Butler v. State Mutual Life Assurance Co.

Andrew H. Adams applied to the defendant’s agent for insurance upon his life. In his application he answered the question, “ For whose benefit is this insurance,” as follows: “Bey. Jeremiah Butler, of Fairport, New York, in trust for Allie Lee Sperbeck.” Miss Sperbeck was, and still is, an infant, not related to Adams. He described her in the application as “ Protege;” upon this application the policy was issued and delivered to Adams.

This policy reads as follows: “ This policy of assurance witnessed!, that the State Mutual Life Assurance Company of Worcester, in consideration of the representations made to them in the application therefor, and of the sum of seventy-six dollars and ninety-two cents, to them paid by Andrew H. Adams, of Chicago, in the county of Cook, and state of Illinois, and of a like sum to be paid to them, or their agent duly authorized, on or before the 1st day of May, at noon, in each year during the term of this poliey: Do insure the life of Andrew H. Adams, of Chicago, in the county of Cook, and state of Illinois, for the use of Beverend Jeremiah Butler, of Fairport, in the state of New York, in trust for Allie L. Sperbeck, of Fairport aforesaid, to the amount of two thousand dollars, for the term of his life.”

That in May, 1879, the said Adams applied to the defendant, through its agents at Chicago, for such a change in the policy as'should give to said Adams the right to appoint a new trustee in case of the death of said Jeremiah Butler during the life-time of said Adams, and the said Adams thereupon delivered the said policy to the said agent for the purposes of such change; that said agent procured said application to be sent to him by defendant from its home office in Worcester, and with the knowledge and consent of said Adams, added to the answer to the question, “For whose benefit is this insurance? ” the following, “ or in the event of the death of said trustee during the life-time of the insured, he shall appoint a trastee to fill the place of the deceased.” That said agent thereupon returned said application, together with the original policy, to the home office of the defendant, and the said policy was again delivered to the said Adams from the home office.

After this change was made Adams again delivered the policy to Butler, in whose hands it remained until his (Butler’s) death, which occurred in July, 1880. The plaintiff, Mrs. Butler, was, on the 27th of September, 1880, appointed Butler’s executrix. She found the policy among her husband’s papers. She subsequently wrote to Adams: “ What shall I do with that life insurance policy?” He replied: “ Return it to me,” and she did so.

Thereupon, in March, 1881, Adams applied to the company for a substitution of Miss Sperbeck’s mother (whom he had previously married), as trustee in Butler’s place. Upon this the learned judge found as follows: “ That upon the death of the said Jeremiah Butler the said Adams appointed Amelia B. Adams as trustee in place of Rev. Jeremiah Butler, deceased, and notified defendant of such appointment, and requested defendant to make such substitution; and defendant thereupon, by resolution of its board of directors, did substitute said Amelia B. Adams in place of Jeremiah Butler, deceased, as such trustee. That at the time of such substitution said Andrew H. Adams had possession of said policy.”

• Adams died in June, 1881, and thereupon the substituted trustee, Mrs. Adams, claimed the insurance policy. The company disputed the claim upon grounds other than her right to sue. A law suit ensued, which was compromised in September, 1882, by the payment of $1,872 in full, and thereupon the policy which, in the meantime, had been in Mrs. Adams’ hands, was surrendered to the company for cancellation.

The plaintiff, Mrs. Butler, knew of Adams’ death immediately after it occurred, but never made any claim to the insurance until after the payment by the defendant to Amelia B. Adams, nor

We concur in the conclusion arrived at by the special term upon these facts. The contract of insurance was undoubtedly with Adams. He insured his own life for the benefit of this child. The child had no insurable interest in Adams’ life, and consequently neither she nor Butler in trust for her could have taken out a valid policy upon Adams’ life.

It was entirely competent for Adams, however, to insure his own life, and thereupon to assign the policy to a designated beneficiary. He could either do this, or he could designate the beneficiary in the policy itself.

