Miller v. First National Bank

I agree with the majority that the order granting the new trial should be sustained; but I do not agree with the interpretation of subdivision 2 of § 7871 of the Compiled Laws as given by the majority in its application to the facts in this case.

The statute says:

"In civil action . . . by or against . . . administrators . . . in which judgment may be rendered or ordered entered for or against them, neither party shall be allowed to testify against the other as to any transaction whatever with or statement by . . . intestate, unless called to testify thereto by the opposite party; and where a corporation is a party in proceedings mentioned in this section, no agent, . . . of such corporation shall be permitted to testify to any transaction had with the . . . intestate."

Fred H. Miller, as administrator of the estate of John Steiger deceased, commenced this action in which the bank became the substituted defendant. The controversy arises over the right to the avails of the life insurance policy made payable to "insured's executors, administrators or assigns." The defendant claimed to be entitled thereto by reason of an assignment of the policy as security for a debt. The issue arises upon the objection to the testimony of the defendant's agent as to the purported assignment made by the deceased himself, — this being the "transaction with the intestate" involved.

The application of this section, to prevent testimony by such agent, requires in this case, four things: A civil action by the administrator; an action in which judgment may be rendered or ordered entered for or against the administrator; the witness sought to be disqualified must be a party to the transaction or the agent of the corporation that is a party; and such witness must be attempting to testify to a transaction with the intestate.

The facts of the case, as set forth in the majority opinion, disposes of all of these points adverse to the rule laid down.

The witness was the agent of the defendant corporation and therefore was in the class that could be disqualified.

The transaction regarding which he was testifying occurred between the corporation and the intestate and therefore was within the prohibited class.

This action is an action commenced by the administrator. He is not suing in his individual capacity; but is suing as administrator. It is only as administrator that he may sue in such case as this. It is as administrator that he is entitled to the possession of the avails of the life insurance policy, and as administrator he is required by the statute to include the same in his inventory of the estate of the decedent so that they may be "distributed to the heirs or the heirs at law of such defendant."

It is one of the duties resting upon him as administrator of the estate. The fact that the proceeds are not subject to the debts, and in this case go directly to the heirs as if the policy had been made payable to them, does not limit the fact that the administrator of the estate is the one to receive and inventory the proceeds, and distribute them. He does this because he is the administrator.

Fred H. Miller has no right to maintain this action unless he be the administrator. It is as administrator he has the right to maintain the action and so this is an action by an administrator. Very easily such an insurance policy could be made payable to the estate so as to be subject to the debts, and the proceeds thereof go to the creditors. The administrator is interested in the insurance policies in order to distribute the avails. That the law provides the proceeds shall be distributed according to a certain plan does not affect the fact that this is a suit by the administrator.

The California decisions cited in the majority opinion are not applicable to the facts in this case because the California statute is different. In California a party cannot be a witness in "an action or proceeding . . . against an executor or administrator upon a claim, or demand against the estate of a deceased person, as to any matter or fact occurring before the death of such deceased person." Our statute does not limit the disqualification to an action upon a claim or demand against the estate. With us a party is disqualified from testifying to a transaction with the intestate in any action by or against theadministrator.

The case of St. John v. Lofland, 5 N.D. 140, 64 N.W. 930, cited in the majority opinion, has no bearing on this case. The testimony sought to be excluded in that case, and which this court said should not be excluded, was not testimony regarding a transaction with the decedent but was testimony regarding a transaction with a deceased administrator of the estate, and therefore did not come within the class of cases where the testimony could be excluded.

The Idaho case cited, Servel v. Corbett, 49 Idaho, 536,290 P. 200, is not in point because the testimony sought to be elicited therefrom was not being given by a party to the suit, but by a mere witness. The witness was Xavier Servel who was not a party to the action. He was a bankrupt and his trustee in bankruptcy was the party. The suit was between the administratrix of the estate of his deceased brother and those who had control of the witness's estate, the United States marshal and the trustee in bankruptcy, and the bankrupt was a mere witness.

The case of Kirkpatrick v. Kirkpatrick, 106 N.J. Eq. 391, 151 A. 51, was a case where the witnesses involved were made defendants because they refused to join as complainants and the court held that they were in fact complainants and therefore could be called by the complainant. The case of McCartin v. Traphagen, 43 N.J. Eq. 323, 11 A. 156, cited in this New Jersey case and referred to in the majority opinion, involved the right of a party to call a defendant, as an adverse party.

