McBride v. Clayton

• Decision Date: 02 December 1942
• Docket Number: No. 2437-7967.,2437-7967.
• Citation: 166 S.W.2d 125
• Parties: McBRIDE et al. v. CLAYTON et al.
• Court: Texas Supreme Court

166 S.W.2d 125

McBRIDE et al. v. CLAYTON et al.

No. 2437-7967.

Commission of Appeals of Texas, Section A.

December 2, 1942.

Error to Court of Civil Appeals of Fifth Supreme Judicial District.

Action by Martin McBride, Jr., individually and as administrator of the estate of Martin McBride, deceased, and by Rose McBride, individually and as guardian of the estate of Warren McBride, a minor, against Southwestern Life Insurance Company and Helen Clayton and others to determine the right to proceeds of life insurance policies, wherein the insurance company filed an interpleader and deposited proceeds of the policies in the registry of the court. A judgment for plaintiff was affirmed in part and in part reformed and affirmed, Clayton v. Southwestern Life Ins. Co., 158 S.W.2d 820, and Helen Clayton and others bring error.

Judgment of the Court of Civil Appeals reversed and that of trial court affirmed.

L. L. Bowman, Jr., of Greenville, for plaintiffs in error.

Lee A. & Allen Clark, of Greenville, for defendants in error.

BREWSTER, Commissioner.

Martin McBride was president and owner of 56 per cent of the capital stock of W. M. McBride, Inc., which operated retail merchandizing stores at Greenville and other cities under a charter of date December 29, 1926, declaring that it was formed "for the purpose of the purchase and sale of goods, wares and merchandise and for the transaction of general retail mercantile businesses." On March 1, 1932, Southwestern Life Insurance Company issued policies Nos. 288911 and 288912 for $10,000 and $15,000, respectively, on the life of McBride with W. M. McBride, Inc., as beneficiary in each. The premiums, aggregating $296.75 per year, were paid for four years by the corporation. In 1935 McBride became totally and permanently disabled, and the insurance company waived further premium payments. By 1937, the business of McBride, Inc., had been reduced to one store, which, in the fall of that year, was destroyed by fire. That portion of the corporation's capital stock not belonging to McBride was owned equally by his sisters, Helen Clayton and Linna Mae McNeil, respondents here. Shortly after the fire, McBride, Inc., was dissolved, its debts paid and its assets (except as hereinafter noted) divided and delivered to McBride and respondents according to their respective interests. A certificate of dissolution being filed with the Secretary of State, he, on December 15, 1937, ordered dissolution of the corporation.

On April 6, 1938, McBride changed the beneficiaries of the policies so that policy No. 288911 became payable to his wife, Rose McBride, and policy No. 288912 to his two sons, Martin McBride, Jr., and Warren McBride.

On August 10, 1938, McBride and his wife entered into a separation agreement. On December 6, 1938, they were divorced. Exactly a year later McBride died.

This suit was filed by Martin McBride, Jr., individually and as administrator of the estate of Martin McBride, deceased, and by Rose McBride, individually and as guardian of the estate of Warren McBride, a minor, against the insurance company, Helen Clayton and Linna Mae McNeil and their husbands, to recover the proceeds of the policies. The insurance company, by interpleader, admitted its liability as stakeholder and tendered the $25,000 into court. The trial court's judgment was that "plaintiffs, Martin McBride, Jr., and Rose McBride, individually, and Warren McBride, a minor" should recover of and from the Claytons and the McNeils, except that the latter were awarded recovery of $890.40 as their proportionate part of the premiums paid by McBride, Inc. By majority opinion, Chief Justice Bond dissenting, the Court of Civil Appeals at Dallas reformed the judgment so as to give respondents 44 per cent of the proceeds, on the ground that McBride, Inc., still had a corporate existence when Martin McBride died and had, therefore, an insurable interest in his life. 158 S.W.2d 820. The correctness of that ruling is the sole point of error assigned here.

