New York Life Insurance v. Chittenden & Eastman ( 1907 )

McClain, J".

Two policies were issued by plaintiff to one Jarvis on the 9th day of September, 1889, each for $1,350, payable on his death to his wife, or, if not living, to his children, or, if no children should survive, then to the executors, administrators, or assigns of the insured. Prior to the 25th day of December, 1894, the wife of the insured had died, and he was without children, and he had assigned the policy of the defendants Chittenden & Eastman, a partnership to whom he was indebted, and forwarded a copy of this assignment to the plaintiff. It appears, also, that prior to the assignment to Chittenden & Eastman there had been another assignment by way of security to the Iowa State Savings Bank which had not been forwarded to the plaintiff, and was not known to it when the assignment to Chittenden & Eastman was received and recognized. On the last .above date Jarvis, the insured, disappeared from his home in Burlington, and was not heard of for more than seven years. At the April term, 1902, of the district court of Des Moines county, the Iowa State Savings Bank applied as creditor for the appointment of an administrator for the estate of Jarvis, alleging his disappearance, and that his whereabouts had continued unkn. wn to his friends and the members of his family, and that he had not been heard from. Proper proceedings were had, under which defendant Waldeck was appointed administrator of the estate of Jarvis, and a claim was then made jointly by Waldeck as administrator and Chittenden & Eastman as assignees for payment of the policies held by Jarvis in the plaintiff company ; and proofs’ of death were furnished by Waldeck, in which were the following statements: “ (7) Date of death: During Christmas week, 1894. (8) Place of death: The assured disappeared, and since that date he has not been heard from. There was nothing in his family or business relations to explain his absence. Ilis brother at the time of his disappearance was a resident of Burlington, Iowa, and has ever since continued to reside there and the most pleasant relations existed between them. . . . (10) In^ what capacity, or by what title, do you claim this insurance As administrator of the estate of the assured.” Negotia-* tions were had between attorneys representing the administrator and an agent of the insurance company in which it was insisted for the administrator that the insurance money was due and payable, and that, unless it was paid, suit would be instituted on the policies. Subsequently two drafts for the amount specified in the policies payable jointly to Chittenden & Eastman, assignees, and O. W. Waldeck, adminis^ trator, were tendered to the attorneys for the administrator by the agent of the plaintiff, with the condition that the administrator and assignees should give a bond of indemnity to the company for the return of the money in case it should be subsequently discovered that Jarvis was not dead at the time of this settlement. The attorneys for the administrator refused in behalf of their client to furnish such bond, and thereupon the drafts were delivered without further insistence upon this condition. The proceeds of the drafts were paid in part to the Iowa State Savings Bank, and in part to Chittenden & Eastman. It is conceded that after this payment and the distribution of the proceeds thereof by the administrator Jarvis was alive, and, on the discovery of this fact in April, 1905, the company tendered back the policies of insurance and demanded the return of the money paid, and on refusal this suit was instituted. As the payment of the insurance was by drafts made jointly to Chittenden & Eastman and Waldeck, this suit is no doubt properly instituted against them jointly, although the money has been in part distributed to tbe Iowa State Savings Bank, which is not a party to this action; but, as our conclusions in the case are not dependent on the extent of the liability, respectively, of Waldeck and Chittenden & Eastman, we shall give that subject no further consideration.

1. Adminstration of estate of absentee. I. If Waldeck as administrator was entitled to maintain a suit against plaintiff under the authority given him in the administration proceeding and to recover the insuranee money which was in fact paid, plaintiff had no right to recovery as against him individually, for he had done what by law he was authorized to do, and could not be held individually liable. The first question, then, as we think, is whether the proceedings for administration on the estate of Jarvis were valid. It) seems to be conclusively settled by adjudications that a,/ probate court acquires no jurisdiction by proceeding to ad-1 minister on the estate of a person on the ground that he is i, dead if in fact he is alive, and such proceedings are entirely invalid, and any judgments or orders made in pursuance* thereof, and any action taken thereunder, are absolutely void : as against the person who is erroneously adjudged to be dead. Without citing the many authorities supporting this proposition, it is sufficient to say that any such proceeding, , if sustained, would result in depriving the person- erroneously adjudged to be dead of his property without due process of law. Scott v. McNeal, 154 U. S. 34 (14 Sup. Ct. 1108, 38 L. Ed. 896).

