194 Iowa 71 | Iowa | 1919
Lead Opinion
The plaintiff’s claim is that her husband, Charles, died seized and possessed of an interest in certain property now in the possession of and held by these defendants; that they refuse to recognize her right to a distributive share therein, and claim to own the same, as against the right asserted by her.
The original purpose of the action was to have ascertained and set aside to her, as the surviving widow of Charles, her distributive share in so much of the property as her husband died seized or possessed of. She claims that he died seized and possessed of an interest in the property now in the hands of these defendants, or some of them.
Here the issues are narrowed to the ascertainment of whether or not plaintiff’s husband, Charles, died seized or possessed of any interest in the property held by these defendants, or some of them. If it be determined that he had an interest in the property at the time he died, then she is entitled to a distributive share therein, and her claim' must be recognized and enforced; but the amount of her interest is not the subject of investigation at this time; for, by agreement of parties, this is left for future consideration and determination by the nisi prius court. The determination of the question here involves only the proper construction of the three writings on which defendants rely to defeat her claim, to which specific reference will be made hereafter.
It appears that, up to and at the time Charles died, Fleming Brothers, including the deceased, Charles, owned quite a large estate, consisting of both real and personal property. The question to be determined is whether this property was owned by these four brothers as joint tenants, with a right of survivor-ship, or whether it was owned by them as partners. It is the claim of the defendants- that all the property in controversy, prior to and at the time of Charles’s death, was held by these
Charles Fleming, the deceased, was married to the plaintiff on the 2d day of January, 1880, and died in Polk County, January 15, 1916.
The first instrument on'which the defendants rely to cut off this widow from a right to share in the accumulations of all these years of her husband’s faithful service and toilsome labor, represented by the property in question, was made on the 14th day of December, 1896, and at a time when but a small portion of the accumulated fortune which is the subject of tfiis litigation had come into existence. It reads as follows:
“Know all men by these presents, that we, Kobert J. Fleming, Charles Fleming, John A. Fleming, and Stanhope Fleming, of the city of Des Moines, state of Iowa, in order to provide for the future uninterrupted prosecution of the business of life insurance in which we are now or may be hereafter engaged and mutually associated, and to fix and determine the interests of each therein, hereby mutually agree, and bind ourselves, our heirs, executors, administrators or survivors and all other persons, that, each of the parties to this stipulation and agreement, shall have only such share of, and interest in the profits, earnings and income of the business of life insurance in which we are or shall be jointly engaged, as shall be actually received by each or paid upon the order of each, with the consent of the others, from the income of said business. And such amount so paid shall fully represent the share and interest of each of the •parties hereto, at any time while we the undersigned shall be associated together in said business or thereafter. Upon the death or withdrawal of any party hereto, all his interest in said business shall thereupon cease and determine and at no time shall any accounting be made or required to be made by any party hereto, his representatives, executors, heirs or survivors, or any other person claiming under him, or to any person officer or representative, upon any basis of labor performed or
No doubt deeming that this instrument did not fully express the purpose and intent of the parties, and might not be construed to effectuate their purpose and intent, they made a second instrument on the 23d day of January, 1897, as follows:
“Know all men by these presents that we, Robert J. Fleming, Charles Fleming, John A. Fleming and Stanhope Fleming of the city of Des Moines, Iowa, in view of our past association in, and the manner of the conduct of our business without the usual and ordinary incidents of a partnership, and to more effectually define and determine our individual interests in said business in the future, as between ourselves and in relation to all 'other persons, and to provide for the future uninterrupted prosecution of said business in which we are now engaged, or may be hereafter associated, hereby mutually agree and bind ourselves, our heirs, executors, administrators, survivors, and all other persons as follows: That in consideration of the services of each of us rendered, or hereafter to be rendered in the business of life insurance, of the income to be derived therefrom and of the mutual stipulations herein contained, each of the parties to this agreement has, and hereafter shall have, only such share of, and interest in the profits, earnings, .renewals due or to become due under any and all contracts of insurance, or commissions thereon, to whomsoever nominally payable in the business of life insurance in which we are now or any of us shall hereafter be jointly engaged, as shall be actually received' by each, or shall be paid upon the order of each with the consent of the others, from' the general funds or income of said business; and any sum or amount so paid shall fully represent the share and interest of each of the parties hereto at any time while any of the undersigned shall be associated together in said business or thereafter. It is further agreed that upon the death or withdrawal of any party hereto, all his interest in said busi
Under these two instruments, they continued their labors and prosecution of the business in which they were engaged and mutually associated, and further property was accumulated through the joint efforts, and a large estate created. However, on the 7th day of January, 1911, feeling that they had not yet fully expressed in writing their relationship to each other and to the estate that had been and was being accumulated, they made a third writing, as follows:
“Whereas, the undersigned, Robert J. Fleming, Charles Fleming, John A. Fleming and Stanhope Fleming are engaged in the life insurance business in the states of Iowa, Nebraska and Wyoming under a contract with the Massachusetts Mutual Life Insurance Company; and,
“Whereas, each of the undersigned is the owner of one fourth of the stock of a corporation organized under the laws of the state of Iowa known as Fleming Brothers, Incorporated; and
“Whereas, the undersigned also are the owners of certain
“Whereas, the undersigned expect to acquire additional property hereafter; and,
“Whereas, the said property now held and owned by the undersigned has been acquired by them with the understanding that it shall be disposed of as hereinafter set out;
“Now, therefore, in consideration of the premises and one dollar in hand paid by each of the undersigned to each of the others whose names are signed hereto;
‘ ‘ This agreement made and entered into by and between the said Robert J. Fleming, Charles Fleming, John A. Fleming and Stanhope Fleming on the 17th day of January, A. D. 1911, will witness:
“1st. That the partnership between the undersigned is with the express and distinct understanding and agreement that all of the property heretofore acquired by the undersigned has been acquired as the results of the said partnership, and that said property now belongs to the said partnership, including all proceeds of said insurance business with the renewals to which the parties hereto may be entitled thereon,
“2d. That upon the death of either one of the undersigned, the property then owned by the said partnership, including all property standing in the names of the individual partners which embraces said stock in Fleming Brothers, Incorporated, shall be and become the property of the surviving brothers of the said partnership; and that what said decedent has theretofore withdrawn from said partnership shall constitute his sole and entire interest therein, and the sole and entire interest of his estate therein.
