Whitehead v. New York Life Ins. Co.

• Decision Date: 13 April 1886
• Citation: 6 N.E. 267,102 N.Y. 143
• Parties: WHITEHEAD v. NEW YORK LIFE INS. CO.
• Court: New York Court of Appeals Court of Appeals

102 N.Y. 143

6 N.E. 267

WHITEHEAD

v.NEW YORK LIFE INS. CO.¹

Court of Appeals of New York.

April 13, 1886.

Appeal from judgment of general term supreme court, First department, affirming judgment in favor of plaintiff on all three policies, entered upon a decision at special term.

Wm. B. Hornblower, for appellant.

C. Elliott Minor, for respondent.

FINCH, J.

All three of the life insurance policies sought to be revived and enforced in this action purport on their face to be contracts with the wife as the party assured, and not at all with the husband, who stands in the policies as simply the life insured; his conduct and death furnishing the contingencies upon which the liabilities of the insurer are made to depend. As the relation was tersely described on the argument, the contract is about the husband, but not with him. He, therefore, in procuring the policies to be made, in paying the premiums, in receiving and acting upon notices, and in doing whatever was necessary to perfect and continue the rights of the assured, must stand in the attitude of an agent, acting for and representing the assured, (Baker v. Union Life Ins. Co., 43 N. Y. 283,) and as having no interest in the policies, unless, possibly, after the death of all of the assured. And it makes no difference that they have been kept in total ignorance of the existence of the policies for their benefit until after the death of the insured, for their claim to the fruits of the insurance must necessarily be a ratification of the acts by which it was obtained. The wife, therefore, in this case, had a vested interest in the policies at the moment of their delivery to the insured, by force of the statute which permitted them to be made in their existing form. Laws 1840, c. 80. Prior to that enactment, and at common law, it was open to question whether the wife and children had an insurable interest in the life of the husband and father, (Bliss, Life Ins. § 10; Ruse v. Mutual Life Ins. Co., 23 N. Y. 516,) and if he could protect them save by taking out policies in his own name, and for the benefit of his estate, which in the end would go to them. But this made the insurance liable for his debts, and left it impossible for those who needed assistance most to obtain it at all. Ruppert v. Union Mut. Ins. Co., 7 Rob. (N. Y.) 156.

The statute was intended to and does remedy the difficulty. it expressly authorizes the wife and children to insure the life of the husband and father, and hold the provision without liability for his debts, and the policies here purport to have made exactly that contract. They created a vested interest in the wife, and one also in the children, by force of the clause providing for payment to them if the wife should die before the maturity of the policy. It is true that one of the policies, that in the case marked ‘A,’ uses the word ‘heirs' instead of children, and much of the appellant's argument is founded upon that fact. But the conclusions which we have reached as to Policy A make that difference unessential, and permit us, for the purposes of the discussion, to treat the word ‘heirs' as meaning children, and all the policies as alike in that respect; so that the wife held the insurance for her own benefit, if she survived her husband, and the children, if she died before him. These persons were the assured, with whom, through the husband as agent, the contract was made, and they acquired and held their ownership irrespective of the question whether the policies had been actually delivered to them.

Such actual delivery, as a necessary condition of their interest and ownership, is argued here; and one case in this state is cited as authority for the doctrine. Bickerton v. Jaques, 28 Hun, 119. But the policy in that case was taken out by Jaques, and made payable to his sister, and so was not issued under the act of 1840, and was unaffected by it; the court expressly in its opinion adverting to that fact. The interest and ownership of the wife and children in a statutory policy is further indicated by the law relating to its assignment. The cases which hold that the wife cannot traffic with her policy, by assignment or otherwise, go upon the basis that she is owner, but rest the prohibition upon the character of the property as a provision for orphanage and widowhood; and the statutes permitting an assignment by her, under careful and restrictive provisions, necessarily recognize her interest and ownership as supporting the transfers allowed. The case of Olmsted v. Keyes, 85 N. Y. 593, recognizes this right of the wife to the fullest extent. The whole argument of that case proceeds upon the theory that the assured, when the policy is made payable to her, or, as in that case, to a trustee for her, becomes sole owner, and, but for the statute regulations, could dispose of it as she pleased. Upon her death the ownership of the policy was held to vest in the husband, by the usual marital right over the wife's property, and his interest was founded upon hers. We have seen that in these cases the action of the husband is as agent, and hence a delivery of the policy to him is a delivery to the wife, for whom he acts, and the manual possession of the paper by her cannot be essential to her right.

These policies, therefore, at the moment of their execution, vested in the wife and children as the assured, under the provisions of the statute. Their interest was in the whole contract, and not merely from year to year, and so far only as it was executed. New York Life Ins. Co. v. Statham, 93 U. S. 24. They had the right, if the husband failed to pay the premiums, to pay them themselves, and so continue the policy in force. It is a necessary result of this ownership that the husband cannot, without the assent of the assured, surrender the policy to the company. Stilwell v. Mutual Life Ins. Co., 72 N. Y. 419; Bliss, Ins. § 348; Knickerbocker Life Ins. Co. v. Weitz, 99 Mass. 157;Chapin v. Fellowes, 36 Conn. 132. His act in so doing is not, within the scope of the authority, inferable from his taking out the policy, and is repudiated, instead of ratified, by the claim of the assured founded upon it. It follows that the action cannot be defended upon the ground of such surrender, or through any rights thus obtained. The plaintiffs are entitled to treat that obstacle as removed, and to have possession of their policies, unless barred by some other reason.

Such other reason is alleged to be the forfeiture of the policies through non-payment of annual premiums as they fell due, and these omissions raise the remaining questions in the case. Policy A, in December, 1874, and five months before the attempted surrender, was forfeited by its terms, on account of neglect to pay the annual premium then falling due. The usual notice of its amount, and of the dividend which might be applied upon it, was given to the insured, to whom alone it had been previously sent, and who was certainly the agent of the assured for the purpose of receiving such notice, and paying the premium about to mature. While, at that...