Fidelity Mut. Life Ins. Co. v. City Nat. Bank of Fairmont

• Decision Date: 30 December 1950
• Docket Number: Civ. No. 221-F.
• Citation: 95 F. Supp. 276
• Court: U.S. District Court — Northern District of West Virginia
• Parties: FIDELITY MUT. LIFE INS. CO. v. CITY NAT. BANK OF FAIRMONT et al.

95 F. Supp. 276

FIDELITY MUT. LIFE INS. CO. v. CITY NAT. BANK OF FAIRMONT et al.

Civ. No. 221-F.

United States District Court N. D. West Virginia, Fairmont Division.

December 30, 1950.

Russell L. Furbee and C. Howard Hardesty, Jr., of Fairmont, W. Va., for plaintiff, Fidelity Mut. Life Ins. Co.

Amos & Amos and Robert W. Lowe, all of Fairmont, W. Va., for defendant, City Nat. Bank of Fairmont.

Tusca Morris, of Fairmont, W. Va., for defendant, Marjorie H. Ave Lallemant.

Jack Manley, of Fairmont, W. Va., for defendant, Donald P. Ave Lallemant.

WATKINS, District Judge.

This is an interpleader action in which the plaintiff insurance company asks the court to determine which of two claimants, City National Bank of Fairmont or Marjorie H. Ave Lallemant, (now Marjorie H. O'Flynn) is entitled to the cash surrender value of an insurance policy carried by plaintiff on the life of defendant, Donald P. Ave Lallemant. The insurance company has paid the sum of $5,822.83 into court and has been dismissed as a party to this action. The case was tried by the court without a jury. There is very little dispute as to the facts.

Previous to October 25, 1948, defendant Donald P. Lallemant and Marjorie H. Lallemant, then husband and wife, agreed that their marital differences were irreconcilable, and decided to enter into a separation agreement, and for a division of their property. The terms of the agreement were worked out by the parties and their attorneys by correspondence. They agreed to meet in Washington, D. C., at the law office of Kenneth Davis, attorney for the husband, on October 26, 1948, to execute the agreement which was to be prepared by William Hughes Lewis, attorney for the wife. Davis promised to have certain life insurance policies of the husband, referred to in the agreement, present at the meeting, since these policies were to be assigned to the wife, and Lewis agreed to bring to Washington with him a deed to certain Maryland property, the agreement providing that the wife was to transfer her one-half interest in this property to her husband.

They met as agreed on October 26, and executed the separation agreement, which was dated October 25. By the terms of that agreement the husband agreed to pay the wife certain monthly sums of money for her maintenance and support and for the maintenance, support and education of their only child, John D. Lallemant. The wife transferred to the husband simultaneously with the execution of the agreement her one-half interest in the Maryland property. By the terms of the agreement the husband agreed to pay the wife the sum of $68,000 in equal installments of $500 per month commencing November 25, 1948. The agreement, duly executed and acknowledged by both parties and witnessed by their respective attorneys, provided: "As collateral security to insure the payment of the said balance of $68,000, the Husband has delivered to the Wife simultaneously with the execution of this agreement two insurance policies, one with a face value of $49,000, issued by Fidelity Mutual Life Insurance Company of Philadelphia, Pa. and the other in the face amount of $25,000 issued by the Atlantic Life Insurance Company of Richmond, Va., together with assignments thereof to the Wife. The Husband agrees to keep the said policies in full force and effect and to pay the premiums accruing thereon as they become due."

At the time of the execution and delivery of the separation agreement, the husband also executed, acknowledged and delivered a formal assignment of the Fidelity Mutual Life Insurance policy to his wife, the assignment being on a form furnished by the insurance company. Besides the execution of the separation agreement providing for the assignment of the $49,000 Fidelity Mutual policy, and the formal assignment thereof, the husband executed and delivered to the wife 136 monthly notes of $500 each, with an acceleration clause therein, evidencing the monthly payments to be made by him to his wife under the terms of the separation agreement.