“The premiums upon all insurance carried by the undersigned, whether life or accident, (except Policy No. 741051 in the Mutual Life Insurance .Company of New York, upon the life of Robert J. Fleming, payable to Emma D. Fleming, his wife, which policy is not a part of said partnership property) have been paid by the said partnership, and the said partnership is entitled to the proceeds of all such insurance except the policy above referred to payable to Emma D. Fleming.
“3d. This contract covers not only the property now
“Executed in quadruplicate.”
In this third instrument, the parties to the first two instruments have undertaken to define the relationship existing between them, and to more clearly state the relationship they sustained to the property, and to define more clearly what they meant when they said in the first two contracts, ‘ ‘ In order to provide for the future uninterrupted prosecution of the business of life insurance, in which we are now or may be hereafter engaged and mutually associated.” This last quoted instrument is the last expression of these parties touching the subject-matter of all three contracts; and they themselves have therein stated, in words that have definite and legal signification, what they understood the relationship was, under which they were operating.
We look to what is written in these three instruments, taken as one instrument, to find the thought that lies back of the writing, — the purpose and intent of the parties in the making of the writing, — and to find the legal status that the writings create. That these parties had a purpose and an intent to accomplish something touching their rights, duties, and obligations to each other in the making of the instruments, and a purpose to fix the rights of each in the property accumulated and to be accumulated, must be assumed. Within these instruments the height, depth, width, and length of that purpose must be found. The thought of the brothers could not have been that the title to the property acquired, as it came into existence, should vest in no one, except the portion taken and appropriated by each to his immediate needs. The title to property that can be the subject of ownership, we must assume, vests in someone, whether it be an individual, individuals, or a legal entity. This property, when it came into existence, vested in these brothers. They became vested with the title as joint tenants, or they became vested with the title as tenants in common, or they became vested with the title as a copartnership. The character of the title held by these defendants is the subject of our investigation,
The essential elements of an estate in joint tenancy are that it be held by two or more 'jointly, with a clear right in all to share in the enjoyment of the thing during their lives. There are four requisites: The tenants must have one and the same interest. The interest must accrue by one and the same conveyance, except as modified by the statute of uses. They must commence at one and the same time, and the property must be held by one and the same undivided possession. If such an estate be recognized, and the right of parties to create it, with all its unnatural consequences, the consequences that legally flow from it must be permitted to flow, no matter what this court may think of the justice or injustice of it, and though it leave this wife to the cold charity of an unsympathetic world. In none of the writings did these brothers bind themselves to make any provision for her. If she receive aught from them, it comes to her, not as a matter of right, but as a matter of grace.
It is time that, under the common law, an estate may be created and held in joint tenancy. The estate is joined in the number of persons interested. No matter what the number of parties interested may be, the tenants are regarded as one individual. The right that each has in the joint estate continues
.Considering the foundation upon which the doctrine of joint tenancy rests, it is the opinion of this court that it does not apply to commercial enterprises of this kind, and that no joint tenancy can arise out of a commercial enterprise, such as we have here before us in this case. It is inconsistent with the very foundation principle upon which joint tenancy exists or can exist.
Analyzing these writings, we find that, at the time the first instrument was made, the parties had in mind that they were
If the parties were, in fact and in law, joint tenants, then each had a right to enjoy the income of the estate; and the fact that one of the tenants appropriated a portion of the income to his own use could not have the effect of destroying his interest in the subject-matter of the tenancy. The idea of joint tenancy is that each tenant has a right to an equal enjoyment of the thing which is the subject-matter of the tenancy. If the receiving of any portion of the income or the profits of the estate had the effect of destroying the interest of each in the subject-matter of the tenancy, then, upon the appropriation of any of the profits by the tenants, or any of them, the joint tenancy would cease. The provision of the contract above referred to must have been intended as limiting the right to enjoy the income and profits of the business, and not as taking his right in the subject-matter of the tenancy. His right to take was measured by his needs.. What he took was a declaration, by the taking, of his then needs, and measured his right, at that time, to take to his personal use the income and profits. It does not mean that it measured or could measure his interest in the property accumulated by the joint efforts of the parties, or that the
The second contract, though changed in wording, expresses practically the same thought, with the added purpose to transfer to the entity, whatever it is, all rights of Robert J., under his contract with the Mutual Life Insurance Company of New York.
It will be noted that, in the first two writings, no direct provision is made for the vesting of the title to accumulated property in any designated entity or person. It is now assumed by these defendants that it vested in the brothers as joint tenants. No estate in the tangible property that accumulated as a result of the business enterprise is by express provision vested in any person, persons, or entity. We turn, therefore, to the third writing, for further light as to the purpose and intent of these parties and the status created by the preceding writings.
