Northwestern Mut. Life Ins. Co. v. Kidder

• Court: Indiana Supreme Court
• Writing for the Court: MONKS
• Citation: Northwestern Mut. Life Ins. Co. v. Kidder, 70 N.E. 489, 162 Ind. 382 (Ind. 1904)
• Decision Date: 31 March 1904
• Parties: NORTHWESTERN MUT. LIFE INS. CO. v. KIDDER.

162 Ind. 382

70 N.E. 489

NORTHWESTERN MUT. LIFE INS. CO.

v.KIDDER.

Supreme Court of Indiana.

March 31, 1904.

Appeal from Circuit Court, Vigo County; Jas. E. Piety, Judge.

Action by Kate Kidder against the Northwestern Mutual Life Insurance Company. From a decree sustaining a demurrer to defendant's bill of interpleader, it appeals. Affirmed.

B. V. Marshall and Baker & Daniels, for appellant. McNutt & McNutt, for appellee.

MONKS, J.

Appellee sued appellant on February 12, 1902, in the Vigo circuit court, upon a bank check dated January 25, 1902, for $10,000, drawn by appellant upon the Wisconsin National Bank of Milwaukee, payable to appellee. Appellant on February 25, 1902, filed an interpleader, and sought therein to have other alleged claimants substituted as defendants in its place, and to be discharged from liability to either party on its depositing in court the amount of said check, interest, and costs, as provided in section 274, Burns' Rev. St. 1901 (section 273, Rev. St. 1881; section 273, Horner's Rev. St. 1901). At the same time appellant filed proof of service of notice of said interpleader on the other alleged claimants. A motion by appellee to make the pleading more specific was sustained by the court. Afterwards, on July 11, 1902, appellant filed a verified amendment to its interpleader. Appellee on the same day filed a demurrer to appellant's amended interpleader, and at the same time appellant filed a motion to strike said demurrer from the files “for the reason that the statute on the subject of interpleaders does not contemplate demurrers thereto.” On July 12, 1902, the court overruled said motion and sustained said demurrer to appellant's amended interpleader, and on the same day rendered final judgment in favor of appellee against appellant for the amount of said check, interest, and costs. The errors assigned and not waived are: “(1) The court erred in sustaining appellee's motion to make appellant's interpleader more specific; (2) the court erred in overruling appellant's motion to strike out appellee's demurrer to appellant's amended interpleader; (3) the court erred in sustaining appellee's demurrer to appellant's amended interpleader.”

It appears from appellant's amended interpleader that appellant, a foreign corporation, on September 6, 1894, executed its policy of life insurance, by which it promised to pay to appellee, wife of Edson W. Kidder, of Terre Haute, Ind., upon proof of the death of said Edson W. Kidder, the sum of $10,000; that said Edson W. Kidder died on January 12, 1902, said policy being at that time in full force for the sum of $10,000, and thereafter, upon due proof being made by appellee, the beneficiary in said policy, of the death of said Edson W. Kidder, appellant, at Milwaukee, Wis., on January 25, 1902, signed the check sued upon, and on January 27, 1902, caused the same to be delivered to appellee, at Terre Haute, Ind., in payment of said life insurance policy, and the same was received by the appellee as a payment in full of said policy, and she at the same time surrendered said policy to appellant as fully paid. On January 28, 1902, after said check had been delivered to appellee and said life insurance policy surrenderedas aforesaid, certain national banks and trust companies located in Connecticut, Massachusetts, Pennsylvania, and Rhode Island, claiming to be creditors of the W. L. Kidder & Son Milling Company, of Terre Haute, Ind., demanded of appellant the payment to them of the $10,000 payable under said policy, and notified appellant not to pay said insurance policy on the life of said E. W. Kidder to appellee, stating that said insurance was paid for by said milling company, and that said corporation was insolvent, and said fund belonged to its creditors; and, if checks had been delivered by appellant to any one on account of said insurance, a demand was made that appellant stop payment thereof. That appellant had no notice of the claim of said creditors until January 28, 1902. On January 30, 1902, the Wisconsin National Bank of Milwaukee, by direction of appellant, refused payment of the check sued upon. On February 11, 1902, said creditors notified appellant that said E. W. Kidder, the person “insured in said policy, was at the time of his death practically the only stockholder of W. L. Kidder & Son, and dominated its board of directors; that he had for a considerable time been largely indebted to said corporation, and that it had for a long time been insolvent; that portions of its moneys had by said E. W. Kidder been wrongfully diverted from the creditors of said corporation to the payment of the premiums on said policy of insurance issued by appellant, and that the creditors asserted ownership of the whole proceeds of said life insurance policy by reason of said alleged wrongful diversion of the funds under said circumstances”; that, although said insurance policy was issued long prior to the formation of the corporation of W. L. Kidder & Son, “the later premiums were paid after the organization of W. L. Kidder & Son, and from the funds of that corporation; and that the creditors could at least claim a proportion of that insurance, and should assert a claim to the whole of it.” At the time the check sued upon was in the hands of appellant's agent at Terre Haute for delivery to appellee, a number of the creditors of the W. L. Kidder & Son Milling Company were informed of said fact, and they made no objection thereto; and neither they nor the receiver of said W. L. Kidder & Son Milling Company gave any notice to appellant's said agent before or at the time the settlement was made with appellee, and said check delivered to her. A receiver of the W. L. Kidder & Son Milling Company was appointed by the Vigo circuit court, and had entered upon the discharge of his duties before January 27, 1902.

