Matlack v. Mutual Life Insurance Co. of New York

• Decision Date: 22 March 1897
• Citation: 36 A. 1082,180 Pa. 360
• Parties: Theodosia Matlack v. The Mutual Life Insurance Company of New York and the Seventh National Bank of Philadelphia, Appellants
• Court: Pennsylvania Supreme Court

36 A. 1082

180 Pa. 360

Theodosia Matlack v. The Mutual Life Insurance Company of New York and the Seventh National Bank of Philadelphia, Appellants

No.

Supreme Court of Pennsylvania

March 22, 1897

Argued January 5, 1897

Appeal No. 259, Jan. T., 1896, by defendants, from decree of C.P No. 4, Phila. Co., March T., 1893, No. 1063, on bill in equity. Affirmed. WILLIAMS and MITCHELL, JJ., dissent.

Bill in equity to compel the payment of the proceeds of a policy of life insurance.

The case was referred to Hampton L. Carson, Esq., as master, who reported as follows:

FINDING OF FACTS.

On April 16, 1862, an application was made to the Mutual Life Insurance Company of New York by George D. G. Matlack, in the name of Theodosia Matlack, his wife, for a policy of life insurance in the amount of $5,000, to be issued upon his own life in favor of his said wife. By memorandum written on the face of the application the policy was to be dated April 18 1862. On the back of the application there was printed in plain type an act of the state of New York, passed March, 1858, "for the benefit of married women in insuring the lives of their husbands," by which, in case of the death of the husband and the survival of the wife, "the sum or net amount of the insurance becoming due and payable by the terms of the insurance shall be payable to her, to and for her own use, free from the claim of the representatives of her husband or any of his creditors;" such exemption, however, not applying where the amount of the annual premium paid out of the funds or property of the husband should exceed $300. The amount of the premium stipulated for was the sum of $29.55 in each quarter, or the sum of $118.20 a year.

Policy No. 26,717 was duly issued by the company, in accordance with the application, upon the life of George D. G. Matlack for $5,000 in favor of Theodosia Matlack, his wife, dated April 18, 1862. The policy was handed by her husband to Mrs. Matlack, who retained possession of it, with the premium receipts. Premiums were paid in full up to April 18, 1869, the last payment on this identical policy being made on the 18th of January, A.D. 1869, which carried it to the first-named date. During the years 1867 and 1868 the dividends were employed in the payment of the premiums. Reversionary dividends and an additional dividend, commonly called an "adjustment," were from time to time declared, of which there were various surrenders, the net result of which was that at the anniversary of the policy in 1868 there was a total of $638.13 credited to the policy. During that year there were two surrenders of dividends, amounting to a total of $351.78, which, being taken from the former sum, left a balance of $286.38 reversionary dividend, which was carried over to the anniversary of the policy on April 18, 1869. This had a value in cash of $107.58. According to the books in the possession of the Philadelphia agent of the insurance company the policy was entitled to $373.90 in reversionary dividends in April, 1869. This had a cash value of $140.49.

On January 28, 1869, George D. G. Matlack became indebted to the Seventh National Bank through the discount of a note in the sum of $1,278.83, and on February 19, 1869, a second note was discounted for $500, making a total indebtedness of George D. G. Matlack to the bank, on the latter date, of $1,778.85. On December 5, 1868, the bank had become a holder of a paid-up policy of life insurance, issued by the Mutual Life Insurance Company of New York, No. 90,331, for $350 on the life of George D. G. Matlack, in which Theodosia Matlack had no interest. On February 16, 1869, after the discount of the first note and before the discount of the second note by the bank, George D. G. Matlack, by threats to take his own life and coercion, obtained the signature of his wife to an assignment in writing of policy No. 26,717 to the Seventh National Bank, dated eo die, and witnessed by one Benjamin Butler. The witness was informed that Mrs. Matlack signed the written assignment unwillingly, and that Mr. Matlack had taken the policy from its hiding place where Mrs. Matlack had secreted it. Of these facts neither the bank nor the insurance company had knowledge. A rule of the company, then in force, provided that policies issued to married women on the lives of their husbands are not assignable. The assignment, though taken away by Mr. Matlack, was not delivered to the bank, and was produced from the custody of the plaintiff, who obtained it from her husband in 1888, when he was conducting some fruitless negotiations with the bank for the transfer of his life insurance papers. The receipts for premiums in former years were also taken possession of by Mr. Matlack shortly after he secured the assignment. On April 14, 1869, the cashier of the bank wrote to Mr. Matlack as follows: "The insurance policy matter is to be arranged on or before the 18th inst. Please call at the bank in time to complete the arrangement." And again on April 17, 1869, he wrote: "The premium on policy is due to-day. Call at the bank on Monday by 10 A.M. without fail, so that the matter can be arranged according to agreement."

