Sigal v. Hartford Nat. Bank & Trust Co.

• Decision Date: 05 March 1935
• Parties: SIGAL v. HARTFORD NAT. BANK & TRUST CO.
• Court: Connecticut Supreme Court

177 A. 742

119 Conn. 570

SIGAL v. HARTFORD NAT. BANK & TRUST CO.

Supreme Court of Errors of Connecticut.

March 5, 1935

Appeal from Superior Court, Hartford County; Edwin C. Dickenson Judge.

Action by Lillian M. Sigal against the Hartford National Bank &amp Trust Company for a declaration of the invalidity of a purported trust agreement pertaining to insurance policies and for other relief. A demurrer to the complaint was sustained, and judgment was rendered for defendant in the superior court on plaintiff's failure to plead further and plaintiff appeals.

No error.

Argued before MALTBIE, C.J., and HAINES, BANKS, AVERY, and JENNINGS, JJ.

Josiah H. Peck, of Hartford (I. Oscar Levine and Louis H. Katz, both of Hartford, on the brief), for appellant.

Francis W. Cole, of Hartford (Pomeroy Day, of Hartford, on the brief), for appellee.

MALTBIE, Chief Justice.

The complaint states the following situation: Nathan Sigal took out three life insurance policies in different companies, in each of which it was agreed that the insurer " would pay to the plaintiff," his wife, at his death a certain sum. Thereafter Sigal entered into a purported trust agreement with the defendant, a copy of which is made an exhibit attached to the complaint. This agreement, so far as it is necessary to refer to it for our present purposes, provided that the defendant as trustee should collect the sums due upon the policies, if Sigal did not sell or surrender them, change the beneficiary named in them, or revoke the agreement in whole or in part, should hold and invest the money, should make payments from the income to Sigal's mother and sister, should pay to, or use for the benefit of, the plaintiff or their children the rest of the income, with power to use also a portion of the principal for them, and ultimately should pay the principal of the fund, at the times fixed for such distribution, to their children living and the representatives of any child who should then be deceased.

This agreement the plaintiff claimed to be void because it was testamentary in character and not executed in accordance with the requirements of the statutes concerning the execution of wills (Gen. St. 1930, § 4876). Sigal notified each company that the beneficiary in the policy issued by it had been changed from the plaintiff to the defendant as trustee. The change in beneficiary was also alleged to be void because of the invalidity of the purported trust agreement. Thereafter the defendant collected the sum due on each policy. The money is alleged to be the property of the plaintiff, but, despite demand made, the defendant has refused to pay it to her. The prayers for relief were for money damages and for a judgment declaring that the purported trust agreement and the changes in beneficiary were invalid and that the proceeds of the policies in the hands of the defendant were the property of the plaintiff. The defendant demurred to the complaint upon five grounds; the first four of which were to the effect that the trust agreement was not testamentary in character and was valid and effectual, and the fifth to the effect that the plaintiff had no right of action in any event, because the change under which the defendant as trustee was substituted in each policy as beneficiary terminated her rights under the policy. The trial court sustained the demurrer upon the first four grounds and found it unnecessary to consider the fifth.

We have hesitated to determine this case in the absence of certain interested parties. The action is essentially one, not to recover damages for a wrong done by the defendant to the plaintiff, but one to enforce the plaintiff's right to a fund in the hands of the defendant. In the disposition of this fund others than the parties to this action have a direct interest; thus Sigal's mother and sister and the children of the plaintiff and Sigal have rights which would be adversely affected if the contention of the plaintiff is correct and it is possible that, should the agreement be held invalid but the change of beneficiary be held valid, Sigal's estate might under the terms of the policy have an interest in a trust which might result under such circumstances. But the question at issue has been ably and thoroughly presented to us; in our opinion the agreement is clearly valid; a decision to this effect will give the persons who are mentioned in it all they could claim; and any right of the estate would depend upon facts not appearing upon the present record and which may or may not exist. We shall therefore decide the case, even though, of course, our decision would not be conclusive upon the rights of persons not parties to the action. Rockwell v. Bradshaw, 67 Conn. 8, 15, 34 A. 758; Barnes v. Kelly, 71 Conn. 220, 222, 41 A. 772; White v. Smith, 87 Conn. 663, 667, 89 A. 272, L.R.A. 1917D, 596; Bartram v. Powell, 88 Conn. 86, 92, 89 A. 885.

A life insurance policy is a contract to pay a sum of money upon the death of the insured, in consideration of a payment or payments duly made during his life. Allen v. Hartford Life Ins. Co., 72 Conn. 693, 695, 45 A. 955; Reed v Provident Savings Life Assur. Soc., 190 N.Y. 111, 118, 82 N.E. 734; Keckley v. Coshocton Glass Co., 86 Ohio St. 213, 225, 99 N.E. 299, Ann.Cas. 1913D, 607. Such a policy may contain provisions for its surrender for cash, and the insured may often borrow money upon it; so under some circumstances he may create in another a right to receive the proceeds of the policy, and this he may do for a consideration accruing to him as well as by way of gift. Allen v. Hartford Life Ins. Co., 72 Conn. 693, 45 A. 955; Colburn's Appeal, 74 Conn. 463, 51 A. 139, 92 Am.St.Rep. 231. In these, and perhaps other ways, an insured may realize money for himself upon the policy. So, because of a right which he may have to realize upon policies which are made payable to himself, his estate, or his personal representatives, or in which he has reserved the right to change the beneficiary, the value of such policies may during his life be treated as an asset of his estate. See 3 Remington, Bankruptcy, §§ 1248, 1250; Cohen v. Samuels, 245 U.S. 50, 38 S.Ct. 36, 62 L.Ed. 143. But where the policy is made payable to some person as named beneficiary and the insured dies while the designation of that beneficiary is still in effect, whatever amount is due at his death is payable to that person and forms no part of the estate of the insured. Mullen v. Reed, 64 Conn. 240, 250, 29 A. 478, 24 L.R.A. 664, 42 Am.St.Rep. 174; Shepard & Co. v. New York Life Ins. Co., 87 Conn. 500, 504, 89 A. 186; Farmers' Loan & Trust Co. v. McCarty, 100 Conn. 367, 372, 124 A. 40; Gurnett v. Mutual Life Ins. Co., 356 Ill. 612, 619, 191 N.E. 250. In such a situation the sum due upon his death is not the property of the insured. " ‘ A will is the legal declaration of intention as to the disposition of one's property after death. To this intention, made known through the written declaration, the law gives effect, and so executes the testator's will.’ Jacobs v. Button, 79 Conn. 360, 362, 65 A. 150,...