In re Hazeldine's Estate
| Decision Date | 21 June 1938 |
| Docket Number | 44209. |
| Citation | 280 N.W. 568,225 Iowa 369 |
| Parties | In re HAZELDINE'S ESTATE. v. LAFFERTY (DAVENPORT BANK & TRUST CO. et al., Interveners). COBURN |
| Court | Iowa Supreme Court |
Appeal from District Court, Scott County; Wm. W. Scott, Judge.
Action to establish claim against the estate of Arthur E. Hazeldine deceased, and to impose lien on and subject the proceeds of certain life insurance policies to the payment of such claim. Davenport Bank and Trust Company, as guardian of the minor child and heir at law of Hazeldine, deceased, intervened. From a decree in favor of the estate and the intervenor, the claimant appeals.
Affirmed.
Havner, Flick & Powers, of Des Moines, and Welles, Kelsey & Cobourn, of Toledo, Ohio, for appellant.
Cook & Balluff, of Davenport, for appellee H. R. Lafferty administrator.
Matthew Westrate, of Muscatine, for appellee Red Jacket Mfg. Co.
Lane & Waterman, of Davenport, for appellee Davenport Bank & Trust Co.
Arthur E. Hazeldine and Grace King were married in 1920 and in October, 1930, their marriage was dissolved by a decree of divorce. Mary E. King is the mother of Grace King and of James Ernest King. After her divorce from Arthur E. Hazeldine, Grace King married a man named Hugh, and her name appears in the record as Grace King Hugh. Arthur E. Hazeldine remained single after the divorce and died on September 22, 1935, as the result of an automobile accident. After his death and before the institution of the action at bar, Dorothy Gwendolyn Hazeldine, then eight years of age, was found and adjudicated to be his illegitimate child and only heir at law. H. R. Lafferty was duly appointed and qualified as administrator of Hazeldine's estate and on March 14, 1936, the claim herein involved was filed against said estate. This claim is based upon moneys advanced to Hazeldine by Mary E. King, and was filed and is here prosecuted by James S. Coburn, assignee of Mary E. King. On August 4, 1936, the administrator filed a report of all claims filed against the estate. This report classified such claims, allowed some and disallowed others, and asked for an order approving the report and directing payment of certain claims allowed out of proceeds of life insurance in the hands of the administrator which, the report alleged, had been pledged to such payment. In this report the claim of Coburn, as assignee of Mary E. King, was allowed in full as a claim of the third class, without any preference to payment out of proceeds of life insurance. Upon the filing of the administrator's report the court fixed the time for hearing and directed that notice be given to all creditors.
At the time of his death and for some time prior thereto Hazeldine carried five separate life insurance policies on his life, in the aggregate amount of approximately $72,000. The beneficiary named in each of said policies was either the estate of Hazeldine or the administrator thereof. Following the filing of the report of the administrator, and before hearing thereon, the claimant filed an amendment to his claim and objections to the report. The amendment alleged in substance that, prior to his death, Hazeldine promised Mary E. King that, if she would refrain from instituting any proceeding against him to enforce the payment of the money owed to her by him, he would arrange to make payment thereof and would make the life insurance policies carried by him and the proceeds thereof available to her as security for the repayment of the money owed to her, either by assignment of such policies or by designating her as beneficiary thereof; that, in reliance upon said promise, Mary E. King refrained from instituting proceedings to enforce payment; and that, by reason of the said agreement, the proceeds of said life insurance policies inured to and are the property of claimant. In addition to the prayer of the original claim, the amendment prayed the court to order the defendant administrator to complete and specifically perform said agreement of Hazeldine and pay the proceeds of said life insurance policies, in the sum of $72,000, or so much thereof as shall come into the hands of the administrator, to claimant, as assignee of Mary E. King. The objections were to that portion of the report which failed to recognize and recommend the establishment of the claim as a preference claim entitled to payment out of the proceeds of life insurance policies. The objections also refer to litigation as to certain of said life insurance pending in the United States Circuit Court of Appeals for the Eighth Circuit, and in the district court of Hennepin county, Minnesota, and state that, until such litigation is finally determined, it cannot be determined whether it will be necessary for claimant to establish his right to the proceeds of the insurance thus involved.
