Travellers' Insurance v. Healey

MAYHAM, P. J.

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 consideration on this appeal, for the purpose of determining who, if any, of the claimants were, at the time of the commencement of this action, beneficiaries entitled to the proceeds of this policy:

“This said sum insured to be paid at the office of said Go., 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 upon 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. Ninth. 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 and the assured, Josephine, to Healey, for the same, and also delivered to her the policy in question, as security, which she has ever since retained. No 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 November, 3886, 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, 3-890,-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 Healey 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 November, 1890, an alleged guardian of the children of Alonzo and Josephine, all of whom were infants, forbade, by letter, the plaintiff from paying anything on the policy, either to Healey or Peterson & Packer, and therein asserted that the children of Alonzo and Josephine had an interest in the policy. None of the claimants under the policy have demanded that this policy be converted into cash, under the provisions of the eighth clause of the same, except the demand made by Healey in her complaint in the action brought by her against the insurance company. Alonzo H. Doty and Josephine Doty are still living, as are the children. The learned trial judge found that the title to this policy was in Peterson & Packer, who held the first written assignment from the insured and assured, and are entitled to exercise the option given by the policy to the holder thereof; that the assignment to Healey was invalid, and that she had no interest in the policy; that the children of the insured and assured have neither of them any interest in the policy, actual or contingent. By the judgment,' Ann Healey was perpetually enjoined from the further prosecution of her action against the plaintiff, and it directed the plaintiff to pay to Peterson & Packer the proceeds of the policy, whenever they shall exercise their option, less $100 costs allowed to the plaintiffs in this action. From the judgment the defendants Ann Healey and Starks A. Doty and Carrie E. Doty, children of the assured, appeal.

It is insisted on the part of the appellant Healey that this policy, by its terms, after the lapse of 15 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 10 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 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 the husband for her benefit without his consent in writing, during the .life of her husband. Smillie v. Quinn, 90 N. Y. 496; Baron v. Brummer, 100 N. Y. 376, 3 N. E. 474; Brick v. Campbell, 122 N. Y. 337, 25 N. E. 493. This policy was issued prior to the enabling act of 1879, and unless that act gave her power to assign this policy, she could not do so while her husband was living, she having at the time living children.

At common law, and by the act of 1840, and all subsequent acts down to the enactment of chapter 248 of the Laws of 1879, a policy on the life of the husband, for the benefit of the wife, was not assignable by her, where she had living children. The act of 1873 only authorized a married woman to make an assignment of such a 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, 25 N. E. 493, 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 contingent 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 the 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 who is named as beneficiary in this policy is fully authorized to assign the same, with the consent of her husband, regardless of the claim of her children, as subsequent beneficiaries in the same policy. The provisions of that chapter are as follows:

“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 he 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 representatives, with the written consent of her husband, to any person whomsoever, or 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 15 years, at the option of-the holder. But can the assignee of one of rhe 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 assignlnent 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 inhered 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 w'ould 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 consent of the 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 holders 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 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 were extended, and that, with the consent of her husband, all obstacles in the way of an assignment are removed, and that the cases of Brick v. Campbell, 122 N. Y. 337, 25 N. E. 493, and Anderson v. Goldsmidt, 103 N. Y. 617, 9 N. E. 495, are authorities in support of that contention. The rights of children in a policy issued on the life of a husband for the benefit of the wife were not involved or discussed in the case of Brick v. Campbell, supra. In Anderson v. Goldsmidt, supra, the policy was unlike the one at bar. In that case the policy was issued to the wife, on the life of her husband, payable May 31, 1885, to the wife, and, in case of her death before her husband, to her children. Before the period for the maturity of the policy fixed in it, she, with her husband, assigned it to the plaintiff in that action. She and her husband lived beyond the time of the maturity of the policy, and on the 31st of May, 1885, the personal representative of the assignee, who had died, sued upon the policy. The wife interposed a claim for the money, and it was paid into court; and the title to the same, in a litigation between the wife and the representative of the assignee, was held to be in the latter, notwithstanding the condition in the policy in favor of the children. In that case Judge Earle, after quoting the provisions of chapter 248 of the Laws of 1879, used this language:

“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 rig'ht 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 90 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, and 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 case have a cohtingent interest in this policy, which will become absolute if Josephine die before the insured. Nor does the expiration of 15 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 in whom the absolute right vests might, after the expiration of the 15 years, exércise the option. But, so long as the ultimate right to this fund remains unsettled, none of the contingent beneficiaries can exercise the option. But, as Peterson & Packer have not assumed to exercise the option, the question of their right to do so is not before us. If we are right in our conclusions above, the rights of the respective parties to the proceeds of the policy in question cannot be determined in this action. The right of Josephine to this money depends upon her surviving her husband. The right of Peterson & Packer depends upon the title of their assignor, which cannot now be determined. The right of the children of the insured depends upon the death of their mother before that of their father, all of which events are in the uncertain future.

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 not all 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 up the claim of Peterson & Packer as assignees of the policy. No claim to this, policy or fund by Starks A. Doty and Carrie E. 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 interplead 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, 23 N. E. 991. But can the rights of the conflicting claimants be definitely settled by an interpleader, so long as they are inchoate? The very nature of an interpleader seems to presuppose that the rights of the parties to 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 the 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 in the children, who, as holders of the same, could exercise the option of then demanding the cash value, or they could refuse to exercise the option, and thus postpone the time of payment until the death of the insured, when they could then demand the full face of the policy. Under such conditions, we do not think an action of interpleader will lie. The parties defendant do not claim the same thing. Healey claims $740 cash. Peterson & Packer claim to be adjudged entitled to the policy, with all benefits under it. The children claim a contingent interest in the policy, and ask that the adjudication as to the final right of the parties be postponed until, either by the death of the insured or Josephine, it may be ascertained who at that time shall be entitled to the beneficial interest under th§ policy. They make no claim against the plaintiff, but ask a postponement until their claim may mature. Under these conditions, it does not seem to us that the requirements for an interpleader are met, even as laid down in Crane v. McDonald, Id., relied upon by the learned counsel for the plaintiff, who concede that in that case it was held “that the material allegations in a bill of interpleader are (1) that two or more persons have preferred a claim against the complainant; (2) that they claim the same thing; (3) that the complainant has no beneficial interest in the thing claimed; and (4) that he cannot determine, without hazard to himself, to which of the defendants the thing belongs”; citing Atkinson v. Manks, 1 Cow. 691, 703. It follows that, if such allegations are material in a complaint, they must be supported by the proof, before a decree can pass in favor of the plaintiff. The proof in this case fails to establish the facts necessary to support such allegations: (1) All the parties defendant have not preferred a claim against the complainants. (2) All do not 'claim the same thing. (3) That the complaint has no beneficial interest in the thing claimed. (4) That the plaintiff cannot determine, without hazard to itself, to which of the claimants the thing belongs. For this reason, and the reason stated in this opinion on the other branch of this case, we think the judgment should be reversed. Judgment reversed, and a new trial ordered; costs to abide the event.