is in the nature of normal “wear and tear.” However, the borrower is liable for “theft or loss.” It would seem that damage as the result of a collision is of the latter category. Minḥat Yizḥak asserts that, since a) it is common knowledge that every automobile owner has insurance coverage and indeed such coverage is mandated by law19Minḥat Yiẓḥak seems to confuse collision coverage with liability insurance. Although liability insurance is required in virtually all jurisdictions, collision coverage is not. Indeed, many owners of cars having low resale value find collision coverage to be uneconomic. Nevertheless, Minḥat Yiẓḥak’s second point is entirely valid. and b) it is "the custom of the land" not to demand compensation from the borrower when insurance compensation is forthcoming, the borrower may plead that it was an implied condition of the bailment contract that he would not be held liable under such circumstances. In support of this contention Minḥat Yizḥak cites Teshuvot Havvot Ya'ir, no. 106, who rules that a maid cannot be held responsible for breaking a dish or glass since most employers do not attempt to collect damages for such loss.
Minḥat Yizḥak rules that the owner is entitled to recover from the borrower any increase in the insurance premium that may be levied upon him as a result of his claim. Although indirect loss is generally not actionable, this situation is different by virtue of the fact that, if the borrower disclaims liability for the increase in the insurance premium, the owner may forego his claim against the insurance carrier and pursue a claim for damages against the borrower.20See Bava Kamma 8a. Minḥat Yizḥak apparently assumes that there is no "custom of the land" not to recover an increase in premium costs from the borrower.
6. Double Compensation for Medical Expenses
The question of recovery of medical expenses from a tortfeasor when those expenses have been defrayed by medical insurance would, on first analysis, seem to be no different from recovery of property damage that is covered by insurance. However, upon further examination, that issue, which has not been explicitly addressed by rabbinic scholars, is more problematic.
Rambam, Hilkhot Hovel u-Mazik 4:15, rules that medical expenses of a married woman for treatment of wounds sustained as a result of battery are payable to her husband because, as explained by Maggid Mishneh, ad locum, a husband must pay medical expenses incurred by his wife. Rosh, Ketubot 6:1, disagrees with Rambam's position and rules that the costs of treatment are payable directly to the physician. Rosh further rules that the tortfeasor is liable for estimated costs of treatment with the result that if the woman's recovery is more rapid than usual, and consequently the physician's fees are less than anticipated, the balance is payable to the wife, as is the case with regard to pain and suffering which accrues to the wife.
It would seem that, according to Rambam, the tortfeasor is liable for medical expenses only to the insurance company just as the tortfeasor is liable only to the husband who is responsible for his wife's medical expenses. Moreover, it would seem that, according to Rambam, the same should be the case with regard to property damage as well, as is indeed the view of Teshuvot Harei Besamim and Teshuvot Divrei Hayyim.
However, R. Elchanan Wasserman, Kovez Shi'urim, Ketubot, sec. 218, raises an objection with regard to Rambam's view. The Gemara, Gittin 12b, declares that, in the case of a battery committed against a slave, medical expenses are payable to the slave and not to the master. R. Elchanan poses the following question: Title to any property acquired by a slave is immediately vested in his master. If so, why are medical costs not paid to the master? Based on that difficulty, R. Elchanan develops the thesis that a battery victim has no pecuniary interest in a claim for medical costs; rather, the victim's claim is to be healed and restored to health. Battery generates an obligation in personam on the part of the tortfeasor to be made whole physically. The tortfeasor must either heal the victim himself or, if he is not proficient in the medical arts, he must hire a physician to do so on his behalf. R. Elchanan further asserts that a husband's obligation vis-à-vis the medical treatment of his wife is entirely similar, i.e., he must restore her to health and, if he is unable to do so, he must hire a physician to do so on his behalf. Payment of medical expenses to the husband by the tortfeasor is not a satisfaction of a monetary claim of the husband but simply an expedient designed to assure medical treatment of the wife for which, in cases of battery, the tortfeasor has primary responsibility. It follows from this theory, declares R. Elchanan, that, if the victim dies of other causes before receiving medical treatment, the heirs have no claim of recovery of the costs that would have been incurred for medical treatment.
If so, it would seem to this writer, that, according to R. Elchanan's thesis, were a physician willing to treat the patient without a fee, the victim would have no claim whatsoever upon the tortfeasor for medical expenses since that claim is not in the nature of a pecuniary claim for damages but constitutes a claim in personam to be healed. Similarly, if payment is made by a third party, e.g., an insurance company (or even a relative who defrays the costs ex gratia rather than in the form of a loan), the tortfeasor has no liability.
