Northwestern Mut. Life Ins. Co. v. Amos
| Decision Date | 29 March 1904 |
| Court | Michigan Supreme Court |
| Parties | NORTHWESTERN MUT. LIFE INS. CO. v. AMOS. |
Appeal from Circuit Court, Wayne County, in Chancery; George S Hosmer, Judge.
Suit by the Northwestern Mutual Life Insurance Company against Lavern Amos. From a decree in favor of defendant, complainant appeals. Affirmed.
Complainant has appealed from a decree sustaining the demurrer to complainant's bill in equity. The bill alleges complainant's due incorporation; that on December 30 1899, one Walter G. Amos, husband of the defendant, applied to the company for a policy of insurance for $2,000, the annual premium being $62.66; that on the same day he applied for another policy of $3,000, the annual premium to be $93.99; that his wife, the defendant, was the beneficiary named in said policies; that the complainant prepared the policies at its home office in Milwaukee, placed the requisite internal revenue stamps in small envelopes, to be attached to said policies and canceled when the policies were delivered; that said stamps were not attached and canceled because the premiums had not been paid, and the policies were not valid until paid; that each policy contained the following provision: 'This policy shall not take effect until the first premium shall have been actually paid while the insured is in good health;' that said policies, with the revenue stamps, in the small envelopes pinned to them were sent by mail to its general agent at Chicago; that said general agent delivered them to one Ellis, who had taken the applications, and who was a subagent of one Cole, who was soliciting insurance for the complainant; that said Walter Amos was employed as the Western agent of the Murphy Iron Works of Detroit, had an office in Chicago, was receiving a salary of $1,200 per year, and resided with his family at Morgan Park, Chicago; that his office was in the Bedford building, on Dearborn street, about the business center of the city; that Amos made applications for two policies, because he was uncertain whether he should be able to pay the premiums upon the twothousand or the three-thousand dollar policy; that his income was not sufficient to enable him to carry either of said policies and defray his other expenses, but that he expected his salary to be raised, or to secure other employment; that said policies were handed to said Amos for inspection only, and were left with him to examine their terms; that he did so, and afterwards returned them to Ellis; that afterwards an agent of another company solicited Amos for insurance; that Amos again desired to inspect the policies, and obtained them from Ellis for that purpose, the internal revenue stamps being still in the envelopes and pinned to the policies; that said Ellis & Co. from time to time requested said Amos to accept the policies and pay the premium; that Amos never did so, and never decided to accept the policies; never paid the premiums or any part thereof, and received no credit or extension of time, but kept said policies for the sole purpose of inspection; that he kept the policies in the desk in his office in the city, to which desk others had access; that on March 21, 1900, said Amos was killed; that these policies were then found in the office of the Murphy Iron Works, in Chicago, and came into the possession of the defendant; that on December 26, 1900, one of complainant's attorneys presented said policies to the collector of internal revenue at Detroit, with the stamps still unattached, and induced said collector to attach and cancel them, and indorse thereon the following certificate: 'I certify that the revenue stamps upon this policy were taken from the attached envelope and affixed and canceled by me, under the provisions of section 13 of the War Revenue Act of 1898, upon request of Lavern Amos, made December 26, 1900.' The bill then further alleges that the stamps were not omitted from said policies by mistake or inadvertence; that no showing of such fact was made to the collector, and that the collector's act was without authority; that on January 9, 1901, defendant commenced a suit at law on said policies in the circuit court for the county of Wayne; that said suit was duly transferred to the Circuit Court of the United States for the Eastern District of Michigan, Southern Division, January 28th; that testimony was taken and the case ready for trial, when defendant, plaintiff in that suit, submitted to a nonsuit, with leave to move to set it aside within 20 days; that no motion was made to set the same aside, and on December 31, 1902, she commenced suit in the Wayne circuit court upon the $2,000 policy, which suit is still pending. The bill then avers that said policy was never delivered; that the premium was never paid; that no credit was ever given; and that the possession and attempted enforcement of said policy by said defendant is a fraud upon the complainant's rights. The prayer of the bill is that said policies be surrendered and canceled.
