Laws v. New York Life Ins. Co.

• Decision Date: 19 February 1936
• Docket Number: No. 7932.,7932.
• Citation: 81 F.2d 841
• Parties: LAWS v. NEW YORK LIFE INS. CO. et al. NEW YORK LIFE INS. CO. v. LAWS et al.
• Court: U.S. Court of Appeals — Fifth Circuit

81 F.2d 841 (1936)

LAWS v. NEW YORK LIFE INS. CO. et al.

NEW YORK LIFE INS. CO. v. LAWS et al.

No. 7932.

Circuit Court of Appeals, Fifth Circuit.

February 19, 1936.

L. S. Gaulden, of West Palm Beach, Fla., for appellant Pearl Gaulden Laws.

J. L. Doggett and Charles Cook Howell, both of Jacksonville, Fla., for appellees and cross-appellant.

Before SIBLEY, HUTCHESON, and WALKER, Circuit Judges.

WALKER, Circuit Judge.

In March, 1928, New York Life Insurance Company, an appellee, herein referred to as the Insurer, issued its policy of insurance in the sum of $10,000 on the life of William Laws, Jr., the beneficiary named in the policy being Mary A. Laws, the wife of the insured at the time the policy was issued. The policy contained the following provisions:

"Assignment. — Any assignment of this Policy must be made in duplicate and one copy filed with the Company at its Home Office. The Company assumes no responsibility for the validity of any assignment."

"Change of Beneficiary. — The Insured may from time to time change the beneficiary, unless otherwise provided by indorsement on this Policy or unless there be an existing assignment of this Policy. Every change of beneficiary must be made by written notice to the Company at its Home Office accompanied by the Policy for indorsement of the change thereon by the Company, and unless so indorsed the change shall not take effect. After such indorsement the change will relate back to and take effect as of the date the Insured signed said written notice of change whether the Insured be living at the time of such indorsement or not, but without prejudice to the Company on account of any payment made by it before receipt of such written notice at its Home Office. In the event of the death of any beneficiary before the Insured the interest of such beneficiary shall vest in the Insured, unless otherwise provided herein."

In November, 1929, the Insured and the State Bank & Trust Company of New Smyrna, Florida (herein referred to as the Bank), entered into a so-called "Trust Agreement," dated October 28, 1929, which called the Bank party of the second part, and, after reciting that the Insured had made the party of the second part the beneficiary under said policy, provided that, in the event of the death of the Insured, the party of the second part "shall collect the insurance due under said policy aforesaid" and "pay all just debts and liabilities owing by the said party of the first part insofar as the amount of insurance collected will apply and if there be any balance or remainder thereof of said insurance money so collected by the said beneficiary, then pay it over to the estate or legal representatives, heirs, executors or administrators of the said party of the first part." Pursuant to an above set out provision of the policy, the beneficiary under it was changed, an indorsement on the policy showing that the new beneficiary was: "State Bank and Trust Company of New Smyrna, Fla., as trustee, in accordance with the terms of a trust agreement dated the 28th day of Oct., 1929." When the Insured made application for that change of beneficiary, he delivered to the Insurer a copy of said trust agreement. When the trust agreement was executed the Insured was indebted to the Bank. The trust agreement was made to secure that debt. Upon the Insured's paying that debt, the Bank delivered the policy to the Insured, but failed to destroy or return to Insured the trust agreement, which was in the possession of the Bank when it subsequently failed. In January, 1931, another change of beneficiary was made in the manner provided in the policy, the new beneficiary being the appellant, who was the wife of the Insured when she became the beneficiary under the policy. Upon the death of the Insured attorneys for certain alleged creditors of the Insured notified the Insurer that such creditors claimed the proceeds of the policy as beneficiaries under the Trust Agreement. After receiving such notice and proof of death, the Insurer sent its check for the amount due under the policy, the check being made payable to appellant and the Bank. The former officials of the Bank, upon being requested to indorse that check, refused to do so, by reason of lack of power, the trust power of the Bank having terminated. Thereafter appellant filed a suit in a Florida state court, praying that the powers granted the Bank by the trust agreement be decreed to have been performed and the trust fully executed, and that the trust agreement be canceled. The alleged creditors in whose behalf the above-mentioned notice to the Insurer was given intervened in that suit. Upon learning of that state court suit, the Insurer sought leave to intervene therein, setting up what had occurred as to alleged creditors of the Insured asserting claims to the insurance money, and what the Insurer had done as above stated. Soon after that application was made appellant brought suit on the policy. No order on that application was made in the state court suit, which is still pending. In the suit brought by the appellant on the policy the Insurer filed a so-called equitable plea which set up facts above stated, renewed the tender of the amount due on the policy, alleged the absence of collusion and that appellant was merely a stakeholder, and prayed leave to pay into court the amount due on the policy (that amount being the amount of the policy, less the amount of a loan to the Insured thereon, with interest on the balance from the date when the Insurer received proof of Insured's death to the date of the institution of appellant's suit on the policy), that the cause be transferred to the equity side and proceed as a suit in equity, that the alleged creditors of the Insured be made parties, that appellant and said alleged creditors be required to interplead, and that Insurer be discharged and be allowed costs and attorney's fees. After the court had overruled appellant's motion to strike parts of said equitable plea, the alleged creditors of the Insured were made parties defendant to said equitable plea, appellant was required to answer that...