Travelers' Insurance v. Healey

On the 23d day of May, 1874, the plaintiff issued its policy for $2,000 on the life of Alonzo H. Doty, which policy contained the following provisions, which are material for

“ This said sum insured to be paid at the office of said Co., in Hartford, Conn., to Josephine Doty (hereinafter called the ‘ Assured’), wife of the said insured, within ninety days after due notice and direct evidence that the death of the said insured has taken place during the continuance of this policy, and within that period of any year for which period the premium shall have been actually paid, and not otherwise. In the event of any indebtedness to the company, either on the part of the insured or assured, then such sum only as shall remain in excess of such indebtedness shall become due and payable as aforesaid. And, in case of the death of the said assured before the decease of the said insured, the said insurance shall be paid, when due, to their children, if any then living, or to their guardian, in trust, if they be minors. But, if neither said assured nor any such child shall survive said insured, then said insurance shall be paid to his executors, administrators or assigns. * * * Eighth. That this policy may be converted into cash, at the option of the holder, at any time after the expiration of fifteen years from the date hereof, for the amount indorsed on the back of this policy, corresponding to the age (nearest birthday) of the insured at the time of such conversion ; provided that this policy shall have been first paid up by the payment of ten full annual premiums, as herein stipulated. Minth. That no assignment of this policy shall be valid, unless made in writing indorsed hereon, and unless a copy of such assignment, shall be given to this company within thirty days after its execution ; and any claim against this company arising under this policy made by any assignee shall be subject to proof of interest. ’’

On the 13th of April, 1894, the insured borrowed of the defendant Ann Healey $600, and gave a joint note of himself atid the assured, Josephine, to Healey, for the same, and also delivered to her the policy in question, as security, which she has since retained. Mo assignment of the policy was made to her at that time, but on the 4th of April, 1890, Alonzo and Josephine executed and delivered to Healey a written assignment of all their right, title, and interest in the policy. On the 29th of October, 1886, Josephine and Alonzo executed an assignment of the policy to the defendants, Peterson & Packer, reciting in the same an indebtedness to them of $1,130.65, for which sum on the same day they perfected judgment against the defendants Alonzo and Josephine. On the 1st day of Movember, 1886, Peterson & Packer gave the plaintiff written notice of the assignment of the policy to them. On the 24th of May, 1889, Healey notified the plaintiff, by letter, that the policy had been verbally assigned to her to secure a $600 loan ; and on the 4th of April, 1890, she, by her attorneys, sent the plaintiff a copy of the written assignment of the policy to her on that day. On the 22d of October, 1891, Ann Healy commenced an action against the plaintiff to recover $740, in the complaint in which it is alleged that she “ elects that the same be converted into cash.” On the 17th of Movember, 1890,.

It is insisted on the part of the appellant Healey that this policy, by its terms, after the lapse of fifteen years from its date, became payable in cash, at the option of the holder, and that by the delivery to her, without an assignment by the insured, as collateral to a loan, after ten years from the date, she became the holder, and, as against all but the plaintiff, the assignee, in law, of the policy ; and she insists that it does not lie with the other defendants to challenge her title on the ground that the policy, by its terms; required an assignment in writing. We think that that contention cannot, prevail. She did not acquire possession of the policy by any written assignment, as required by the terms of the contract itself, but received the same only as a pledge, or collateral security of a loan made to the insured. Such transfer was, at most, only a pledge, and gave the pledgee, if any right, only a special property right in the policy, which would divest the interest of the assured. It was, at most, an agreement to give a lien to secure the payment of of the $600. McFarland v. Wheeler, 26 Wend. 467 ; Bank v. Alcott, 46 N. Y. 12 ; McCaffrey v. Wooden, 62 Barb. 316 -323.

