Fisher v. Donovan

• Decision Date: 05 January 1899
• Citation: 77 N.W. 778,57 Neb. 361
• Parties: FISHER ET AL. v. DONOVAN ET AL.
• Court: Nebraska Supreme Court

57 Neb. 361

77 N.W. 778

FISHER ET AL.

v.DONOVAN ET AL.

Supreme Court of Nebraska.

Jan. 5, 1899.

Syllabus by the Court.

1. To create a trust fund out of which a trustee may make disbursements, the trustor must have some present or future right to, or interest in, the fund directed to be set apart.

2. A member of a fraternal beneficiary society has no such interest or property in the proceeds of a certificate therein that he can impress such proceeds with a trust in favor of his creditors.

3. A certificate in a fraternal beneficiary society is a mere expectancy, and the beneficiary has no vested right therein.

4. A member holding a certificate in a fraternal beneficiary society may, at his option, change the beneficiary therein, so long as he complies with the laws of such society, and keeps within its limitations, and those of the statute under which it is organized.

5. Upon the death of a member holding a certificate in a fraternal beneficiary society, the money arising from such certificate vests absolutely in the beneficiary properly designated by the member.

6. Creditors have no right to, or interest in, a certificate in a fraternal beneficiary society, either before or after the death of the member, and they cannot participate in the fund derived therefrom.

7. The contrary not appearing, the statute of a sister state will be presumed to be similar to our own.

8. The rules and regulations of fraternal beneficiary societies for the creation and payment of their funds to the properly designated beneficiaries should receive such liberal construction as to carry out the benevolent purposes sought to be accomplished.

9. The promise of one party to pay the debt of another cannot be enforced unless such promise be in writing, signed by the party to be charged.

Appeal from district court, Fillmore county; Hastings, Judge.

Action by Levi L. Fisher, assignee of John Fisher, and others, against Lillian Donovan and others. Judgment for defendants, and plaintiffs appeal. Affirmed.

John D. Carson, for appellants.

Charles H. Sloan and F. B. Donisthorpe, for appellees.

SULLIVAN, J.

This action was brought to restrain the defendant Lillian Donovan, widow of Jere Donovan, deceased, from converting to her own use the proceeds of two certificates of life insurance issued to her late husband by fraternal beneficiary societies, and to impress such proceeds with a trust in favor of the plaintiffs as creditors of the insured. From a decree in favor of defendants, the plaintiffs have appealed.

Jere Donovan was postmaster at Geneva, in Fillmore county. He was indebted to the plaintiffs and others for borrowed money. He represented to his creditors that in case of his death they would be paid out of the moneys to be derived from insurance upon his life. The insurance carried by him was as follows: In the Knights of Pythias, $1,000, payable to his two infant children; in the Ancient Order of United Workmen, $2,000, of which sum $1,000 was payable to his widow and $500 to each of his children; in the Modern Woodmen of America, $2,000, of which half was payable to his widow and half to his children. September 4, 1894, Mr. Donovan was taken sick. His sickness continued until October 25th of that year, when he died. At times during his illness he was troubled and anxious about his debts, and expressed a desire that, in case he did not recover, they be paid out of his life insurance. On one occasion he asked Mr. Carson, an attorney, to call, and to him he gave a list of his liabilities. On another occasion, while his physician was present, he called his wife into the sick room, and said to her: “I want you to pay my debts. Will you do it?” to which she responded, “Yes.” He also said, “Doctor, you hear this, don't you?” to which the doctor replied, “Yes.” Nothing else was said or done. It is asserted by appellants that these facts and circumstances constituted Lillian Donovan a trustee of the fund afterwards received by her in satisfaction of the benefit certificates, and that she should be now compelled to execute the trust. Mrs. Donovan was appointed administratrix of her deceased husband's estate. After setting off to her the exemptions provided by law for the widow, there remained nothing for distribution among creditors. However, she voluntarily paid several claims against the estate, and the appellants, asserting that she did this in partial execution of the trust, earnestly insist that she be now required to carry out completely the wishes expressed by her husband in his last illness. To create a trust fund out of which a trustee may make disbursements, the trustor must have some present or future right to, or interest in, the property directed to be set apart; in other words, to constitute a valid trust there must be (1) a competent trustor, (2) a transfer to a competent person, (3) a fund or object capable of being transferred, and (4) a cestui que trust capable of taking or participating in the fund. Commissioners v. Walker, 6 How. (Miss.) 143. Had Jere Donovan such a right or interest in the certificates in question, and have his creditors, the appellants here, the right to participate in the fund? We think not. The purposes and objects of these beneficiary organizations are vastly different from those of ordinary life insurance companies. The so-called “old line” life insurance companies immediately on the issuance of a policy confer on the beneficiary a valuable right, which cannot be devested without the consent of such beneficiary. Such policies may be pledged or assigned by the beneficiary as security for debts of the insured. These policies often by law have a marketable or cash surrender value, making them a form of property. But not so with certificates in fraternal beneficiary societies. They are mere expectancies. The beneficiary has no vested rights in them, and the insured may at any time, at his option, change the beneficiary, provided only he keeps within the limitations established by the rules of the society, and complies with the laws respecting a change of beneficiary. Neither have these certificates a cash surrender value. The supreme court of Pennsylvania, in construing a certificate similar to those in question here, say: “The testator had no property in the fund. * * * The fund in fact was never his property. He had power of appointment only, and such power did not create any property in him. The purpose of these certificates excludes the claim that there was any property in him.” Association v. Jones, 154 Pa. St. 99, 26 Atl. 253. The insured member of such societies has himself no interest in the fund. He possesses only a mere power of appointment. Rollins v. McHatton, 16 Colo. 203, 27 Pac. 254;Hellenberg v. District No. 1, 94 N. Y. 580. Jere Donovan had no property...