Farmers' & Traders' Bank of Shenandoah v. Johnson

• Citation: 91 N.W. 1074,118 Iowa 282
• Parties: FARMERS AND TRADERS BANK OF SHENANDOAH, IOWA, Appellee, v. ANNA JOHNSON, Appellant
• Decision Date: 28 October 1902
• Court: United States State Supreme Court of Iowa

91 N.W. 1074

118 Iowa 282

FARMERS AND TRADERS BANK OF SHENANDOAH, IOWA, Appellee, v. ANNA JOHNSON, Appellant

Supreme Court of Iowa, Des Moines

October 28, 1902

Appeal from Page District Court.--HON. O. D. WHEELER, Judge.

ACTION on two promissory notes, and to establish and foreclose a lien on a policy of insurance on the life of Phineas H Watson, in which defendant was named as beneficiary; and by her assigned to plaintiff as collateral security for the payment of the two notes. Defendant pleaded the illegality of the assignment--First, because it was not stamped as required by the acts of congress and, second, because such assignments are contrary to public policy, and void. The trial court found for plaintiff, and the defendant appeals.

Affirmed.

W. P Furguson for appellant.

C. S Keenan for appellee.

OPINION

DEEMER, J.

Defendant and her husband, William Johnson, borrowed of the plaintiff something like $ 557, and executed their promissory notes therefor. To secure the said notes, defendant, who was the beneficiary in an ordinary life policy of insurance issued on the life of her father, and on which she had paid nine annual premiums, assigned the same to plaintiff by a written instrument which reads as follows, to wit: "December 22d, 1899. For value received, in consideration of the Farmers' and Traders' Bank of Shenandoah, Iowa loaning us $ 225.00 now, and for any sums previously or hereafter loaned us, we hereby assign as collateral security, as their interest may appear, the attached insurance policy, 462,933, for $ 1,000.00, on the life of Phineas H. Watson, in the Mutual Life Insurance Company of New York, the same being payable to Anna J. Bartholomew, daughter, now Anna Johnson. Anna Johnson. Wm. Johnson." At the time the assignment was made, the internal revenue law was in force, which required such instruments to be stamped. When issued, no stamp was affixed thereto; but when sent to the insurance company it was returned with the suggestion that stamps had been omitted, and plaintiff thereupon affixed the proper stamps, and caused them to be canceled in the name of the defendant. This was done some time in the summer of the year 1900, and this action was brought in August of that year.

It will be noticed that plaintiff is in no manner related to Phineas H. Watson, and it is not and was not his creditor. The beneficiary was the daughter of the insured, and the debtor of plaintiff. Appellant contends that, as plaintiff had no insurable interest in the life of Watson, the assignment to it was invalid; and her counsel present some cases which seem to so hold. These cases do not appeal to us, however, and, for reasons to be hereinafter suggested, it will appear that many of them are not in point. That a daughter has an insurable interest in the life of her father seems to be held by many cases. Insurance Co. v. France, 94 U.S. 561 (24 L.Ed. 287); Insurance Co. v. Bailey, 80 U.S. 616, 13 Wall. 616 (20 L.Ed. 501); Geoffroy v. Gilbert, 5 A.D. 98 (38 N.Y.S. 643); Warnock v. Davis, 104 U.S. 775 (26 L.Ed. 924); Elkhart v. Houghton, 103 Ind. 286 (2 N.E. 763, 53 Am. Rep. 514); Cronin v. Insurance Co., 20 R.I. 570 (40 A. 497); Insurance Co. v. Hazlewood, 75 Tex. 338 (12 S.W. 621, 7 L.R.A. 217, 16 Am. St. Rep. 893); Bank v. Hume, 128 U.S. 195 (9 S.Ct. 41, 32 L.Ed. 370); Loomis v. Insurance Co., 6 Gray 399; Crosswell v. Association, (S. C.) 51 S.C. 103, 28 S.E. 200; Insurance Co. v. Kane, 81 Pa. 154 (22 Am. Rep. 741); Bursinger v. Bank, 67 Wis. 75 (30 N.W. 290, 58 Am. Rep. 848); Lane v. Lane, 99 Tenn. 639 (42 S.W. 1058); Voorheis v. Society, 91 Mich. 469 (51 N.W. 1109); Insurance Co. v. O'Niel, 54 L.R.A. 228, 229, and cases cited in note (s. c. 45 C.C.A. 641, 106 F. 800). Although there are many cases to the contrary. Even if the rule established by the authorities cited were not true, we do not see how defendant would be injured by the decree entered in this case. If she had no insurable interest in the life of her father, and took nothing under the policy, then she is in no manner harmed by this decree. It does not lie in the mouth of a beneficiary who has assigned a policy and obtained money on the strength thereof to say that the policy was invalid because she had no insurable interest. The policy is not void, even should it be found that the beneficiary had no such interest as that the proceeds could be made payable to her. Caudell v. Woodward (Ky.) 96 Ky. 646, 29 S.W. 614; Rindge v. Society, 146 Mass. 286 (15 N.E. 628); Mayher v. Insurance Co., 87 Tex. 169 (27 S.W. 124). Moreover, it is doubtful if any one but the insurance company may take advantage of the fact that the beneficiary had no insurable interest. Johnson v. Van Epps, 110 Ill. 551. Without making a definite pronouncement on this point, it is sufficient to say that defendant is clearly estopped from saying that she had no insurable interest.