However, R. Elchanan's position is a bit problematic. Estimated medical expenses must be paid in full even if the healing process takes less time than usual. The balance is categorized by the Gemara, Gittin 12b, as a form of compensation for pain and suffering. Compensation for pain and suffering is payable to the wife and indeed, according to Rosh, the balance of the estimated medical expenses is similarly payable to the wife. Baḥ, Even ha-Ezer 83:4, declares that, according to Rambam, the husband may retain the balance. However, according to R. Elchanan, who asserts that the husband himself has no pecuniary interest in his wife's claim for medical expenses but is merely a custodian of the funds or a conduit to assure her treatment, any balance should logically accrue to the wife. If that is indeed R. Elchanan's view, it is in conflict with that of Baḥ. Thus, if R. Elchanan's thesis is accepted, an accident victim cannot be allowed double recovey for medical expenses. If, on the other hand, Baḥ's view is accepted, it follows that medical expenses must be treated in the same manner as other tort damages with regard to the possibility of double recovery.
II. Life Insurance and the Ketubah
In our society it is commonplace for husbands to purchase life insurance policies and to name their wives as beneficiaries. The laudable motivation is to provide funds for the support of a wife who becomes bereft of her husband and at the same time loses her source of financial support. The halakhic question that arises is whether a wife who is the beneficiary of a life insurance policy of significant value may also claim payment from her husband's estate of the obligations arising from her ketubah or whether that claim is to be deemed to have been satisfied by the proceeds of the insurance policy.
Although the issue may elude the attention of the parties, it is present in a number of cases, particularly in instances of second marriages, in which financial disputes arise between the widow and the husband's heirs. Surprisingly, there appears to be but a single published discussion of this question. That analysis, authored by a Sephardic scholar, R. Yehudah Chaim ha-Kohen Masalton, is included in his Ve-Zot le-Yehudah (Cairo, 5697), Even ha-Ezer, no. 8.
The details of the case brought before Rabbi Masalton and the Bet Din of Cairo are rather complex. The policy in question was for the sum of five hundred guineas payable to the policyholder twenty years after the date of issue or, in the event of his death in the interim, to the insured's wife immediately upon his death.
In Ashkenazic communities, the amount of the tosefet ketubah, i.e., the sum to which the groom obligates himself in addition to the amount prescribed by statute, is standard.21See Tur Shulḥan Arukh, Even ha-Ezer, end of section 66 and Baḥ, ad locum. In the case of a virgin bride, standard practice is to place a value of one hundred silver zekukim upon the property brought to the marriage by the bride as a dowry. That sum is returnable to the bride upon termination of the marriage either by death of the husband or divorce. The groom customarily assumes an obligation to return that sum together with an additional one hundred silver zekukim for a total of two hundred silver zekukim in addition22See Derishah, Even ha-Ezer 66:4. However, Baḥ, Even ha-Ezer, sec. 66, s.v. ve-akhshav and ibid., kuntres aḥaron, maintains that the two hundred zuzim are included in the valuation of the dowry. to the statutory two hundred zuzim.23For a discussion of various opinions regarding the weight, and hence the value, of these coins, see R. Judah Kelemer’s excellent analysis of the text of the ketubah and the principles upon which it is based, Tosefet Ketubah (Jerusalem, 5750), pp. 13–16. In many Sephardic communities, the groom's assumption of an obligation in the form of tosefet ketubah is subject to voluntary adjustment and/or negotiation with the result that the value of the obligation represented by the ketubah may vary from case to case.
Coincidentally or by design, in the case under discussion, the widow's ketubah declared an obligation in the sum of five hundred guineas—precisely the face value of the insurance policy. That sum was promptly paid to the widow by the insurance company. The matter was further complicated by a local custom that was acknowledged by Rabbi Masalton as an implied condition of the agreement memorialized in the ketubah. Local custom denied recovery of the tosefet ketubah in whole or in part unless an equal amount remained in the estate for distribution to the heirs.24That custom has its origin in a takkanah promulgated in some Spanish communities, particularly Molina, during the medieval period. As reported by Teshuvot ha-Rosh, klal 55, no. 8, the widow was entitled to return of her dowry and, in addition, a maximum of fifty percent of the balance of the estate. Cf., Encyclopedia Judaica (Jerusalem, 1971), XV, 478. In the case under discussion, the total value of the estate was two hundred and fifty guineas.