Again, such transfer could not operate as a valid assignment by Josephine, one of the assured, for the reason that by chapter 248 of the Laws of 1879 she could not make a valid assignment of a policy on the life of her husband for her benefit without his consent in writing, during the life of her husband. Smilie v. Quinn, 90 N. Y. 496 ; Baron v. Brummer, 100 id. 376; Brick v. Campbell 122 id. 337; 33 St. Rep. 520 . This policy was issued prior to the enabling act of 1879, and unless that act gave her power to

At common law, and by the act of 1840, and all subsequent a.cts down to the enactment of chapter 248 of the Laws of 1879, a policy on the life of her husband, for the benefit of the wife, was not assignable by her, where she had living children. The act of 1878 only authorized a married woman to make an assignment of such policy with the written consent of her husband, when she had no children living at the time. It will be observed, by an examination of all the decisions upon this subject, that the right to make such transfers has never been upheld, except where authorized by the express terms of the statute. In discussing this question, Potter, J., in Brick v. Campbell, 122 N. Y. 343 ; 33 St. Rep. 520 , uses this language:

“So strictly have the courts adhered to the enabling acts passed by the legislature upon the subject of such policies, that they have refused to regard the general enabling acts in relation to married women and their separate property as having any reference or application to such policies.”

Independently, then, of the requirement of the policy itself that the transfer must be in writing, it seems quite apparent that no valid transfer of this policy was made to Healey. This conclusion is reached aside from, and independent of, the question raised and pressed by the learned counsel for the children of Alonzo and Josephine — that, as against them, no valid assignment of this policy, either to Healey or Peterson & Packer, has been or can be made, so as to divest the contingent interest of such children. Three contigent beneficiaries are named in this policy. The first taker is Josephine, the wife, if she survive her husband ; if she does not, then the second taker is her children or child of the insured living at the time of his death, or the descendants of any who may have died; and, in case no widow or descendants of the insured survive him, then his executors or administrators. This policy must be regarded as a contract made between the plaintiff and the insured for the benefit of the assured, named as beneficiaries therein. The rights of the beneficiaries, from the very nature of the contract, do not depend upon any privity between the insured and the beneficiaries named in the policy, and do not depend upon the principle enumerated in the somewhat criticised authority of the case of Lawrence v. Fox, 20 N. Y. 268 . The rights of the assured rest in contract, and are capable of being enforced as other contracts, and stand where, at the maturity of the policy, the contract leaves them. Those rights, I think, may be regarded as vested rights, subject only to be defeated by the happening of a contingency provided for in the policy itself. It is quite true that form and character of such a contract are largely regulated by statutes in force at the time of the making of the contract, or by some subsequent statute which may operate retrospectively on the same.

It is insisted by the learned counsel for Peterson & Packer that, under the provisions of chapter 248 of the Laws of 1879, the wife

“ All policies of insurance heretofore or hereafter issued within the state of New York upon the lives of husbands for the benefit, and use of their wives, in pursuance of the laws of the state, shall be from and after the passage of this act assignable by said wife, with the written consent of her husband ; or in case of her death, by her legal representatatives, with the written consent of her husband, to any person whomsoever, ór be surrendered to the company issuing the policy with the written consent of her husband.”

It is to be observed that this provision of statute makes no reference to policies for the benefit of children as well as for that of the wife. The policy under consideration provides for both these-classes of beneficiaries. It is true that the policy provides that it may be converted into cash after fifteen years," at the option of the holder. But can the assignee of one of the possible beneficiaries, without the consent of the other possible beneficiaries, be deemed the holder, as against the rights of the latter? The death of Josephine before the assignment would have devolved the benefits of this policy on her children, if her husband were at that time-living. It is difficult to see how any greater right could attach to her assignees than inherited in her at the time of. the assignment. The policy is a chose in action, which passes only by assignment - and as the same was not transferable by delivery, and negotiable only by assignment, it would seem to follow that the assignee took no greater interest than was possessed by the assignor at the .time of the assignment. Davies v. Austen, 1 Ves. Jr. 247; Greene v. Warnick, 64 N. Y. 220 . Doubtless, Josephine could, at the time of making the assignment, with the eonsentof her husband, transfer to her assignee her contingent interest in the policy, and the assignee would, in'the event of her surviving her husband, realize on the policy; but if her husband survived her the right which belonged to her or her assignee would vest, by the terms of the policy, in her children. Under such conditions, can Peterson & Packer, as. assignees of Josephine be deemed the holder of this policy as against the children, so as to adopt the option of converting this policy into cash while their rights to the same still exist, and have not been extinguished ? Such a conclusion seems to be at war with the plain provisions and intent of the policy. The rights of children under a policy issued on the life of the husband for the benefit of the wife seem to have been guarded by the legislature, when they are not made beneficiaries by the terms of the policy. By chapter 821 of the Laws of 1873, the wife was authorized to assign a policy in her favor, with the consent of the husband, and will the same, when she had no children. This authority negatives the 1 existence of such right under that act when she has children. But it is insisted that, under the provisions of chapter 248 of the Laws of 1879, the powers of a wife to assign a policy was extended, and that with the consent of her husband, all obstacles in the way of

“ The mere fact that she had children at the time of making the assignment did not render the assignment void. The statute, whether there be children or not, gives the wife, with the consent of her husband, the absolute power to assign or surrender the policy. It is quite true that the children had a contingent interest in the policy, which would have become vested in case the wife had died before the policy matured. But here she survived that period, and hence the contingency did not arise which gave the children any interest whatever in the policy.’’

