Union Central Life Ins. Co. v. Woods
| Decision Date | 20 April 1894 |
| Docket Number | 1,016 |
| Citation | 37 N.E. 180,11 Ind.App. 335 |
| Parties | UNION CENTRAL LIFE INS. CO. v. WOODS |
| Court | Indiana Appellate Court |
C. L Holstein, C. E. Barrett, G. G. Reiley, W. M. Ramsey, L Maxwell, R. Ramsey and M. R. Waite, for appellant.
M. W. Fields, L. C. Embree and J. W. Ewing, for appellee.
The appellee sued the appellant in the Gibson Circuit Court to recover the proceeds of an insurance policy on the life of her deceased husband, of which policy she was the alleged beneficiary. The venue of the cause was changed to the Knox Circuit Court. The appellant filed an answer in eleven paragraphs, to each of which a demurrer was sustained, and upon appellant's refusal to plead further, judgment was rendered in favor of the appellee for $ 2,994.78. The ruling of the court upon the demurrer is the only error relied upon.
Some of the paragraphs of the answer are in the nature of set-offs, based upon a provision in the policy which permits the appellant to deduct certain indebtedness from the insurance money. The provision just referred to reads as follows:
"In case of the death of the insured prior to the maturity of this policy, the same being in force, the company will pay the amount herein named within sixty days after receipt of notice and satisfactory proof of death, the balance of the year's premium, if any, and all other indebtedness being first deducted."
It is alleged in the paragraphs referred to that at the time of death of the insured, Isaac Woods, he was indebted to the company for borrowed money in an amount equalling that of the insurance, and it is asked that this debt be set off against and deducted from the amount of the insurance designated in the policy.
The policy provides that the company, in consideration of
Whether the appellant was entitled to set off the amount loaned the insured in his lifetime depends upon the terms of the contract and the meaning of the language "all other indebtedness" therein contained.
The facts pleaded show that the loan of $ 2,300 by the company to the insured was not made until some time after the issuing of the policy, and that it was effected partly to enable the insured to pay the premiums and to revive the policy which he had suffered to lapse, when the loan was made, though the greater portion was not for that purpose.
We see no valid reason why an insurance company and an applicant for life insurance may not enter into a binding agreement to the effect that the company will undertake to loan the insured a sum of money as well as to insure his life, and that the money loaned is to be deducted from the proceeds of the policy at the time of the maturity thereof. Such a contract is not in violation of the principle of indemnity upon which insurance is generally based, for the money may be needed for the payment of premiums and other purposes to enable the insured to secure the full benefit of such insurance. Hence, if the contract in suit had provided in terms for a loan of money, and a repayment of the same out of the proceeds of the insurance, we think such a provision would be binding upon all parties, although the policy be written for the sole benefit of the wife. It is true that in ordinary life insurance, where the wife of the insured is the beneficiary, the title of the policy vests in her immediately upon execution and delivery thereof, and no arrangement between the company and the insured affecting the interest of the wife in the insurance money, which is not provided for by the terms of the policy itself, will be binding upon her. Harley, Admr., v. Heist, 86 Ind. 196; Pence, Admr., v. Makepeace, 65 Ind. 345; Bliss Life Ins. (2d ed.), p. 517, section 318.
We think it is otherwise, however, where the policy expressly provides for a restriction or limitation of the wife's interest, or makes it depend upon a future contingency, such as an arrangement for a loan of money from the company to the husband and a repayment of the same out of the proceeds of the policy, when due. Whatever may be considered the true consideration underlying the insurance, the wife can not be said to possess a greater interest in the policy than is given her by the terms thereof. When she acquires the title to the same, upon execution and delivery, she takes such title burdened with all its conditions and limitations. She can receive no more insurance, in other words, than the insured has contracted for in her behalf. If the insured has, therefore, stipulated for a loan to himself, to be paid out of the insurance money when it becomes due, by an acceptance of the policy she assents to the deduction of such loan from such proceeds, and she can not afterwards be heard to deny the company's right to make such deduction.
It is not claimed, however, in the present case, that the policy in terms provides for a loan of money to the insured and the repayment of the same out of the insurance money, nor is there, in point of fact, such a stipulation. What the appellant does contend is that the provision in the policy permitting the company to deduct from the amount of the insurance money the balance of the year's premiums, "and all other indebtedness," is broad enough to confer upon the company the right to make such a loan to the insured and secure itself by withholding an equal amount from the proceeds of the policy at maturity.
It must be conceded, we think, that if the policy was one the ownership of which was and remained in the insured to the time of his death, he was at liberty to use and dispose of the same in any manner that seemed proper to him. He could pledge it as security for his individual debts, and could in various ways incumber or divest his interest therein at pleasure. He could contract with the company for a loan of money, and would have the right to assign the policy to the company to secure the loan. But even if he did not make such an assignment, we are inclined to the view that if the policy was legally his property, or the title was such that he could pledge or assign the policy, he could contract for any legitimate indebtedness to the company subsequently to the execution of the policy, and that the provision to deduct "all other indebtedness" would entitle such company to deduct such loan from the insurance, as in that case it is easily seen that the parties could be held to have contemplated just such an arrangement, and thus provided for it in the contract of insurance.
The policy contains the statement that it is written "for the benefit of the insured, if living at the maturity" thereof. The word maturity here obviously refers to the maturing of the policy during the lifetime of the insured. It provides that if the premiums are paid during the term of fifteen years, and other conditions complied with, and the insured is then living, the insurance shall be paid to Isaac Woods. If, however, the latter should die during the fifteen years, such insurance was to become payable to Mary E. Woods, his wife, if living, otherwise to the executors, administrators or assigns of the insured.
It is insisted on behalf of the appellant that the policy was one of endowment. Anderson's Law Dic., p. 401. Endowment insurance provides for the payment of the sum insured to the person insured if he live to a certain time, or, if he die before that time, to some other person nominated in the policy. Bliss on Life Ins., 2 ed., p. 6, section 6.
Such a policy is in many of its characteristics, respecting the rights of the parties under it, different from an ordinary life policy procured by a husband for the sole benefit of his wife. In a policy of the kind last mentioned the wife acquires the absolute title upon its execution, and she becomes its owner the same as if it were a note or other chose in action payable to her, and hence no act of her husband or the insurance company, without her concurrence or assent, can deprive her of such title to or interest in the policy, if its conditions have been complied with; while if the policy be one of endowment, payable to the husband, if living at the end of the endowment period, or to the wife, if the insured should die during such period, and she be then living, the title to the policy does not vest absolutely in the wife upon the execution of the policy, nor, indeed, until the husband's death, during such period, and the husband retains at least a qualified interest in and title to the policy during his lifetime.
Assuming that the policy in suit is one of endowment, payable to the husband if living at its maturity, and to the wife in case of his death during the period of endowment, the question arises: In whom was the title to the policy at the time of its execution and delivery? The appellant's position is that in such a case the wife acquires no interest in the policy...
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Union Cent. Life Ins. Co. v. Woods
... 11 Ind.App. 335 37 N.E. 180 UNION CENT. LIFE INS. CO. v. WOODS. 1 Appellate Court of Indiana. April 20, 1894 ... Appeal from circuit court, Knox county; G. W. Shaw, Judge. Action by Mary E. Woods against the Union Central Life Insurance Company on a policy. Judgment for plaintiff. Defendant appeals. Affirmed. Holstein & Barrett, for appellant. M. W. Fields, L. C. Embree, and J. W. Ewing, for appellee. REINHARD, J. The appellee sued the appellant in the Gibson circuit court to recover the proceeds for an insurance ... ...