The heirs contended that the insurance policy did not represent a gift to the wife but was designed to assure payment of the ketubah. But, they further claimed, since the total value of the estate, including the insurance proceeds, totaled seven hundred and fifty guineas, the widow was entitled to no more than fifty percent, i.e., three hundred and seventy-five guineas. Accordingly, not only did they decline to make any additional payment to the widow, but they also demanded that the widow turn over to them the sum of one hundred and twenty-five guineas, representing the difference between fifty percent of the estate (inclusive of the proceeds of the insurance policy) and the amount she had collected from the insurance company.
Rabbi Masalton correctly notes that designation of a beneficiary on an insurance policy could not constitute a valid conveyance of the value of the policy for the obvious reason that the policy does not acquire that value until the death of the insured. Hence, any such conveyance would fail by reason of the fact that the property to be conveyed is not yet in existence at the time of the conveyance (davar she-lo ba le-olam).25See Shulḥan Arukh, Ḥoshen Mishpat 209:4. Rabbi Masalton seems to be under the impression that designation of a beneficiary constitutes a conveyance for purposes of civil law. That assumption is inaccurate as evidenced in part by the fact that designation of a beneficiary is revocable. There is nothing in either the language or the nature of an insurance policy to indicate that it constitutes a revocable or conditional conveyance, particularly since the insured is generally described as the owner of the policy. It would be somewhat more cogent to construe the naming of a beneficiary as a conveyance to the beneficiary in situations in which the beneficiary is also designated as the owner of the policy. However, as will be shown later, even in that case, designation of a beneficiary does not constitute a conveyance by the insured but assumption of an obligation vis-à-vis the beneficiary on the part of the insurance company.
Assuming, arguendo, that the insurance contract contains language of conveyance to the owner rather than language of obligation, whether or not, for purposes of Jewish law, execution of such an instrument constitutes a valid conveyance with regard to property not yet in existence is a matter of controversy. The kinyan, or mode of transfer represented by designation of a beneficiary, is not one of the forms of kinyan expressly recognized by Halakhah. Rather, it must be regarded as being in the nature of situmta, i.e., the custom and usage of merchants. Some authorities maintain that situmta is effective even with regard to property not yet in existence; others maintain that the limitation against conveying property not yet in one’s possession applies to situmta as well. See sources cited by Pitḥei Teshuvah, Ḥoshen Mishpat 201:2. That controversy appears to center upon the nature of situmta: Is situmta simply an additional mode of generating absolute determination (gemirat da‘at) or evidence that such has occurred, or does situmta represent a rabbinic ordinance validating transfer of title even in the absence of formal kinyan? If the former, there are no grounds to assume that situmta is effective in situations in which ordinary modes of conveyance are not; if the latter, a rabbinic edict might give effect to a conveyance in the form of situmta even for the conveyance of property with regard to which biblical conveyance is impossible. Cf., Teshuvot Rivash, no. 308; Teshuvot ha-Rosh, klal, 12, no. 3; Teshuvot ha-Rashbash, Tikkun Soferim, din asmakhta; Teshuvot Maharshal, no. 34; Yam shel Shlomoh, Bava Kamma 8:60; Teshuvot Rema, no. 134; Ma‘aseh Ḥiyya, no. 14; Teshuvot Ḥatam Sofer, Ḥoshen Mishpat, no. 66 sec. 2; and Ḥukkat Mishpat, Hilkhot Mekhirah 1:5 and mekorot, ibid., sec. 11, as well as addenda, no. 1.
However, as will be explained in the text, a life insurance policy is not a conveyance of property, but represents simply an obligation on the part of the insurance company to pay a sum of money at a certain time (i.e., upon the death of the insured) to the individual designated by the owner. Naming the beneficiary as the owner means only that the beneficiary alone has the power to designate an alternate beneficiary.