It appears that, between the time of the making of the second contract and this third contract, Fleming Brothers had incorporated, or a corporation was created, known as Fleming Brothers, Incorporated. This corporation issued to each of the brothers stock in equal parts, we take it, and each undertook to assign his stock by writing his name on the back thereof, without naming the assignee, and deposited it in a receptacle which it is claimed was under the control of all four of the brothers. This third contract makes plain what is wanting in the other contracts, and says that they were associated together as a partnership, and that the partnership is with the express and distinct understanding and agreement that all the property heretofore acquired by the undersigned had been acquired as the result of said partnership, and that said property now belongs to said partnership. Reading the previous writings in the light of the revelations made in the third writing, it is not as difficult to understand and to give legal force and efficacy to what is therein said. We take it that these four brothers organized a partnership, with the understanding that the business carried on by the partnership should remain intact, and that the future of the business should be uninterrupted in its prosecution; that the title to the earnings and income of the business — the accumulated assets — should vest in the partnership; that each party should have a right to take, with the consent of the others, so much of the earnings of the partnership as his needs demanded,
“We are engaged as partners in the life insurance business, mutually associated together as partners, and as such we desire to provide for the future uninterruption of the business in which the partnership is engaged.”
But it is said that the fact that they called themselves partners, or that they were there engaged in a common enterprise
A slight history of the origin of partnership will not be out. of place at this time. Originally, it was founded on confidence, independent of any contractual relationship. Because of the fact that, in the early days, families followed one occupation, these partnerships usually were found to exist among relatives. Though founded in confidence in the early days, in modern times it was recognized as. a contractual relationship. It grew out of the necessities of trade, but confidential relationship was retained in the modern law. At the time the law courts first gave cognizance to what is known as partnership relationship, they were familiar with tenancies in common and joint tenancies. However, under joint and common 'tenancies, the co-owners sustained no confidential relationships to each other,— at least, not such as is found in modern partnerships; and the right of agency did not exist among the joint co-owners. After passing through many stages of formation, the law came to regard partnership as an entity, something separate and distinct from the individuals, and in some respects, much the same, as a corporation is separate and distinct from its stockholders. At. common law, a partnership was nothing more than an association of individuals. A firm was recognized as a short form of expression to designate partners collectively. The early decisions touching partnership depend a great deal on the viewpoint of the particular judge, — whether he had a mercantile conception or a common-law conception of a partnership; so that the courts have sometimes reached different conclusions, although the facts upon which they based their conclusions were substantially the same. Originally, there were different theories
“A contract of two or more persons, to place their money, effects, labor, and skill, or some, or all of them, in lawful commerce or business, and to divide the profit, and bear the loss, in certain proportions.”
Other writers define it as a combination of two or more persons of capital or labor or skill, for the purpose of business for their common benefit. Gilmore on Partnership, on pages 1 to 6, defines it thus:
“Partnership is a relation existing by virtue of a contract, express or implied, between persons carrying on a business owned in common, with a view of profit to be shared by them. ’ ’
It is defined in the English Partnership Act of 1890, 53 and 54 Victorian, Chapter 39, Paragraph 1, as “the relation which subsists between persons carrying on a business in common, with a view of profit.”
Partnership implies that there is more than one person interested in it, and there is implied a mutual consent to the association; but that is not controlling, since there may be organizations, by mutual consent, which are not partnerships, such as churches. A partnership, in its true sense, is formed for the purpose of trade or business, and the profits realized from the business must be the property of the persons associated, if they are to be treated as partners. Missouri Bottlers’ Assn. v. Fennerty, 81 Mo. App. 525; Burt v. Lathrop, 52 Mich. 106.
We find, therefore, that a partnership existed between these parties. The provision, therefore, in the contract that, upon the death of any member, his interest in the partnership property should pass to his brother partners, is an attempt to make a testamentary disposition of the interest of each partner. A fair consideration of all these instruments shows that they were not understood as creating a joint tenancy. It fairly shows that all the profilers understood that they were associated together as partners, and that a partnership existed. An attempt to create survivorship among partners is an attempt to make a testamentary disposition of the dying partner’s property, or his interest in the partnership property, in favor of the surviving partners, to take effect after his death.
We are satisfied with the decree of the district court, and its judgment is affirmed. — Affirmed.
Dissenting Opinion
(dissenting.) I. The majority opinion is fine literature. It discloses much research and learning. It is clear in the statement of thought units. On first reading,
Reference has been had to grounds buried in argument. Some confusion exists as to what is argument, and what is relied upon as a ground for the final conclusion reached^. In this class are attempts to construe the three writings into which the parties entered. This construction deals with the purpose and object of the writings, — the relation of each of the writings to each of the others, and to all three; and it singles out one part of the writings and construes it to mean what it most clearly does not say. I may as well say at this point as say it anywhere that, in my opinion, this case presents no writings to be construed ; that the writings themselves are so clear that no judicial construction is warranted; that here there is no question as to what was done and intended; and that the sole question is, What is the effect of that which has been written? To what that effect is, I shall, of course, recur later.
The majority declares:
“The determination of the question here involves only the proper construction of the three writings on wliich defendants rely to defeat her claim;” that “within the cover of these writings must be found all that these men had in mind touching their personal relationship, and their relationship to and interest in the property accumulated by the joint efforts.”
