Southern Nat. Life Ins. Co. v. Ford's Adm'r

• Decision Date: 10 January 1913
• Citation: Southern Nat. Life Ins. Co. v. Ford's Adm'r, 151 Ky. 476, 152 S. W. 243 (Ky. Ct. App. 1913)
• Parties: SOUTHERN NAT. LIFE INS. CO. v. FORD'S ADM'R et al.
• Court: Kentucky Court of Appeals

152 S.W. 243

151 Ky. 476

SOUTHERN NAT. LIFE INS. CO. v. FORD'S ADM'R et al.

Court of Appeals of Kentucky.

January 10, 1913

Appeal from Circuit Court, Franklin County.

Action by the Fidelity Safety Vault & Trust Company, as administrator and trustee of the estate of Thomas B. Ford, to determine the alleged lien rights of the Southern Life Insurance Company as against property of testator bequeathed to his son, Elliott Ford. Judgment having been rendered in favor of the Insurance Company and Elliott Ford having died after having been declared an insane person, his guardian who was afterward appointed his administrator, answered taking the liens of the Insurance Company, and sought to set aside the judgment. From a judgment establishing Elliott Ford's indebtedness in favor of the Insurance Company but declaring that it should only operate as a claim against Elliott Ford's estate and was not payable out of the trust funds, the Insurance Company appeals. Reversed.

Jno. W Ray, of Louisville, for appellant.

D. W. & Jno. B. Lindsey, of Frankfort, for appellee Fidelity Trust Co. Robt. B. Franklin and Robt. C. Talbott, both of Frankfort, for appellee Ford's Adm'r.

TURNER J.

Thomas B. Ford died a widower and resident of Franklin county in March, 1903. He left as his only child Elliott Ford, a boy then nearly 17 years of age. In September, 1902, he made and published his last will and testament which is as follows, to wit:

Will:

"In the name of God--Amen:

"I, Thomas B. Ford, hereby make and declare this my last will and testament.

"I give to my son Elliott Ford all of my property real and personal, to be held in trust by the Fidelity Safety Vault and Trust Company of Louisville, Kentucky, until he is twenty-five years of age and then he is to have possession and control of same. Said trustee is to superintend his property and see that the interest of my son is protected and that he is properly provided for according to his means.

"He is to aid his Grand Mother and Aunt Rose and see that they have a home while they live; permitting them to occupy the house and lot on Washington Street without rent, with such other members of her family that Mrs. Elliott may desire.

"Witness my hand this 23rd of Sept. 1902.

"Thos. B. Ford.

"Witnesses:

"G. W. Chinn.

"W. H. Watkins."

Codicil: "I give to Miss Rose Elliott my household and kitchen furniture except the piano.

"In my hand-writing Dec. 1, 1902.

"T. B. Ford."

The will was shortly after his death duly probated, and the Trust Company qualified as administrator with the will annexed and as testamentary trustee of Elliott Ford and as guardian for Elliott Ford. In July following the Trust Company in all three capacities filed its action against Elliott Ford and numerous creditors of Thomas B. Ford seeking a settlement of the decedent's estate and asking the advice of the chancellor about matters connected with the administration of the trusts. The chancellor below instructed the trustee by an order to allow the infant Elliott Ford not exceeding $500 per year for his support and education; but it appears that the young man was a wayward, profligate, and extravagant person, and was dissatisfied with this allowance, and undertook to raise money after he became of age by incumbering the real estate which he had taken under his father's will. The appellant Insurance Company, with full knowledge and notice of the fact that the trust estate was being administered by the chancellor, and of the provisions of the decedent's will, and without asking the consent of either the chancellor or the trustee, and without their knowledge, on January 30, 1909, loaned Elliott Ford about $1,500 in money upon the condition that he would take out $5,000 life insurance with it, and pay the premiums thereon for two years in advance, and the interest on the loan for two years in advance, and the further condition that he would buy 50 shares of its stock at $20 per share, and took a mortgage from him for $3,500 upon the trust property. Within five months thereafter, and on May 6, 1909, the Insurance Company again advanced Elliott Ford about $3,000 in money, and sold him 100 shares of its stock at $20 per share upon the condition that he would take out another $10,000 policy, and pay the premiums thereon for two years in advance and took his note for $6,715.17, secured by mortgage on the trust property. Both of these transactions were had after Elliott Ford became 21 years of age; but before he became 25 years of age; and it appears that all this time the stock of the company was not worth exceeding $12.50 per share.

In March following the first transaction Ford sold the first 50 shares of stock paid for by him at $20 per share to one of the attorneys for the company at $12 per share, and within 30 days after the second transaction the local agent of the Insurance Company bought back the 100 shares of stock which Ford had bought at $20 per share for $6 per share. It appears from the evidence of the local agent of the Insurance Company that in the summer of that year he knew Elliott Ford to be in very delicate health, and did not believe that he would live a year, and that through his efforts an agreement was reached between Ford and the company, by which the two life insurance policies were canceled in consideration of repayment by the company to Ford of some part of the premiums paid by him. This was done at a time when the agent knew that Ford was very hard up for money, and when it would be easy to take advantage of his situation. On the 24th of November, 1909 the Fidelity Trust Company, as administrator and trustee, filed a supplemental petition in equity, wherein it made the appellant Southern National Life Insurance Company a defendant, and set up the fact that it claimed a lien upon the trust estate, and called upon it to assert it, and thereafter and on April 27, 1910, the appellant filed its answer and cross-petition, setting up the facts with reference to the mortgages. On the 1st of October, 1910, the court in entering a judgment upon various claims and matters involved in the litigation adjudged, among other things, that Elliott Ford was indebted to the appellant Insurance Company in the sum of $10,215.17, with interest from May 30, 1911, and that the company had a lien upon the trust property to secure the payment of same, subject to the prior lien of the Fidelity Trust Company. At the time this judgment was entered Elliott Ford was ill at the home of his father-in-law in Bourbon county, and had for several weeks theretofore been out of his mind, and unable to attend to any business whatever. It appears that some time in August of that year he was stricken with typhoid fever, and, having had previously a constitutional disease, the two together had affected his mind to such an extent as...