Scheele v. Lafayette Bank

• Decision Date: 13 November 1906
• Citation: 120 Mo. App. 611,97 S.W. 621
• Parties: SCHEELE v. LAFAYETTE BANK.
• Court: Missouri Court of Appeals

97 S.W. 621

120 Mo. App. 611

SCHEELE v. LAFAYETTE BANK.

St. Louis Court of Appeals. Missouri.

November 13, 1906.

1. CONTRACTS — AGREEMENT FOR BENEFIT OF THIRD PERSON—RIGHT TO SUE.

Insured, for the purpose of securing certain notes held by defendant bank, contracted to assign an insurance policy to the bank for its benefit and for the benefit of plaintiff, his daughter. A new policy was thereupon issued, providing that five-sixths of the value thereof should be paid to the bank, and that the other one-sixth should be paid to plaintiff; the bank agreeing to advance and pay all premiums subsequently accruing on the policy. Held, that the benefit to be derived by plaintiff from the bank's contract to keep such insurance in force was substantial, and not merely incidental, and that plaintiff was therefore entitled to sue the bank for breach of such agreement.

2. SAME—PREMIUMS—NOTICE.

Where insured transferred a life insurance policy to a bank for its benefit and also for the benefit of plaintiff, the bank agreeing to pay subsequent premiums, and the policy provided that such premiums were payable at certain stated periods, the insured was not bound to notify the bank of premium calls, but it was the bank's duty to make periodical inquiries of the insurer as to the amount of premiums in time to pay them as they matured.

3. ACTION—ACCRUAL.

A life insurance policy, which was transferred for the benefit of plaintiff and a bank, provided that the policy should be payable 90 days after the death of the insured. The bank failed to pay subsequent premium calls, as required by the assignment contract, whereupon the policy was forfeited. Held, that plaintiff's right of action against the bank to recover the value of her interest in the policy accrued on the date of insured's death.

4. DAMAGES—BREACH OF CONTRACT.

Where a life insurance policy was assigned to a bank for the benefit of itself and plaintiff, and the bank failed to perform its contract to pay subsequent premiums, which resulted in a forfeiture of the policy, the measure of plaintiff's damage in an action against the bank for breach of such contract was the amount plaintiff would have received under the policy in case the contract had been performed, with interest.

Appeal from St. Louis Circuit Court; Jesse A. McDonald, Judge.

Action by Lizzie Scheele against the Lafayette Bank. From a judgment for plaintiff, defendant appeals. Affirmed.

