Jansen v. Tyler
| Decision Date | 24 September 1935 |
| Parties | JANSEN v. TYLER et al. |
| Court | Oregon Supreme Court |
In Banc.
Appeal from Circuit Court, Multnomah County; Hall S. Lusk, Judge.
On petition for rehearing and motion to modify.
Petition for rehearing denied; former opinion modified.
For former opinion, see 47 P.2d 969.
W. C. Bristol and E. R. Harvey, both of Portland (W C. Bristol and Manning & Harvey, all of Portland, on the brief), for appellant.
A. E Clark, of Portland (Clark & Clark, Blaine B. Coles, and R. R Bullivant, all of Portland, on the brief), for respondents.
Respondents filed a petition for rehearing; appellant submits a motion to modify the opinion, which is in the nature of a petition for rehearing. It seems to be unquestioned that William Anson Tyler, deceased while president of the Municipal Reserve & Bond Company, held a fiduciary position. It is admitted that he paid the first three premiums on the two policies of insurance in question with the funds of the corporation.
Respondents contend, with considerable zeal, that, in order for plaintiff to recover, it is necessary for it to show that the use of the funds by Tyler constituted an embezzlement. With this contention we are unable to agree. It is not essential that a managing officer of a corporation, who is often spoken of as a trustee, but is rather a quasi trustee, in the wrongful use of the funds of the corporation for his own benefit, should commit a technical embezzlement. We may call it a conversion misapplication, misappropriation, or an embezzlement.
In our former memorandum we stated : "In order for plaintiff to recover, it was necessary for him to show that premiums on the policies of life insurance were paid from the funds of the Municipal Reserve & Bond Company, which had been appropriated wrongfully by William Anson Tyler, deceased." To this statement we still adhere. Counsel for respondents were considerably exercised, for the reason that the cases cited by the court in the former opinion chanced to involve an embezzlement. It is well settled that whenever a trustee or other person in a fiduciary position wrongfully purchases land or personal property with trust funds, or funds in his hands impressed with a fiduciary character, and takes title to such property in his own name, without any declaration of a trust, a trust with respect to such property at once results in favor of the original cestui que trust or other beneficiary. The doctrine in regard to such a trust is of wide operation and is used by courts of equity in maintaining and protecting beneficial rights of property. It is applied to trustees proper, to executors, administrators, directors, and managers of corporations, guardians of infant wards, agents using money of their principals, partners using partnership funds, and to all persons who stand in fiduciary relations towards others. 1 Pomeroy, Equity Jurisprudence (4th Ed.) § 422. There may or may not be an element of embezzlement in such transactions. In addition to the authorities cited in our former opinion, see the following cases, which are instructive in regard to the rule involved in trusts: Manaudas v. Mann, 22 Or. 525, 30 P. 422; Dunham v. Siglin, 39 Or. 291, 299, 64 P. 661; Young v. Hughes, 39 Or. 586, 65 P. 987, 66 P. 272; Thorsen v. Hooper, 57 Or. 75, 109 P. 388; North v. Union Savings & Loan Association, 59 Or. 483, 117 P. 822; Templeton v. Bockler, 73 Or. 494, 144 P. 405; Barnes v. Spencer, 79 Or. 205, 153 P. 47.
In applying the principle that the cestui que trust, the receiver of the Municipal Reserve & Bond Company, is entitled to the proceeds of the policies in the proportion that the payments paid from the trust funds bore to the total premiums paid, we figured the first three premiums as having been paid by the company; the fourth by Tyler; and, in payment of the fifth, a dividend on each policy of $203.75 was applied in payment of that premium. This we allocated to plaintiff and to the trustee for Mrs. Tyler and her daughter, according to the interest of each party in the policy. In regard to the policy loan of $1,295, which, together with another policy dividend, paid the quarterly premiums Nos. 7 to 12, inclusive, but little was said in the argument or briefs as to the application of the loan, and, as Tyler signed a note for same, the premiums paid from the policy loan were credited to him. In this we were in error. We think, after mature deliberation, that the proceeds of the policy loan should be apportioned and applied the same as a policy dividend. A policy loan is made upon the sole security of the policy of insurance, and, when made, it does not create the ordinary relation of debtor and creditor between the insurance company and the insured. It is an advancement on the policy without a personal obligation as to repayment. Section 46-506, subd. 1 (f), Oregon Code 1930, requires that the loan shall be made "on proper assignment or pledge of the policy and on the sole security thereof." The regular relation of debtor and creditor does not exist between the borrower and the company. It is in the nature of a withdrawal of the reserve pro tanto, as under the terms of the contract the insured is entitled at any time to demand and receive a loan, and he alone has the option of deciding whether he will ever repay it or not. 32 C.J. 1166, § 279; Rustin v. Aetna Life Ins. Co., 98 Neb. 426, 153 N.W. 548; 2 Couch, Cyc. of Ins. Law, 995, § 355; 1 Cooley, Briefs on Insurance (2d Ed.) 159; Wagner v. Thieriot, 203 A.D. 757, 197 N.Y.S. 560, affirmed Id., 236 N.Y. 588, 142 N.E. 295. Policy loans are not liabilities of the estate of the insured. Faris v. Faris, 76 Ind.App. 336, 130 N.E. 444; In re Waldsburger's Estate, 78 Colo. 516, 242 P. 982, 45 A. L. R. 718, Annotation.
The Municipal Reserve & Bond Company is entitled to its proportionate share of the dividends and policy loan, and to credit therefor. We therefore compute the amount of the proceeds of the policies that each party is entitled to as follows: Policies No. 649852 and No. 649853, each for $25,000, were on the life of ...
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...N.Y. 369, 34 N.E. 205, 20 L.R.A. 566; Brown v. New York Life Ins. Co., 9 Cir., 152 F.2d 246; Jansen v. Tyler, 151 Or. 268, 47 P.2d 969, 49 P.2d 372; Succession of Onorato, 219 La. 1, 51 So.2d 804, 24 A.L.R.2d 656; Exchange State Bank v. Poindexter, 137 Kan. 101, 19 P.2d 705. These cases fal......
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