Rabbi Masalton also advances the argument that no kinyan is necessary because, since the proceeds of the policy are expressly made payable only upon death of the policyholder, the gift can be construed as mortis causa (meẓaveh maḥamat mitah). To be sure, since the rabbinic enactment giving effect to such verbal gifts even in the absence of valid kinyan was born of a concern that aggravation caused by inability physically to consummate the transfer might hasten death, most authorities maintain that the rabbinic legislation is limited to gravely ill persons, and to persons making such gifts in actual contemplation of death, e.g., a person about to be executed or a person preparing to embark on a sea voyage or desert journey. However, Mordekhai, Bava Meẓi’a, sec. 254, cites the opinion of Maharam who maintains that all gifts predicated upon death are governed by the rabbinic ordinance governing gifts mortis causa. Accordingly, Rabbi Masalton suggests that the widow who is in possession of the funds might rely upon the authorities who accept the ruling of Maharam. However, if, as must be assumed, an insurance policy is not a conveyance of property to the beneficiary but a directive concerning payment of a debt, that controversy is not relevant to the resolution of the issue. However, Rabbi Masalton notes that although immediate transfer of title is not possible, a person can validly obligate himself to deliver an object of value that is not yet in existence.26See Pitḥei Teshuvah, Ḥoshen Mishpat 209:3. Nevertheless, citing Teshuvot R. Akiva Eger, no. 141,27For additional sources see Ḥukkat Mishpat, Hilkhot Mekhirah 30:4 and ibid., bi’urim, secs. 13 and 17. Opposing views, including that of Teshuvot Mahara Sason, no. 133, maintain that heirs are bound even in such circumstances. See Ḥukkat Mishpat, bi’urim, loc. cit. Rabbi Masalton argues that if a person has obligated himself to deliver property not yet in existence, e.g., the fruit of a tree, but dies before the fruit comes into existence, his heirs are under no obligation to transfer the property to the decedent's designee. Two theories have been advanced in explanation of why heirs are not bound to consummate the conveyance of the title even though the decedent, were he alive, would be obligated to do so: (1) since transfer of title has not been consummated, the obligation is personal in nature and, in effect, dies together with the obligee; or (2) even if a lien attaches upon the property when the property comes into existence, such a lien cannot be generated in cases of inheritance since absolute title vests in the heirs prior to attachment of the transferee's lien upon the fruit and thereby preempts such attachment. Applying that principle, Rabbi Masalton argues that, since the policy acquires the nature of property only upon the death of the insured, the property does not vest in the policyholders but in the heirs who are not bound by the policyholder's undertaking.
Rabbi Masalton's characterization of an insurance contract as an undertaking by the policyholder obligating himself to deliver the proceeds to the beneficiary is not borne out by the facts. In actuality, the policyholder does not bind himself to the beneficiary in any way. Indeed, a policyholder is usually at liberty to change beneficiaries or even to surrender the policy.
Proper analysis of the halakhic issues depends upon correct understanding of the nature of life insurance policies. An insurance policy constitutes nothing more than a contract between the policyholder and the insurance company with payment due to the policyholder himself in form of the cash value of the policy upon surrender (or, for contemporary policies, payment of the face value upon survival to age 99) or, upon death of the insured, payment of the face value either to his estate or to a designated beneficiary. Thus, the original question remains: In directing the insurance company to make payment to his wife upon his demise, did the husband direct the insurance company to make an ex gratia payment on his behalf or did the husband direct the insurance company to tender payment in satisfaction of the claim represented by the ketubah?