In the first, the object is stated to be “to provide for the future uninterrupted prosecution of the business of life insur-
“That the partnership between the undersigned is with the express and distinct understanding and agreement that all of the property heretofore acquired by the undersigned has been acquired as the results of said partnership, and that said property now belongs to the said partnership, including all proceeds of said insurance business with the renewals to which the parties hereto may be entitled thereon.”
And it recites that each signer owns one fourth of the stock in the corporation known as Fleming Brothers, Incorporated. One part of the second writing makes specific reference to certain things that the parties shall own, by assigning and transferring “for the mutual benefit of the parties hereto” certain renewal commissions and “all commissions -earned or hereafter to be earned, and all bonuses allowed, payable or to become payable in any manner, whether payable to or standing in the name of Robert J. Fleming or any of the other parties to this agreement, * * * to be used, applied and disposed of in the manner only as herein agreed and provided for.”
The third contract makes the first reference to the following fact: “Said property now held and owned by the undersigned has been acquired by them with the understanding that it shall be disposed of as hereinafter set out;” that said property includes certain real estate; and that it is purposed to acquire more by means of what will be realized from the joint business.
There are provisions which, for convenience in further ref
There is a declaration that the purpose is to fix and determine the interest of each and of all signers. (1)
It is distinctly understood and agreed by the parties hereto that they nor any of them have or can have any property rights or money interests in said business, other than that herein specified and defined. (1) • ,
“In consideration of the services of each of us rendered, or hereafter to be rendered in the business of life insurance, of the income to be .derived therefrom and of the mutual stipulations herein contained, each of the parties * * * has, and hereafter shall have, only such share of, and interest in the profits, earnings, renewals due or to become due under any and all contracts of insurance, or commissions thereon, to whomsoever nominally payable in the business of life insurance in which we are now or any of us shall hereafter be jointly engaged, as shall be actually received by each, or shall be paid upon the order of each with the consent of the others, from the general funds or income of said business.” (2)
‘ ‘ It being the intention of all the parties to this agreement, and they hereby declare that [neither] they, nor any of them have, or can have any property rights or money interest in said business other than that herein specified and defined, so long as any of them shall be associated together in the business of life insurance.” (2)
“And any sum or amount so paid shall fully represent the share and interest of each of the parties hereto at any time while any of the undersigned shall be associated together in said business or thereafter.” (2)
"What one who has deceased “has theretofore withdrawn from said partnership' shall constitute his sole and entire interest therein, and the sole and entire interest of his estate therein.” (3)
“It is further agreed that upon the death or withdrawal of any party hereto, all his interest in said business, and in the assets thereof, shall thereupon cease and determine; and at no time shall any accounting be made, or required * * * to any
Upon the death or withdrawal o£ any party hereto, all his interest in said business shall thereupon cease and determine (without right to accounting- for the past.) This is repeated. (1-2)
The purpose is to bind survivors. (1)
‘ ‘ Upop, the death of either one of the undersigned, the property then owned by the said partnership, including all property standing in the names of the individual partners which embraces said stock in Fleming Brothers, Incorporated, shall be and become the property of the surviving brothers of the said partnership.” (3')
It is manifest that, as to vital points, each of the three writings, in effect, repeats. It is manifest that the three read together are the contract, and a clear-cut one. What the contract is, is perfectly stated in the decree appealed from, to wit:
“Considering the terms of the agreements, it is clear they were made with an intent to establish a joint ownership of the property acquired by the brothers, with a right of survivorship, upon the death of a brother, in the surviving brothers or brother. Such intent and purpose appear in every contract. * # * The intent of the parties to the instrument set out above is clearly to create an estate, with the incident of stirvivorship.”
There is no just right to construe; and at the one point where most of the construing is being done, the construction is an erroneous one. I refer to the part which I have set out. That is where it is said over and again, and by repetition in different ones of the writings, that the share and interest of one who dies is what he has drawn out while he lived. It is the part which the majority holds was not intended to be “literally” construed. It is the part of an unmistakably clear Contract which the majority amends by means of “construction.” The judicial amendment is this:
“This provision was intended to cover the immediate needs of each of the parties so associated and engaged in the business. Its purpose evidently was to forestall any extravagant tendencies on the part of any of the brothers, and to conserve the interests and profits of the business, to the end that the business
I repeat, the words written are too plain to permit construction. The parties took great pains to say, and said most clearly and repeatedly, that they did not intend what the majority declares they did intend. I beg to add that the “literal” construction is demanded, because it is the only construction which is in harmony with the entire purpose of the contract. I mean by this that, if it was the purpose to cut off inheritable interest, and to give the share of one who predeceased to the survivor, it must have been intended that the only interest of the one dying first should be what he had received in life. For if his interest is more than that, he will die seized of property, and it will not go to his survivor, but to next of kin or devisees or both. In defining the interest and share to be what was received in life, the parties but recognized that they had contracted to cut off inheritable interest, and to create a survivorship. I venture to say that is what they did contract to accomplish. There is no warrant for saying that the part defining share and interest is not to be construed literally. There is better reason for saying that that part of the writings is needless. Once agreed that neither party shall have an inheritable interest, once agreed that, when one dies, all that remains belongs to the survivors, and, without more, it has been agreed that the interest of each is measured by what he receives before he dies. So when it is all said and done, we have a clear contract that whoever died first left nothing to inherit, — nothing for dower or marital rights to attach to; that, at his death, the title became complete and perfect in his survivors, and so on, until the last survivor was reached. As said, the only question is whether this is a lawful and enforeible contract. There is no question about what the contract is.
