Union Central Life Ins. Co. v. Flicker

• Decision Date: 20 February 1939
• Docket Number: No. 8943.,8943.
• Parties: UNION CENTRAL LIFE INS. CO. et al. v. FLICKER et al.
• Court: U.S. Court of Appeals — Ninth Circuit

101 F.2d 857 (1939)

UNION CENTRAL LIFE INS. CO. et al. v. FLICKER et al.^*

No. 8943.

Circuit Court of Appeals, Ninth Circuit.

February 20, 1939.

A. L. Abrahams, of Los Angeles, Cal., for appellant.

William A. Monten, of Los Angeles, Cal., for appellees.

Before GARRECHT, HANEY, and STEPHENS, Circuit Judges.

HANEY, Circuit Judge.

In an interpleader suit filed by an insurer, funds deposited in the registry of the court which became due under a life insurance policy issued to Samuel Rabinovich were decreed to be a part of insured's estate, and the insured's widow has appealed.

On December 29, 1924, The Union Central Life Insurance Company, an Ohio corporation, hereinafter called the insurer, issued the policy in question in the amount of $50,000, numbered 827,108. On July 24, 1926, the insurer issued a second policy to the insured for $25,000, and on August 1, 1928 issued to the insured a third policy for $100,000. Appellant, the insured's wife, was named as the beneficiary in all the policies, but the insured reserved the right to change the beneficiary. At the time insured applied for and received all these policies, he was a resident of and domiciled in the State of New York.

In 1929, appellant and the insured moved to California. On June 8, 1930, the insured assigned absolutely the second policy for $25,000 to his brother, Frank Rabinovich, who was one of the principal shareholders of Ogus, Rabinovich & Ogus, Inc., a New York corporation.

On September 14, 1930, the insured changed the beneficiary in the policy in question, in the amount of $50,000 from appellant to his "estate" and on the following day assigned it "together with all rights reserved to me as the insured under the said policy, or as the owner thereof, or as the beneficiary thereunder * * * and all sum or sums of money, interest, benefit and advantage whatsoever, now due, or hereafter to become due to me by virtue thereof * * *" to Ogus, Rabinovich & Ogus, Inc., hereinafter called the assignee. A duplicate of the assignment was filed with the insurer, and the latter acknowledged receipt of the same to the assignee on September 27, 1930. The policy in question, at the time of the assignment, had no cash surrender value in excess of indebtedness which was a charge thereon.

The evidence conclusively showed that the assignment to the assignee was made pursuant to an agreement between it and the insured, whereby the assignee agreed to keep the policy in force by payment of premiums, and from any proceeds received, retain therefrom the amount of the indebtedness owing by insured to it, including the amount of premiums paid by it, with 6% interest, and pay the balance to appellant. It is not clear whether or not appellees question that such an agreement was made. However all the evidence was to that effect, and none was contrary, and therefore it need not be set out herein.

At the time the foregoing assignment was made there was also in force a fourth policy for $25,000 issued to insured by another insurer, in which appellant was designated as the beneficiary.

On December 19, 1931, appellant was adjudicated a bankrupt on her petition, and sometime during the summer of 1932, she obtained a discharge therein.

On August 16, 1936, the insured died. Continuously since the early part of 1928, the insured had been insolvent. The premiums on the policy in question since the date of the assignment thereof to the assignee had been paid by it.

The amounts due on the second and third policies were paid to the brother who sent $2,000 to appellant. The amount due on the fourth policy was paid to appellant.

Appellant petitioned a California state court to be appointed executrix of the insured's will, alleging in the petition: "That the character and estimated value of the property of said estate, and the probable annual income therefrom, so far as known to your petitioner are as follows: Insurance and Personal Effects, in excess of $10,000.00." Letters testamentary were issued to appellant on October 14, 1936. Thereafter she claimed and received as such executrix a check from the insurer for $30,975.41, the amount due on the policy in question. Subsequently, upon advice of her attorney, she returned the check to the insurer, and on December 21, 1936, brought an action in her individual capacity against the insurer in a state court of California to recover the amount due on the policy in question.

On December 31, 1936, the bill of interpleader was filed by the insurer in the court below, alleging that appellant, individually and as executrix, and the assignee, all claimed the balance due on the policy in question, and that such claims were conflicting. The insurer deposited the balance due on the policy in the sum of $30,975.41 in the registry of the court, and prayed that appellant, individually and as executrix, and the assignee be required to interplead and litigate their claims.