Rabbi Masalton advances a second line of reasoning that is relevant even upon an accurate analysis of the character of an insurance policy. He argues that, if indeed it was the husband's intent to make a gift of the proceeds to his wife, the gift is governed by the halakhic provisions stemming from the principle "It is a mizvah to fulfill the words of the deceased" as recorded in Shulḥan Arukh, Hoshen Mishpat 252:62 and Even ha-Ezer 54:1. In light of the many authorities who maintain that "It is a mizvah to fulfill the words of the deceased" even with regard to property that comes into possession of the estate after the testator's death, Rabbi Masalton argues that the heirs are under obligation to fulfill those wishes. However, in the case brought before him, he questions whether that was indeed the husband's intent since, under the terms of the policy, had the husband survived for a period of twenty years, payment would have been made to him rather than to the wife.28Rabbi Masalton categorizes this as a “self-evident assessment” (umdena de-mukhaḥ) of the husband’s intention. He further contends that any ambiguity must be interpreted in favor of the heirs and cites Teshuvot Maharashdam, Ḥoshen Mishpat, no. 337 and Ozen Aharon, p. 38, to that effect. Accordingly, argues Rabbi Masalton, it is likely that the husband did not intend the policy to be a gift but to provide assurance of payment of the ketubah. Thus, Rabbi Masalton's reasoning would lead to the conclusion that a typical life insurance policy that provides for payment only upon death of the insured is to be construed as a gift to the wife. Nevertheless, in the concluding section of his responsum, Rabbi Masalton asserts that in a city in which the claim for payment of the tosefet ketubah might entirely deplete an estate and effectively disinherit the heirs, it is unthinkable that a husband would intend his wife to be the beneficiary of his life insurance policy and collect her ketubah as well. Moreover, asserts Rabbi Masalton, many authorities maintain that the principle "It is a mizvah to fulfill the words of the deceased" is applicable only in situations in which funds have been deposited with a bailee with specific instructions for disbursement after death. He further cites authorities who, accordingly, maintain that "It is a mizvah to fulfill the words of the deceased" does not apply to property not yet in existence when such a directive is issued.29See Knesset ha-Gedolah, Ḥoshen Mishpat 252:32 and Sedei Ḥemed, Kuntres ha-Kelalim, Ma‘arekhet ha-Mem, no. 219, s.v. ve-od. Furthermore, Mordekhai, Bava Batra, sec. 592, rules that a deposit accompanied by an express declaration, "If I need the funds, return them to me; but if I die, give them to my son" does not qualify as a valid testament. The rationale underlying Mordekhai's ruling is that "It is a mizvah to fulfill the words of the deceased" applies only to situations in which designation of a beneficiary is absolute. Rabbi Masalton argues that, even if the provision is not spelled out in the insurance contract, since it is commonly known that a policy can be surrendered for its cash value, every insurance policy, is, in effect, predicated upon a specific reservation allowing the policyholder to reclaim its cash value and hence the heirs are under no obligation to "fulfill the words of the deceased."
Rabbi Masalton reports that, because of the element of doubt involved, the Bet Din allowed the widow to retain the proceeds of the insurance policy that were already in her possession but disallowed any additional claim for satisfaction of the ketubah.
As is evident from the foregoing discussion, adjudication of this issue involves two separate questions: (1) Whether the intent of the husband in purchasing an insurance policy is to assure payment of the ketubah or whether it is intended as an entirely separate ex gratia provision for his wife. (2) If the latter, whether the heirs have a claim for recovery of the proceeds either from the insurance company or from the widow on the grounds that (a) there was no inter vivos gift and (b) they are for some reason not obligated to "fulfill the words of the deceased."
It seems to this writer that the first issue may be resolved on the basis of the general halakhic principle that possession by a creditor of an instrument of indebtedness is prima facia evidence of non-payment of the debt. As expressed by the Gemara, Bava Batra 70a, if the debt has indeed been paid, "What is your note doing in my hand" (shetarkha be-yadi ma'i ba'i)? That presumption represents an assessment of human behavior. A debtor who has satisfied a debt simply does not allow a creditor to retain a promissory note that constitutes evidence of ongoing indebtedness. The debtor will decline to discharge the debt unless and until the promissory note is returned to him. A ketubah is simply a particular type of promissory note. A husband who makes provision for payment of the ketubah during his own lifetime is entitled to recover the ketubah. Indeed, in discussing what is to be done with a ketubah that originally belonged to a woman who is still married to the man named in that instrument but which has been lost and subsequently found by a stranger, the Gemara, Bava Mezi'a 7b, considers the possibility that the ketubah may have been lost by the husband who may have recovered the ketubah from his wife30Cf., however, Rashba and Ritva, in their commentaries ad locum, who understand the concern to be that the husband may have delivered the bundle of coins subsequent to loss of the ketubah so that the couple might be permitted to continue to engage in marital relations. upon delivery to her of a "bundle" of coins which she can later apply to payment of the ketubah when it becomes due. It would clearly be inappropriate for the wife to retain her ketubah once the debt it represents has been satisfied lest it be used to claim the debt a second time.
Assuredly, as noted by the commentaries on Bava Mezi'a 7b, a creditor may at times require a debtor to deposit a pledge as security for payment even if the creditor holds a promissory note. Accordingly, if the insurance policy is designed only as security in the event of failure of the heirs to pay the value of the ketubah, possession of that instrument by the wife does not constitute evidence of non-payment. Unlike a bundle of coins which are to be returned upon payment of the ketubah, the proceeds of an insurance policy would constitute actual payment of the ketubah rather than security for future payment. Thus it is certainly arguable that the husband would not name his wife as beneficiary and also permit her to retain her ketubah unless he intends the insurance proceeds to be a gift unrelated to payment of the ketubah.
