Price v. The First National Bank of Atchison

• Decision Date: 06 April 1901
• Docket Number: 11,888
• Citation: 64 P. 639,62 Kan. 743
• Parties: ELIZA J. PRICE v. THE FIRST NATIONAL BANK OF ATCHISON, KANSAS
• Court: Kansas Supreme Court

64 P. 639

62 Kan. 743

ELIZA J. PRICE v. THE FIRST NATIONAL BANK OF ATCHISON, KANSAS

No. 11,888

Supreme Court of Kansas

April 6, 1901

Decided January, 1901.

Error from Atchison district court; W. T. BLAND, judge.

STATEMENT.

THIS was an action originally brought in the district court by the New York Life Insurance Company, alleging a controversy between Eliza J. Price and the First National Bank of Atchison, Kansas, as to the proceeds of a policy of insurance which was issued on the life of John M. Price, husband of Eliza J. Price, on the 11th day of July, 1865, and praying that the insurance company might be permitted to pay into court the sum of money due on the $ 5000 policy, and that it be further relieved from any liability in the premises. An order was subsequently made, with the consent of all the parties, for the payment of the money into court by the insurance company, relieving it from further liability, and providing that issues should be joined between said bank and said Eliza J. Price, widow of said John M. Price, who died in October, 1898. The bank and the widow interpleaded in the action; and the only controversy in this case is between them, the insurance company having paid the money into court in pursuance of said order.

It appears by the record and the pleadings, which are voluminous, that in 1890 John M. Price and his wife were indebted to the bank in about the sum of $ 10,000. On July 10 of that year, Price and wife executed to the bank two renewal notes therefor, and conveyed, by deed, to David Auld, in trust for the bank, to secure said renewal notes, several parcels of real estate in the city of Atchison and vicinity Auld at the time giving back to them a written defeasance. The deed was withheld from record, and Price was permitted to rent, mortgage and dispose of the property as he chose. In the fall of 1893, the homestead property of Price and wife which was not included in said deed, had been sold for delinquent taxes, amounting at that time to about $ 1200, on which sale a deed was due in September, 1893. There was also a mechanic's lien against the homestead for $ 1100. Price went to the bank to borrow money to pay the liens and taxes. The application was at first refused, but afterward the bank wrote him a letter asking him to call, and finally offered to loan him $ 3200 in cash, and thereafter to loan him $ 600 more, upon condition that he include the homestead, which was worth about $ 10,000, in the security for the new loan, and also make the homestead liable for the old loan. In addition thereto the bank asked that he assign to the bank the policy in controversy in this action, and another policy for $ 3000 issued by the Kansas Mutual Life Insurance Company, not paid up. This arrangement was made in the absence of Mrs. Price, although the policies of insurance referred to were both payable to her as beneficiary. The papers were prepared by the bank, and were sent by a notary in the bank's employ to Mr. Price's office where they were executed by Price and wife. The assignment of the policy in this action was in the following words:

"For value received, we hereby transfer, assign and deliver to the First National Bank of Atchison, Kansas, life policy number 26,050, with all our right, title and interest in and to the same, issued by the New York Life Insurance Company to John M. Price, of Atchison, Kansas, and payable, on the death of said John M. Price, to Eliza J. Price. Amount of policy, five thousand dollars ($ 5000).

"And it is agreed that when this policy shall become payable the insurance therein named shall be paid to the First National Bank, and its receipt therefor shall be a full satisfaction of said policy.

JOHN M. PRICE.

ELIZA J. PRICE."

That assignment was made and the policy was delivered to the bank by John M. Price on the 19th of January, 1894, at which time the bank paid to Price the $ 3200, less the amount required to pay the taxes and mechanic's lien on the homestead, which were paid by the bank. On the same day the bank took two renewal notes of $ 4434.10 each, for the balance due it upon the old debt of $ 10,000, contracted prior to 1890, and on which payments had been made, and these two renewal notes, together with the notes for the $ 3200, and twelve notes for $ 50 each, for the amount which the bank agreed to loan in the future, were all included in the new mortgage, which covered the homestead alone, while the two notes of $ 4434.10 each remained secured by the deed previously given to Auld in trust for the bank as renewals of the original debt. All these notes drew interest at ten per cent. per annum,

On the 21st of March, 1896, the bank brought a suit in foreclosure, case No. 7907, against Price and wife, to foreclose the mortgage last given, to wit, upon the homestead, and in said action took a personal judgment on all of said notes against Price and wife for $ 16,729.09, and an order for the sale of the homestead and application of the proceeds.

