Strode v. Meyer Bros. Drug Co.

• Decision Date: 14 April 1903
• Citation: 101 Mo. App. 627,74 S.W. 379
• Parties: STRODE v. MEYER BROS. DRUG CO.
• Court: Missouri Court of Appeals

74 S.W. 379

101 Mo. App. 627.

STRODE v. MEYER BROS. DRUG CO.

Court of Appeals at St. Louis, Missouri.

April 14, 1903.

LIFE INSURANCE — CREDITOR AS BENEFICIARY —CONTRACT WITH DEBTOR—EVIDENCE —INSURABLE INTEREST—VALIDITY OF POLICY —TRUST AS TO EXCESS.

1. Evidence, in a suit by an administrator against decedent's creditor to compel an accounting of the proceeds of a life insurance policy, examined, and held to show that the policy was taken out by the decedent to secure the creditor, and not by the creditor in its own right.

2. In a suit by an administrator against decedent's creditor to compel an accounting of the proceeds of life insurance, the testimony of the creditor's treasurer as to what an insurance agent had reported to him the decedent said relative to the insurance is hearsay.

3. The insurable interest which a creditor has in his debtor's life extends only to such amount as will satisfy the indebtedness.

4. The fact that a creditor has insured his debtor's life, with the latter's consent, in excess of the indebtedness, does not make the policy void as a wager contract; but the creditor is bound to account to the debtor's estate as trustee for the excess.

Appeal from St. Louis Circuit Court; Daniel D. Fisher, Judge.

Action by Garrard Strode, public administrator of John Stokes, deceased, against the Meyer Bros. Drug Company. Judgment for plaintiff, and defendant appeals. Affirmed.

McKeighan & Watts, for appellant. Johnson, Houts, Marlatt & Hawes, for respondent.

Statement of Facts and Opinion.

GOODE, J.

In the year 1885 John M. Stokes, now deceased, was a member of the firm of Jones & Stokes, which was engaged in the drug business at Sumner, Ill. At that time said firm owed Meyer Bros. Drug Company $111, or thereabouts, for merchandise. October 12, 1897, Stokes made a written application to the Fidelity Mutual Life Insurance Company, of Philadelphia, for a policy of insurance in the sum of $5,000 on his life, and a policy was issued by said insurance company in November of that year, by which $50 were to be paid to Stokes' administrator or executor at his death, and the remainder of the proceeds to the Meyer Bros. Drug Company. The provision of the policy in regard to the payment of its proceeds conformed to a direction contained in Stokes, application, which reads as follows: "For whose benefit is the insurance? J. M. Stokes, $50; the balance to Meyer Bros. Drug Company, creditor, or their legal representatives—i. e., $4,950." The application likewise stated that the money to keep the policy in force would be furnished by the Meyer Bros. Drug Company. Both the policy and the application are attached as exhibits to the agreed statement of facts, which statement need not be reproduced in full, because many of the facts agreed to are unimportant on this appeal. At the time Stokes took out the insurance he was 35 years of age, and his expectancy of life was 31 years. The annual premium was $94.80, and the premiums were paid by the drug company until Stokes' death, which happened February 10, 1900. Thereafter the insurance company paid $4,950 to the Meyer Bros. Drug Company, which kept the entire amount, refusing to pay any of it to the respondent, Strode, who is the administrator of Stokes' estate. This suit was brought to compel an accounting by the appellant; the contention of the respondent being that appellant is only entitled to retain of the insurance money enough to pay what Stokes owed and the money expended in keeping the policy alive, with interest on those items.

The agreed statement of facts contains an admission that the defendant acted in good faith in respect to the application for and issuance of the policy. Attached to the statement as an exhibit is the account appellant held against Jones & Stokes, which, as copied from appellant's ledger, is as follows:

                                                 Jones & Stokes, Sumner, Ill
                 1885.                                             1886
                Nov. 9. To Mdse., 60 days .............. $22 15   Jan. 26. By cash ...... $10 00
                Dec. 24.     "   ..............           16 00
                   "    To Notes, 15 days ..............  40 00
                   "         "    30 days ..............  42 85
                   1900
                July 19. Interest from date, 8% ........  56 50
                Feb. 4, 1897. This account secured by insurance
                policy on life of Stokes
                Settled by payment of life insurance policy, 7-19-1900
                

The premiums paid by the drug company amounted to $299.40.

A letter written by Stokes to the appellant, December 7, 1897, was put in evidence, in which Stokes inquired why he was not released from the notes mentioned in the account, as he had fulfilled his part of the agreement in reference to the insurance. To this the drug company replied, December 13th, that it had not yet received the policy, but, when it was received, a letter would be sent to Stokes releasing him from further prosecution on appellant's claim. Another letter, written by Stokes, and the reply to it, are as follows:

                              "Sumner, Ill., Jan. 9, 1898.
                

"Meyer Brothers Drug Co., St. Louis, Mo. —Gentlemen: Please inform me as to my insurance policy taken out at West Salem, Ill., in '97, payable to you and my wife, of the Jones & Stokes account. I am anxious to know if you still hold the policy and I pass ex.

                  "Resp.,              J. M. Stokes, M. D."
                                         "January 13, 1899.
                

"Mr. J. M. Stokes, Sumner, Ill.—Dear Sir: We beg to advise that we still hold a policy on your life, which is in full force, and which is in the Fidelity Mutual Life Ass'n, of Philadelphia. You passed the examination very well.

                   "Yours truly,       Meyer Bros. Drug Co.,
                                       "By T. G. Meyer."
                

The agreed statement reserved the right to the appellant to introduce explanatory evidence as to Jones & Stokes' account; also evidence to show at whose instance the insurance was applied for by Stokes.

It will be observed that on the account against Jones & Stokes is a notation, of date February 4, 1897, that the account was secured by an insurance policy on the life of Stokes, and also another notation, dated July 19, 1900, that the account had been settled by the payment of the life insurance policy. In explanation of those notations the Meyer Bros. Drug Company elicited testimony from its treasurer and one of its officials (Geo. T. Meyer), who had charge of its insurance policies, that he made the first notation under a misapprehension in regard to the ownership...