Marquis v. New York Life Ins. Co.

• Decision Date: 23 June 1952
• Parties: , 37 A.L.R.2d 261, 48 O.O. 354 MARQUIS v. NEW YORK LIFE INS. CO.
• Court: Ohio Court of Appeals

Page 389

92 Ohio App. 389

108 N.E.2d 227, 37 A.L.R.2d 261, 48 O.O. 354

MARQUIS v. NEW YORK LIFE INS. CO.

Court of Appeals of Ohio, Hamilton County.

June 23, 1952.

Syllabus by the Court.

A life insurance policy, payable upon death of the insured or upon reaching the age of 65 years, provided for certain benefits to the insured prior to the maturity of the policy, to-wit:--That after three full years' premiums had been paid and before default in payment of premiums, the insurer would upon receipt of the policy and a satisfactory loan agreement, advance the cash value of the policy upon the sole security of the policy; and, also, that in event of default of payment of premium after three full years had been paid and the Automatic Premium Loan Provision was not applicable, the policy would be converted into Non-Participating Extended Term Insurance in absence of an election by the insured to take the cash value or participating paid-up insurance; and, also, that within three months after such default, but not later, the insured might elect in place of Non-Participating Extended Term and Participating Paid-Up Insurance to surrender the policy, and all his rights thereunder and receive its cash surrender value.

By the terms of the policy the Automatic Premium Loan Provision was made applicable.

The insurer was served with garnishee process in an action by the plaintiff against her former husband. The insurer answered that the policy had a cash surrender value of $733.43, but denied any indebtedness. Judgment was rendered for the plaintiff and the garnishee ordered to pay $733.43 into court. This, the garnishee refused to do.

In an action under favor of Section 11851, General Code, to recover judgment against the garnishee, it was held that as the obligation of the insurer to pay the cash surrender value was subject to the performance of the aforesaid conditions, and these conditions had not been performed, the obligation was not subject to garnishment process and judgment for the garnishee was directed.

Taft, Stettinius & Hollister, Cincinnati, for appellant.

Cowell & Fletcher and Frank Espohl, Cincinnati, for appellee.

MATTHEWS, Judge.

This is an appeal from a judgment for the plaintiff in an action under Section 11851, General Code, against defendant, for failure to comply with an order against it as a garnishee made in an action in which the plaintiff in the present action was plaintiff and Gordon Marquis was defendant.

The plaintiff in her petition in the present action alleged that she instituted the prior action to recover judgment against Gordon Marquis in the sum of $1,625, and that in said action an order of attachment and garnishment was issued and duly served upon The New York Life Insurance Company as garnishee, who answered, admitting that it owed Gordon Marquis $733.43. Whereupon the court ordered said garnishee to hold said sum subject to the further order of the court, that thereafter the court entered judgment against Gordon Marquis in plaintiff's favor for $733.43, and ordered the garnishee to pay that amount into court. The plaintiff also alleged that the garnishee, The New York Life Insurance Company, failed and refused to pay the sum into court. The plaintiff prayed for judgment for $733.43, with interest.

The defendant answered that petition by admitting that plaintiff had instituted an action against Gordon Marquis, as alleged by her, and that an order of garnishment was issued thereon, and that it had filed an answer as garnishee. The defendant specifically denied that it had admitted owing Gordon Marquis $733.43 or any other sum and generaly denied all other allegations.

At the trial it was disclosed that the essential facts were uncontroverted. It was agreed that the defendant had issued a policy upon the life of Gordon Marquis for $10,000, payable to him if he should live to be 65 years of age, and if he should die before reaching said age to his mother, or if she should be dead, then to his father, and that the property rights of the insured under this policy prior to its maturity on his reaching 65 years of age were the subject-matter of this controversy. It is clear that nothing happened or could happen in the action in which this defendant was garnishee only, and had denied that it was indebted, that would bar it from raising the issue that it was indebted, in this action under favor of Section 11851, General Code.

The policy was placed in evidence by stipulation of the parties. The only circumstances under which the defendant obligates itself to pay to the insured anything pending the maturity of the policy are set forth in the following provisions of the policy:

'Loan Provisions'

'After three full years' premiums have been paid and before default in payment of premium or within the grace period, the Company upon receipt of this policy and a loan agreement satisfactory to the Companmy, will advance to the insured on the sole security of this policy, and amount, which, with interest, shall be within the cash value of this policy.'

'Non-Forfeiture Provisions'

'In event of default of payment of premium after three full years have been paid, the following benefits shall apply if the premium remains unpaid and the automatic Premium Loan provision is not applicable:

'(a) Non-Participating Extended Term Insurance: (Under this title are provisions for automatic nonparticipating extended term insurance in the absence of an election by the insured to take the cash value or participating paid-up insurance.)

'(b) Participating Paid-Up Insurance.' (Under this heading are found the terms and conditions under which the insured may elect to take participating paid-up insurance.)

'(c) Cash Value: Within three months after such default, but not later, the insured may elect in place of such Non-Participating Extended Term Insurance or Participating Paid-Up Insurance to surrender this policy and all claims hereunder and receive its cash value as at date of default less an indebtedness hereon.'

'4. Cash Value Of Fully Paid Policy.

'If this policy shall have become fully paid by its terms, the insured at any time may surrender this policy and all claims hereunder and receive its then cash value less any indebtedness hereon.'

There was no evidence that the insured or any one else had surrendered this policy to the defendant, or that defendant had possession of the policy. There was no evidence that the insured had elected to receive the cash value in lieu of Participating Extended Term or Participating Paid-Up Insurance.

The question presented is whether under these circumstances the court was right in entering judgment against the defendant on its admission that at the time the notice was served on it as garnishee the policy had a cash surrender value of $733.43

The plaintiff-appellee relies upon two Ohio cases and one Nebraska and one New York case. Neither of the Ohio cases involved the question here presented. In Hoffman v. Weiland, 64 Ohio App. 467, 29 N.E.2d 33, the insurer admitted the indebtedness and the only question argued or decided was whether that indebtedness was exempt under Section 9394, General Code, in an action by the divorced wife against her unmarried former husband, who had no children or other dependents. The court held it was not exempt. If any such question as here presented lurked in the facts of that case, it was not flushed into the open. The cash surrender value was treated as an unconditional mature debt. The insurer did not plead any conditions.

In Foulks v. Foulks, 49 Ohio App. 291, 197 N.E. 201, the question was whether the court, in an action for divorce, alimony, and division of property, had jurisdiction to, and should under the circumstances award to the wife a certain 20 year endowment policy upon the life of the husband, in which he was the named beneficiary. The court listed the various alternate rights under the policy, that the husband had these rights and that the rights were property, and found that the trial court did not err in ordering him to assign the policy to the wife. The court said nothing about the conditions necessary to be performed in order to obtain the cash surrender value. Whatever they were, if any, would inhere in the policy after its transfer to the wife.

And we find no Ohio case that can be said to be in point. In Orlopp v. Schueller, 72 Ohio St. 41, 73 N.E. 1012, the court held that the property or money held by an executor or administrator in his representative capacity cannot be reached by garnishment process in an action against an heir or legatee before an order of distribution has been made. And in 72 Ohio St. at page 59, 73 N.E. at page 1015 the court said: 'Until such time the executor or administrator is not the debtor of the heir or legatee, nor is it certain that he is the custodian of any property belonging to him.'

Talcott v. Field, 34 Neb. 611, 52 N.W. 400, did not involve the garnishability of the cash surrender value of an unmatured policy. The policy had matured, the total insurance had been paid to, and invested by the insured's wife. The question was whether under the circumstances of that case the property in...