Smith v. Nat'l Ben. Soc.

• Decision Date: 07 October 1890
• Parties: SMITH v. NATIONAL BEN. SOC.
• Court: New York Court of Appeals Court of Appeals

123 N.Y. 85

25 N.E. 197

SMITH

v.NATIONAL BEN. SOC.

Court of Appeals of New York.

Oct. 7, 1890.

Appeal from supreme court, general term, second department.

Action by Fred. H. Smith against the National Benefit Society of the City of New York on a policy of insurance on the life of John Tyler, in which plaintiff was designated as beneficiary. Judgment on a verdict for defendant was affirmed by the general term, (4 N. Y. Supp. 521,) and plaintiff appeals.

Joseph A. Shoudy, for appellant.

A. J. Perry, for respondent.

FINCH, J.

The facts of this case are unusual and extraordinary. In answer to the plaintiff's demand for the sum payable by the defendant's policy of life insurance the company took upon itself the difficult burden of proving that the assured perpetrated a deliberate fraud, planned upon a broad scale, and accomplished by taking his own life; that, his efforts to achieve success failing, and a future of poverty and debt seeming to await him, he determined to secure a large insurance upon his life, appropriate it to the payment of his creditors and the comfort and support of his relatives, and reach the result by suicide. The difficult burden was successfully borne, as the verdict of the jury has determined, and the sole in quiry now is whether the scope and range of the evidence admitted, showing the acts and declarations of the assured, transcended the lawful limit or violated the rules of evidence. The plaintiff was a creditor of the assured, and stands in the case as the assignee of the policy, from the date of its transfer to him. He describes as a witness the manner of its acquisition. Tyler owed him about $10,000 and upon demand of payment proposed to secure the debt by an insurance upon his life. The plaintiff assented. The conversation was in December, 1885, and, in pursuance of the agreement made, the policy now sued was executed in June of the next year. By its terms the defendant constituted Tyler a ‘benefit member’ of the ‘society’ and agreed ‘to pay to Fred. H. Smith, creditor, if living, if not, to the heirs at law of said member,’ the sum insured. The plaintiff, having thus become the owner of the policy, objected on the trial to proof of the acts and declarations of Tyler as incompetent to affect or destroy the policy transferred. The general term questioned his right, considered as an assignment carrying a vested interest, and rely upon section 18, c. 175, of the Laws of 1883, under which the defendant company was organized. That section attaches the beneficial interest to the membership, and permits the member to change the payee or beneficiary of the insurance, without the latter's consent. Where the right of the payee has no other foundation than the bare intent of the member, revocable at any moment, there can be no vested interest in the named beneficiary any more than in the legatee of a will before it takes effect. But the statute does not prevent a contract between the parties by force of which a vested interest does pass, in which respect the present case differs from Hellenberg v. District No. 1, 94 N. Y. 580. There the designation was in the nature of an inchoate or unexecuted gift, revocable at any moment by the donor, and remaining wholly within his control. Here the transfer was as collateral security for an existing debt, and the fact brought to the knowledge of the defendant company, which explicitly promised to pay the plaintiff in his character as creditor. Granting, however, that such was the relation of the parties, we are still of opinion that no material error is shown by the record, since all the evidence to which objection was made came fairly within the res gestae, and the rule permitting proof of the actual transaction involved in the issue. The limitations upon that rule are essily stated, but often difficult in their application. Those limitations were well described in Tilson v. Terwilliger, 56 N. Y. 277. The declarations must be made at the time of the act done which they are supposed to characterize; they must be...