Brown v. Equitable Life Assurance Society of United States
| Decision Date | 30 January 1899 |
| Docket Number | 11,463 - (248) |
| Citation | 78 N.W. 103,75 Minn. 412 |
| Parties | CYRUS L. BROWN v. EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES |
| Court | Minnesota Supreme Court |
On Reargument April 10, 1899.
Action in the district court for Hennepin county to recover the amount of a life insurance policy. The court, Johnson, J. found in favor of plaintiff for the sum of $2,027, and interest, and from an order denying a motion for a new trial defendant appealed. Reversed.
Life Insurance -- Assignment of Policy without Consideration -- Assignment by Assignee.
The defendant issued a policy of insurance on the life of the plaintiff, payable to himself in 20 years. Subsequently plaintiff assigned the policy to H., by a written assignment absolute in form, but in fact merely as security or indemnity for a loan which he agreed to procure for the plaintiff, but which he failed to do. H., however, remained in the possession of the policy, and subsequently assigned it to a bank as security for a loan, which he has never repaid. The bank made the loan relying on the absolute assignment from plaintiff to H., and believing, from an examination of it that H. was the owner of the policy, and without any knowledge that plaintiff had any claim to it, or of any equities between him and H. When the policy matured, the defendant paid it to the bank, but with notice of plaintiff's claim. From the time the policy was assigned to H. until it matured, H. paid the premiums on it, which plaintiff has never repaid.
Equities of Insured -- Estoppel.
1. Held, that the bank took the assignment of the policy subject to the equities between plaintiff and H., and that plaintiff was not estopped, as to the bank, to assert his rights, by the fact that he had executed and delivered to H. an assignment of the policy absolute in form.
Lien for Premiums Paid.
2. But held, also, that H. had a lien on the policy for the premiums he had paid; that this right passed to the bank by his assignment, and, to the amount of the premiums paid by H., it was entitled to the money on the policy. And the payment by the defendant to the bank constituted a defense, pro tanto, to an action on the policy.
Upon Reargument.
July 11, 1899.
Assignments Valid.
Held, that the policy, being valid when issued, was assignable by plaintiff to H., and by H. to the bank.
Equities of Insured -- Estoppel.
Also, that the bank would take the policy subject to the equities of the plaintiff, unless the conduct of the latter was such as to equitably estop him, but the mere fact that the assignment from him to H. was absolute in form would not create such an estoppel.
Laches of Insured.
But the laches of the plaintiff, and his practical abandonment of the policy for 11 years, by neglecting to take any active measures to recover it from H., and neglecting during all that time to pay the premiums necessary to keep it from lapsing, would estop him from asserting any rights under the policy, or attempting to avail himself of its benefits as against H. or his assignee, the bank, who had kept it alive by paying the premiums at his own expense.
Hale & Montgomery, for appellant.
Plaintiff cannot take advantage of his own wrongful acts and laches, to defeat an innocent bona fide holder. Fassett v. Smith, 23 N.Y. 252. The assignee of a chose in action takes a perfect title, if the owner has armed his immediate assignee with evidence of absolute ownership, and has thereby misled such subsequent assignee into purchasing on the strength of the apparent ownership. The owner, having placed his immediate assignee in a position to commit the wrongful act, must suffer. Cochran v. Stewart, 21 Minn. 435; McNeil v. Tenth, 46 N.Y. 325; Weyh v. Boylan, 85 N.Y. 394; Moore v. Metropolitan, 55 N.Y. 41; Colebrooke, Coll. Sec. § 45; Jones, Pledges, § 466. By weight of authority, the owner of a life insurance policy issued on his own life may assign it, though the assignee has no insurable interest in the life; and the policy is assignable like any other chose in action, if it contains no provision to the contrary. Ashley v. Ashley, 3 Sim. 149; Valton v. National, 20 N.Y. 32; Olmsted v. Keyes, 85 N.Y. 593; Travelers v. Healy, 25 App.Div. (N.Y.) 53; Clark v. Allen, 11 R.I. 439; St. John v. American, 2 Duer, 419; Bursinger v. Bank, 67 Wis. 75; Lemon v. Phoenix, 38 Conn. 294; Fairchild v. Northeastern, 51 Vt. 613; Mutual v. Allen, 138 Mass. 24; Harrison v. McConkey, 1 Md. Ch. 34; Souder v. Home, 72 Md. 511; Murphy v. Red, 64 Miss. 614; Currier v. Continental, 57 Vt. 496; Robinson v. U.S. Mut. Acc. Assn., 68 F. 825; Langdon v. Union, 22 Am. L. Reg. 385; Martin v. Stubbings, 126 Ill. 387; Bloomington v. Blue, 120 Ill. 121; Eckel v. Renner, 41 Oh. St. 232; Hine & N. Assignment, 73, 75, 81; Bliss, Life Ins. (2d Ed.) §§ 23, 26, 30; Angell, Life Ins. § 325. See Hogue v. Minn. P. & P. Co., 59 Minn. 39. Cases holding the contrary doctrine hold that the policy may be assigned to secure a debt. The presumption is that the holder or pledgee is holder for value with good title. Colebrooke, Coll. Sec., §§ 431, 436 -- 438; Jones, Pledges, § 146.
