## Facts

- Eugene Ryan and Gerald Tickle, both licensed morticians, entered business together in 1971 involving funeral home enterprises in Nebraska.
- Ryan Funeral Home, Inc. had 477 shares; Ryan owned 50 shares and Tickle purchased 25 shares, and they obtained a five-year option (exercisable by “Ryan and Tickle, or the survivor of them”) to purchase remaining shares.
- In 1972, they bought the Mullen Funeral Home as equal partners, financing the purchase through borrowing and installment payments.
- To fund a survivor’s purchase of the deceased partner’s business interests, they arranged cross-owned life insurance policies totaling $100,000: each owned a policy on the other’s life, with proceeds payable to the survivor.
- Ryan later died of cancer, and Tickle received about $88,000 in proceeds as the surviving partner/beneficiary.
- Lois M. Ryan, as widow and executrix of Ryan’s estate, sued Tickle to recover the proceeds, alleging Tickle lacked an insurable interest and the arrangement was an unlawful wagering contract.

## Issues

1. Whether a business partner had an insurable interest in the life of the other partner under a buy-sell insurance arrangement.
2. Whether the cross-owned life insurance plan was a wagering contract void as against public policy.
3. Whether the decedent’s estate or widow may challenge a policy’s validity or seek recovery of proceeds from the beneficiary on insurable-interest/public-policy grounds after the insurer has paid.

## Decision

- The Nebraska Supreme Court affirmed dismissal of the executrix’s petition with prejudice.
- The court held that lack of insurable interest is a defense that may be raised only by the insurer.
- Because the insurer paid the proceeds to the named beneficiary, the executrix lacked standing to attack the policy or compel the beneficiary to return the proceeds.
- The court rejected the characterization of the arrangement as a wagering contract where the insurance was tied to a legitimate business purpose of funding a survivor’s buyout.

## Legal Principles

- Objections that a life insurance policy lacks an insurable interest are generally assertable only by the insurer, not by heirs, executors, or other third parties.
- When an insurer has paid proceeds to the named beneficiary under the policy, third-party challenges seeking disgorgement based on insurable interest are foreclosed.
- Life insurance structured to finance a business buy-sell or succession plan between co-owners is consistent with public policy and is not treated as an unlawful wagering contract.

## Conclusion

The court upheld the beneficiary’s receipt of life insurance proceeds funding a partner buyout, ruling that the decedent’s estate could not recover the payout because only the insurer may contest insurable interest and the insurer had already paid under the policy.


Ryan v. Tickle, 210 Neb. 630, 316 N.W.2d 580 (Neb. 1982)