46 Md. 469 | Md. | 1877
delivered the opinion of the Court.
We have had this controversy before us on a former occasion. It was then in the form of an action of trover for the alleged conversion of the policy of insurance, 38 Md., 242. That action resulted adversely to the plaintiff; and immediately upon the decision of that case, the present bill was filed.
In the former case, this Court decided that the assignment of the policy by Dungan and wife to Webb was not a pledge, and that, consequently, they had not at the time of the alleged conversion and suit brought, the interest and title of bailors, so as to enable them to maintain an a'ction of trover for the conversion of the policy. We expressly refrained, however, from intimating any opinion as to the rights and liabilities of the parties in a different form of action or proceeding.
The policy of insurance on the life of Francis D. Dungan was issued by the defendants on the 17th of June, 1861, to and for the benefit of Mrs. Elizabeth W. Dungan, the wife of the said Francis D., for the sum of $5,000 ; and which policy contains an express agreement on the part of the defendants that, in consideration of the representations made in the application, and of the sum of $245 to them paid by the assured, and of the like sum to be annually paid on the particular day mentioned, during the continuance of the policy, they would well and truly pay or cause to be
The note given to Webb was not paid at maturity, and, indeed, has never been paid, and consequently the policy was not redeemed ; and Webb, as assignee, paid the premiums as they fell due in 1863, 1864 and 1865 ; and on the 28th of November, 1865, he surrendered the policy to the company, for which he received its reserve value, amounting at that time to $1,248.51. Mrs. Dungan, the assured, died in August, 1868, and Mr. Dungan, upon whose life the policy was taken, died in April, 1870. Mrs. Dungan died intestate, and letters of administration upon her estate were not obtained by the plaintiff until December, 1871.
The present application proceeds upon the theory that the assignment and receipt or defeasance before cited, when taken together, constitute a mortgage to secure the payment ef the note for $220.25, and that there has been no such foreclosure as to preclude the plaintiff the right to redeem the policy, and, under the peculiar circumstances of the case, to recover the amount of the insurance as if the policy subsisted in full force at the death of Francis D. Dungan ; and, accordingly, the plaintiff not only seeks to redeem the policy, but to recover the amount thereof, less the amount of unpaid premiums and interest, due the company, and the amount of the note with interest due Webb, together with the premiums paid by him while he held the policy as assignee. This claim of the plaintiff is controverted by the defendants in all the aspects in which it has been presented; and there has been considerable evidence adduced to show the circumstances of the transac
We have held in the former case that the assignment ' and the receipt or defeasance are to be taken together as the evidence of the contract between the parties, and the character of that contract is to be determined from the manifest intention of the parties thus evidenced. Any agreement in the assignment, or in the separate instrument, showing that the parties intended the assignment to operate as a security for the repayment of money, is all that is' necessary to make it a mortgage, and such an agreement is plainly apparent on the face of the defeasance before recited ; and when it is once ascertained that the assignment is to be considered and treated as a mortgage, then all the consequences appertaining in equity to a mortgage must be strictly observed, and the right of redemption is regarded as an inseparable incident. Jaques vs. Weeks, 7 Watts, 261. And, as a general proposition, an agreement, at the time of the loan, to purchase or take the estate at a given price, in case of default, is not permitted to interfere with the right of redemption ; the Court looking at the real contract, which is but a security for the debt, treats the time mentioned for redemption as only a formal part of the instrument, and thus makes the general intention override the words of the particular stipulation. Hipwell vs. Knight, 1 Y. & Coll. Ex. Cas., 415, 416. Indeed it may be stated as a rule never to be transgressed, that a mortgagor cannot, by any contract entered into with the mortgagee at the time of the mortgage, give up his right of redemption, or fetter it in any manner by confin
Policies of insurance on life, as well as stocks and personal annuities, are not only assignable but proper subjects of mortgage ; and if accompanied by an actual transfer, the mortgagee may, after default and due notice to the mortgagor to redeem, proceed to sell, without the trouble and delay of bringing a bill to foreclose ; and in such case the title, if the sale be bona fide made, will vest absolutely in the vendee. Dyson vs. Morris, 1 Hare, 413, 425 ; Tucker vs. Wilson, 1 P. Wms., 261; Hart vs. Ten Eyck, 2 John. Ch. R., 100 ; 2 Sto. Eq. Jur., sec. 1031. Rut in case of a mortgage, or assignment of a policy of life insurance as collateral security for a debt, with right of redemption, the assured is not relieved from the obligation to pay the premiums in order to keep the policy alive, according to the requirement of the contract of insurance, unless it be by some arrangement between the company and the mortgagee; nor is the mortgagee bound, in the absence of some agreement with the mortgagor to that effect, to keep the policy alive and subsisting, by the payment of the premiums as they may accrue due. He may be prompted by his interest to keep the security alive and in an available condition ; but if he pays the premiums while he is the holder of the policy, he pays them on the faith of the policy as a security for reimbursement; but such payment in no way changes the nature of the security itself, — that is to say, such payment in no manner destroys the right of redemption.
