Barbin v. Moore

• Decision Date: 02 February 1932
• Citation: 159 A. 409
• Parties: BARBIN v. MOORE.
• Court: New Hampshire Supreme Court

159 A. 409

BARBIN

v. MOORE.

Supreme Court of New Hampshire. Coos.

Feb. 2, 1932.

Action by Romeo T. Barbin, guardian, against Hugh K. Moore, administrator of the estate of George Leclerc, deceased.

Facts agreed, and case transferred from Superior Court.

Case discharged.

In 1924, the defendant's decedent, George Leclerc, insured his life under two policies, one payable to his wife Imelda, and the other to two daughters, now wards of the plaintiff. Each policy contained a provision that the insured could change the beneficiaries.

In 1926, George pledged both policies to a bank as additional collateral security, in the event of his death, for a loan of $9,000, which was also secured by a mortgage on his real estate. His wife joined in the assignment of the policy in which she was named as beneficiary.

In 1928, George revoked the appointment of his wife as beneficiary, and substituted for her the plaintiff's wards.

After the loan was negotiated, George made payments thereon, so that at his death there was due to the bank $7,762.94. Thereafter the insurer paid the bank that sum, and the bank discharged the mortgage. The administrator then sold the real estate for $9,025, which he now has in his hands.

If the plaintiff recovers the $7,762.94 which he claims from this fund, George's estate will be insolvent.

In the superior court, Oakes, J., transferred without ruling the question whether the money paid the mortgagee belonged to the estate of the plaintiff's wards, and as to which they were entitled to reimbursement from their father's estate, or whether their only interest in the insurance was the balance remaining after that payment. An order was made that there be judgment in accordance with the decision here.

Warren W. James and Ira W. Thayer, both of Berlin (Mr. James, of Berlin, orally), for plaintiff.

Crawford D. Hening, of Berlin, for defendant.

PEASLEE, C. J.

No question appears to have been made as to the form of the proceeding. The appropriate remedy would be a bill in equity asking that the plaintiff, whose wards' property has been taken to pay a debt of the defendant's decedent, for which it was pledged as collateral security, be subrogated to the secured creditor's right in property of the decedent which was also pledged for the debt. But as the parties submitted their claims upon agreed facts, the superior court made an order that judgment should be entered in accordance with the conclusion as to whether the plaintiff is entitled to reimbursement. The question whether assumpsit could be maintained (White v. Company, 75 N. H. 504, 77 A. 401; Hunt v. Association. 68 N. H. 305, 38 A. 145, 38 L. R. A. 514, 73 Am. St, Rep. 602) need not be considered. Upon filing a proper bill in equity the plaintiff will be entitled to a decree. Hunt v. Association, supra, 68 N. H. 309, 38 A. 145, 38 L. R. A. 514, 73 Am. St. Rep. 602.

I. Various incidental questions, thought to have a bearing upon the main issue in the case, have been argued. For convenience, they are disposed of before taking up that issue.

The rights of these parties are to be determined as of the death of the defendant's decedent. Nothing has occurred since that time to affect their related positions. A third party, having a lien on the insurance and also on the real estate, which has since been sold by the administrator, elected to take its pay out of the insurance money. This automatically discharged the lien upon the real estate, as far as the secured creditor was concerned. But if, as between the estate and the policy beneficiaries, it was the duty of the administrator to pay the debt, elementary equitable doctrines subrogate the beneficiaries to the right against the mortgage security including the fund into which that security has been converted by the administrator. Merrill v. Houghton, 51 N. H. 61.

It has been argued that these policies in a Massachusetts company, payable in that state, are Massachusetts contracts, and that all the transactions here involved are to be settled by Massachusetts law. This is a misconception of the situation. The rights of the insurer, or of any party against the insurer, are not involved. Nor is there any question as to the power of the assured to take this insurance from his children and give it to his creditors, or make it a part of his estate. The issue is whether his dealings with the policies in this state amounted to such action. The extent of the assignment made by the pledge of the policies as collateral security is the controlling factor in the case. This pledge was made in this state by and to local residents, and the designated beneficiaries also resided here. Such an undertaking is to be dealt with according to local law. Saloshin v. Houle, 85 N. H. 126, 155 A. 47; Spencer v. Myers, 150 N. Y. 269, 44 N. E. 942, 34 L. R. A. 175, 55 Am. St. Rep. 675; Henry v. Thompson, 78 N. J. Eq. 142, 78 A. 14; Wilde v. Wilde, 209 Mass. 205, 95 N. E. 295. "Whether a contract is assignable depends upon the law of the place of making the contract; whether if assignable it has been assigned, and what the effect of the assignment is upon the rights of the parties depends upon the law of the place of assignment." Am. Law Inst. Restatement, Conflict of Laws, Proposed Final Draft, § 383A, Comment (a).

