Mutual Life Ins. Co. of New York v. Hagerman

• Decision Date: 29 June 1903
• Citation: 72 P. 889,19 Colo.App. 33
• Parties: MUTUAL LIFE INS. CO. OF NEW YORK v. HAGERMAN.
• Court: Colorado Court of Appeals

72 P. 889

19 Colo.App. 33

MUTUAL LIFE INS. CO. OF NEW YORK v. HAGERMAN.

Court of Appeals of Colorado

June 29, 1903

Appeal from District Court, Arapahoe County.

Action by Jennie R. Hagerman against the Mutual Life Insurance Company of New York. Judgment for plaintiff, and defendant appeals. Reversed.

D.V. Burns and Wm. R. Barbour (Edward L. Short of counsel), for appellant.

T.B Stuart and Chas. A. Murray, for appellee.

GUNTER J.

In 1866 appellant issued a policy on the life of David Heller, the pertinent part of which is:

"This policy of insurance witnesseth that the Mutual Life Insurance Company of New York, in consideration of the representations made to them in the application for this policy, and of the sum of twenty-two dollars and eight cents, to them duly paid by Mrs. Fannie Heller, wife of David Heller, merchant, and of the semiannual payment of a like amount on or before the seventeenth days of May and November in every year during the continuance of this policy, do assure the life of David Heller of New York, in the county of New York, state of New York, for the sole use of his said wife, in amount of two thousand dollars for the term of his natural life.

"And the said company do hereby promise and agree to pay the amount of said insurance at their office in the city of New York, to the assured for her sole use, if living, in conformity with the statute, and if not living to her children or their guardian for their use, in sixty days after due notice and proof of the death of the said party whose life is hereby insured, the balance of the year's premium, if any, being first deducted therefrom."

In 1884 David Heller and Fannie Heller made their promissory note for $600, payable to Henry Body, and assigned as collateral security therefor their interest in the policy. At the time they had nine children, who still survive. The note was never paid. It was assigned in 1887 by Body to Metzler; by Metzler in 1890, to Norman Hagerman; by Hagerman, in 1891, to appellee. Body, Metzler, and Norman Hagerman, successively, when assigning the note, executed instruments purporting to assign the policy as collateral security for the note, and advised appellant of such assignments. Mrs. Fannie Heller died July, 1889, leaving surviving her husband, David Heller, and the nine children above mentioned. February, 1898, appellee, who had possession of the policy under her purported assignment thereof, delivered it to appellant, with the request that a paid-up policy be issued therefor. Pursuant to such request, appellant, February, 1898, made an indorsement on the policy, purporting to make the same a paid-up policy for $1,903, and in the same favor as the original. March, 1898, after the policy had been indorsed as paid up, and while it remained in the New York office of appellant. David Heller called there and asked for it, and the policy was by mistake delivered to him. At the time of the judgment below it was in the possession of the children of David and Fannie Heller. July 2, 1898, appellee wrote appellant: "Kindly advise me how much cash you will pay for the surrender of paid-up policy granted in place 47,018 [[policy in suit]." July 8, 1898, appellant replied: "Acknowledging your inquiry for reply; letter J.R. Hagerman, July 2, 1898, paid-up nonparticipating insurance $_____ on surrender within six months after default. Cash purchase; $810 if legally surrendered before August 8, 1898." After the policy had been indorsed as a paid-up policy (February, 1898), and after above correspondence of July, 1898, appellee demanded of appellant possession of the policy, or payment to her of the sum of $810, the amount which the company had agreed to pay for the policy if legally surrendered. After appellant had discovered the mistake made in delivering the policy to David Heller in March, 1898, it made unavailing effort to regain possession of it. When appellee demanded possession of the policy, it was unable to deliver it, the policy having passed out of its possession, and it refused to make the payment of $810 demanded. Thereupon, October, 1898, appellee brought the present action, alleging a conversion of the policy by appellant, that its value was $1,000, and asked judgment for that sum, with interest. Trial to the court resulted in judgment against appellant for $898.92, which judgment contained the provision that it might be satisfied by the deposit in court within 30 days, for delivery to appellee, of a paid-up policy for $1,903 on the life of David Heller.

