Olmsted v. Keyes

On the 9th day of July, 1846, the Mutual Life Insurance Company of Hew York issued a policy of insurance upon the life of Lester Y. Keyes to the plaintiff, John Olmsted, as trustee for Huldah Keyes, the wife of Lester, whereby, in consideration of annual premiums to be paid by such trustee, it agreed to pay to him, upon the death of Lester, the sum of SI,000. From the date of the policy to his death Lester paid the annual premiums. Lester and Huldah had several children who are defendants in this action. She died intestate in Hovember, 1857, and thereafter, in August, 1861, Lester intermarried with the defendant Mary L. Keyes, and in August, 1864, the plaintiff, upon the request and direction of Lester, for value received, assigned to Mary L. all his right, title and interest as trustee of and for Huldah Keyes in the life policy with all the advantages to be derived therefrom, and due notice of the assignment was given to the insurance company. In January, 1878, Lester died intestate, leaving surviving him Mary L. his widow, and one child by her, and all the children of his first wife, with one exception. In the same month the defendants Burdick and Mary L. Keyes, the widow, were appointed administrators of Lester. In due time the necessary proofs of the death of Lester were made to the insurance company and it thereupon paid to the plaintiff the amount due upon the insurance policy, to wit, the sum of $1,811, which sum was in the hands of the plaintiff at the commencement of this action. Since the commencement of this action, Helen M. Yosbnrg, one of the children of Huldah, has been duly appointed the administratrix of her estate and as such administratrix she was made a party defendant in this action.

This action was commenced to determine the conflicting claims of the various defendants to the money paid to the plaintiff upon the policy. The foregoing facts were found at the Special Term and it was there also found that it was the intention of Lester, when he procured the policy and paid the

This policy was taken out by Lester, for the benefit of his wife. It was an insurance upon his own life for her benefit. While one cannot insure a life in which he has no interest, every person can insure his own life for any sum upon which he can agree with an insurance company. A life insurance is not like fire insurance, a contract of indemnity, but a mere contract to pay a certain sum of money on the death of a person in consideration of the due payment of a certain annuity for his life. (Dalby v. The India and London Life Assurance Co, 28 Eng. Law & Eq. 312; Rawls v. American Life Ins. Co., 36 Barb. 357 ; S. C., 27 N. Y. 282 ; Ins. Co. v. Bailey, 13 Wall. 616 .) Like every other contract to pay money such a policy is a chose in action with all the ordinary incidents of every other chose in action. It is abundantly settled in this State, that one who takes an insurance upon his own life may make the policy payable to any person whom he may name in the policy, and that such person need have no interest in the life insured, and that if the policy be valid in its inception, the party taking it may assign it to any person as he could assign any other chose in action, and that the policy will continue valid in the hands of the assignee, although he has no interest whatever in the life insured. So a creditor

The rule, as gathered from these authorities, is that where one takes out a policy upon his own life as an honest and bona fide transaction, and the amount insured is made payable to a person having no interest in the life, or where such a policy is assigned to one having no interest in the life, the beneficiary in the one case and the assignee in the other may hold and enforce the policy if it was valid in its inception, and the policy was not procured or the assignment made as a contrivance to circumvent the law against betting, gaming and wagering policies. It follows, therefore, that one may, with the consent of the insurer, deal with a valid life policy as he could with any other chose in action, selling it, assigning it, disposing of it, and bequeathing it by will, and it has been well said that if he could not do this life policies would be deprived of a large share of their utility and value.

Therefore, but for the statutes which will hereafter be noticed,.

The general role of the common law is that the husband may, during the joint lives, reduce his wife’s choses in action to possession, and thus appropriate them to his own use, or he may release them or assign them so as to bar the wife’s right of survivorship. (Reeves’ Dom. Rel. [B. & B.’s ed.] 55, etc.; Clancy’s Hus. and Wife, 109, etc.; Schuyler v. Hoyle, 5 Johns. Ch. 196 ; Westervelt v. Gregg, 12 N. Y. 202 .) But during the joint lives the husband cannot assign or release, so as to bar the wife, surviving, her choses in action, payable after bis death, or upon contingencies or at times which do not come or happen until after his death. In such cases, however, his assignment is good as against the whole world but his wife surviving. In White v. St. Barbe (1 Ves. & B. 406) the master of the rolls said that a husband can dispose of his wife’s property in expectancy

Howto apply these principles to this case. The wife’s interest in this policy was a chose in action. At her death it passed to her husband. He then caused it to be assigned to his second wife, the defendant Hary L., and thus, within the meaning of the law, he reduced it to possession. The assignment was valid as against him and was therefore valid as against the whole world. The written assignment is expressed to have been for value received, and in the absence of proof to the contrary must be assumed to have been, but whether it was for a valuable consideration or not it was good as against him, and that is sufficient, as the rights of a surviving wife are not in question. If the chose in action had been a note payable at his death his assignment thereof would have been valid, and for precisely the same reason his assignment of this policy was valid.

