German-American State Bank of Ritzville v. Godman

• Citation: 83 Wash. 231,145 P. 221
• Decision Date: 06 January 1915
• Docket Number: 12338.
• Court: United States State Supreme Court of Washington
• Parties: GERMAN--AMERICAN STATE BANK OF RITZVILLE et al. v. GODMAN.

145 P. 221

83 Wash. 231

GERMAN--AMERICAN STATE BANK OF RITZVILLE et al. v. GODMAN.

No. 12338.

Supreme Court of Washington

January 6, 1915

Department 1. Appeal from Superior Court, Franklin County; O. R Holcomb, Judge.

In the matter of the estate of Henry E. Christensen, deceased. Action by the German-American State Bank of Ritzville and others against M. M. Godman. From the judgment, the bank and Charles W. Johnson, guardian ad litem, appeal. Affirmed.

Wm. O'Connor, of Seattle, for appellants.

Benton Embree, of Seattle, for respondent.

GOSE J.

This litigation arose out of a controversy over the application of the proceeds and avails of certain policies of insurance upon the life of Henry E. Christensen, deceased. The policies in controversy amount in the aggregate to $17,000. The administrator with the will annexed collected upon the policies $15,739.28. The court held that $14,537.83 of this amount was exempt from the debts of the insured, expenses of administration, and funeral expenses and expenses of the last sickness. The administrator and the German-American Bank of Ritzville, a corporation, intervener, and the guardian ad litem have appealed. The death of Judge Godman was suggested in this court, and Mary B. Godman, as the executrix of his last will and testament, was substituted as the respondent.

The admitted facts are as follows: Henry E. Christensen died testate June 1, 1912. He was then a resident of Franklin county in this state. He was married to Anna M. Christensen in 1901. The will was admitted to probate on the 24th day of June, 1912, and on that date James W. McBurney was appointed administrator with the will annexed upon the petition of the widow Anna M. Christensen, who was also named as executrix in the will. On the 7th day of July, 1909, Henry E. Christensen made his last will and testament which, after the formal recital that he was then of sound and disposing mind provides:

First. Nominates Anna May Christensen as executrix of the will.

Second. 'I hereby direct my executrix to pay all my lawful debts and the expenses of my funeral as soon as may be conveniently possible for her so to do after my decease.'

Third and fourth. Bequeathes the sum of $10 to each of his two children.

Fifth. 'The rest, residue and remainder of my estate both real and personal and wherever located, I give, devise and bequeath unto my said beloved wife Anna May Christensen.'

Sixth. Directs that his will be executed and his estate settled without the intervention of any court except such as the law requires.

Seventh. Revokes all former wills and testaments.

After the admission of the will to probate and the appointment of the administrator with the will annexed, the surviving wife, Anna M. Christensen filed a petition in the estate, setting forth her marriage, the death of the deceased, the issuance of the policies upon the life of the deceased after the marriage, and averring that she claims one half of the proceeds and avails of the policy as her community property and the other half thereof in virtue of the terms of the will. The administrator answered, setting forth the proceeds and avails of the policies which had come into his hands in the amount heretofore stated, and prayed for an order to pay all just debts. The German-American State Bank intervened, and alleged that the estate was indebted to it 'in a large sum,' and that the estate, aside from the insurance policies, was insufficient 'to pay any appreciable part of the indebtedness of the estate.' It further alleged that it was the intention of the testator to appropriate the proceeds and avails of the policies to the payment of his debts. These matters were put in issue by the answer of the surviving wife.

Three of the policies, aggregating $12,000, were made payable to the insured's 'executors, administrators or assigns,' one policy for $2,0000 was made payable to 'the estate of the insured,' and two policies, aggregating $3,000, were made payable to 'the legal representatives of the insured.' After finding the facts stated in this paragraph, the court allowed the administrator the following credits: (a) The reasonable expenses in making proof of death, $112.40; (b) premiums paid upon the policies when the insured was insolvent, $158.34; (c) statutory fees and compensation for collecting the policies, $629.57; and (d) $880, the amount theretofore paid by the administrator for the support of the widow and the two minor children. The court further directed the administrator to pay to each of the two minor children the sum of $10, the amount of their respective bequests, and directed him to pay to M. M. Godman, as assignee of the widow, the sum of $14,537.83.