Section 274, Burns' Rev. St. 1901 (section 273, Rev. St. 1881; section 273, Horner's Rev. St. 1901), under which said interpleader was filed, is as follows: “A defendant against whom an action is pending upon a contract, or for specific real or personal property, may, at any time before answer, upon affidavit that a person not a party to the action, and without collusion with him, makes against him a demand for the same debt or property, upon due notice to such person and the adverse party, apply to the court for an order to substitute such person in his place, and discharge him from liability to either party, on his depositing in court the amount of the debt, or delivering the property, or its value, to such person as the court may direct; and the court may, in its discretion, make the order.” Said section 274 (273), supra, is a copy of section 122 of the New York Code of 1851 (Voorhees' Code 1851, p. 82); and it has been uniformly held that the same created no new cases of interpleader, but that the statutory remedy as to all cases falling within its provisions is a mere substitute for the equitable remedy by independent suit, and is governed by the same rules. Sherman v. Patridge, 11 How. Prac. 154, 4 Duer, 646;Vosburgh v. Huntington, 15 Abb. Prac. 254, 257;Pustet v. Flannelly, 60 How. Prac. 67, 69; Delancy v. Murphy, 24 Hun, 503; Stevenson v. New York, etc., Co. (Sup.) 41 N. Y. Supp. 964, 965, 966, 10 App. Div. 233, 235; Venable v. New York, etc., Co., 49 N. Y. Super. Ct. 481; Wells v. National City Bank (Sup.) 58 N. Y. Supp. 125, 126-128;Standley v. Roberts, 59 Fed. 836, 841, 8 C. C. A. 305;Nelson v. Goree, 34 Ala. 565, 576, 577;Johnson v. Maxey, 43 Ala. 521, 541; 3 Pomeroy's Eq. Jurisprudence, § 1329. It is laid down in 3 Pomeroy's Eq. Jurisprudence (2d Ed.) § 1322, “that the equitable remedy of interpleader depends upon and requires the existence of the four following elements: *** (1) The same thing, debt, or duty must be claimed by both or all the parties against whom the relief is demanded. (2) All their adverse titles or claims must be dependent, or derived from a common source. (3) The person asking the relief-the plaintiff-must not have or claim any interest in the subject-matter. (4) He must have incurred no independent liability to either of the claimants; that is, he must stand perfectly indifferent between them, in the position merely of a stakeholder.” It must also appear from the facts alleged in the interpleader that the plaintiff cannot pay either claimant without hazard to himself; in other words, that the third party's claim has some reasonable foundation, or that there is some reasonable doubt as to whether the stakeholder would be reasonably safe in paying out the money. Nofsinger v. Reynolds, 52 Ind. 218, 225;Crane v. Burntrager, 1 Ind. 165, 169;Ketcham v. Brazil, etc., Co., 88 Ind. 515, 517; Bassett v. Leslie, 123 N. Y. 391, 399, 25 N. E. 386; Crane v. McDonald, 118 N. Y. 648, 654, 23 N. E. 991;Trigg v. Hitz, 17 Abb. Prac. 436, 439-441;Hinsdale v. Bankers', etc., Co. (Sup.) 76 N. Y. Supp. 448;Id., 72 App. Div. 180, 76 N. Y. Supp. 448;Lennon v. Metropolitan, etc., Co. (City Ct. N. Y.) 45 N. Y. Supp. 1033, 1034;Roberts v. Vanhorne, 21 App. Div. 369, 370, 47 N. Y. Supp. 448;Stevenson v. New York, etc., Co. (Sup.) 41 N. Y. Supp. 964;Id., 10 App. Div. 233, 41 N. Y. Supp. 964; The Nassau Bank v. Yandes, 44 Hun, 55; Baltimore, etc., Co. v. Arthur, 90 N. Y. 234, 237, 238.

Where there is no privity between the claimants-where their titles are independent, not derived from a common source, but each asserted as wholly paramount to the other-the stakeholder is obliged, in the language of the authorities, to defend himself as well as he can against each separate demand. A court of equity will not grant him interpleader. Pearson v. Cardon, 2 Russ. & M. 606, 609-612; Crawshay v. Thornton, 2 Mylne & C. 1, 19-21; Nikolson v. Knowles, 5 Madd. 47; Pfister v. Wade, 56 Cal. 43;Third Nat. Bank v. Lumber Co., 132 Mass. 410; 3 Pomeroy's Eq. Jur. (2d Ed.) 1324. The same rule is declared in Crane v. Burntrager, 1 Ind. 165, 168; The...