"5: On or about June 2, 1924, Karl M. Smith and the defendant, Hugo W. Schoellkopf, formed a partnership to engage in the business of purchasing and selling paper, paper bags, rope and twine, to be conducted under the name of Karl M. Smith Cordage Company, with headquarters at Dallas.
"6: The said Karl M. Smith had had previous experience in such business, and became the active manager of the business, but was a man of no means or financial responsibility. The said Smith furnished no capital to the business; the defendant Schoellkopf furnished only a nominal sum, but it was contemplated that the partnership would, and it did, operate on funds borrowed from Dallas banks, and the loans were made and credit was extended to the firm on the financial responsibility and personal liability of the said defendant, Schoellkopf.
"7: During the negotiations for, and as a part of, the formation of the partnership, the partners, Smith and Schoellkopf, mutually agreed that the policy involved in this suit should be, and it was, procured for the full and complete protection of the defendant Schoellkopf in all matters relating to the partnership, including a protection pro tanto for the defendant Schoellkopf against loss in consequence of the undertaking, and against any liability to him on the part of Karl M. Smith growing out of the partnership.
"8: Pursuant to the said agreement, the policy was procured, and immediately delivered by the said Karl M. Smith to the defendant Schoellkopf, in whose continuous possession the policy has been ever since and by whom it was produced at the trial.
"9: All premiums falling due on the policy prior to June, 1928, were paid out of the partnership funds. The quarterly premium of $28.39 due June 28, 1929, was not paid in cash, but for and on account of the said premium the said Smith gave the plaintiff a premium lien on the policy for $28.39. No subsequent premium was paid, the policy lapsing for the non-payment of the quarterly premium due September 28, 1929. The plaintiff used the cash value of the policy, first, to pay the premium lien, and then to purchase extended insurance which lasted beyond the date of the death of the said Smith.
"10: By December 17, 1927, the partnership had become insolvent, and on that date the partners executed a written agreement for dissolution of the partnership, in the execution of which the defendant Jennie Smith joined. Such agreement was in words and figures substantially as follows:
"`Whereas, on or about June 2, 1924, Hugo W. Schoellkopf and Karl M. Smith formed
a partnership to engage in the purchase and sale of paper, paper bags, rope and twine, in Texas and Oklahoma, to have headquarters at Dallas, and to be conducted under the name of Karl M. Smith Cordage Company; and
"`Whereas, such partnership has continued until this date; and
"`Whereas such partnership is insolvent, —that is to say, it is indebted in a sum in excess of its assets, and
"`Whereas, Hugo W. Schoellkopf is financially solvent and desires to terminate the partnership and to take possession of and liquidate all of the assets of the partnership and apply them, so far as possible, to the discharge of the liability of the partnership.
"`Now, therefore, this instrument witnesseth the agreement of Karl M. Smith and Hugo W. Schoellkopf, as follows:
"`1: The partnership heretofore existing between Karl M. Smith and Hugo W. Schoellkopf, is hereby terminated.
"`2: All assets and records of the partnership are hereby assigned, transferred and delivered to Hugo W. Schoellkopf, for administration, conversion into money and application to the debts of the partnership, as aforesaid. Each partner, however, shall continue liable to creditors, as at present, and to each other, for his share of all indebtedness.
"`3: All authority of Karl M. Smith and of his wife, Mrs. J. G. Smith, and of all employees or other representatives of the business, to act in anywise or to any extent for Hugo W. Schoellkopf or for the partnership, or with reference to any asset or liability of the partnership, is hereby terminated.
"`4: Complete and sole authority shall be possessed by the said Hugo W. Schoellkopf to administer, collect, liquidate, sell, dispose of, exchange or otherwise convert into cash, all of the assets of the partnership.
"`Witness the signatures of the parties, this December 17, 1927.
"`[Signed] Karl M. Smith
"`[Signed] Hugo W. Schoellkopf
"`[Signed] J. G. Smith.'
"11: Pursuant to the said agreement for dissolution, the defendant Schoellkopf completely liquidated the partnership business. He reduced all of the partnership assets to cash, and applied such cash, as far as it would go, toward the satisfaction of the partnership obligations, but such obligations exceeded the proceeds of said assets by the sum of $53,400. In carrying on such liquidation, the defendant Schoellkopf had to use, and did use, to pay off obligations of the partnership to a local bank and other creditors of the firm, $57,000. of his own personal funds, and he received repayment of the same from the proceeds of the partnership assets only to the extent of $3,600. The said sum of $53,400. represented and was the amount of the net loss of the partnership undertaking, which loss was borne wholly by the defendant Schoellkopf. Neither the partnership nor the defendant Schoellkopf owed the said Smith anything.
"12: The said Smith's share of the said loss was one-fourth thereof, or the sum of $13,350. which sum, in the settlement of accounts between the partners, the said Smith owed the defendant Schoellkopf. The said Smith never paid, and no one for him has ever paid, to the partnership, the said Schoellkopf, or anyone else, any share of the partnership indebtedness, or any share of the said loss, or any share of the said Smith's indebtedness, in the settlement of accounts as between the partners, in the sum of $13,350, save that since the death of the said Smith the defendant Schoellkopf has collected on another policy on the life of the said Smith, payable to the said Schoellkopf, a sum less than $4,600.
"13. In August, 1928, the said Karl M. Smith made known to the plaintiff that he desired to change the beneficiary of said policy to his wife, the defendant Jennie Smith, sometimes known as Janet Goulding Smith, and procured from the plaintiff its regular printed form for use in designating a new beneficiary, known as Change of Beneficiary form. On August 15, 1928, the said Smith executed such form, and forwarded it to the plaintiff. The policy however, was not sent therewith to the plaintiff, but the said Smith requested the plaintiff to issue a copy or duplicate policy and to endorse thereon the change of beneficiary as designated by him. The change of beneficiary form so executed was in words and figures as follows:
"`Note: Policy must be sent with this to the home office of the company. Change of beneficiary is not effective until endorsed on the policy by the company.
"Change of Beneficiary"