The administrator, Lafferty, filed an answer and a cross-petition against claimant, as assignee of Mary E. King. The answer admitted the filing of the claim and the pending litigation, but denied all other allegations of the amendment to the claim and of the objections to the administrator's report. The cross-petition alleged that the administrator had collected and held proceeds of certain life insurance policies, subject only to the rights of two named claimants, other than Coburn, to a part of the proceeds of two of said policies under a written assignment and a written agreement of Hazeldine; that one Dorothy Gwendolyn Hazeldine, a minor, had been adjudged and decreed to be the daughter of Hazeldine, deceased; that all of the proceeds of life insurance, except such part thereof as was pledged or assigned by Hazeldine in his lifetime, are exempt from the debts of Hazeldine, and are held by the administrator, in the nature of a trust fund for distribution to the heir or heirs. The prayer asked that the claim of Coburn for any lien upon or preference of claim upon the proceeds of life insurance be denied, and that such proceeds be declared exempt from debts of the decedent, and from claims against the estate. To this answer and cross-petition of the administrator the claimant, Coburn, filed a motion to strike, which, on hearing, was overruled.
The Davenport Bank and Trust Company, as guardian of Dorothy Gwendolyn Hazeldine, filed a petition of intervention, alleging that its said ward was the only heir of Hazeldine, and, as such, was entitled to the proceeds of all policies of life insurance not assigned by Hazeldine in writing, in his lifetime; denied the allegations contained in the amendment to claim; and asked that the administrator's report of disallowance and classification of claims be approved, that claimant be found to have no lien upon or preference of claim with respect to the proceeds of policies of life insurance, and that the right of the intervenor to all such proceeds be established as superior to any right of the claimant. The claimant filed an answer to the cross-petition and the petition of intervention of the bank, denying the jurisdiction of the court to adjudicate as to the insurance policies involved in other litigation.
Upon motion of the claimant the cause was transferred to equity and was tried as an equitable action. The trial court entered a decree finding that the claimant, Coburn, as the assignee of Mary E. King, had no lien upon or right in any of the policies of life insurance upon the life of Hazeldine, deceased, and that the proceeds of all said life insurance policies in the hands of the administrator were exempt from the debts of Hazeldine, deceased, and were held or to be received and held by the administrator for Dorothy Gwendolyn Hazeldine, the daughter and heir at law of Arthur E. Hazeldine, deceased. The decree also overruled the objections and exceptions of the claimant to the administrator's report. From this decree of the trial court the claimant has appealed.
No question is here involved as to the indebtedness owed by Hazeldine to Mary E. King, and the claim based upon such indebtedness was allowed by the administrator in the full amount of $75,879.57. The questions here involved go to the right of the claimant to subject the proceeds of insurance upon the life of Hazeldine to the payment of this claim. Of the five policies with which we are here concerned, by express provision thereof, one was payable to the estate and the remaining four were payable to the administrator. On the face of these policies, therefore, they were subject to the provisions of Sections 8776 and 11919 of the Code of Iowa, 1935, as follows:
It is conceded by the appellant that, unless there was " an agreement or assignment to the contrary," as provided in Sec. 8776, or unless there was a " special contract or arrangement," as provided in Sec. 11919, the proceeds of the five policies here involved would not be subject to the payment of Hazeldine's debts, but would inure to the benefit of his daughter and only heir, Dorothy Gwendolyn Hazeldine. It is conceded by the appellees that the proceeds of life insurance may be subjected to the debts of the insured by " an agreement or assignment," as provided in Sec. 8776, or " by special contract or arrangement," as provided in Sec....
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