Watts v. Gibson, 12377.

• Decision Date: 15 November 1930
• Docket Number: No. 12377.,12377.
• Citation: 33 S.W.2d 777
• Parties: WATTS v. GIBSON.
• Court: Texas Court of Appeals

33 S.W.2d 777

WATTS v. GIBSON.

No. 12377.

Court of Civil Appeals of Texas. Fort Worth.

November 15, 1930.

Error from District Court, Wise County; J. F. Carter, Judge.

Action by Oscar W. Watts against E. P. Gibson, in which defendant pleaded certain offsets and counterclaims. There was a judgment for defendant, and plaintiff brings error.

Reformed and affirmed.

John L. Poulter, of Fort Worth, for plaintiff in error.

C. T. Gettys, of Decatur, for defendant in error.

DUNKLIN, J.

Four life insurance policies were issued on the life of Mrs. Lucinda Watts, each of which named her son, Oscar W. Watts, as the sole beneficiary. The beneficiary paid the insurance premiums on all of those policies up to April 30, 1924—a period of about fifteen years—at which time he found that he was unable to pay further premiums, and in order to avoid a lapse of the policies and a loss of all benefits thereunder, he proposed to E. P. Gibson to convey to him a one-half interest in all the benefits to be derived from those policies upon the death of his mother if Gibson would assume and pay all premiums thereafter accruing on those policies up to the date of the death of Mrs. Lucinda Watts. Mrs. Lucinda Watts also gave her consent for her son to make that contract, and thereafter a contract in writing was executed by Oscar W. Watts and E. P. Gibson, by the terms of which Gibson obligated and bound himself to pay all future premiums and dues on the four policies, and in consideration therefor Watts agreed to and did sell and convey to Gibson a one-half interest in all of those policies, and further agreed that on the death of his mother he would make all necessary proofs of her death and deliver to Gibson one-half of the proceeds collected on the policies. That agreement was executed by both parties on April 30, 1924. Thereafter, Gibson proceeded to pay the premiums on the policies as they fell due and kept up those payments without default until the death of Mrs. Lucinda Watts, which occurred on May 18, 1927. The payments so made by Gibson aggregated $759.55. After the death of Mrs. Lucinda Watts, proof of her death was duly furnished the respective companies in accordance with the agreement of Oscar W. Watts, and there was collected on the four policies the aggregate of $2968.25. On one of the policies the sum of $917 was paid to Gibson with the consent of Oscar W. Watts. The amounts collected on the other three policies were in each instance paid by check or draft to the order of Oscar W. Watts, and he indorsed the same over to Gibson, who collected the same.

E. P. Gibson was not related to Mrs. Lucinda Watts either by blood or by marriage.

This suit was instituted by Oscar W. Watts against E. P. Gibson, and in his petition the facts above set out were alleged. Plaintiff further alleged that defendant had no insurable interest in the life of the deceased, in that he was not related to her in any manner, and therefore the contract made between the parties evidencing a transfer by plaintiff to defendant of a one-half interest in the policies was illegal and void; that the money paid by defendant for premiums on the policies, to wit, $759.55, was advanced as a loan; that the defendant had collected and appropriated all the proceeds of the policies; that he was entitled to reimburse himself for the amount he had advanced to pay the premiums on the policies, and was also entitled to a further credit of $516.50 which he had paid to the plaintiff out of the proceeds; and that all over and above those two credits constituted usurious interest for the alleged loan, and plaintiff sought a recovery of such excess, together with a statutory penalty for usurious interest, aggregating the sum of $3,970.89.

Following a plea of general demurrer and general denial, the defendant pleaded specially the written contract between the parties noted above, the payment of premiums by the defendant in good faith and in reliance upon said contract, with the further allegation that after the policies were collected the plaintiff transferred to defendant one-half of the proceeds and thereby vested in defendant title and right thereto, all in pursuance of and for the purpose of carrying out his said written agreement theretofore made.

The defendant further pleaded the payment of premiums on the policies in the sum of $759.55, and the payment to the plaintiff of $515.56.

There was a further plea of certain offsets and counterclaims as against the plaintiff's demand, which will hereinafter be referred to and which the defendant sought to have allowed in reduction of any amount the plaintiff might otherwise show himself entitled to recover.

