Mutual Life Ins. Co. v. Watson

• Decision Date: 23 February 1887
• Parties: MUTUAL LIFE INS. CO. OF NEW YORK v. WATSON, Adm'x, and another.
• Court: U.S. District Court — Southern District of Georgia

30 F. 653

MUTUAL LIFE INS. CO. OF NEW YORK v. WATSON, Adm'x, and another.

United States Circuit Court, S.D. Georgia, Eastern Division.

February 23, 1887

(Syllabus by the Court.) On the trial of a bill of interpleader, between a life insurance company and the administratrix of a deceased policy-holder, and a claimant of the fund due on the policy under an alleged assignment, the assignee is incompetent to testify to any transactions with the insured in the life-time of the latter, either by the law of Georgia, (Code, Sec 3854,) or Rev. St. U.S. Sec. 858.

If under the guise of a contract to deliver goods at a future day, the real intent be to speculate in the rise or fall of prices, and the goods are not to be delivered, but one party is to pay to the other the difference between the contract price and the market price of the goods at the date fixed for executing the contract, the whole transaction is nothing more than a wager, and is null and void; following Irwin v. Williar, 110 U.S. 499, 4 S.Ct. 160.

Where the agents of a life insurance company show active sympathy with one who claims the proceeds of a policy, against the legal representative of the insured, and refuse to pay any part of the same until such claimant is satisfied, although such claim is for a portion only, it is evidence of bad faith, in the meaning of section 2850 of the Code of Georgia, and the company may be proceeded against for 25 per cent. damages, and counsel fees.

And this is especially true where the policy stipulates that 'the company will not notice any assignment of its policy until a duplicate or certified copy thereof shall be filed in the company's home office,' and where the company admits it has no notice of such assignment, and no such duplicate has been filed.

Alex. Proudfit, for plaintiff.

Hardeman & Davis, Dessau & Bartlett, and Garrard & Meldrim, for defendants.

SPEER J.

This is a bill for interpleader. The averments are that George E. Watson insured his life for the sum of $2,000 with complainants. He died on the twenty-third day of October, 1885. Several years prior to his death, and before his intermarriage with Sallie E. Watson, he indorsed on the policy an assignment in these words:

'I hereby assign my interest in the within policy to J. W. Hinson.

(Signed) 'GEO. E. WATSON.'

After his death, this policy was found among his effects, and was taken charge of by Sallie E. Watson, who qualified as his administrix. She made proof of the death of her husband, but the company refused to pay her unless she would agree that the sum of $801.73 should be paid to Hinson, this being the amount to secure which, he insists the assignment was made. Mrs. Watson refused to recognize this claim, or the validity of the assignment, and brought suit for the face value of the policy, 25 per cent. damages, and $200 counsel fees, under section 2850 of the Code of Georgia, relating to refusals by insurance companies to pay their policies when due. Hinson also threatened suit, and notified the company not to pay the policy to Mrs. Watson. The prayers are those usual in bills of interpleader. An order has been passed, permitting the company to pay into court the sum of $2,000, which they admit to be due on the policy, and the actions at law have been enjoined to await the determination of this cause.

The questions to be determined are: First. Is the demand of Hinson, and the alleged assignment of the policy to secure the same, valid? Certain oral and written evidence has been introduced, subject to the decision of the court as to its competency, and the testimony of Hinson, taken before the examiner, is offered. This is objected to by Mrs. Watson, and section 858 of the Revised Statutes is cited. It provides:

'In the courts of the United States no witness shall be excluded in any action on account of color, or, in any civil action, because he is a party to or interested in the issue tried; provided that, in actions by or against executors, administrators, or guardians, in which judgment may be rendered for or against them, neither party shall be allowed to testify against the other as to any transaction with, or statement by, the testator, intestate, or ward, unless called to testify thereto by the opposite party, or required to testify thereto by the court. in all other respects, the laws of the state in which the court is held shall be the rules of decision as to the competency of witnesses in the courts of the United States in trials at common law, and in equity and admiralty.'

The attitude and character of the parties before the court places them within the operation of this rule of evidence. Mrs. Watson is the administratrix of the estate of her deceased husband. J. W. Hinson is pressing for what is equivalent to a judgment against the estate for $801.73, with interest. Manifestly, congress felt that the general rule, permitting parties to testify on their own motion, was disadvantageous to the representatives of deceased persons. Page v. Burnstine, 102 U.S. 668. The rule is practically the same in Georgia. Code, Sec. 3854. This provides that, 'where one of the original parties to the contract or cause of action in issue or on trial is dead, or is shown to the court to be insane, or where an executor or administrator is a party in any suit on a contract of his testator or intestate, the other party shall not be permitted to testify as his own favor. ' Flournoy v. Wooten, 71 Ga. 168. He may testify as to facts which do not confront the interests of the dead man's estate where the testimony of the latter, if in life, might protect them. Gabbet v. Sparks, 60 Ga. 585.

Counsel for Hinson cites Crawford v. Moore, 28 F. 830, in support of his competency. There the circuit court of the United States, in a suit filed by the widow and minor children of John Monroe against Moore, permitted the latter to testify as to a rescission of a contract with the deceased husband and father. It will be observed, however, that this was not a suit by 'the administrator or executor,' in the restricted language of section 858 of the Revised Statutes. They also cite Potter v. National Bank, 102 U.S. 163. There a witness, who was interested in the issue, but not a party to the record, was permitted to testify to statements of the testator touching the subject-matter in controversy. The supreme court very clearly point out the distinction between that case and this. 'A witness may be interested in the issue, without being a party thereto,-- a distinction which seems to have been recognized in all the statutes to which reference has been made. ' Id. 164.

Here Hinson is not only interested, but he is a party. And in Monongahela Nat. Bank v. Jacobus, 109 U.S. 277, 3 S.Ct. 219, the administrator had been completely eliminated. The liability of his intestate had become fixed by judgment. 'The real issue,' say the court, 'was between the bank and Jacobus; ' and they admitted the testimony under the first clause of section 858, and not under the second clause, on which Hinson must base his title to competency. Hinson is, for these reasons, adjudged incompetent to testify to any transaction with Watson, his testimony is not considered, and the validity or invalidity of the assignment has been determined by the rest of the evidence.

It is insisted that all of the written and oral evidence before the court shows that the demand of Hinson against Watson is based upon losses, resulting from buying and selling contracts for future delivery of cotton. This seems undeniable. The accounts rendered and put in evidence and the correspondence between the parties, all show this to be true; and it is no longer open to question that transactions of this character are void, and that contracts based thereon cannot be enforced in a court of law. They are nothing more nor less than wagers. Irwin v. Williar, 110 U.S. 499, 4 S.Ct. 160; Cunningham v. National Bank of Augusta, 71 Ga. 400. In the latter case, Mr. Justice BLANFORD, for the court, with much felicity, presents the dangerous character of these illegal agreements. 'But what,' said that learned judge, 'is the transaction termed 'futures?' It is...