The court found that the reasonable value of the funeral expenses was $432.60, and that the reasonable expenses of the last sickness of the deceased amounted to $35. These two items the court refused to deduct from the proceeds and avails of the insurance policies. Findings 16 and 17 are as follows:

'16. That in his lifetime the said Henry E. Christensen realized that he was insolvent, and he believed and said that his life insurance would be sufficient to pay his debts after his death.'

The assignee excepted to this finding.

'17. The estate of the said deceased is now insolvent and will probably be insufficient to pay the funeral expenses and the expenses of the last sickness of said deceased.'

We find no exception to this finding. The appellants excepted to certain conclusions of law.

1. Whether the policies in controversy were community property we need not decide. They were subject to testamentary disposition to the extent of the testator's interest in them.

'Every person who shall have attained the age of majority, of sound mind, may by last will devise all his or her estate. * * *' 1 Rem. & Bal. Code, § 1319.

Rem. & Bal. Code, § 1342, provides that one-half of the community property is subject to testamentary disposition. This principle was recognized in Grigsby v. Russell, 222 U.S. 149, where it was held that the rule of public policy that forbade the taking out of insurance by one on the life of another in which he has no insurable interest does not forbid the assignment by the insured of a valid policy to one not having an insurable interest in his life.

'Where the insurance is payable to the insured or to his estate or to his executors, the proceeds may be bequeathed and will pass under a general or residuary bequest of his property.' 1 Underhill on Wills, § 56.

'Policies payable to the assured or his legal representatives may be disposed of by him by his will as part of his estate, but policies otherwise payable cannot be so disposed of.' 25 Cyc. 895.

The law does not differentiate between policies payable to the 'executors, administrators, or assigns' and policies payable to 'the estate' of the insured. Mitchell v. Allis, 157 Ala. 307, 47 So. 715.

The words 'legal representatives' mean ordinarily 'executors or administrators.' Sulz v. Mut. Reserve Ins. Co., 145 N.Y. 563, 40 N.E. 242, 28 L. R. A. 379; 25 Cyc. 887.

A policy made payable to the 'legal representatives' of the assured may be bequeathed to his fiancée by the terms of a residuary clause in his will. Walker v. Peters, 139 Mo.App. 681, 124 S.W. 35. In re Heilbron's Estate, 14 Wash. 536, 45 P. 153, 35 L. R. A. 602, impliedly recognizes this principle.

2. The Code (Rem. & Bal. § 569) provides that:

'The proceeds or avails of all life and accident insurance shall be exempt from all liability for any debt.'

Counsel for the appellants say that our statute is sui generis, and in criticism of it say:

'We think if the Legislature had given a little thought to the matter and had used a little judgment in passing the law, it would have read as follows: 'The proceeds of all life insurance shall be exempt to the beneficiary from all debts of the decedent.''

The Legislature, however, did not so provide. As was said by Judge Hadley in Flood v. Libby, 38 Wash. 366, 80 P. 533, 107 Am. St. Rep. 851: 'It would be difficult to employ language more sweeping and comprehensive than that used in the statute.' In that case it was held that endowment policies in the hands of judgment debtors were exempt from seizure and sale in a proceeding supplementary to execution. It was contended that life insurance which has a present surrender value to the holder was not exempt from liability for his debts, and that the statute only protects insurance payable to a beneficiary other than the assured, and which was intended for the protection of the family or other beneficiary without any present or prospective interest in the insured. This view was rejected. In Holden v. Stratton, 198 U.S. 202, 25 S.Ct. 656, 49 L.Ed. 1018, in considering this statute, it was said that the amendment of 1897 (page 70, 1 Rem. & Bal. Code, § 569), extending the exemption of 1895 (page 396) to accident insurance, together with the fact that the statute is broader in its terms than the statutes of most other states, 'conclusively show the intention of the Washington Legislature to adopt a broader and more comprehensive exemption.' The statute received a liberal construction in Northwestern, etc., Co. v. Chehalis County Bank, 65 Wash. 374, 118 P. 326. In Walker v. Spokane, 62 Wash. 312, 113 P. 775, Ann. Cas. 1912C, 994, in speaking of another statute, we said:

'When the language of the act is plain, free from ambiguity, and devoid of uncertainty, it is unanimously [universally] held that there is no room for construction, and that inconvenience following the enforcement of the law as expressed can have no weight in the construction of the statute.'

In Reiff v. Armour & Co., 79 Wash. 48, 139 P. 633, we said that it was the intent of the law to exempt...