Assuming then, that the policy was valid when issued,--and this we do not at this time decide,--or that defendant is estopped from denying its validity, the next question is the legality of the assignment to plaintiff. There are cases holding that such an assignment is invalid, for the reason that the assignee has no insurable interest in the life of the insured. See Warnock v. Davis, supra; Alabama Gold Life Ins. Co. v. Mobile Mut. Ins. Co., 81 Ala. 329 (1 So. 561); Insurance Co. v. McCrum, 36 Kan. 146 (12 P. 517, 59 Am. Rep. 537); Downey v. Hoffer, 110 Pa. 109 (20 A. 655); Roller v. Moore's Adm'r., 86 Va. 512 (10 S.E. 241, 6 L.R.A. 136), and some other cases. But even in these jurisdictions it is generally held that no one but the insurer may take advantage of the invalidity, and that the assignee of a policy may recover what he has advanced, or expended in keeping it in force, with interest on the money out of the use of which he has been deprived. Hoffman v. Hoke, 122 Pa. 377 (15 A. 437, 1 L.R.A. 229); Meyers v. Schumann, 54 N.J.Eq. 414 (34 A. 1066); Stoelker v. Thornton, 88 Ala. 241 (6 So. 680, 6 L.R.A. 140); Warnock v. Davis, supra; Helmetag's Adm'r. v. Miller, 76 Ala. 183 (52 Am. Rep. 316); Harley v. Heist, 86 Ind. 196 (45 Am. Rep. 285); Basye v. Adams, 81 Ky. 368, and authorities heretofore cited. So that, should we follow the rule of these cases, it would not profit appellant, for the decree entered in this case simply subjects the policy to the payment of plaintiff's judgment on the notes. But we are not prepared to go to the extent of some of these cases. The better rule, we think, is that such an assignment as was made in this case is valid, and that the assignee need not have an insurable interest in the life of the insured or in that of the beneficiary. Our views are well expressed in Insurance Co. v. Allen, 138 Mass. 24 (52 Am. Rep. 245), which reviews and discusses some of the cases hitherto cited. See, also, Brown v. Association (Mass.) 172 Mass. 498, 53 N.E. 129); Curtiss v. Insurance Co., 90 Cal. 245 (27 P. 211, 25 Am. St. Rep. 114); Fitzpatrick v. Insurance Co., 56 Conn. 116 (13 A. 673, 17 A. 411, 7 Am. St. Rep. 288); Rittler v. Smith, 70 Md. 261 (16 A. 890, 2 L.R.A. 844); Murphy v. Red, 64 Miss. 614 (1 So. 761, 60 Am. St. Rep. 68); Belknap v. Johnston, 114 Iowa 265, 86 N.W. 267; Brown v. Mansur, 64 N.H. 39 (5 A. 768); Carpenter v. Knapp, 101 Iowa 712, 70 N.W. 764; Olmsted v. Keyes, 85 N.Y. 593; Clark v. Allen, 11 R.I. 439 (23 Am. St. Rep. 496); Shuman v. Supreme Lodge, 110 Iowa 480, 81 N.W. 717. In this state all causes of action are assignable,...