Even if Hadley had no insurable interest, and the assignment to him was illegal, so that he could not have enforced payment, and the bank had no insurable interest, plaintiff cannot raise these questions, because they were not raised by the insurance company. The case is the same as if the company had been sued on the policy, and had paid the money into court to await an adjudication whether plaintiff or the bank was entitled to it. Standard v. Catlin, 106 Mich. 138; Milner v. Bowman, 119 Ind. 448; Meyers v. Schumann, 54 N.J.Eq. 414. G.S. 1894, § 5273, provides only for a method of procedure, which may or may not be adopted. Defendant may raise the question of equitable estoppel to show ownership in the bank. See Parker v. Crittenden, 37 Conn. 148; Krathwohl v. Dawson, 140 Ind. 1; Rose v. Crittenden, 37 Conn. 148; Krathwohl v. Dawson, 140 Ind. 1; Rose v. Teeple, 16 Ind. 37; Rose v. Hurley, 39 Ind. 77; Kinnear v. Mackey, 85 Ill. 96. Plaintiff, having been guilty of gross negligence, is entitled to no consideration. Gleason v. District of Columbia, 127 U.S. 133. The notice on the policy would not prevent the bank from enforcing its claim against defendant, nor was it necessary for defendant to consent to the assignment to make it complete. See Nicollet Nat. Bank v. City Bank, 38 Minn. 85; Hogue v. Minn. P. & P. Co., supra; 2 May, Ins. §§ 388 -- 396; Mutual v. Hamilton, 5 Sneed (Tenn.) 268; Bliss, Life Ins. § 333; New York v. Flack, 3 Md. 341; Marcus v. St. Louis, 68 N.Y. 625.
Smith & Smith, for respondent.
Under the law as declared in MacDonald v. Kneeland, 5 Minn. 283 (352), and Hogue v. Minn. P. & P. Co., 59 Minn. 39, the bank obtained no title by the assignment. There is no equitable estoppel to prevent plaintiff from denying the bank's title. There can be no such estoppel because the bank is not a party, and has no interest in the proceeding. No judgment in this case would affect the bank. Had defendant desired to have the rights of the bank considered, it should have brought the bank into court under G.S. 1894, § 5273. Defendant cannot assert title in a stranger, without first paying the money into court and summoning the alleged owner. Truesdale v. Sidle, 65 Minn. 315; Birdsall v. Fischer, 17 Minn. 76 (100); Peck v. Snow, Church & Co., 47 Minn. 398. An estoppel available only to a stranger to the suit will not avail either of the parties. 7 Am. & Eng. Enc. 23. None of the elements of an equitable estoppel exist. 7 Am. & Eng. 12 -- 23. An estoppel can never be allowed where it would itself perpetrate a fraud, work injustice or fail to protect the innocent. 1 Herman, Est. §§ 14, 20; Mills v. Graves, 38 Ill. 455; Turnipseed v. Hudson, 50 Miss. 429. Estoppel must be mutual. Majenborg v. Haynes, 50 N.Y. 675; Maguire v. Selden, 103 N.Y. 642; Empire v. Moers, 27 App.Div. (N.Y.) 464. See Califf v. Hill-house, 3 Minn. 217 (311); Combs v. Cooper, 5 Minn. 200 (254); Pence v. Arbuckle, 22 Minn. 417; Whitacre v. Culver, 8 Minn. 103 (133); Whitcomb v. Hardy, 68 Minn. 265; First v. Ricker, 71 Ill. 439; People v. Brown, 67 Ill. 435; Ball v. Hooten, 85 Ill. 159; Davidson v. Young, 38 Ill. 145; Dorlarque v. Cress, 71 Ill. 380; Chandler v. White, 84 Ill. 435; Thomas v. Bowman, 29 Ill. 426.
Under the provisions of the policy, without the consent of the company no assignee can maintain an action on the policy; nor will title pass without the written consent of the insurer. Hogue v. Minn. P. & P. Co., supra; Nicollet Nat. Bank v. City Bank, 38 Minn. 85; Merrill v. New England, 103 Mass. 245; Marcus v. St. Louis, 68 N.Y. 625. An assignment without consent of the company, when consent is required, is invalid, and confers no title to the assignee as against the company, and the proceeds will be paid to the assignor or his heirs. Unity v. Dugan, 118 Mass. 219; Commercial v. Treasury, 61 Ill. 482; Kase v. Hartford, 58 N.J.L. 34; Wilson v. Hill, 3 Metc. (Mass.) 66; Flanagan v. Camden, 1 Dutch. 506; National v. Lupold, 101 Pa. St. 111.
While the insured may himself assign the policy to one having an insurable interest, or to secure a debt to one having no such interest, one who holds by assignment from the insured may not make a subsequent assignment to a person who has no insurable interest and is not a creditor of the insured. In the cases cited by defendant, except Ashley v. Ashley and Souder v. Home, the only question was whether the insured could make a valid assignment to his own assignee with or without insurable interest. The position here maintained by plaintiff is supported by the following authorities: 2 May Ins. § 398; 2 Beach, Ins. § 850; 2 Joyce, Ins. § 889; Trinity v. Travelers, 113 N.C. 244;...
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