But, in the exercise of. its jurisdiction ovér property within the State, it may be provided by the legislature that after the absence of the owner unheard of for a specified period such property may be administered upon in the same form of proceeding as is provided for administration upon the property of a person deceased, and such administration will be valid as against the absentee and all persons interested, although he is in fact not dead. Cunnius v. Reading School District, 198 U. S. 458 (25 Sup. Ct. 721, 49 L. Ed. 1125). Section 3307 of our Code provides for such an administration on the estate of one who has absented himself from the State and concealed his whereabouts from his family for a period of seven years, and under the decision last above cited we have no doubt that this section is constitutional and provides for a proceeding which may properly be resorted to in such cases, and which is conclusive on the absentee and those claiming under him. The administration granted as to the property of Jarvis was in accordance with the provisions of this section, and we think it was valid.

„ T2. Insurance: ami settlement: estoppei. Waldeck as administrator had the right, therefore, to receive from the plaintiff the proceeds of the policies on Jarvis’ life so far as such proceeds were payable to his administrator, and, as Chittenden & Eastman 7 7 assented to such payment and to the distribution of the proceeds by Waldeck as administrator, there was a final settlement under the policies, which, if Jarvis had been in fact dead, would have been binding on all parties. It may be conceded that the policies did not mature simply on the granting of administration on the estate of Jarvis as an absentee. The conditions of the policies were that the sums named therein should be paid on Jarvis’ death, and, as already indicated, the administration was not conclusive as to the fact of his death, but only .as to the fact of his absence and the concealment of his whereabouts from his family for seven years. But the facts which justified the’ administration would also as evidence have established a right of action on the policies by the administrator and the assignees to recover the insurance money, for those facts would have been sufficient evidence of death to sustain a judgment based on that fact. The plaintiff company was thereupon brought face to face with the question whether it would pay the amounts of the policies or stand suit thereon, and question the fact of the death of Jarvis.

It may further be suggested that the obligation of the plaintiff under its policies was to pay the amount named therein to the proper beneficiary within sixty days after due notice and satisfactory proof of death, and that proof of death stating the facts which, if established, would show the liability of the company was furnished, and no objection thereto on the part of the .company was made. Under these conditions, and for the purpose of avoiding an action on the policies, the plaintiff company elected to pay over the amount thereof to the persons entitled to receive the insurance money if Jarvis were in fact dead, and this compromise and settlement of a claim based on the assertion of his death was, we think, binding and conclusive on the company. Had a judg-’ ment been secured in an action by the administrator with authority to represent the rights of all persons interested inj the proceeds of the policies, such judgment would have beeficonclusive as to the death of Jarvis, and the company could not, after, paying-the amount of such judgment, have recovered back the money paid on discovering that the essential fact in issue in the case, to wit, the death of Jarvis, -had been erroneously adjudicated. The judgment would have been¡ conclusive as to that fact. Therefore we think that a settlement by which the money was paid for the purpose of avoiding a suit in which such a judgment might have been rendered is also conclusive, and that plaintiff cannot now recover back the money thus paid.

In a case quite similar in its essential facts to the one now before us the Court of Appeals of New York held that an arrangement for the payment of the amount of the policies entered into in view of the assumed death of the assured as indicated by his absence unheard of" for more than seven years was binding after it had been ascertained that -he was still living; such arrangement having been made with regard to the chances of success of the claimant under the policy at the time when the insured was thought to he dead. In that case, as in this, “ clearly but one thing was .dealt with or could be in the agreement of .settlement, to wit,_ the. possibility that the insured should prove to be alive.” Sears v. Grand Lodge, 163 N. Y. 374 (57 N. E. 618, 50 L. R. A. 204). In the case before us there was no compromise, it is true, as to the amount to be paid; but there was a compromise on the question whether anything was payable, and for the purpose of avoiding litigation the plaintiff elected to make payment. A voluntary payment is usually conclusive, and cannot be recovered back. Manning v. Poling, 114 Iowa, 20; James v. Dalbey, 107 Iowa, 463; Davenport & St. P. R. Co. v. Rogers, 39 Iowa, 298; Bailey v. Paullina, 69 Iowa, 463; Baldwin v. Foss, 71 Iowa, 389; Lyman v. Lauderbaugh, 75 Iowa, 481; Weaver v. Stacey, 93 Iowa, 683; Windbiel v. Carroll, 16 Hun. (N. Y.), 101; National Life Ins. Co. v. Jones, 1 Thomp. & C. (N. Y.), 466.

