Barbour's Admr. v. Larue's Assignee, &C.

• Decision Date: 04 May 1899
• Citation: 106 Ky. 546
• Parties: Barbour's Administrator v. Larue's Assignee, Etc.
• Court: Kentucky Court of Appeals

106 Ky. 546

Barbour's Administrator v. Larue's Assignee, Etc.

Court of Appeals of Kentucky.

May 4, 1899.

APPEAL FROM LARUE CIRCUIT COURT.

D. H. SMITH FOR THE APPELLANTS.

E. E. McKAY ON SAME SIDE.

I. W. TWYMAN AND J. P. HOBSON FOR APPELLEES.

W. S. PRYOR ON SAME SIDE. (J. P. HOBSON OF COUNSEL.)

I. W. TWYMAN AND W. S. PRYOR FOR APPELLEES UPON A PETITION FOR A REHEARING

JUDGE BURNAM DELIVERED THE OPINION OF THE COURT.

This is the second appeal in this case. The opinion on the former appeal is reported in 96 Ky., 326 . After reciting the allegations of the petition, the court in that opinion say: "The only question to be determined in this case is whether or not the policies of insurance passed under the deed of assignment for the benefit of the creditors, and that necessarily depends upon the intention of the assignor in taking out said policies of insurance on his life, and as expressed in said deed of assignment. The policies are not before us, nor copies of them. Their terms and conditions, and the beneficiaries thereof, are not known to us, save and except as stated in the petition and amended petition. Whether or not they were valuable as assets would depend upon the number of premiums that have been paid, the length of time they have to run, and their cash surrender value, if any; assuming that they had passed under the general deed of assignment, and that the assignor was still living. Like other choses in action, they are subjects of assignment. They are used daily in commercial transactions as a basis of credit, often being pledged as collateral securities for debt. They are not such assets as may be attached during the life of the assured, or sold under execution. We must, however, for the purpose of the demurrer, assume the facts stated in the petition and amended petition are true. The allegation therein that these policies were payable to the assignor, his order, or creditors, and that he used them as a basis of credit, stating that he had his life insured for the benefit of his creditors, coupled with the language used by him in the deed of assignment, indicated that he intended to pass them to his assignee for their benefit."

On the return of the case to the lower court, issue was joined and proof taken, and upon the final hearing the court adjudged both policies to the assignee, and from this judgment appeal is prosecuted.

The testimony shows that on the 28th day of August, 1891, Larue made an assignment to appellee for the benefit of his creditors, and that he furnished a very minute inventory of the property covered by the assignment. Neither of the policies of insurance sued on was included in that inventory, but, following the inventory, the deed provides: "If I have omitted to name any property, accounts, or claims not herein mentioned in this deed, the same is hereby assigned and transferred to my assignee for the purpose aforesaid."

And this action by the assignee to recover the value of these policies is based upon this section of the deed of assignment.

The policy in the Equitable Life Insurance Company of New York was assigned to Barbour & Doherty on the 18th day of September, 1891, on the back of the policy, and is in these words: "Whereas, O. M. Barbour and William Doherty stand as my security for a large amount of money, and will evidently have to pay the same, and being unable in my financial condition to pay and keep up the premiums, and for value received, I hereby transfer and assign to Owen M. Barbour and William Doherty the full benefit of the within policy No. 518,711. Given under my hand this 18th day of September, 1891. L. L. Larue."

And a fuller assignment was made Barbour & Doherty on the 29th day of September, 1891.

At the time this assignment was made Barbour & Doherty were the sureties in a note for $2,500 of Larue. The policy was dated the 5th day of March, 1891, and reads as follows: "The Equitable Life Assurance Society, in consideration of the written and printed application of this policy, which is hereby made a part of this contract, and the payment in advance of $167, and of the annual payment of $167, to be made thereafter at the office of the society in the city of New York on or before the 24th day of February in every year during the continuance of this contract, does promise to pay to Lewis L. Larue, his executors, administrators, or assigns, at the office of the society in the city of New York, $5,000, upon satisfactory proofs of the death of the said Lewis L. Larue, of Hodgensville, in the county of Larue and State of Kentucky."

Larue died on the 14th day of February, 1892. It appears from the testimony of G. G. Gaddie, the local agent who solicited this policy, that decedent did not have the money to make the first payment in full at the time the policy was issued, but that he advanced the premium for him, which was subsequently repaid to him, except $37, for which he took the note of Larue. This $37 note was paid to him by the assignees, Barbour & Doherty, after the assignment of the policy to them. Gaddie testifies that he applied to the assignee, Srygley, and that he declined to pay it, referring him to Barbour & Doherty as the proper persons to pay same.

The Kentucky policy was assigned to the Hayses on the 21st day of October, 1891. This policy was issued on the 21st day of February, 1891, the contract therefor being made by one Jesse L. Talbott, as agent for the company. The amount of the premium was $162.35, and in this case, also, Larue did not have the money to pay the premium, and it was advanced for him by the agent of the company, who took the note of Larue therefor, payable to himself. Subsequently to the assignment the Hayses paid off this note to Talbott, and when the second premium on the policy fell due they also paid that. This policy recites "that it is issued in consideration of the sum of $162.35, and of a like sum to be paid at the home office in the city of Louisville on or before the 2d day of February in every year thereafter." The policy provided that "if any premium, or part of premium, or any note given therefor, shall not be paid on or before the day on which it becomes due at the office of the company in the city of Louisville, or to an agent producing a receipt of the company signed by the president or secretary, the policy shall then become void, and insurance cease, without notice to the insured, or parties interested in this policy, or holders thereof: Provided, however, in case of default of the payment of the third or any subsequent annual payment, then this policy, without further negotiations or stipulations, shall be binding upon the company for such amount of non-participating paid-up insurance as specified in the table of paid-up values indorsed hereon."

This policy further recited "that it was issued and accepted upon the express conditions that the said L. L. Larue may, with the consent of the company, at any time assign it, or before assignment change the beneficiaries therein, or make any other change." At the date of the assignment of this policy to the Hayses, they were the securities of Larue for a sum largely in excess of the whole amount of the policy. On the 30th day of November, 1891, Larue made a will, which, subsequently to his death, was probated and admitted to record.

In the fourth clause thereof he recites: "Under the late transfer, the estate that I now hold, and am entitled to as allotted by law, I will and bequeath the same to be disposed of as follows: First, I will to my beloved wife, Emaline Larue, all of my personal property, of every character whatever, that may belong to me at the time of my death, to become absolutely hers, and to be disposed of by her as she may deem proper. Also, I will and bequeath to her all of my right and interest in and to a homestead of $1,000, to be disposed of as she may deem proper. I hereby will that H. D. Larue collect my life insurance policy in the Equitable Life Insurance Company of New York, $5,000, pay to O. M. Barbour the amount of his lien on said policy and to Miss Lizzie Dorsey $1,000, the amount of her lien on the homestead property, and, after the payment of the firm debts of Larue & Son, composed of L. L. Larue and H. D. Larue, the balance to be equally divided between my two sons, H. D. Larue and W. L. Larue. I hereby name and appoint my son H. D. Larue as my executor to carry out the provisions of this my last will and testament."

On the next day thereafter he made this codicil: "I hereby amend and add to my will, as made on the 30th day of November, 1891, that my...