In the latter case, upon delivery of the policy to such designated beneficiary, the contract was executed, the beneficiary’s interest became vested, and the appointment was irrevocable. The company’s obligation reads as follows:

“ And the said company do promise and agree to pay to Beverend Jeremiah Butler aforesaid, in trust as aforesaid, his legal representatives, at their office in Worcester, in lawful money of the United States, the said sum of $2,000 in sixty days after presentation of satisfactory proof of the death of said Andrew H Adams, any indebtedness of this company on account of this policy being first deducted therefrom.”

Upon the delivery of the policy to Butler, the contract took ■effect as an agreement between the company and Butler in trust, and it could not thereafter be varied in any particular without the consent of the beneficiary. And here such consent could not have been given, as the beneficiary was an infant. The effect of the transaction was precisely the same as though the policy had in its inception run to Adams alone, and upon an assignment thereof by Adams to Butler in trust the latter had procured the company’s promise to pay him to be endorsed upon his assignment. It has been authoritatively held that where a person takes out a policy of insurance upon his own life, and the amount is made payable to another having no interest in the life, or where the insured assigns his policy to one having no such interest, the beneficiary or the assignee may hold and enforce the policy. Olmsted v. Keyes, 85 N. Y., 593 .

In the case at bar, the company had notice of their own agreement to pay Butler as trustee, and, in case of his death, to pay his legal representatives. That was before them, upon the face

The promise to pay Butler’s “ legal representative ” was nothing more than a promise to pay as required by law. For, before the act of 1882, it was well settled that a trust of personal property devolved (on the death of the trustee) upon the trustee’s personal representatives. Wetmore v. Hegeman, 88 N. Y., 72 ; Bunn v. Vaughan, 5 Abb., N. S., 269; Boone v. Citizens' Savings Bank, 84 N. Y., 83 .

As there was no reservation in the policy of the right to make a fresh appointment upon the death of the trustee named therein, Adams’ power in this respect ended with the delivery of the policy to Butler.

Thereafter the legal effect of the transaction was left to the law. Even Butler could have made no agreement, after his acceptance of the trust, which would have affected the vested rights of the beneficiary.

Any attempt to do so would have been a violation of his trust. There can be no estoppel in such a case. The defendants knew what their legal obligation was. They knew that they had agreed to pay to Butler in trust for Allie Sperbeck. They knew also that in case of his death they had agreed to pay to his legal representative. They were also bound to know that that was their legal duty even if they had not expressly so covenanted.

The possession of the policy by Adams thus had no legal significance. It was entirely natural that he should have it, and that he should pay the premiums thereon from time to time. The company knew from the very terms of the instrument that the gift was executed and irrevocable. They were certainly put upon inquiry as to whether the policy had been delivered to the contract appointee before permitting Adams to change the legal process of devolution.

But upon the facts appearing in the record it is not necessary to place our judgment upon the latter proposition. For the defendants admit that they caused the policy to be delivered to Butler. This appears from the absence of any denial in the answer of the fourth paragraph of the complaint, which reads as follows:

TV". That thereupon the defendant corporation caused said policy to be delivered, and it was duly delivered through said Adams to said Jeremiah Butler, and was thereafter held by said Jeremiah Butler in his possession as trustee as aforesaid until his death.

Thus the defendants permitted the change in question, and "because of that change made the payment to Mrs. Adams, with full knowledge that the policy had been delivered to Butler, that the rights of the beneficiary thereunder had vested, and that con

The claim that a new trustee should have been appointed in Massachusetts is without force, for two reasons: First, because adequate provision is made in the policy “for supplying the vacancy,” to quote the Massachusetts statute, caused by Butler’s death, namely, that the insurance money should be paid, in that event, to his personal representative. And second, because the question relates to the remedy and is governed by the lex fori. Here, too, the cestui que trust is the real party in interest and she is before the court by her guardian ad litem. The trust is a mere naked trust, and the trustee has no duty thereunder save to receive the insurance money and pay it over to the guardian of the infant beneficiary for the latter’s benefit.

In our judgment, the defendant is now for the first time lawfully called upon to perform its contract, and the judgment requiring such performance was right and should be affirmed, with costs.

Van Brunt, P. J., concurs.