It will be seen in the case from which the above quotation is made, that the whole case turned upon the fact that the wife survived the period at which the policy absolutely matured, to wit, May 31, 1885, when her right became absolute, and all possibility of a devolution of the benefits of the policy upon the children ceased. The policy under discussion in the case at bar matures and becomes payable at the office of the company within ninety days after notice of the death of the insured. Clearly, the rights of the beneficiaries named in the policy cannot be fixed or known until the death of the insured. That period has not yet arrived, arid until it does, in the language of Judge Earle, “the children have a contingent interest in the policy, which would have become vested, had the wife died before the policy matured.” It follows, therefore, from the authority of Anderson v. Goldsmidt, referred to by the counsel for the respondents, that the children in this cuse have a contingent interest in this policy, which will become absolute if Josephine die before the insured. Nor does the expiration of fifteen years, at which time the option of the holder to demand cash payment commences, constitute the maturity of the policy, so long as any contingency exists as to who shall be the ultimate beneficiary. It may be conceded that, if all contingency was removed, the person to whom the absolute right vests might, after the expiration of the fifteen years, exercise the option. But, so long as the ultimate right to this fund

It is also urged by the learned counsel for the appellants Doty that this action of interpleader cannot be maintained for the reason that the parties named as defendants are notall demanding the same relief or right, as against the plaintiff. The complaint alleges the issuing of its policy on the life of Alonzo H. Doty; sets out the policy, and some of the acts done under it; also sets up the claim made by Ann Healey to recover $740, the present cash value of the policy, and her election to accept that sum in full satisfaction for the amount of the same. The complaint also sets upon the claim of Peterson & Packer as assignees of the policy. Ho claim to this policy or fund by Stark A. Doty and Carrie B. Doty, infant children of the insured, was made, against the plaintiff; but a letter from Peter Doty, claiming to be guardian of these children, was sent to the plaintiff, forbidding payment to either Peterson & Packer or Ann Healey, — claiming that the policy could not be properly assigned, and claiming that the infants had an interest in the policy. Under these facts, the plaintiff claimed, in its complaint, that as it acknowledged its liability on the policy the parties should inter-plead in this action, and settle the question as to the rights under the policy, between themselves, to the same. If the rights of these conflicting claimants were in a condition in this case, at the time of the commencement of this action, to be adjudicated and settled between themselves, then there was sufficient conflict between them to justify a bill of interpleader on the part of the plaintiff. Crane v. McDonald, 118 N. Y. 648 ; 80 St. Rep. 98 . But can the rights of the conflicting claimants be definitely settled by an inter-pleader, so long as they are inchoate? The very nature of an interpleader seems to pre-suppose that the rights of the parties of the action are matured, fixed, and determined, or at least so far settled as not to depend upon the happening of a future event, which is certain to occur, but upon the order in which such event may occur the rights of the parties must depend. But, so long as the contingencies upon which the rights of the respective parties depend continue to exist, it is alike impossible to determine who is to be the ultimate beneficiary in this policy, or the amount of the liability of the plaintiff on the same. If Josephine survive her husband, so that the title vest in her assignee, then the whole face of the policy would be due, and pass to them, under the assignment, and a payment of $740 would not extinguish the plaintiff’s liability. If Josephine should die before the insured, as we have seen, the title to the policy, or the proceeds of it, would vest

(concurring.) — Story, in his Equity Jurisprudence, remarks, in reference to a bill of interpleader (section 8Ó6):

“It is properly applied in cases where two or more persons severally claim the same thing, under different titles or in separate interests, from another person, who, not claiming any title or interest therein himself, and not knowing to which of the persons he ought to render the debt or duty claimed, or to deliver the property in bis custody, is either molested by an action or actions brought against him, or fears that he may suffer injury from the conflicting claims of the parties. He therefore applies to a court of equity to protect him, not only from being compelled to pay or deliver the thing claimed to both the claimants, but also from the vexation attending upon the suits which are, or possibly may be, instituted against him. ”