It may be added, however, that nothing has been cited or found to indicate that the law in Massachusetts differs from the conclusions reached herein. Blinn v. Dame, 207 Mass. 159, 93 N. E. 601, 20 Ann. Cas. 1184, much relied upon in argument, contains nothing to the contrary. It merely holds (and that by a divided court) that a general assignment for the benefit of creditors gives the assignee a right to compel a formal assignment of a policy similar to those here involved. Statutes similar in all respects to those hereinafter relied upon have been in force in that state for many years. Smith v. Bullard, 61 N. H. 381. And whatever there may be in earlier cases to the effect that a designated beneficiary, whose nomination is subject to change, has no legal rights during the life of the insured, is nullified by the holding in Tyler v. Treasurer & Receiver General, 226 Mass. 306, 115 N. E. 300, L. R. A. 1917D, 633, that such a beneficiary takes a present vested right.

Some reliance is placed upon the fact that when the policies were pledged to the bank the then designated beneficiary in one of them, Imelda, joined in the assignment. She was the wife of the insured, and the debt secured by the policies was his. Her interest in the policies was not affected by her attempt to pledge it for the debt of her husband. P. L. c. 288, § 2. "The case is as if the plaintiff [the wife] had not signed the assignment." Stokell v. Kimball, 59 N. H. 13. 14.

It has been suggested that the statute (P. L. c. 277, § 1) providing certain safeguards as to policies wherein a married woman is the designated beneficiary forbids any alteration in derogation of her rights. The language of the case last cited tends to support such a conclusion; but in a later case, where the point was pressed in argument, it was decided that, if the policy contained a reservation of the right to change the designated beneficiary, such action would cut off her right. Barton v. Association, 63 N. H. 535, 3 A. 627. The change from the wife to the children was legal. Whether, if that change had not been made, his pledge of the policy would have been valid against the widow's claim to the insurance is a question which it is unnecessary to consider.

As to one of the policies the designation was changed to the present beneficiaries after the pledge of the policies to the bank. In the view which is hereinafter taken of the nature and extent of the pledge, this fact is immaterial to the decision of the case. The conclusion being that the insured did not appropriate anything beyond what was necessary to secure the bank, all the remainder of the title went to the designated beneficiaries, whether they were named before or after the pledge.

Another thought evident throughout the defendant's argument is that the eventual receipt of the insurance money by the estate of the decedent, especially as far as creditors of the estate are concerned, is a fact which the law will view with complacency at least, and from which it will be slow to afford relief. Upon this phase of the case there is no occasion to consider common-law rules. The Legislature has declared the policy of the state upon the subject, and the relative rights of beneficiaries and creditors of the estate.

"When a policy of insurance is effected by a person on his own life or the life of another, expressed to be for the benefit of a third person or his representatives, the party for whose benefit such policy is so expressed to be made shall be entitled to the sum so insured, against the claims of the creditors or representatives of the party effecting the same." P. L. c. 277, § 2. This statute deprives the creditors of any right to lay claim to the insurance, even where fraud upon them is charged. While upon proof of fraud they may recover the premiums paid by the decedent (Ib. section 3), they have no other claim upon the fund. Smith v. Bullard, 61 N. H. 381. The statute applies to policies which reserve to the insured the right to change the beneficiary as well as to those which do not. The case last cited was of the former class. The same conclusion has been reached elsewhere. G. P. Farmer, etc., Co. v. Albright, 90 N. J. Eq. 132, 106 A. 545.

The fact that the estate will be insolvent unless it can hold the fund arising from the sale of the mortgaged property is urged as a reason why the plaintiff cannot have relief. This fails to take into account the comparative rights of designated beneficiaries and creditors of the insured, as established by the statute. Proof that the fund would be applied to the satisfaction of the claims of the decedent's creditors does not entitle the administrator to hold...