II. It may be conceded, for the sake of argument, that joint tenancy does not apply to “commercial enterprises,” and that neither in this state or generally has it been recognized that such tenancies can be created as to “a commercial enterprise.” But does that quite meet the situation? These parties attempted nothing as to their commercial enterprise. What they did do was to arrange concerning the moneys that might be realized
III. The most definite ground assigned for the final conclusion is this: It is found that the relation between the parties was that of a partnership; next, that the provision creating sur-vivorship as to the partnership property “is an attempt to make a testamentary disposition óf the interest of each partner.” Finally, that “an attempt to create a survivorship among partners is an attempt to make a testamentary disposition of the dying partner’s property or his interest in the partnership property, in favor of the surviving partners, to take effect after his death.” As a ground for affirmance, this finding can have but one construction, to wit: that a partnership cannot enter into a contract of survivorship, because it is a partnership; and, passing that, if a partnership does make such a contract, it amounts to an unenforcible testamentary gift.
I am of opinion that no partnership was created, notwithstanding that the writings at times refer to the relationship as being that. While I agree that there may be a partnership if
The matter cannot be better stated than is done in Wood v. Logue, 167 Iowa 436, wherein we say:
“Laying aside the question as to what name or designation we shall apply to the transaction between the grantor and grantees, what good reason can be assigned in law or equity for the courts’ refusing to give it effect according to its clear intent?”
It is said that the title to property subject to ownership must vest in someone, — an individual, individuals, or a legal entity. To be sure, that is so; but what is it relevant to ? especially when it is also said 'that this property, when it came into existence, vested in these brothers, and that they became vested in these, either as joint tenants or by placing title in a copart-nership.
This involves a repetition of the idea that there is a difference as to a partnership.
IV. One of the matters as to which it is difficult to say whether it be merely argument, used as some sort of inducement, or a reason for affirming the decree below, is that part of the majority opinion which asserts, rightly enough, that, as a general proposition, estates in joint tenancy have, in modern times, ceased to be a favorite of the courts. Though true, how is this material, if such tenancies are still recognized in this jurisdiction, and if therein contracts to create them may be specifically enforced in equity ? If that be the state of the law in this jurisdiction, what purpose is served by those statements in the opinion which direct attention to the origin and character of joint tenancy; that in its origin it was feudal; that some states have denied the existence of it, except as to real property; that some states have abolished it altogether; and that some require strict proof thereof?
It may be conceded that, in early decisions, among which Hoffman v. Stigers, 28 Iowa 302, is one, that something was . said to the effect that the estate of joint tenancy is not favored by our law. But when we consider the statute on tenancies, and its construction in cases much later than the Hoffman case and like decisions, such language in the early cases can mean no more
Nomenclature is, of course, quite immaterial.- We so held in Wood v. Logue, 167 Iowa 436. For we there held that the thing created, whatever its right name, was a joint tenancy, which cut off inheritable interest and created a survivorship. Will anyone venture to affirm that the writing in the Logue case more clearly or even as clearly evinced an intent to cut off the inheritable interest and to create a survivorship? So finding in the Logue case rests largely upon deduction and inference,- — ■ sound, but still but deduction and inference. In the case before us, the trial court that defeated the defendants also declared that purpose to cut off inheritance and to create a survivorship is clear beyond all doubt. And there is absolutely no room for either deduction or inference. For the provision in both the second and in the alleged controlling third writing, we find this:
“It being the intention of all the parties to this agreement,
All right and interest in renewals and bonuses, no matter in whose name, is to be transferred for the mutual benefit of the signers “to be used, applied and disposed of in the manner only” agreed on in the writing. (2)
“ It is further agreed that, upon the death or withdrawal of any party hereto, all his interest in said business, and in the assets thereof, shall thereupon cease and determine [without accounting for the past].” (2)
“Upon the death of either one of the undersigned, the property then owned by the said partnership, including all property standing in the names of the individual partners which embraces said stock in Fleming Brothers, Incorporated, shall be and become the property of the surviving brothers of the said partnership; and that what said decedent has theretofore withdrawn from said partnership shall constitute his sole and entire interest * * * of his estate therein.” (3)
Y. The majority says:
“We are satisfied wdth the decree of the district court, and its judgment is affirmed.”
But the holding of that court was not based on imperfect testamentary gift; and that court did not hold that the contracts did not clearly express an intention to create an interest that could not be inherited, and which was to go to the survivors. The decree below' is bottomed wholly on the conception that the contract is violative of sound public policy. I do not find that the majority places the affirmance upon that ground. And it seems to me it should not have been put on that ground by the trial court. The legislature is the supreme guardian of public policy, and whatsoever it approves is sound public policy. The statutes of this state in plain terms permit just what these defendants did. This court has so construed them. What the legislature authorizes to be done cannot be violative of sound public policy.
VI. It is true that, in a sense, each of the signers trans
This has its bearing, too, on the question of public policy. The very fact that the. statutes restrain the alienation of real property, while permitting it absolutely as to personal property, shows that disposition of the latter by such an agreement as the one at bar is not against public policy. This answers, too, what the opinion is moved to say upon the fact that the wife is the weaker vessel, who maintains the home and rears the children, and is entitled to have provision made for her by law. Both the
VII. Speaking by way of summary:
á. We held, in the Logue case, 167 Iowa 436, that it is unnecessary to give the arrangement a name; that nomenclature was immaterial. We said:
“Laying aside the question as to what name or designation we shall apply to the transaction between the grantor and grantees, what good reason can be assigned in law or equity for the court’s refusing to give it effect according to its clear intent?”
