Liebing v. Mutual Life Ins. Co. of New York

• Decision Date: 27 November 1918
• Docket Number: No. 20487.,20487.
• Citation: 207 S.W. 230,276 Mo. 118
• Parties: LIEBING v. MUTUAL LIFE INS. CO. OF NEW YORK.
• Court: Missouri Supreme Court

207 S.W. 230

276 Mo. 118

LIEBING v. MUTUAL LIFE INS. CO. OF NEW YORK.

No. 20487.

Supreme Court of Missouri. In Banc.

November 27, 1918.

Rehearing Denied December 12, 1918.

Appeal from St. Louis Circuit Court; Charles B. Davis, Judge.

Action by Mary S. Liebing against the Mutual Life Insurance Company of New York, to recover on an insurance policy. From a judgment entered on a peremptory instruction to find for plaintiff, defendant appeals. Reversed and remanded.

Fordyce, Holliday & White, of St. Louis (Frederick L. Allen, of New York City, of counsel), for appellant.

James J. O'Donohoe, of St. Louis, for respondent.

Opinion of the Court in Division No. 1.

BOND, J.

I. This is the second appeal in this case. On the former appeal the question presented was the propriety of an adverse instruction, under the constraint of which plaintiff took a nonsuit, with leave to move to set it aside. The evidence in the case and the points then in judgment are set out in 269 Mo. 509, 191 S. W. 250.

Upon the remand of the former appeal the pleadings were reformed, and submitted, among other issues, the applicability of the statutes of Missouri to a loan agreement made by the assured with defendant, secured by a pledge of the policy in suit.

The loan agreement, of date October 12, 1904, was to the effect that the Mutual Life Insurance Company of New York lent to Frederick W. V. and Mary S. Blees the sum of $9,550. From this amount the company deducted the sum of $4,291.50 as premium to September 29, 1905, and $468 as interest thereon. This agreement also contained the following:

"The receipt of the foregoing amount as a loan is hereby acknowledged upon the pledge as hereinafter set forth in policy No. 1207072 in said company. And the said parties of the second part agree to repay the said sum of $9,550 to the company at its head office, Nassau, Cedar, and Liberty streets, in the city of New York, on the 29th day of September, 1905.

"In consideration of the amount of said loan the parties of the second part hereby assign, transfer and set over all of their right, title and interest in and to said policy No. 1207072 issued by said company on the life of Frederick W. V. Blees, together with any and all moneys which may be or become payable under the same, to the company as collateral security for the payment of said loan with interest, the said parties of the second part will forever warrant and defend the title of the said company to the said policy.

"In the event of default in the payment of said loan on the date hereinabove mentioned, the company is hereby authorized at its option, without notice and without demand for payment, to cancel said policy, and apply the customary cash-surrender consideration then allowed by the company for the surrender for cancellation of similar policies, namely, $9,550 to the payment of said loan with interest, the balance, if any, to be payable to the parties entitled thereto on demand, or the company may at its own option renew said loan for one year or less period on the written request of any one of the parties of the second part hereto and without any further notice to any one of the parties of the second part."

The policy pledged for this loan agreement was issued on September 29, 1901. When the above loan agreement was sent to the home office of the defendant in New York and accepted, and after the deductions as therein provided for, a check for the remainder, drawn upon the American Exchange Bank of New York, was forwarded to the assured and subsequently paid. No further premiums were ever paid on the policy, nor was the loan paid at its maturity, to wit, September 29, 1905.

Thereafter, on November 15, 1905, the defendant exercised the right under the loan contract to foreclose the pledge of the policy and applied the full cash-surrender value to the extinguishment of the loan and cancellation of the indebtedness and the policy.

Frederick W. V. Blees, the assured, before his death on September 8, 1906, and before making the loan, assigned the policy in question to his wife, who jointly with him executed the loan agreement. About six years after the death of her husband, the wife, who had remarried, brought the present action. On the trial the court gave a peremptory instruction to find for plaintiff, resulting in a judgment for $92,069.28. Defendant duly appealed.

II. The decisive question now presented relates to the action of the trial court in excluding all evidence as to the laws of New York. Defendant pleaded that the loan agreement and pledge of the policy was a contract made in New York and governed by its laws, which were also pleaded in defendant's answer on the last trial. The trial judge took the view that this contract and pledge were covenants subsidiary to the policy, and not independent, and therefore as much under the restrictions of the applicatory statutes of this state (R. S. 1909, § 6946), as the policy itself. That view was in accord with the former decisions of this state. Head v. Ins. Co., 241 Mo. 403, 147 S. W. 827, and cases cited.

The former of these cases has been reviewed by the Supreme Court of the United States (N. Y. Life Ins. Co. v. Head, 234 U. S. 149, 34 Sup. Ct. 879, 58 L. Ed. 1259), but that court did not deem it necessary to the conclusion there expressed to rule upon the relation of a loan agreement to the contract contained in the policy — i. e., whether subsidiary or independent — since its view, that the loan agreement before it was not subject to the terms of the forfeiting statute of Missouri (R. S. 1909, § 6946) was based upon the postulate that the state of Missouri could not control "all subsequent agreements" by the parties to a policy of insurance taken out in that state, if entered into "in other jurisdictions by persons not citizens of Missouri and lawful when made." N. Y. Life Ins. Co. v. Head, supra, 234 U. S. loc. cit. 165, 34 Sup. Ct. 883, 58 L. Ed. 1259. To the extent that the loan contract, whether subsidiary or independent as to a policy, in the Head Case was not subjected to the non-forfeiting statute (R. S. 1909, § 6946) governing the policy, the previous rulings of this court were disapproved.

While the parties to the loan agreement in the Head Case were nonresidents of Missouri, that fact was not a determining one in the decision of the Supreme Court of the United States; for in the subsequent decision of N. Y. Life Ins. Co. v. Dodge, 246 U. S. 357, 38 Sup. Ct. 337, 62 L. Ed. 772, it distinctly appeared that the assured Dodge and his wife, the beneficiary, were at all times citizens and residents of Missouri, and that they borrowed money on a pledge of the policy, sending it and the loan contract to New York for acceptance according to the agreement signed by them in Missouri. In disposing of the issue arising on that state of facts, it was said:

"That the policy when issued to Dodge became a Missouri contract, subject to its statutes, so far as valid and applicable, is undisputed and clear. The controlling doctrine in that regard was announced and applied in Equitable Life Assurance Society v. Clements, 140 U. S. 226 [11 Sup. Ct. 822, 35 L. Ed. 497], New York Life Insurance Co. v. Cravens, 178 U. S. 389 [20 Sup. Ct. 962, 44 L. Ed. 1116], and Northwestern Life Ins. Co. v. Riggs, 203 U. S. 243 [27 Sup. Ct. 126, 51 L. Ed. 168, 7 Ann. Cas. 1104]. In each of those cases the controversy related to the interpretation and effect of the original policy — not a later good-faith agreement between the parties. We held that to the extent there stated the state had power to control insurance contracts made within its borders. With...