There is no case which holds that a fife policy for the benefit of the wife, her husband surviving, passes, by the rules of the common law to her personal representatives for the benefit of her estate, to the exclusion of her husband. On the contrary, it was said by the chancellor, in. Moehring v. Mitchell ( 1 Barb. Ch. 264 ; affirmed in the Court of Appeals,

The statutes of this State, in respect to insurances upon lives of husbands for the benefit of wives, must now be considered. The first is chapter 80 of the Laws of 1840, section 1 of which made it lawful for a married woman to cause the life of her husband to be insured, and provided that, in case she survived her husband, the amount of the insurance should be payable to her, to and for her own use, free from the claims of the representatives of her husband or of any of his creditors; but that such exemption should not apply where the amount of premiums annually paid should exceed $300. Section 2 provided that, in case of the death of the wife before the decease of her husband, the amount of the insurance might be made payable after her death to her children for their use, and to their guardian, if under age. It may be assumed that this policy was taken out under that act, and yet it will not aid these appellants.

Section 1 secures the amount of insurance to the wife only, in case she survives her husband. Here she did not survive her husband. There is nothing, therefore, in that section to take away his common-law right in the amount insured as survivor.

“ The amount of insurance may be made payable, in case of the death of the wife before the period at which it became due, to her husband or to his, her or their children for their use as shall be provided in the policy of insurance, and to their guardian, if under age.”' Here again it is provided that the policy must determine to whom of the persons named payment shall be made. In 1873, by chapter 821, section 2 was again amended, and the section, as amended, provided that a married woman holding a policy for her benefit or for the benefit of herself and her children might surrender such policy to the company issuing the same in the same manner as any other policy; and also provided that in case. she had no issue she might dispose of such policy by will or by deed, which disposition should invest such person or persons, to whom the policy had so been bequeathed or granted and conveyed, with the same rights in respect thereto as such married woman would

I can see nothing in all this legislation which gives countenance to the idea that, by virtue of section 2, as enacted in 1840, the children of Huldah obtained any right in this policy, the insurance not having been made payable to them in any event. If it had been the intention of the law-makers that the amount should be absolutely payable to them, in case of the death of their mother before the decease of her husband, they would have so provided in plain terms, as was done in Massachusetts (Swan v. Snow, 11 Allen, 224 ), instead of providing that it might be made payable to them.

There was nothing decided in Eadie v. Slimmon ( 26 N. Y. 9 ) in conflict with any views herein expressed. All that was decided there is that a policy of insurance to a married woman, made under the Laws of 1840, for her benefit and that of her children in case of her death, could not be transferred so as to divest the interest of the wife or of her children. In that case the insurance was upon the life of the husband for the sole use of his wife, and in ease of her death before him, for the use of her children. There was nothing in the statute of 1840 which expressly prohibited the assignment of such a policy; but it was held that it would be a violation of the spirit of that act to hold that a wife could sell or traffic with her policy, as though it were realized personal property or an ordinary security for money. It is stated in the opinion of Judge Denio, that that statute looks to a provision for a state of widowhood and for orphan children ; and so it does. It provides that a married man may effect an insurance upon his life for the benefit of his widow, and also for the benefit of his children; but the provision need not be for both unless he chooses to make it so. When the learned judge said that “by the general rules of law a policy on the life of one sustaining only a domestic relationship to the insured would become inoperative by the death of such insured in the life

It is said, however, that because the wife could not assign this policy, and because the husband could not control it during her life-time, in consequence of the statute of 1840,-there-fore the common-law right of survivorship to the husband was also destroyed. It is difficult to see how this conclusion follows. The statute went so far, and limited the right, of the husband during her life, but it' went no further. When Huldah died the statute ceased to operate upon the policy, and then the common-law right of the husband became operative. I know of no principle, and there certainly is no authority holding that the husband must have the right to dispose of his wife’s choses in action during her life, in order to reduce them to possession or control them after her death. (Ransom v. Nichols, supra.) So far as the statute interfered with his common-law right in reference to this policy, it was gone. In all other respects his common-law rights remained.

Lester took out this policy, and paid the premiums thereon for about eleven years, to make a provision for his first wife in case she survived him. He then continued the insurance after

The judgment should, therefore, be affirmed, with costs.

Folgeb, Gh. J., Abdbews and Fimch,' JJ., concur; Dabtfobth and Milleb, JJ., dissenting; Sapallo, J., absent at ai’gument.

Judgment affirmed. '