We said, also, that that intent was the granting of a unity of title with right of survivorship; and that the grantor had a right to prefer such an arrangement to “a tenancy in common, with the ordinary incidents to such an estate. ’ ’
b. In joint tenancy, neither of the successive survivors receives anything by inheritance from the deceased cotenant, and his title is derived solely and directly through the deed which created the tenancy. And the one who dies first does not die seized of any inheritable interest. And the last survivor becomes “the sole and unqualified owner.” Wood v. Logue, 167 Iowa 436, at 442. And such a contract is sanctioned by Iowa law. It is the essential distinction between an estate in common and a joint tenancy. And in the absence of statute, the survivors take the whole estate, free from any charges on the property made by the deceased cotenant. 23 Cyc. 488, 489.
c. Dower cannot attach to the estate of a joint tenant where, as in this case, his estate remains joint until his death; and this because his estate is not an estate of inheritance. It follows that decedent neither possessed in his lifetime nor died seized of any estate to which a dower interest in plaintiff could attach or inhere. He merely departed from the estate at his death. Code Section 3366; 14 Cyc. 891 to 902.
d. A joint tenancy may be created “by any conveyance or act of purchase inter vivos which gives an estate to a plurality of persons without adding any restrictive, exclusive, or explanatory words.” 23 Cyc. 483 B.
e. It is not the law that joint tenancies can be created as to land only, nor that they cannot be created by a partnership as to partnership property, either personal or real. In McKinnon v. McKinnon, (C. C. A.) 56 Fed. 409, it is held that inheritable interest may be destroyed and a survivorship created in all property, “personal and otherwise,” held in partnership when the senior partner dies. And that is the holding of Stewart v. Todd.
f. It is not the law that a contract like the one at bar fails for being a testamentary gift; for, though not executed with the formalities of a will, it is saved because it rests on consideration. Stewart v. Todd.
g. Speaking to the rule generally, I find a pronouncement in 23 Cyc. 483 A that “a joint tenancy exists where a single estate in property, real or personal, is owned by two or more persons, other than husband and wife, under one instrument or act of the parties.”
h. There is no difficulty about construction here. The writings either clearly create the tenancy, or they do not. The whole test whether they do create one is to be solved by an inquiry as to whether four elements co-exist, to wit: (1) Unity of interest; (2) unity of title; (3) unity of time, except as modified by the statute against perpetuity; (4) unity of possession. That is to say, each owner must have one and the same interest, conveyed by the same act or instrument, to vest at one and the same time, and each must have the entire possession of every item of property held in joint tenancy, as well as the whole. 23 Cyc. 484, 485. It follows that, as to estates held hi joint tenancy, no right of dower will attach. Mayburry v. Brien, 15 Peters (U. S.) 21; Park on Dower 37; 1 Scribner on Dower (2d Ed.) 269; 4 Kent’s Commentaries 37.
Rehearing
We adhere to the view that the theory of joint tenancy, in a common-law sense, is not available to carry the appellants any further than the terms of their contract carry them. If this contract by its own terms was effective to divest each of the contracting parties of his estate, and to transfer the same to the survivor of them, then it were needless to say that a joint tenancy was or was not created. If, on the other hand, the contract by its own terms was not effective to that end, then it was not effective to create a joint tenancy, in the common-law sense. If the contract had purported in terms to create a common-law joint tenancy, a somewhat different argument would obtain at this point. It did not do so. On the contrary, it purported in terms to create a partnership. In determining the effect of the contract, therefore, we cannot add to its terms the legal fiction involved in a common-law joint tenancy. To do so would be to assume a joint tenancy as a major premise, in order to prove it as a conclusion.
To put it in another ivay, the typical case of joint tenancy is ordinarily created by grant of a third party. It involves no necessary contractual relation between the joint tenants. In this case, the alleged joint -tenancy was not created by act of any third party. It was created, if at all, solely by the contract of the alleged joint tenants. Assuming, for the purpose of this discussion, that a joint tenancy may be thus created, it would be, nevertheless, a status created by the contract of the parties, and not otherwise. Whatever the rights thus created, they must be determined in obedience to the contract, and to nothing else. In the last analysis, therefore, we have before us a contract; nothing more, nothing less. Being a contract, it may be enforced as such, unless there be some legal impediment thereto.
The result is that the decedent left an estate; and the contract must be deemed to operate as a claim or incumbrance upon it, either in part or in its entirety, in the same manner as a contract to make a will. Though, therefore, the contract be deemed enforcible as one to make a will, the question remains, Is it effective as against the widow of the decedent ?
If, in the absence of a contract, the deceased partner had made a will disposing of his property to his brothers in the manner described by this contract, doubtless it would- not be claimed that such will could be effective as against the widow.
Code Section 3376 provides:
“The survivor’s share cannot be affected by any will of the spouse, unless consent thereto is given,” etc.
We have held that this section of the statute is applicable to personal property, as well as to real estate. Ward v. Wolf, 56 Iowa 465; Linton v. Crosby, 61 Iowa 401; May v. Jones, 87 Iowa 188. See, also, Code Section 3362. The statute, therefore, is an impediment to the operation of the husband’s will upon his estate in such a way as to deprive the widow of her distributive share of either the personalty or the realty.