The New Jersey statute involved is entirely different from ours. The court refers to it as § 4 of the Evidence Act (2 Comp. Stat. 1910, p. 2218). This section says:

"In all civil actions any party thereto may be sworn and examined as a witness, notwithstanding any party thereto may sue or be sued in a representative capacity; provided, this section shall not extend to permit testimony to be given by any party to the action as to any transaction with or statement by any testator or intestate represented in said action, unless the representative offers himself as a witness on his own behalf, and testifies to any transaction with or statement by his testator or intestate, in which event the other party may be a witness on his own behalf as to all transactions with or statements by such testator or intestate, which are pertinent to the issue."

This section prevents a party from voluntarily presenting himself as a witness unless the representative offers himself as a witness; but it does not prevent the representative from calling this party as an adverse witness.

The case of Farmers State Bank v. Smith, 36 N.D. 225, 234, 162 N.W. 302, cited by the majority opinion says "We come to the conclusion that the legislature intended that the administrator and executor should inventory the policies and the amount, if any, received thereon, and that he should then distribute the proceeds to the heirs, rather than put the same into the estate." This case expressly shows that it was part of the powers of the administrator in such case to distribute the proceeds and says "the duty of distribution is placed upon him and not upon the county court."

Stress is laid upon the clause in the statute which says the action must be one "in which judgment may be rendered or ordered entered for or against the administrator." Whatever judgment is rendered in this case will be for or against the administrator. The judgment will be that the avails do not belong to the bank, but are to be turned over to the administrator to be inventoried and distributed by him; or it will be held the policy was assigned to the bank and the administrator therefore has no right to the proceeds and cannot inventory and distribute them.

The case in which such statute is applicable is one involving qualifications of the witnesses. The witnesses disqualified are not those who have an interest in the issue. The test is this — is the witness tendered a party? If a party he will be disqualified to testify as to a transaction with the intestate, even if he have no interest in the issue. In Nugent v. Dittel, ___ Iowa, ___, 239 N.W. 559, the defendant was made a party under the theory that he claimed some interest in the real estate involved, which real estate was claimed by the plaintiff as executor of the estate of a decedent. Dittel answered alleging the estate belonged to his co-defendant, and as the opinion says, he claimed "to have no interest in the outcome of the litigation." The facts in the case show he had no interest. The court held he was disqualified to testify as to the transaction between the decedent and his co-defendant, because he was a party to the action. It may be said that this Iowa case differs from the one involved because there the estate of the decedent was interested in the real estate involved, and in this case the evidence shows that the avails of the insurance policy do not go to the estate but go directly to the heirs. However it is not the interest in the issue which is the deciding factor, it is the relationship of the witness to the lawsuit — is he a party? Had the plaintiff in this case offered to testify as to the transaction with the decedent the defendant could have objected to him as a witness on the ground that he was a party to the action, and could not be called without defendant's consent. The fact that he would not be permitted to use the avails to pay the debts of the estate could not impair the defendant's right to exclusion. That the assets of the estate are not increased or decreased by the outcome of this lawsuit, does not alter the facts, that this is a suit by the administrator of the estate, that the bank is a party to the action, and that the transaction sought to be shown is one had with the decedent and is the one involved in the action. We are not concerned, as in California, with whether it is a claim or demand against the estate. A witness may have a very vital interest in the outcome of the lawsuit and it may turn upon the very issue involved here — the signature of the decedent to the alleged assignment — but that does not prevent him being a witness so long as he is not a party.

In Corbett v. Kingan, 19 Ariz. 134, 166 P. 290, 294, the court, after quoting extensively from various decisions including decisions from the United States Supreme Court — all dealing with the question of the interest of the witness in the transaction and its effect upon such statutes — says: "We have come to the conclusion that the persons prohibited from testifying under our statute as to transactions and statements of a deceased person when a judgment may be either for or against the legal representative, heir, devisee, or legatee of the decedent are confined to formal technical parties to the suit, and that the interest of the witness, however immediate or extensive, is not the disqualifying factor."

The fact then that the estate may have a vital interest in the issue or that the estate can have no interest in the issue is not the controlling factor. The controlling factor is, is it an action by the administrator and is the witness sought to be disqualified a party, or agent of a party? Hence I dissent from that portion of the majority opinion which holds the testimony offered was admissible.