The Mutual Reserve Fund Life Association was incorporated under the laws of the state of New York, and at the dates hereinafter named was authorized to do business in the state of Missouri. The association in 1883 issued its policy insuring the life of Albert G. Scheele, of the city of St. Louis, Mo. The policy was reissued in 1894. In October, 1897, the Henry Scheele & Sons Livery &amp Undertaking Company was indebted to the defendant bank in the sum of $4,800, evidenced by its three several promissory notes. The livery and undertaking company became insolvent, and made a deed of assignment of all its property for the benefit of its creditors, giving a preference to Mary A. Scheele for the payment of $1,500 the company owed her. A suit against the company and the indorsers on the notes it owed the bank, to set aside the deed of assignment, was threatened by the defendant. To obviate the bringing of the threatened suit, on October 22, 1897, the following contract in writing was entered into by and between the bank and Albert G. Scheele, to wit: "This agreement, made and entered into this twenty-second day of October, 1897, by and between Albert G. Scheele, of Eureka, Missouri, party of the first part, and the Lafayette Bank, a corporation organized and existing under the laws of Missouri, engaged in business in the city of St. Louis, Missouri, party of the second part, witnesseth: Whereas, the Henry Scheele & Sons Livery & Undertaking Company, a corporation, as maker, is justly indebted to the said Lafayette Bank on three promissory notes, which are indorsed by Henry J. Scheele and Matthias H. Scheele, as co-makers, and on which notes the said Henry J. Scheele and Matthias H. Scheele are still liable, the said promissory notes being described as follows, to wit: (1) A note of the said company for the sum of thirteen hundred dollars, dated July 19th, 1897, payable to the order of the said Lafayette Bank in three months after its date, with interest from its maturity at the rate of eight per cent. per annum; (2) a note of said company for the sum of twenty-five hundred dollars, dated September 10th, 1897, payable to the order of the said Lafayette Bank in three months after its date, with interest from its maturity at the rate of eight per cent. per annum; and (3) a note of said company for the sum of one thousand dollars, dated September 21st, 1897, payable to the order of the said Lafayette Bank in three months after its date, with interest from its maturity at the rate of eight per cent. per annum; all of the said notes being indorsed as aforesaid. And whereas, the said Henry Scheele & Sons Livery & Undertaking Company is insolvent, and has made a deed of trust on all of its assets securing the payment of the said notes, provided the note for fifteen hundred dollars in said deed of trust referred to, which note was given by the said company to Mary A. Scheele, shall be first paid in full out of the proceeds of the sale provided for in said instrument. And whereas, at the sale held under the said instrument there was realized sufficient to pay off in full the indebtedness due by the said company to Mary A. Scheele, and the amount which will remain over will be insufficient even to fully satisfy the note herein firstly described, which said promissory note is now due and remains unpaid. And whereas, the said Lafayette Bank has threatened to institute suit against the said company and the indorsers aforesaid on the said promissory note so due, and also on the other promissory notes, hereinbefore described, which are held by it, when they respectively become due and payable: Now, therefore, in consideration of the sum of five dollars to said party of the first part paid by the said Lafayette Bank, the receipt of which is hereby acknowledged and confessed, and in further consideration of the forbearance on the part of the said Lafayette Bank from instituting suit on the said promissory notes as against the maker and indorsers of the said notes up to the time when the first payment shall be made to it by the trustee in said deed of trust, it is agreed by and between the parties hereto that the said party of the first part will and hereby does assume the payment of the indebtedness due under the said notes; it being understood, however, that if the said Albert G. Scheele shall hereafter cause to be made out in the name of the Lafayette Bank a five-sixths interest in and to a certificate of membership now held by him in the Mutual Reserve Fund Life Association for the sum of five thousand dollars, dated February 5th, 1894, and numbered 10,226, that the same shall be given and received as full payment of the liability hereby assumed, and also in full discharge from any liability whatsoever on the said notes, or either of them, on the part of said Henry J. Scheele and Matthias H. Scheele, or either of them; it being agreed that the latter two will also be released by an indorsement in writing to that effect made on the backs of the said notes. And it is hereby agreed that, as a further consideration for the giving to the said Lafayette Bank of the aforesaid interest in the said certificate of membership, that the said Lafayette Bank will relinquish and give up all rights acquired by it under the said deed of trust, which is recorded in Book 1408, at page 451, of the recorder's office of the city of St. Louis, and also that it will pay or cause to be paid promptly when due, at its own expense, all premiums, dues, assessments, or charges of any kind whatsoever which may become payable under the said entire certificate of membership from the time the same is received by it, and not only for the five-sixths part thereof, which will be in its name. In witness whereof, the said party of the first part has hereunto set his hand and seal, and the said party of the second part has caused its corporate name and seal to be hereto affixed by its president, the day and year first above written. Albert G. Scheele. [Seal.] Lafayette Bank, By F. Arendes, its President."

On Scheele's application and the surrender of his certificate of insurance, dated in 1894, the life association issued to him a new policy, dated February 22, 1897, in lieu of the one surrendered. This new policy, which was delivered to the defendant bank, and thereafter retained by it, recited: "That in consideration of the application and of the admission fee paid, said life association does thereby receive said Albert G. Scheele, of St. Louis, Mo., as a member of said association, `upon the consideration aforesaid, and upon the further consideration and upon the condition of the payment of the dues for expenses to be paid on or before the 14th day of February in every year during the continuance of this certificate or policy of insurance, and also upon the further condition of the payment of all mortuary premiums payable at the home office of the association in the city of New York within thirty days from the first week day of February, April, June, August, October, and December of each and every year during the continuance of this certificate or policy of insurance, and subject to all the provisions and requirements and benefits stated on the second page of this certificate or policy of insurance, which are hereby referred to and made a part of this contract. There shall be payable to the Lafayette Bank of St. Louis, Missouri (creditor), as its interests may appear, five-sixths, and to Lizzie Scheele (daughter) one-sixth, of Eureka, county of St. Louis, state of...