The question still remains whether the fact that the husband during life contracted to make such a will, will avoid the operation of Section 3376. May the wife assert the impediment of the statute against the operation of such contractf If the statute disabled the husband from making a will detrimental to the wife, could the husband, nevertheless, make a valid contract obligating him to make such will?. Doubtless it were more accurate to say, not that the husband was disabled from making the will, but that the operation and effect of his will would, under the statute, be subject to the consent of the widow, so far as her distributive share was concerned. A contract to make a will would be fully performed by the making of the will. Would
We are not unmindful that, during the lifetime of the decedent, there was no legal impediment to his disposing of his personal property. He could have sold it: he did not sell it. He could have transferred it, perhaps, even without consideration: he did not transfer it. There was no transferee. At this point, we are not concerned with forms. We look to the substance of the property rights of this decedent. Though'in form he transferred all his property’to the corporation, he was the joint creator of the corporation, — an owneruf one fourth thereof. Though each of the four parties transferred liis stock in severalty of them jointly, and thereby changed tlíé'íorm si- Mgr-property right, he still owned the substance thereof. This is not saying that the contract was void and of no effect as against the decedent’s estate. It is only saying that it is not effective to defeat the widow’s right to her distributive share.
Construing and applying the statute broadly (Sections 3362, 3376) to the purpose of its enactment, it leaves no opening for ingenuity to enable a husband to remain during life in full dominion of his'property, and yet to dispose of the same after death to the exclusion of the widow from her distributive share.
Personal property, it is true, would be subject to the good-faith indebtedness of the husband; but, as against the widow, it would not be subject to a mere scheme to absorb it. This does not imply that these brothers had a conscious purpose to wrong any surviving widow. Doubtless their only active purpose was to create the enterprise and to draw upon it for the care of all who were dependent upon them, either severally or jointly. Though the contract imposed upon them no obligation in respect to any surviving widow, the surviving partners do recognize an obligation, either moral or legal, to care for the plaintiff as such surviving widow, and they offer to provide her generous support. But the specific motive is not controlling. The right of a widow
Performance is partial because the validity of the promised consideration was only partial. The partial failure of consideration would be a just ground of offset against full performance. No legal damag'e accrued, therefore, even as against the decedent or his estate. In assuming the validity of the consideration of the contract, therefore, we do so with this qualification.
This opinion is supplemental to the original opinion, and is not a substitute therefor. One reason therefor is the vigorous attack made upon the original opinion, as being in conflict with Stewart v. Todd, 190 Iowa 283. The opinion in the latter case and the original opinion herein were both written by the late Justice Gaynor. No reference was made in the original opinion herein to the Stewart case. An examination of that case will readily show how little occasion there was that such reference should be made. The contract in that case was one between husband and wife, and its enforcement was sought and obtained by the surviving husband, as against the collateral heirs of his wife. The question whether a contract for his entire estate after death, between the deceased spouse as grantor and a third
Dissenting Opinion
(dissenting.) I. The majority declares:
“The justices concurring in the majority opinion heretofore filed are still satisfied that the case was properly decided. Because of some features of the argument in support of the petition for rehearing, we are disposed to add to the former opinion this further word of discussion.”
Even if one note but part of the well made attacks upon said opinion, he will find that counsel have not misconceived it, and that it should not have the foregoing approval.
a. That opinion urges against the contract defendants have, that it deals with personal property owned by a partnership. Such holding is bad law, and conflicts with our own and other decisions. In Stewart v. Todd, 190 Iowa 283, we sustain such a contract, though its subject is confessedly partnership property, including personal property. In McKinnon v. McKinnon, (C. C. A.) 56 Fed. 409, the contract enforced deals with nothing but the personal property of a partnership. While Baker v. Syfritt, 147 Iowa 49, involves no partnership, it does uphold a survivorship agreement that deals with property both personal and real. And see Smith v. Douglas County, (C. C. A.) 254 Fed. 244.
b. One argument of the opinion is that a “commercial enterprise” cannot “be affected by a joint tenancy.” This is irrelevant and fallacious, because the contract gives rights, even if it were true that such enterprise may not so be affected, and because this contract deals, not with a commercial enterprise, but with future accumulations of that enterprise. As well say that money received from land is not personal property because the source is real property.
c. It not only “construes” what needs no interpretation, but it erroneously interprets plain words away. The contract says repeatedly that each signer and his estate shall, unless he be the last survivor, have no interest in or rights to the partnership property, “except such share * * * as shall be actually re
d. There should be no approval of the pronouncement that “estates in joint tenancy have in modern times ceased to be in favor with the courts.” The statute sanctions such tenancies. See Wood v. Logue, 167 Iowa 436. At mildest, this is a declaration that the law of the land may be disfavored by the courts.
II. The “supplemental” opinion must be tested by itself. It neither supports nor is it supported by the original opinion. The “supplemental” opinion is neither a supplement nor a “further word of discussion.” The original does not touch what the supplemental one advances.
The majority says:
“In the last analysis, therefore, we have before us a contract; nothing more, nothing less. Being a contract, it may be enforced as such, unless there be some legal impediment thereto.”'
And then elaborates matter utterly irrelevant to the issue so stated. This shows that the only material question has been forgotten for the time being, and it tends to explain why the true issue seems not to have been determined at all.