There seems to he a want of harmony in the authorities as to the real and true nature of the contract of insurance, such as that contained in the policy before us. By some it is maintained, and with great show of reason, that the insured, upon the payment of the first premium, effects an insurance upon the particular life only for one .year, or until the next premium day, and purchases a right to continue that insurance from year to-year, during the life insured, at the same rate, leaving it optional with the assured whether to renew or continue the policy or not, and thus making the payment of the premiums a condition -precedent to any subsequent liability on the part of the > insurers. This view of the subject is strongly maintained hy the Supreme Court of Connecticut, in the recent case of Worthington vs. The Charter Oak Life Ins. Co., 41 Conn., 372. While on the other hand, a majority of the Supreme Court of the United States have held, in the case of The New York Life Ins. Co. vs. Statham, 3 Otto, 24, that j the contract is an entire contract of assurance for life, sub- J ject .to discontinuance and forfeiture for non-payment of any of the stipulated premiums, and thus the payment of | the premiums is made a condition subsequent. But, according to either view of the subject, it is certainly true that
From this view of the requirements of the contract, it is clear that, in order to maintain the position of the plaintiff in this case, it is necessary to show by satisfactory evidence, that the assured, while it is admitted she did not pay the premiums, did that which was equivalent to actual payment; that is to say, that she tendered payment of them as they became due. But in this we think the plaintiff has faijed.
The evidence of the tender of the premiums due the 17th of June, 1863, is not in all respects satisfactory; and it is explicitly denied by Webb, the agent. But, conceding the tender to have been then made to Webb, the defendant’s agent, as contended by- the plaintiff, it becomes immaterial in the present aspect of the case, inasmuch as Webb, as assignee, did, in fact pay the premium, and continued to pay it for the years 1864 and 1865, and thus kept the policy alive, subject to the right of redemption, upon.payment of the mortgage debt, and the premiums advanced for the preservation of the security. It is not pretended that there was any tender of the mortgage debt to Wehh at that time, or at any subsequent time. Indeed, the witness admits that he did not know at the. time that, the. policy.had been, assigned ta Webb,. o,r
After young Dungan’s interview with Wehh in June 1863, there was no further steps taken on the part of the assyired in reference to the policy until September 1865, when, distrusting the representations of Webb as to what hq-d been done with the policy, inquiry was made in regard to the matter at the home office of the defendants. At that time the policy was still alive and subsisting, and would so continue until June 17th, 1866. And theassured was so informed by the officers of the defendants. The correspondence that ensued, and before the policy was surrendered by Webb, between the attorney of the assured and the president of the insurance company, had reference to the claim and demand of Wehh, — the defendants at the time having no interest in the policy other than mere insurers. Mr. Grover, the president, by his letter of the 6th of November 1865, informed Mrs. Dungan’s attorney of the claim of Webb, and the terms upon which he, Webb, was willing to re-transfer the policy. The president did not, in that lettér, profess to he acting in the interest of the company, but only as he was authorized to speak for Wehh as the holder of the policy. It was not until December 12th, 1865, that the president of the'company communicated the fact that the policy had been surrendered by Webb; the surrender having been made on the 28th of November 1865. In all this correspondence and negotiation there was no tender or offer to pay either the amount claimed by Wehh, which was excessive, or the amount actually and fairly due on account of the note, and money advanced for premiums. And it was not until May, 1866, that young Dungan, according to his testimony, went to the office of the defendants in Newark, and
But, notwithstanding we decide that the present bill cannot be sustained for the redemption and collection of the policy, as if in force, we think that, under the facts and circumstances of this case, there is an equity to which the plaintiff is entitled..
