Missouri, K. & T. Trust Co. v. Krumseig, 756.

• Decision Date: 05 November 1896
• Docket Number: 756.
• Citation: 77 F. 32
• Parties: MISSOURI, K. & T. TRUST CO. v. KRUMSEIG et al. [1]
• Court: U.S. Court of Appeals — Eighth Circuit

77 F. 32

MISSOURI, K. & T. TRUST CO. v. KRUMSEIG et al. ^[1]

No. 756.

United States Court of Appeals, Eighth Circuit.

November 5, 1896

This was a bill filed in the district court of St. Louis county Minn., by Theodore M. Krumseig and Louise Krumseig, the appellees, against the Missouri, Kansas & Texas Trust Company, a corporation organized under the laws of Missouri the appellant, to cancel a mortgage executed by the appellees to the appellant on real estate in the city of Duluth, upon the ground that the same was void for usury, and upon the further ground that it was a contract for life insurance, and void because the appellant was a foreign corporation, and had not complied with the laws of Minnesota to entitle it to do business in that state. On the application of the appellant the cause was removed from the state court into the circuit court of the United States for the district of Minnesota on the ground of the diverse citizenship of the parties. On the 29th of July, 1890, Theodore M. Krumseig one of the appellees, made application to the appellant to borrow $2,000. The application was made according to a form prescribed by the appellant, and reads as follows: 'I hereby make application to the Missouri, Kansas and Texas Trust Co., of Kansas City, Mo., for a loan of $2,000.00 upon lot No. seven (7), block No. sixty-two (62), of Portland Division addition, city of Duluth, county of St. Louis, state of Minnesota, which property I now own in fee, and the abstract to which accompanies this application. ' Here follow some statements relating to the domestic and business affairs of Krumseig and a description of the property to be mortgaged. The application then continues:

'In consideration of the above premises, I agree to execute and deliver to the said company 10 promissory notes, each of the sum of $360, payable in monthly installments of $30.00, commencing at date of signing contract. The said notes cover principal sum loaned, interest, and cost of guaranty to cancel debt in case of death, and shall be secured by good and sufficient deed of trust or mortgage executed by myself and wife on said ground and improvements. The contract hereafter to be entered into, if my application should be accepted and contract entered into in writing between myself and said company, shall provide that the mortgage or deed of trust given to secure the above notes shall contain a clause guarantying, in case of my death before payment of any unpaid installments, a release of unpaid portion of debt, if I shall have promptly paid previous installments and kept other conditions. As part of foregoing condition, I agree, before acceptance of this application and the execution of said contract, to pass such medical examination as may be required by said company, and to pay said company the usual fee of $3.00 therefor, and to pay all fees for recording deed of trust or mortgage. This application and proposal to stand open for acceptance for ten days from date hereof.

'(Signed)

Theodore M. Krumseig.

'Date July 29th, 1890.'

Krumseig submitted to a medical examination such as is required of applicants for life insurance, and executed the promissory notes and mortgage provided for in the application, the latter of which contains the following provision: 'And it is further understood by and between the said parties of the first part, their executors, administrators, or assigns, and the said party of the second part, the Missouri, Kansas & Texas Trust Company, that in case said Theodore M. Krumseig, one of the parties of the first part, should die after the execution and delivery of the said notes and this mortgage, and within ten years thereafter, each and every of the said notes remaining unpaid at the said date shall be surrendered to the executors or administrators of the said Theodore M. Krumseig, one of the parties of the first part, and this mortgage shall be canceled and satisfied: provided, however, that said parties of the first part shall have promptly paid each monthly installment that shall have become due prior to his death, according to the terms of the notes hereinbefore mentioned, and that he has not committed suicide within two years, and has not, without written consent of the party of the second part, visited the Torrid Zone, or personally engaged in the business of blasting, mining, or submarine operations, or in the manufacture,handling, or transportation of explosives, or entered into the service of any railroad train or on a steam or sailing vessel for two years.'