Plaintiff filed a supplemental petition in reply to defendant's answer, in which he specially pleaded that the insurance policies in question were all issued by fraternal benefit associations, and therefore the proceeds thereof were exempt and not subject to the offsets claimed by defendant under and by virtue of article 4847, Rev. Civ. Statutes. One of the offsets so pleaded by defendant was a promissory note purported to be executed by plaintiff, payable to the order of the First National Bank of Decatur, and which the defendant alleged he had acquired as assignee for a valuable consideration paid. As to that item plaintiff specially pleaded non est factum, and he also invoked the statute of limitation of four years as against it. The plea of non est factum was not verified, and therefore that defense need not be further noticed. Thomason v. Berry, 276 S. W. 185, by the Commission of Appeals.

A jury was impaneled to try the case, but when the evidence was concluded the court dismissed the jury and proceeded to determine the issues of fact as well as of law without its aid.

The findings of fact and conclusions of law by the trial court are in the record, and based thereon judgment was rendered denying plaintiff any recovery, from which judgment he has prosecuted this appeal by writ of error.

The following is taken from the findings of fact:

"That at the time the proceeds of said insurance was received plaintiff agreed with defendant that said proceeds should be divided equally between himself and defendant pursuant to and in accordance with the contract of date April 30th, 1924, above set out, and voluntarily placed all such funds in the hands and possession of said Gibson with the understanding and agreement that one-half of same belonged to said Gibson, and with the further understanding and agreement that there should be paid out of plaintiff's part a note for $239.50 and interest thereon held by defendant."

The testimony of plaintiff himself was ample to support that finding by the trial court. His testimony was also corroborated by that of defendant, and there was no testimony to the contrary.

Even though it be said that the contract originally made between the parties stipulating that defendant should have one-half the proceeds of the policies when collected in consideration of his payment of all the premiums accruing after the date of the contract was voidable as against public policy, within the purview of such authorities as Cawthon v. Perry, 76 Tex. 383, 13 S. W. 268; Lewy v. Gilliard, 76 Tex. 400, 13 S. W. 304; Goldbaum v. Blum, 79 Tex. 638, 15 S. W. 564, still defendant having complied with his obligations under that contract and the policies having been saved from total loss and later collected, raised at least a moral obligation on the part of plaintiff to abide by the same, and that moral obligation was a sufficient consideration to support the later assignment of one-half of the proceeds to the defendant after the same had been collected. Indeed, appellant has presented no contention to the contrary. And the assignment to defendant of a one-half interest in the proceeds of the policies after collection being legal and binding, the same constituted a waiver of any right of plaintiff to claim that the original written contract between him and defendant was void as against public policy. Colburn v. Coburn (Tex. Civ. App.) 211 S. W. 248; Floyd v. Patterson, 72 Tex. 202, 10 S. W. 526, 13 Am. St. Rep. 787; 6 R. C. L. p. 821, § 217.

But the waiver just referred to above was not a waiver of plaintiff's right to claim the statutory exemption given by article 4847, of half of the proceeds of the policies as against the items of set-off pleaded by the defendant and allowed by the trial judge. The burden was upon plaintiff to prove facts necessary to show that the remaining half of the funds, after defendant's half had been deducted from the whole, was exempt under the statute from subjection to the payment of those offsets, all of which were shown to be just and lawful claims owing by plaintiff and of which defendant is the lawful owner and holder.

Article 4820 reads:

"Any corporation, society, order or voluntary association, without capital stock, organized and carried on solely for the mutual benefit of its members and their beneficiaries, and not for profit, and having a lodge system with ritualistic form of work and representative form of government, and which shall make provision for the payment of benefits in accordance with Article 4824 is hereby declared to be a fraternal benefit society."

Article 4847, in the same chapter of the statutes and which is invoked by plaintiff, is as follows:

"No money or other benefit, charity or relief or aid to be paid, provided or rendered by any such society shall be liable to attachment, garnishment, or other process, or be seized, taken or appropriated or applied by any legal or equitable process or operation of law to pay any debt or liability of a member or beneficiary or any other person who may have a right thereunder, either before or after payment."

Plaintiff offered in evidence two certificates, as follows:

"I, R. B. Cousins, Jr., Chairman of the Board and Commissioner of Life Insurance of the State of Texas do hereby certify that the...