On April 22, 1869, another policy (physically speaking) was issued by the Mutual Life Insurance Company of New York, No. 26,717 (being the same number as the former policy), for the sum of $5,000 on the life of George D. G. Matlack, payable to his executors, administrators, or assigns, for the same quarterly premium, maturing on the same days as in the former policy (18th days of April, July, October and January), and issued without any medical re-examination of the insured. Seven years had elapsed since the medical examination on which the first policy was based. The old policy of the same number in favor of Mrs. Matlack, was surrendered to the company and declared lapsed, with the endorsement on it, "to own favor, having lapsed April 22, 1869." The reversionary dividends credited to the policy lapsed with the policy, but were subsequently used in the payment of premiums on the substituted policy. The substituted policy had endorsed upon it "Premium on former policy same number, paid in full to April 18, 1869." On April 24, 1869, the substituted policy was assigned by Mr. Matlack to the Seventh National Bank, Benjamin Butler again acting as a witness. On the same day the transfer was entered at the office of the insurance company. The premium was paid April 26, 1869, by the check of the cashier of the bank and charged to Mr. Matlack's account. Of the preceding facts the plaintiff had no notice until December, 1888, when she learned what had taken place from her husband. She was not notified by the insurance company of the lapse of the policy nor of the issue of a new one, nor was she ever called on for premiums. The subsequent premiums as they matured were paid by the bank, partly in cash and partly by the application of annual dividends credited to the policy, until the death of Mr. Matlack on January 19, 1893. In 1869 the reversionary dividends were $373.90; dividend, $141.29; cash, $48.46; amount used July and October, $59.10. The total amount of premiums paid by the bank was $1,574.58, and the total amount of dividends applied to the payment of premiums was $1,262.22.

In the deposit book of Mr. Matlack with the Seventh National Bank, written by himself, occur the following statements: --

"PHILADELPHIA, February 16, 1869.

"Transferred policy 26,717 in favor, February, 1869, Theodosia Matlack, 16, $5,750, my wife, amount of policy including dividends. The bank allowed this policy to lapse only for a few minutes, as I was in the examiner's room all prepared to have the company issue a new policy in the bank's favor for $5,000. The Insurance Company issued a new policy on my life in the Seventh National Bank's favor for $5,000.

"GEORGE D. G. MATLACK."

And on a preceding page:

"PHILADELPHIA, August 6, 1888.

"I this day called at the office of the Mutual Life Insurance Company of New York and was informed that policies on my life in their company, No. 26,717 for $5,000 and No. 90,313, $358, paid up, were in full force.

"GEORGE D. G. MATLACK,

"2439 N. Fifteenth Street."

There was no evidence to show when these statements were written, nor were they ever made known to either the bank or the Insurance Company.

Shortly after the death of her husband, Mrs. Matlack, on February 4, 1893, subscribed and swore to a claim against the Insurance Company upon one of the company's blanks, describing the policy by number, date, and amount. She was not in possession of the policy, nor had she ever paid or tendered any of the premiums. Proof was made in the usual manner of the death by the production of the doctor's and undertaker's certificate, although these latter were not on the company's blanks. The claim was resisted by the company on the ground that the policy No. 26,717 in favor of Theodosia Matlack had lapsed on April 18, 1869, twenty years before, for nonpayment of premium due that day. With full notice of the plaintiff's claim, payment was made of the substituted policy, No. 26,717, to the Seventh National Bank on March 16, 1893, and a bond of indemnity taken from the bank by the insurance company. Thereupon the present bill was filed, in June, 1893, and later an amended bill.

OPINION.

Upon these facts several questions of law arise, with which the master will deal in their order.

1. The first arises upon the special plea in bar, filed in behalf of the defendant bank, that as to the relief sought by the bill in asking a decree that the so-called assignment of the said substituted policy, No. 26,717, upon the life of the said George D.G. Matlack to the Seventh National Bank be declared illegal, null, and void, inasmuch...