After bringing said action the bank brought another action, No. 7908, based upon renewals of the two renewal notes of $ 4434.10 each, to recover a personal judgment against Price and wife thereon, and to foreclose the deed given to Auld as a mortgage to secure the same; and after the rendition of said judgment of $ 16,348.44, in said action No. 7907, the bank recovered judgment in the other action brought subsequently upon said two notes, and the interest thereon, which last judgment amounted to $ 11,729.09, against Price and his wife, and in said action a foreclosure of said deed was decreed, and the property therein described was ordered sold and the proceeds applied to said last-named judgment.

Soon after the rendition of the last judgment, a stipulation was entered into between the bank and Price and wife, in which it was agreed as follows:

"(1) That execution shall be stayed on such judgment of foreclosure in said cause No. 7907 for ten months from the rendition thereof; (2) that in case the said John M. Price and Eliza J. Price shall fail to keep the taxes promptly paid on the real estate hereinbefore described in said first-entitled cause, No. 7907, and to keep said premises well and adequately insured for the benefit of the said plaintiff bank, then and in such event or failure said bank may pay all such taxes and insurance, and keep the said property free and clear of all taxes and liens and adequately insured up to the time of the sale of such property on execution under such judgment."

It was therein further agreed that said bank was to retain in its possession said policies of insurance on the life of said John M. Price as collateral security, and, if the said policies should mature and payment of death losses thereon be made before the sale of said homestead under execution, the proceeds of the policies should be applied on said judgment in said case No. 7907; and in case of sale thereof before the said policies should mature, and if the proceeds of the sale should be insufficient to satisfy such judgment in case No. 7907, then said policies of insurance were still to be retained by the bank, "to secure whatever deficiency there may then remain unpaid on such judgment 7907, until such deficiency is fully paid or until the said life policies mature, and on said maturity and payment thereof such balance then remaining unpaid on said judgment shall be paid and satisfied in full out of the proceeds of such life policies, and the balance, if any, is to be paid over by said bank to the parties entitled thereto."

There was also an agreement in said stipulation that in case Price and wife should fail to pay or cause to be paid the accruing premiums on the Kansas Mutual policy, the bank was to pay such premiums, upon written notice served on it by Price and wife "and whomsoever may be interested in said policies as beneficiaries, a reasonable time in advance of the accrual of each of such payments of premiums or assessments, of their inability to pay, and their desire that said bank pay the same," and it was provided that the bank should only be reimbursed for such payments, if any, which it might make, out of the proceeds of the sale of the property which was originally foreclosed in action No. 7907. This stipulation was dated May 21, 1897, but the court below found that it was executed "some two months after said date." It was signed by the cashier of the bank and by Price and wife. It does not appear that the bank ever paid any premiums on said Kansas Mutual policy or made any other outlays after the execution of said stipulation.

So far as is shown in the evidence, Mrs. Price never made any other agreement with the bank or its officers than as hereinbefore stated.

Judgment reversed.

Waggener, Horton & Orr, for plaintiff in error.

C. D. Walker, and J. L. Berry, for defendant in error.

OPINION

ELLIS, J.:

The insurance policy in the New York Life Insurance Company had been paid up since 1874, and was the property of Eliza J. Price, the beneficiary named therein. The unconditional assignment to the bank of January 19, 1894, was void, because such bank could not have an insurable interest in the life of John M. Price. (Life Ins. Co. v. Sturges, 18 Kan. 93.)

Parol evidence was admissible for the purpose of showing that although such assignment was absolute on its face, the real intent of the parties was that the insurance policy should be turned over to the bank under such assignment for the purpose of collateral security merely. To show such an intention, it was necessary to prove an agreement to that effect between the bank and the owner of the policy, Eliza J. Price, for there was no evidence in the case that John M. Price had authority to act as her agent in that behalf, and...