3. Payment: covery back. II. Counsel for appellant insist that this'.'payment was one made under a mutual mistake of fact, and that in accordance with a well-recognized equitable principle money thus paid may be recovered back. The rule , . ™us mvoked ls not applicable, however, where under an assumption of fact known to both parties to be doubtful there has been a voluntary payment in extinguishment of a claim. The principle is thus stated in 1 Pomeroy, Equity Jurisprudence (2d Ed.) section 855:

Where parties have entered into a contract or arrangement based upon uncertain or contingent events purposely as a compromise of a doubtful claim arising from them, .... and there is ... an absence of bad faith, violation of confidence, misrepresentation, concealment, and other inequitable conduct, ... if the facts upon which such agreement or transaction was founded . . . turned out very differently from what was expected or anticipated, this error, miscalculation, or disappointment, although relating to a matter of fact and not of law, is not such a mistake within the meaning of the equitable doctrine as entitles the disappointed party to any relief. ... In such classes of agreements and transactions the parties are supposed to calculate the chances, and they certainly assume the risks.

And at another place in the same work (section 849) the author uses this language: “ It should be carefully observed that this rule [allowing recovery of money paid under mistake] has no application to compromises where doubts have arisen as to the rights of the parties, and they have intentionally entered into an arrangement for the purpose of compromising and settling those doubts. Such compromises, whether involving mistakes of law or fact, are governed by special consideration.” The foregoing quotations are made part of the opinion in Sears v. Grand Lodge, 163 N. Y. 374 (50 L. R. A. 204), as applicable to a case very similar to the one before us. In Riegel v. American Life Insurance Co., 140 Pa. 193 (21 Atl. 392, 11 L. R. A. 857, 23 Am. St. Rep. 225), and on a subsequent appeal, 153 Pa. 134 (25 Atl. 1070, 19 L. R. A. 166), it was decided that the holder of a policy accepting its surrender value under the assumption that the assured was still alive might, on proving that in fact the insured had already died, recover the balance of the face of the policy which had matured by the death of the assured without the knowledge of either party. But it is evident that, under these circumstances, there was a mistake as to a fact not within the contemplation of either party in entering into the arrangement. In the case before us the question whether Jarvis was dead was distinctly within the contemplation of both parties, for it was expressly recited in the proof of loss that he had been absent for more than seven years, and had not been heard of within that time. The only question of controversy between the parties in determining whether or not the insurance money should be paid was as to whether Jarvis was dead, and the plaintiff conceded its liability by voluntarily paying the claim. In the absence of fraud or concealment, the means of knowledge as to the fact in controversy being equally accessible to each party, the payment is conclusive. Eagan v. Ætna F. & M. Ins. Co., 10 W. Va. 583; Mutual Life Ins. Co. v. Wager, 27 Barb. (N. Y.), 354.

4. Principal and agent: scope of authority. III. With reference to the consideration of the negotiations between the agent of plaintiff and the attorney for the administrator, it is contended that the acts and statements of the plaintiff’s agent were not binding upon it, for the reason that they are not shown to have been within the scope of his authority, which was limited by stipulations in the policy. It is enough to say that this agent had authority to represent the company in delivering the drafts to the defendants in payment of the claims under the policies, and that what he did and said in connection with the effecting of this settlement must be binding upon the plaintiff. It is to be remembered that he at first refused to deliver the drafts until a bond of indemnity was furnished, and that afterwards, on a representation made to the company by counsel for the administrator, that no bond would be furnished, and that, if not voluntarily paid, the right of recovery under the policies would be litigated, the agent delivered the draft without further condition. Certainly what this agent said and did was within the scope of his authority, regardless of any provisions in the policy. The company is now relying on the delivery of these drafts as constituting the very payment which they make the basis of their right to recover back the money paid, and cannot question the authority of the agent through whom such payment was made.

The judgment of the trial court is therefore affirmed.