Hackney v. Sharp

• Decision Date: 19 January 1942
• Citation: 157 S.W.2d 827,178 Tenn. 310
• Parties: HACKNEY v. SHARP.
• Court: Tennessee Supreme Court

157 S.W.2d 827

178 Tenn. 310

HACKNEY v. SHARP.

Supreme Court of Tennessee.

January 19, 1942

Appeal from Chancery Court, Maury County; Thos. B. Lytle Chancellor.

Suit in equity by Mrs. Maude D. Hackney against W. Thomas Sharp to recover part of the proceeds of a life insurance policy assigned to defendant by the complainant and her deceased husband. Decree for defendant, and complainant appeals.

Affirmed.

J. M Ingram, of Columbia, for appellant.

Hopkins & Hopkins, of Columbia, for appellee.

GREEN Chief Justice.

This case presents a contest over the proceeds of a policy of life insurance between the widow and administratrix of the insured and a creditor of the insured. The chancellor decided the case in favor of the creditor and the widow has appealed.

The case was tried below on a stipulation of facts from which it appears that the deceased Hackney and the defendant Sharp were partners engaged in business in Maury County, Tennessee. During the conduct of this business Hackney became indebted to Sharp in the sum of $1,618 and executed his note for that amount on July 24, 1936, payable to Sharp.

On April 24, 1935, Hackney took out a policy of insurance on his life in the sum of $5,000 payable to his widow, the complainant herein.

The stipulation sets out that Hackney's health began to fail in July, 1936, and that to secure his note to Sharp, Hackney and his wife assigned said policy to the latter as collateral security.

It further appears that in September, 1938, Hackney's health had become more impaired, that he was unable to work, had become financially embarrassed, and had great difficulty in meeting the premiums on the insurance policy. This fact was called to the attention of Sharp, and it was agreed between the two men that Sharp would advance or repay to Hackney the amount already expended by Hackney in payment of premiums on the policy and that Sharp would assume the payment of further premiums on the policy and would cancel the $1,618 note held against Hackney. The stipulation shows that Sharp paid further premiums on the policy prior to Hackney's death amounting to $584.50 and, according to our calculations, he must have paid to Hackney something over $1,100 by way of reimbursing Hackney for premiums on the policy that he (Hackney) had paid.

At the time of the last agreement between Sharp and Hackney, Hackney executed an assignment of the policy to Sharp, in which assignment Mrs. Hackney joined, undertaking to convey absolute title to said policy to Sharp.

Hackney died in 1939 and the insurance company paid the amount of the policy to Sharp, the same being $5,012.13.

As we figure the transaction, exclusive of interest, the policy including, the original debt, repayment to Hackney of premiums paid by him, and premiums paid by Sharp, cost Sharp $3,558.50. The stipulation does not set out the exact figures and the above figures are subject to correction when the final decree is prepared, but are approximately correct.

Mrs. Hackney sues Sharp to recover the difference between the amount received by Sharp on the policy and the aggregate of his expenditures as above detailed. She relies on the authority of Quinn v. Supreme Council, Catholic Knights, 99 Tenn. 80, 41 S.W. 343, and Bendet v. Ellis, 120 Tenn. 277, 297, 111 S.W. 795, 18 L.R.A.,N.S., 114, 127 Am.St.Rep. 1000. The former case involved a benefit certificate payable to a member of the Catholic Knights of America. The later case involved life insurance policies payable to the executors, administrators and assigns of the insured. The benefit certificate and the insurance policies were assigned to persons without insurable interest in the life of the insured. The assignees were not creditors. The benefit certificate and the policies of insurance were taken out and assigned in pursuance of previous arrangements between the insured and the assignees. The transactions were purely speculative on the part of the assignees. Both transactions were held to be wagering in character. The assignees were permitted to retain out of sums received by them on the death of the insured the amounts they had expended in payment of premiums and the balance of the proceeds of the policies were decreed to the representatives of the insured.

The case before us is altogether different. Sharp was a bona fide creditor of Hackney to the extent of $1,618 at the time of the first assignment. At the time of the final assignment when he reimbursed Hackney for premiums paid by the latter, Sharp was Hackney's creditor to the extent of about $2,700. Thereafter...