Steinback v. Diepenbrock

• Decision Date: 10 January 1899
• Citation: 52 N.E. 662,158 N.Y. 24
• Parties: STEINBACK v. DIEPENBROCK et al.
• Court: New York Court of Appeals Court of Appeals

158 N.Y. 24

52 N.E. 662

STEINBACK

v.DIEPENBROCK et al.

Court of Appeals of New York.

Jan. 10, 1899.

Appeal from supreme court, appellate division, First department.

Action by Erwin Steinback against Louise Diepenbrock, executrix, and another, to determine the right to the proceeds of a policy. From a judgment of the appellate division (37 N. Y. Supp. 279), affirming a judgment for plaintiff, defendant Diepenbrock appeals. Affirmed.

A. E. Woodruff and William Phlippeau, for appellant.

J. C. Meyers, for respondent.

PARKER, C. J.

The counsel for the appellant, in his argument, insisted with great earnestness and force that the position several times asserted by this court in support of the legality of the assignment of a policy of insurance to a person having no insurable interest in the life of the insured is a mistaken one, and in conflict with the decisions of the United States supreme court and the court of last resort in many of the states. Warnock v. Davis, 104 U. S. 775;Insurance Co. v. Hazzard, 41 Ind. 116;Insurance Co. v. Statuges, 18 Kan. 93;Schonfield v. Turner, 75 Tax. 324, 12 S. W. 626;Basye v. Adams, 81 Ky. 368; and Helmetag's Adm'r v. Miller, 76 Ala. 183,-furnish support for his assertion as to the rule in the United States supreme court and in some of the other states. Supported by these authorities, the counsel challenged the correctness of the rule that concededly has been long acquiesced in in this state by the courts and the profession. Indeed, Mr. Justice Field, in his opinion in Warnock v. Davis, supra, stated the rule in this state to be that a valid assignment of a policy of insurance could be made to a person without interest in the insured. But the appellant contends that, while this may be the rule here, the decisions in other jurisdictions demonstrate that our position is wrong as a matter of sound public policy, and, therefore, the true rule should be laid down, notwithstanding that expressions inducing the belief that the above rule obtained may have been made by our courts. It is urged that this task will not be a difficult one, for the reason, as the appellant contends, that there have been no cases in this state where the question was necessarily up for decision, and, therefore, all that has been said upon that subject by this court is mere dictum.

In St. John v. Insurance Co., 13 N. Y. 31, a recovery in favor of the plaintiff against an insurance company was sustained where it appeared that one Noyes had effected policies of insurance upon his own life and shortly afterwards assigned them to the plaintiff for a valuable consideration. In the answer the defendant alleged, by way of defense, that the plaintiff was entitled to recover only the amount of money that he had advanced as a consideration of the transfer of the policy to him, and that, if defendant was liable beyond such amount upon the policy, the personal representatives were interested in the excess, and, therefore, necessary parties to the suit. And upon the close of the evidence the counsel for the defendant pressed the point that the plaintiff had no insurable interest in the life of the insured, and, therefore, was not entitled to judgment. The court regarded the question as one necessary to be passed upon in the final disposition of the case, and, after considering it, held that the policies in question were valid in their inception, and that the assignment of them to the plaintiff did not affect the liability of the company, and that to entitle the assignee to a recovery it was not necessary for him to have had an insurable interest in the life of the insured. The next case was Valton v. Assurance Co., 20 N. Y. 32, where Schumacher obtained a policy on his life for $10,000, and by his articles of co-partnership agreed that the plaintiff and another partner should become the owners of the policy and all due thereon in the event of his death before the termination of the partnership. This contingency happened, and the court held that it operated to vest absolutely the title to the policy in the plaintiff and his other partner, and a recovery could be had thereon as against the defendants. It will be observed that in the cases cited the contest was between the assignee and the company issuing the policy, and the question was not squarely presented whether, as between the assignor and the assignee, the assignee would be entitled to retain more than the sum actually invested by him, which is the rule in some jurisdictions. But it necessarily was decided that the policy was not rendered invalid by the assignment, and, further, that the assignee acquired thereby the right to enforce collection of the full amount of the policy from the company.

In Olmsted v. Keyes, 85 N. Y. 593, the plaintiff, having obtained the proceeds of a policy of life insurance, brought an action for the purpose of ascertaining and determining the conflicting claims of various defendants to the moneys paid on the policy. It appeared that Keyes procured a policy of insurance on his life, payable to the plaintiff as trustee for his wife Huldah; Huldah died intestate a few years later; afterwards Keyes married again, and thereupon the plaintiff, for value, assigned the policy to Keyes' second wife, at his request. Keyes subsequently died intestate, leaving, him surviving, his widow and one child by her and several children by his first wife. It was held that during the life of the first wife the policy was her property, and upon her death the title vested in her husband as survivor, and, he having caused it to be assigned to his second wife, the assignment vested the title in her, and she alone was entitled to the money due thereon. There was a difference of view in the court as to the disposition of the case, and the argument that led to the decision considered with care the assignability of a policy of life insurance like any other contract. In the course of the argument the court referred to and considered many authorities in England and in this country, and reached the conclusion that, while an insurable interest is necessary to enable one to take out a policy of insurance on the life of another, it is not necessary that the assignee of a policy validly issued should have such an interest. After careful examination of that opinion, we find it impossible to reach any other conclusion than that it was intended to put at rest whatever controversy there may have been in this state touching the assignability of a valid policy of insurance. The case at bar is the only one we know of where the rule laid down in the case last referred to has been seriously questioned, although it is true that some discussion of the principle was had in Wright v. Association, 118 N. Y. 237, 23 N. E. 186, where the defendant unsuccessfully challenged the right of the assignee to recover, on the ground, among others, that the plaintiff had not an insurable interest in the life of the insured at the time of the assignment. The court in its opinion cited the case of Olmsted v. Keyes, supra.

The result of our further examination persuades us that what has been understood to be the rule in this state is not only in line with the authorities in most jurisdictions upon that subject, but is sound as a matter of public policy. It was formerly the rule in England that, while a policy of insurance could not be assigned at law, it could in equity. By the act of 1867 (30-31 Vict. c. 144) a policy of life insurance was made assignable at law, and in some of the decisions it was said by the court that the object of the statute was to enable the assignee to sue in his own name; but it did not in any other way improve the position of the assignee, who could before that secure the money in equity. British Equitable Ins. Co. v. Great...