The husband was unable to deliver manually to his wife the Fidelity Mutual policy and gave as an excuse for not so doing that the policy was inadvertently left in a vault in some bank in West Virginia. The separation agreement expressly provided that the policy was then and there delivered to the wife. Counsel for the husband had promised to have all necessary papers present, and the agreement had been drafted with that in mind. The husband then and there agreed to deliver the policy to his wife within the next few days, not to exceed ten days. Such promise was not accepted without a writing therefor, counsel for the husband writing a letter to counsel for the wife, dated October 26, 1948, and promising that the policy would be mailed to counsel for the wife as soon as conveniently possible, but not later than ten days from date. After this written promise was made, the execution and delivery of the separation agreement, the formal assignment of the policy, and the execution of the notes, were completed. Not having the original policy at hand, it was not possible to insert the exact number of the Fidelity Mutual policy being assigned, in either the assignment provisions of the separation agreement or the formal assignment on form provided by the insurance company.

The next day, October 27, the wife, acting through her attorneys, William Hughes Lewis and Irving D. Lipkowitz, notified the insurance company by letter that there had been an assignment of its policy to Marjorie H. Lallemant by Donald P. Lallemant, the insured, by the separation agreement and also by formal assignment. The letter stated:

"October 27, 1948.

"Dear Sirs:

"I am the attorney for Mrs. Marjorie H. Lallemant, of New York, New York, who is the wife of your insured, Donald P. Lallemant.

"Yesterday the parties entered into a written separation agreement under the terms of which, among other things, your insured, Mr. Lallemant, agreed to pay in instalments the sum of $68,000., to my said client. The said agreement also provides in part as follows:

"`As collateral security to insure the payment of the said balance of $68,000., the Husband has delivered to the Wife simultaneously with the execution of this agreement, two insurance policies, one with a face value of $49,000., issued by the Fidelity Mutual Life Insurance Company of Philadelphia, Pa., and the other in the face amount of $25,000. issued by Atlantic Life Insurance Company, of Richmond, Va., together with assignments thereof to the Wife. The Husband agrees to keep the said policies in full force and effect and to pay the premiums accruing thereon as they become due.'

"I have in my possession your form of collateral assignment executed by your insured, Donald P. Lallemant. I shall send to you within the next few days, by registered mail, the said policy and the said collateral assignment, so that you make make whatever changes may be necessary in your records.

"This letter is being sent to you to give you notice of the foregoing facts.

"If there is anything which you desire to communicate to me before I send the said policy and collateral assignment to you, please advise me.

"Very truly yours "Irving D. Lipkowitz "By: William Hughes Lewis."

On November 9, the insurance company answered this letter, fixing the number of the policy as 657697, the amount of the policy as $48,000 instead of $49,000, and acknowledged that it had received notice of the assignment by the letter of October 27. The first paragraph of the letter stated: "We have your letter of October 27 stating you are attorney for Mrs. Marjorie H. Lallemant, the wife of the insured under the above-numbered policy, and that the insured and his wife had agreed that the insured would assign a policy in our Company with a face amount of $49,000 to his wife. You did not mention any policy number, so there was a delay in matching up your letter with the proper policy file. I presume the policy numbered above is the one you have in mind, though it has a face amount of $48,000 and not $49,000."

The letter then suggested that it was customary in matters of this kind, also, to have the beneficiary changed to the assignee, in this case the wife, and enclosed a change of beneficiary form in duplicate to be used for that purpose. The forms enclosed described the policy as Policy number 657697. The letter then stated: "If used, both copies should be signed by the insured in the presence of a disinterested witness and dated prior to the date of the assignment, which I understand has already been executed and is in your possession.

"I presume the assignment was executed in duplicate, and both copies should be sent to this office for record. The duplicate copy, properly endorsed, will then be returned to you. If the beneficiary is changed as suggested to the wife of the insured, the assignment need be executed only by the insured.

"Very truly yours "Vincent P. Keesey "Assistant Counsel."

Upon receipt of this letter, Lewis, counsel for the wife, told Keesey by telephone that he disagreed with the suggestion relating to change of beneficiary; that he did not deem a change of beneficiary necessary as a matter of insurance law; that Lallemant was the owner of the policy and there was no reason why the paper in his possession was not sufficient to convey whatever interest he had. Keesey replied that the company felt it was its privilege to do it this way, and Lewis told him he would see what he could do to comply with the request. Thereafter Lewis attempted to communicate with Lallemant and his attorney to get a duplicate of the assignment, but without success. The policy was not delivered within the ten-day period as promised. Thereafter counsel for the wife made repeated efforts by correspondence, telephone and personal contact, to secure delivery of the policy, and each time received further promise or assurance that it would be delivered.

On January 17, 1949,...