I think, under the doctrine just stated, this action was properly

I think, therefore, that the conclusion reached by the learned trial judge — that the action was properly brought for the purpose of protecting plaintiff from a multiplicity of suits, and also from a double recovery — was correct. See Crane v. McDonald, 118 N. Y. 648 ; 30 St. Rep. 98 . I am unable to agree, however, with his conclusion “that the defendants Starks A. Doty and Carrie E. Doty, or either of them, have no longer any interest, either actual or contingent, in said policy.” The instrument insured the life of Alonzo H. Doty in the sum of $2,000 for the term of his natural life ; said sum being payable to his wife, Josephine, or in case of her death before that of the insured, to their children, said Starks A. and Carrie E. Doty. It was held, of a similar policy, in Whitehead v. Insurance Co., 102 N. Y. 143 , that the wife and children acquired a vested interest in the policy at the moment of its delivery to the insured. See U. S. Trust Co. v. Mutual Ben. Life Ins. Co., 115 N. Y. 152 -157; 24 St. Rep. 1 . So, in this case, on the delivery of the policy both the wife and children of the insured acquired a vested right therein, and I am unable to see why such right in the children does not still exist. " The defendants Packer & Peterson have not elected to convert the policy in cash, in pursuance of the provisions of the eighth clause therein, if they had the right so to do, and the trial court determined that the defendant Healey acquired no interest in the policy under the verbal assignment to her ; hence the question involved may be considered as if the instrument did not contain the said eighth clause. Here, then,'is a policy providing for the payment of $2,000 to the wife of the insured, if she should survive him, and, if not, to the defendants Doty, her children. She could, with her husband’s assent, assign her interest in the policy to the defendants Peterson & Packer, or to Healey, but she could not by such assignment inter

It is claimed by the learned counsel for defendant Healey that, under the contract of insurance, Alonzo H. Doty must be deemed the “holder,” and entitled to convert the policy into cash, under the eighth clause thereof. If this position is correct, probably the delivery of the policy to defendant Healey by the insured in consideration of the loan of $600 might be effectual to transfer the same. Marcus v. Insurance Co., 68 N. Y. 625 . In the case cited it was held that a life insurance policy could be transferred by a mere delivery, without an assignment in writing, although the policy, by its teams, requires a written assignment. If the insured, Alonzo fl. Doty, was the “holder” of the policy, within the meaning of the eighth clause of the policy, that provision in the contract was entirely for his benefit, and he could transfer his separate interest in the policy alone, without hie wife joining in the transfer ; and, as to an assignment of his separate interest under the contract of insurance, the act of 1879 did not apply. Hence I am inclined to believe that if the position of the counsel is correct, that Alonzo H. Doty should be deémed the holder of the policy, his conclusion that the defendant Healey was entitled to maintain her action is also correct.

The question therefore arises, who was the holder of the policy ? By it an insurance was effected for the benefit (1) of the wife, (2) the children, and (3) the estate of the insured, in case his wife and children did not survive him. -Does the word “ holder" mean the party having possession of the policy, or the person or persons to whom it is made payable ? IE a promissory note is made to several persons, and in possession of one, each of them is the legal owner and holder. The possession of one is that of all. If a note is made to A., but in possession of A’s agent, A. is still the holder. I am inclined to believe tliot this policy, which secured the payment of $2,000 to Josephine Doty on the death of her husband, or, in case she did not survive him, to. her children, or, if neither wife nor children survive him, to his personal representa-. tives, must be deemed held by the parties to whom it was payable, and that the possession of the policy by the insured, or by either of such parties, must be considered the possession of all. If the policy had been for the wife’s benefit alone, she would have been the holder, and could have exercised the option in the eighth-clause, or could, with her husband’s consent, have assigned the policy, and her assignee could have exercised such option. In such a policy as the one under consideration, in which several parties are interested I am inclined to think that the option can only be made by all these parties together; that the word “ holders ” means the persons to whom the policy is by its terms payable, — the owners thereof." I conclude, therefore, that the trial judge was* right in holding that the defendant Healey was not entitled to maintain her action against the plaintiff. For the reasons

Herrick, J., dissenting.