A bill by an insurance company alleged that complainant wrote policies on the life of defendant's husband, in which defendant was the beneficiary, and that they were delivered to the husband to inspect, having pinned to them certain revenue stamps; that he retained the policies, never paying any premium, and receiving no credit or extension of time, and that after his death they were found in his safe; and that thereafter one of defendant's attorneys presented the policies to a collector of internal revenue, who affixed the stamps, pursuant to Act June 13, 1898, c. 448, � 13, 30 Stat. 454, providing for such an affixing of stamps in case of mistake or inadvertence, but that no showing of such mistake was made to the collector; and it was alleged that the attempted enforcement of the policy was a fraud on complainant, and it was prayed that the policies be canceled. Held, that no fraud was alleged, and there was no ground for interposition of equity.
Thomas A. E. Weadock, for appellant.
John W. McGrath and Wesley L. Nutten, for appellee.
GRANT, J. (after stating the facts).
The chief grounds for the demurrer are (1) that the bill shows that the complainant has a complete and adequate remedy at law; (2) that it does not allege that either Walter G. Amos or the defendant was guilty of any fraud respecting the procurement or possession of said policies. Certainly no fraud is charged upon Mr. Amos. Neither is any fraud charged upon Mrs. Amos in obtaining possession of them. They were found among his papers in the safe of his employer, but over which he had entire control. She certainly had the right to assume that they were valid, and there is no allegation of any knowledge on her part that they are not valid. It is difficult to see how, under these circumstances, any fraud could be alleged or proved.
The complainant in its bill seems to recognize that, up to the time of the receipt of these policies by the defendant, it can neither charge nor prove any fraud. It rests upon the allegation 'that the possession and attempted enforcement thereof are a fraud upon the complainant's rights.' So the attempted enforcement of any claim not founded upon legal right is a fraud upon the other's rights, but courts of law are the proper forum in which to determine the legality of the claim. The allegation is based upon the preceding statement of facts, which in themselves do not show fraud. Under the facts set up in the bill the policies were never delivered, and were therefore never in force. Counsel rely upon John Hancock Mutual Life Insurance Co. v. Dick, 114 Mich. 337, 72 N.W. 179, 43 L. R. A. 566, Mactavish v. Kent Circuit Judge, 122 Mich. 242, 80 N.W. 1086, and Edwards v. Mich. Tontine Invest. Co. (Mich.) 92 N.W. 491. Those cases have no application here. The basis of the equity jurisdiction there sustained was fraud--active fraud in the procurement of the policies, or the renewals thereof, after they had lapsed. The sole question in this case is one of fact, viz., were the policies delivered and the premiums paid, or their payment waived? The doctrine in the Dick Case will not be extended to include cases of this character, where the questions involved are purely legal, no fraud is charged, and there is no possible reason for the interposition of a court of equity. See Mack v. Village of Frankfort, 123 Mich. 421, 82 N.W. 209.
The decree is affirmed, with costs.
The bill of complaint in this cause shows that the policy of insurance of which cancellation is sought came into the possession of the complainant, and was sued upon, under circumstances which made such suit and a claim of liability fraudulent. The suit was afterward removed to the federal court, and, after taking proofs, the plaintiff submitted to a voluntary nonsuit. Subsequently a second suit was begun in the Wayne circuit court. If the bill states the truth, a paper invalid for want of delivery, and not a perfect instrument for want of revenue stamps, was, without right, given the appearance of a contract binding upon the complainant by procuring the revenue stamps to be affixed by a federal official. Had the complainant done this with knowledge of the facts, no one would doubt that it was a fraudulent act. We do not know that it was not so done. It is none the less fraudulent in law if she did it in good faith. The jurisdiction of a court of equity to cancel the policy under the circumstances is, in my opinion, as clear as in the other. The cancellation of instruments is not limited to cases of actual fraud, if it is limited to cases of fraud, which I am not prepared to hold.
But the bill charges...
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