The bill contains this allegation: 'Plaintiffs further allege that said contract, hereby, upon the death of said Theodore M. Krumseig, as provided in said contract, defendant was to deliver up the notes and cancel the said mortgage of record, was and is and was so understood and agreed by and between all of the parties thereto, when made, to be a life insurance contract on the life of said Theodore M. Krumseig; that the original application for the said loan of money hereinbefore mentioned was on one of the printed blanks of the defendant, and said application, signed by said Theodore M. Krumseig, expressly stipulated that said Theodore M. Krumseig should pass such satisfactory medical examination as should be required by defendant, and should pay to the defendant a fee of $3 therefor, and that said application for the loan should not be deemed accepted and approved by defendant until a satisfactory medical examination of said Theodore M. Krumseig had been had; and that thereafter the defendant required the said Theodore M. Krumseig to pass, and said Krumseig did pass, a medical examination, and did pay the said fee of $3 therefor, and said examination was by said defendant submitted to the Prudential Life Insurance Company, of Newark, N.J., with which company defendant had a contract to report on all of defendant's applications for loans in the said state of Minnesota, and, said Prudential Company having reported thereon, said application was thereupon duly accepted, and the notes and mortgage herein described were thereupon executed and delivered to the defendant; and plaintiffs allege, on their information and belief, that, upon favorable report as aforesaid by Prudential Life Insurance Co. on the said Theodore M. Krumseig 'risk,' defendant thereupon entered into a contract with said Prudential Co. whereby said Prudential Co. undertook and agreed to indemnify and save defendant harmless from all loss accruing to defendant under its said contract with the plaintiffs through the possible death of said Theodore M. Krumseig within the life of the said contract.'

The answer denies that the contract is usurious; and, touching the averment in the bill that it is a contract for life insurance, the answer 'denies the allegations of paragraph 7 of said complaint; denies that said contract was, is, or was by either party thereto understood or agreed to be, a life insurance contract; but admits that it was stipulated that said Theodore M. Krumseig should pass such satisfactory medical examination as should be required by defendant, and should pay a fee therefor to the medical examiner of $3, and that said examination was passed, and said fee so paid, and said examination submitted to the Prudential Life Insurance Company, and that said company reported favorably thereon; but defendant denies that said Prudential Company undertook or agreed to indemnify and save defendant harmless from all or any loss which might accrue to defendant under its contract with plaintiffs through the possible death of said Krumseig or otherwise, and alleges that the contract with said Prudential Company was the ordinary and usual contract with it for the insurance, for the period of said loan, of defendant's insurable interest in the life of said plaintiff.'

The agreement between the Prudential Insurance Company and the appellant reads as follows:

'This agreement, made and entered into this twenty-seventh day of February, in the year one thousand, eight hundred and eighty-nine, by and between the Prudential Insurance Company of America, of Newark, N.J., hereinafter designated as the Prudential, and the Missouri, Kansas & Texas Trust Company, of Kansas City, Mo., hereinafter designated as the Trust Company, witnesseth: That the Prudential, in consideration of the premiums hereinafter mentioned, and upon the following terms and conditions, agrees to insure in favor of the trust company the lives of certain persons whose physical condition may be acceptable to the said Prudential:

'First. The persons whose lives are proposed for insurance must be debtors unto the trust company in a sum equal, at least, to the amount of insurance requested.

'Second. The policies of insurance shall be issued upon the renewable reducing term plan. They may be severally renewed for not more than ten successive years, and shall be nonparticipating. The premiums shall be adjusted on the basis of a term insurance for one year, and the amount of insurance under each policy shall decrease each year according to the provisions of the seventh section of this agreement.

'Third. The trust company shall furnish to the Prudential for approval a list of medical examiners, by whom the persons whose lives are to be insured shall be examined.

'Fourth. The expense of conducting the examination shall be borne by the Prudential.

'Fifth. The rates of premium per $1,000 shall be as given in the following table, by which the rate to be paid in each and every year over which each policy extends is that corresponding to the actual age of the life insured in that year:

Premiums per $1,000.

Age. Annual. Semiannual. Quarterly.

21 $9 50 $4 94 $2 52

22 9 64 5 01 2 55

23 9 81 5 10 2 60

24 9 99 5 19 2 65

25 10...