Appellant contends that appellee had no interest in the policy before or after its indorsement as a paid-up policy. This, appellee denies, and further contends that appellant is not in a position to question her interest.

Decisive of the case is the question whether or not appellee, Mrs Hagerman, ever had any interest in the original policy, or in the same after its indorsement as a paid-up policy. If Mrs. Hagerman had no interest therein, she sustained no substantial damage by the alleged conversion. The question of her interest in the policy is determined by its terms. In this ruling the statutes of New York are not considered as a part of the policy, for the reason they are not before us, either by pleading or proof. Looking to the policy, it reads: "And the said company do hereby promise and agree to pay the amount of said insurance *** to the assured (Mrs. Fannie Heller) for her sole use of living *** and if not living to her children or their guardian for their use." (Italics ours.) By this provision of the policy, which is not modified by its other terms, payment to Mrs. Heller is expressly conditioned upon her survival of the insured. David Heller, and, in the event she does not, the amount of the policy is to be paid to her children. Her interest was thus made contingent upon her surviving David Heller. She did not survive him, but died in 1889, leaving surviving David Heller and her nine children, who are still living. With her death ended her contingent interest in the policy, and all rights therein then became vested in her children. When she assigned her interest in the policy to Body in 1884, she had only a contingent interest therein. Only this passed by the assignment. When Body assigned to Metzler in 1887, he had only the contingent interest acquired by him of Mrs. Heller, and only this interest could be pass and did he pass to Metzler. Intermediate the assignment by Body to Metzler (1887) and the purported assignment (1890) by Metzler to Norman Hagerman, Mrs. Heller having died, and her contingent interest having by such event been determined, Metzler's interest in the policy was at an end, and he could pass and did pass no interest therein by his assignment to Norman Hagerman. As Norman Hagerman was without interest in the policy, his assignment thereof to appellee, Mrs. Hagerman, passed nothing. When she delivered the policy to appellant in February, 1898, she had possession of the policy, but no substantial interest therein. Having no interest in the policy, she could be damaged in no substantial manner by the possession of it being withheld. That she had no interest in the policy is sustained by all the authorities. "If there is a provision that the proceeds of the policy or certificate shall be payable to the wife 'if living,' and, 'if not living, to her children,' she will be entitled to the fund if she survives her husband; but, in the case she does not survive him, those children who are living at the time of her death will be entitled to recover. *** Those children who are living at the time of the wife's death will be vested with all interest in and right to the fund." Joyce on Insurance, § 807. "Although a life policy, made under the statute for the benefit of the wife of the insured, provides that in case of her death before her husband's it shall go to the children, and although a statute authorizes a married woman, with her husband's written consent, to assign such policy, nevertheless she has no authority, under the statute, to assign an interest expressly reserved in the policy to her children." Id. 845. "Where the policy was payable to the wife, if living, or, if not living, to the children then living, the death of the wife is the time which fixes the rights of the children." Benefit Societies & Life Insurance (Bacon) vol. 1, § 294. "The effect of an assignment of a policy with the consent of the insured is to place the assignee in the same condition and position with respect to all rights and liabilities under it that the insured occupied before the transfer. It amounts only to the substitution for the assured of the assignee as a party to the policy." Id. § 299. In Conn. Mut. Life Ins. Co. v. Burroughs, 34 Conn. 305, the policy was on the life of George Kendall, payable to his wife, Mary E. Kendall, "her executors, administrators or assigns, for her sole use, within ninety days after due notice and proof of the death of George Kendall." The policy further provided: "And in case of the death of the said Mary E. Kendall, before the decease of the said George Kendall, the amount of said insurance shall be payable after her death to her children, for their use." After the issuance of the policy, Mrs. Kendall made an absolute assignment of the same to one Burroughs. Thereafter she died, leaving a husband--the insured--and one son surviving. Later,...