Petitioners admit that they acquired no right to the policies by virtue of McBride's attempted change of beneficiaries. The respondents assert no rights therein as sisters of the deceased. Nor is any question before us as to how Rose McBride's divorce affected her rights.

In approaching the question before us, it is necessary to consider the legal status of McBride, Inc., as a dissolved corporation, as well as the limitations which sound public policy has placed on the meaning of the phrase "insurable interest."

At common law, when a corporation was dissolved, its real estate reverted to the grantor and its personal property to the King. 1 Black.Com. 484. It was dead, and its former officials had no rights or powers whatever. This worked hardship and resulted in injustice in many instances to both its creditors and its stockholders.

To remedy this, the Legislature, in 1907, enacted subdiv. (7), sec. 4, of Chap. 166, Acts Reg.Sess. 30th Leg., which is now incorporated in Articles 1388 and 1389, R.S. 1925, relevant provisions of which are as follows:

"Art. 1388. Upon the dissolution of a corporation, * * * the president and directors or managers of the affairs of the corporation at the time of its dissolution shall be trustees of the creditors and stockholders of such corporation, with power to settle the affairs, collect the outstanding debts, and divide the moneys and other property among the stockholders after paying the debts due and owing by such corporation at the time of its dissolution * * *; and for this purpose they may in the name of such corporation, sell, convey and transfer all real and personal property belonging to such company, collect all debts, compromise controversies, maintain or defend judicial proceedings, and exercise full power and authority of said company over such assets and property. * * *

"Art. 1389. The existence of every corporation may be continued for three years after its dissolution from whatever cause, for the purpose of enabling those charged with the duty, to settle up its affairs. * * *" (Italics ours.)

Although the statutes give McBride, Inc., a continued existence for as long as three years after the surrender of its charter, it clearly could not be so continued to purchase and sell goods, wares and merchandise and to transact a general retail mercantile business. Its charter ceased on December 15, 1937, to have any force as such, and McBride, Inc., could derive no power from it, could not engage in retail merchandizing under it. Whatever powers remained came by virtue of the statute and only for the specific and limited purposes named therein. Its qualified existence was in the nature of an administration of its estate, with all its corporate rights fixed and determined as of the date of its dissolution. Crease v. Babcock, 23 Pick., Mass. 334, 34 Am.Dec. 61. It was continued only to collect what was due it, to pay what it owed and to distribute what was left of its assets to those entitled to them. Jaffee v. Com'r of Internal Revenue, 2 Cir., 45 F.2d 679; 13 Am.Jur., sec. 1366, p. 1206; 19 C.J.S., Corporations, at p. 1509, § 1743(4). In other words, the powers of its officers had become restricted to those of liquidating agents. 11 Tex.Jur., sec. 470, p. 136.

The statute which the respondents claim gives them an insurable interest in McBride's life is Art. 5048, R.S.1925, pertinent provisions of which are: "Any corporation * * * may be named beneficiary in any policy of insurance issued by a legal reserve life insurance company on the life of any officer or stockholder of said corporation. * * * The beneficiaries aforenamed shall have an insurable interest for the full face of the policy and shall be entitled to collect same."

In applying this statute to the facts before us we must assume that in the use of the term insurable interest the Legislature intended it to mean what the courts of this state had theretofore said it meant. 39 Tex.Jur., p. 200, sec. 107. Before this statute was passed, the Supreme Court had said that insurable interest is the interest of one who may from the life of the insured reap some pecuniary advantage of a definite nature, so that the insurance policy offers no inducement to him to take the insured's life. Cheeves v. Anders, Adm'r, 87 Tex. 287, 28 S.W. 274, 47 Am.St.Rep. 107. That there is more than a presumption that the Legislature knew this judicial definition of the phrase and had it in mind in the enactment of Art. 5048, supra, is established by the fact that the emergency clause thereof recites, "the fact that the courts of Texas have held that a corporation * * * does not have an insurable interest in the life of its officers * * * renders...