It is of course true that, were the husband to recover the ketubah on the claim that the obligations of the ketubah have been satisfied by purchase of an insurance policy, the couple would be forbidden to engage in marital relations since, in the absence of an instrument demonstrating the husband's indebtedness, there is nothing to prevent him from acting precipitously in divorcing his wife.31This is not a concern in a situation in which the husband deposits chattel to satisfy the claim of the ketubah since, under such circumstances, he retains the right of management as well as the right to usufruct. Both rights would be lost to him upon divorce and hence those interests serve to prevent precipitous divorce. See Tosafot, Ketubot 56b, s.v. aval. Moreover, deposit of chattel serves to permit marital relations only on a temporary basis. See Rema, Even ha-Ezer 66:2. However, that consideration does not defeat the underlying point, viz., that a person does not allow a creditor to retain evidence of a debt that has been satisfied. Hence, a husband would not satisfy the obligations of which the ketubah serves as evidence so long as his wife retains the ketubah for any reason. However, since the wife must retain possession of the ketubah so that the couple may legitimately continue to engage in marital relations, the husband, if he intended the insurance proceeds to be in lieu of payment of the ketubah, would perforce demand a receipt or acknowledgment of that arrangement upon naming his wife as beneficiary.32Since the insurance is payable only upon death of the husband, retention of the ketubah by the wife upon such acknowledgment serves its intended purpose, i.e., to discourage precipitous divorce by virtue of the fact that, in the event of divorce, payment of the ketubah would be claimed immediately. It therefore follows that, if the husband names his wife as beneficiary on an insurance policy and also allows her to retain possession of the ketubah without obtaining such an acknowledgment, he does not intend the insurance proceeds to serve as satisfaction of the claims represented by the ketubah. Contrary to Rabbi Masalton's contention, in our society there is certainly no contradictory presumption that a husband would refrain from any and all acts that would serve completely to deprive his heirs of any share of his estate.33Such a presumption is indeed reflected in the discussion of the Gemara, Bava Batra 131b, but is posited only in the context of construction of testamentary language.
If the insurance policy is regarded as a gift to the wife, it seems to this writer that there is no reason to regard the proceeds available upon death of the insured as a deposit with the insurance company with accompanying instructions for delivery to the beneficiary. Were that the case, discussion of the applicability of the obligation to "fulfill the words of the deceased" would be relevant. But, in point of fact, the funds do not represent a deposit that is returned upon death of the insured but constitute payment of indebtedness incurred by the insurance company in consideration of the premiums paid. When a beneficiary is named at the time the policy is issued the indebtedness is assumed by the insurance company in a conditional manner, i.e., the indebtedness is incurred directly in favor of the beneficiary but is due and owing only upon death of the insured unless the policy is surrendered by the insured in which case the indebtedness is limited to the cash value and is in favor of the insured.34According to this analysis, the halakhic validity of a change of beneficiary is somewhat problematic. It is, in effect, a perfectly straightforward cancellation of the company’s debt to the original beneficiary with resultant liability solely to the policyholder and his estate. The designation of a new beneficiary must then be viewed as a conditional assignment of the debt by the policyholder to the substituted beneficiary. That assignment requires a kinyan. Execution of the forms designed to achieve that end may be regarded as a kinyan in the form of situmta. Since it is the insurance company that stands as a debtor vis-à-vis the beneficiary,35There is no reason to construe an insurance contract as an obligation solely to the policyholder but which gives rise to a debt on the part of the insurance company only upon the demise of the insured and to construe designation of a beneficiary as an assignment of that debt to a third party. Were that the case, such assignment, since it becomes effective only upon death, would be valid only as a gift mortis causa. Whether such a gift, predicated upon death but made by a person in good health, is valid as a gift mortis causa is a matter of controversy. See supra, note 25. Moreover, as Rabbi Masalton notes, most authorities maintain that heirs are not obligated to “fulfill the words of the deceased” with regard to property interests that do not vest during the life of the deceased. Furthermore, most insurance companies are owned by non-Jews. Rema, Ḥoshen Mishpat 253:20, rules that a debt owed by a non-Jew, even if secured by a pledge or promissory note, cannot be conveyed mortis causa. the heirs have no standing in the matter. Accordingly, in the view of this writer, the widow's claim for payment of her ketubah should be allowed.