Webb holding the policy as mortgagee, held it subject to the right of redemption, provided the right was exercised within a reasonable time. He could only sell the policy after giving due notice to the assured to redeem, and while we think it was perfectly competent for him to surrender the policy to the company either for its reserve or equitable value, as an advantageous mode of sale and foreclosure, yet it was necessary that notice should have been given to redeem before the surrender took place ; and the party purchasing, or the company accepting, the surrender, without such notice, would only acquire the interest .of the mortgagee, and hold subject to the right of redemption, as the mortgagee held before the sale or surrender.
Now, there is no pretence that any notice was given to redeem before the surrender of the policy. On the contrary, Webb seems to have proceeded as if he were the .absolute owner, and in utter disregard of. the right of
It is contended for the defendants that they should in no manner he affected by Webb's misstatements in regard to the policy before its surrender. But we do not assent to this. Whatever Webb may have done that would create a right or an equity in respect to the policy, as against himself, will, under the circumstances of this case, affect the defendants, who claim to hold under him, and by virtue of his supposed right to surrender the policy. But the defendants took the policy with express notice of the adverse claim of the assured. They knew that the matter was in dispute between Webb and the assured; and it would appear that it was with a view of aiding and assisting Webb in his contention that the surrender was effected. Webb states in his testimony that he surrendered the policy in obedience to the desire of the company, and the president of the company admits that he made suggestions to Webb, as to the impropriety or impracticability of con
In view of these facts, we are compelled to say that there is an apparent want of good faith in the matter. The utmost candor and "good faith were required, not less on the part of the company, its officers and agents, than the-assured ; and not only in the inception of the contract, but in alLsubsequent dealings in respect to it. The policy is exceedingly questionable that gives sanction to any such dealing as that here disclosed between the insurance company and its agent. At any rate, in such case, all the intendments should be made against the company, and in favor of the assured, who may have been prejudiced by the conduct of the agent, sanctioned and adopted by the company, as in the present instance.
Upon the whole, we think it but just to declare that the right of redemption continued to exist at the time of the surrender of the policy, and that the surrender should be regarded as having heen made on the joint account of Webb and the assured, according to their respective interests ; that is to say, on account of Webb to the extent of the interest secured hy the assignment of the policy, including premiums paid, and on account of Mrs. Dungan, the assured, for the residue of the reserve value which the ■ defendant agreed to allow Webb.
The defences relied on by the defendants, of the bar of the Statute of Limitations, and lapse of time, we think should not prevail. The Statute of Limitations as a positive har has no application to a case like this ; and as to the lapse of time, the circumstances of the case afford full explanation of that. In a case of this nature, under ordinary circumstances, such length of time as has been allowed to elapse in this case, before bill filed, would show such laches as to preclude relief. The principle of the case of Lockwood vs.
We shall reverse the decree appealed from and remand the cause, that an account may be taken, if necessary, upon the principle that the defendants are to be charged with the reserve value of the policy at the time of its surrender, that is to say, $1248.51, and be credited with the amount due Webb at the time of the surrender on account of the note, and premiums advanced, with interest to that date ; the balance, with interest, to be decreed to the plaintiif, with costs.
Decree reversed, and cause remanded.