On February 8, 1937, appellant as executrix, filed in the probate proceedings an inventory returning, as the only asset of the estate, the claim on the policy in question, which she stated was "not enforceable and valueless." She thereupon resigned as executrix. Letters of administration c.t.a. were issued to appellees on February 17, 1937, and in this suit they were substituted as a party defendant in the place of appellant as executrix.

The state court action was dismissed.

In the interpleader suit the assignee answered, alleging that the policy in question was assigned to it upon the condition that upon insured's death it would pay the amount received on the policy, after deducting the amount of the indebtedness owing it by the insured to appellant, and that by reason thereof appellant was the owner of, and entitled to receive, the amount deposited in the registry of the court. Appellant filed an answer to the same effect.

Appellees alleged that four claims against the estate of the insured had been approved by them and the probate court, totaling $10,964.66, all of which had been reduced to judgment; that appellant originally was liable on one of the claims which had been reduced to judgment, but that no judgment had been obtained against her because of the bankruptcy discharge; that the net annual premiums on all four insurance policies were $5,100 which "was an unreasonable large sum to pay for insurance by" the insured and that "the payment thereof was in fraud of his creditors"; that the "total sum of $200,000.00 * * * was an unreasonable and excessive protection to" appellant; that payment of premiums on the policies was made while the insured was insolvent; and that appellant knew the amount of insurance carried was unreasonable and excessive, and that the premiums were paid in fraud of the insured's creditors.

Appellees further alleged that the polcy in question was assigned to the assignee upon the understanding that the balance, after payment of the indebtedness owing the assignee by the insured, would be paid to the insured's estate; that the other three policies were assigned to the insured's brother upon a secret agreement that the proceeds thereon, less indebtedness owing the brother by the insured, would by the brother, be paid to appellant and her two children, and by reason thereof the latter "have been more than amply and fully and reasonably protected".

The opinion of the court below discloses consideration of two questions only: (1) did the assignment of the policy in question "work a change of beneficiary"? and (2) was the assignment made to the assignee "as trustee for the wife"? In its opinion the trial court answered both questions in the negative. The court found the facts substantially as related above, there being no conflict in the evidence. It found and concluded that the assignment did not effect a change of beneficiary from the "estate" to appellant, did not assign any portion of the proceeds of the policy to appellant, and further concluded that such assignment did not constitute the assignee a trustee for appellant of any such proceeds. Decree was entered in favor of the appellees, and appellant brought this appeal.

Both parties concede that the law of California prevails and rely on Ruhlin v. New York Life Ins. Co., 304 U.S. 202, 58 S.Ct. 860, 82 L.Ed. 1290, and we will consider the case on that theory. Cf. 79 A. L.R. 809 annotation.

As hereinbefore stated, it is clear that the insured assigned the policy in question to the assignee pursuant to an agreement, that the assignee would pay the premiums thereafter falling due, and from the proceeds received from the policy, deduct the amount of the insured's indebtedness owing it, and deliver the balance to appellant. We think such an agreement would be enforced by the California courts (Legrande v. Legrande, 178 S.C. 230, 182 S.E. 432, 102 A.L.R. 582, annotation; Cal. Civ. Code § 1559; Cal. Ins. Code § 10130, St.1935, p. 638; cf. Silvey v. Hodgdon, 52 Cal. 363), probably on the theory that the assignee held the balance of the proceeds as a trustee for the benefit of appellant. 14 Cal. Jur. 536, § 89. Appellee's argument that since the assignment was made for security, the assignee may retain only an amount sufficient to pay the indebtedness and must deliver the balance to the beneficiary named in the policy, is not pertinent, because the insured and the assignee made a different agreement.

Appellant is therefore entitled to the proceeds of the policy in question (Cal. Ins. Code § 10172, St.1935, p. 639; 6 Couch, Cyc. Ins. Law, 5256, § 1458u; 8 Id. 6426, § 1933), unless the transfer by the insured to the assignee, insofar as it was for the benefit of appellant, was a fraudulent conveyance.

It is provided in Cal. Civ. Code § 3439: "Every transfer of property or charge thereon made, * * * with intent to delay or defraud any creditor or other person of his demands, is void against all creditors of the debtor, and their successors in interest, and against any person upon whom the...