What does it matter that, “in determining the effect of the contract, we cannot add to its terms the legal fiction involved in a common-law joint tenancy,” or that “the alleged joint tenancy was not created by act of any third party,” but “was created, if at all, solely by the contract of the alleged joint tenants;” or that the contract does not purport “in terms to create a common-law joint tenancy?” Surely, it cannot matter “that the theory of joint tenancy, in a common-law sense, is not available to carry the appellants any further than the terms of their contract carry them.” If they are entitled to relief to the extent to which “the terms of their contract carry them,”
In a word, here is no question of names. No dictionary can rightly decide this suit. Eights ought not to be denied because there is a quarrel over the name of the rights, nor because immaterial things may or may not be done. As said in Wood v. Logue, 167 Iowa 436:
“Laying aside the question as to what name or designation we shall apply to the transaction between the grantor and grantees, what good reason can be assigned in law or equity for the court’s refusing to give it effect, according to its clear intent?”
And see Eood on Wills, Section 53.
III. It is stressed that the four signers created a corporation, with themselves as sole shareholders, each receiving his pro rata in shares, and that thereupon each purported to transfer his shares by indorsement and delivery. The preface of the court is: “We are not concerned with forms. We look to the substance of the property rights of this decedent.” But is that done ?
The plaintiff declares over and again that this corporation and these shares were and remained the property of the partnership, and her husband died seized “of an undivided interest in all the property of the partnership, which partnership property includes all the capital stock and property” of said corporation. So then, creating the corporation and so issuing and dealing with the shares is nothing but a change of form.' It should not be seriously contended by those who profess to disregard mere change in form that anything material was effected. If four partners conclude to symbolize hardware owned by the partnership by stock certificates issued to the partners, the rights of each in the hardware remain unchanged. The share certificate represents the hardware. I agree with the majority that:
“The property still remained in the dominion of the same parties. Its benefits still accrued to them. No fifth party had acquired any interest in or incumbrance thereon. * * # If they had then attempted a partition as between themselves, each must have received his one fourth thereof.”
But I cannot follow it in forgetting the effect of its statement. That effect is that the mere creating of the corporation
As to the inquiry, “to whom did he indorse and to whom did he deliver,” and the statement “there was no transferee and no taker of delivery, — they all put their shares into a common receptaele, and locked them in the safe to await eventualities,” I have to say I shall later attempt to show that all this is immaterial. It foreshadows a position more fully developed by the majority elsewhere, and is indicative of the thought that there was no delivery of the stock shares. It may well be said that these shares were in the possession of all four of the contracting parties as long as they lived, and on the death of one, these continued in the possession of the survivors; and that the deposit of the stock nominally in the deceased member, and the assigning by him in blank, amounted to a constructive delivery by him at the time he executed such assignment. But I need not pursue this now. The most the argument of the majority comes to is that the creation and assigning of the shares.effect nothing, because delivery was lacking. If that be granted, then the issuance and attempted transfer of the shares comes to nothing. The net result in law is that each partner retained the same interest in the partnership property as if no corporation had been created by the partnership and nothing whatever had been done by the corporation. In no view was more change effected in partnership rights than if the partnership had retired from business and put all the accumulations therefrom into government bonds. All that would accomplish is that a share in business accumulations would become a share in government bonds.
IY. But, as already indicated, lack of delivery, the retention of joint possession, and the preserving equal access to each partner are amplified in another branch of the argument of the majority. The sum of that argument is that somehow this suit is affected by lack of disseizin of one contracting party, and by failure to deliver to and vest in the other party, and that there is fatal uncertainty as to where title is lodged. It is an argument that has made much bad law, on so-called "contingent remainders. Can it be possible that a contract of survivor-ship wherein several agree that the one last remaining alive shall have all the property of the others is in any way affected by
Y. It is not unknown in the law that title vests, even though full use and enjoyment be postponed, and even though it may not, at the instant when title is said to vest, be known with definiteness who will ultimately have full title. Here, there was an agreement that the survivor should have “the property then owned by the said partnership, which should be and become the property of the survivor member of the said partnership.” I think it is not straining to say that, if vesting and divesting were material, each partner was so divested and each other so invested as that the title remained inchoate in the four until three had died, and that then full title vested in that survivor. We held in Wood v. Logue, 167 Iowa 436, that the last survivor becomes the sole and unqualified owner. Let me repeat that, if divesting and vesting be essential, there was the same flaw in every case wherein survivorship contracts have been upheld.
In AllbrigJit v. Hannah, 103 Iowa 98, at 102, the contract was that the plaintiff should have certain lands upon the death of one Remey, or when Remey and his wife were done with it, and we said that this “was either the present transfer of the fee, subject to a life estate, or an agreement to will the property to the plaintiff;” and that, “whichever it may have been, it was good if plaintiff accepted it and acted thereon, and took possession of the land thereunder. ’ ’ This may not fit the present discussion with absolute exactness, but it does settle that, for the
Recurring to the uncertainty as to who will be the ultimate owner or beneficiary, that difficulty, too, was present in the eases wherein contracts such as this have been held to be valid. In Wood v. Logue, and in Stewart v. Todd, it was as uncertain who would get full title by becoming the last survivor as it was° uncertain, when the contract at bar was signed, which of the four brothers would live the longest.
On the reasoning of the majority, what this court has held as to contingent remainders is bad law, and there is no defending such decisions as that in Woodard v. Woodard, 184 Iowa 1178, and the numerous decisions therein cited in support. In that ease, it was contended that, when the will was executed, it could not be known what greatgrandchildren would be in being when the time for ultimate transfer and vesting arrived, and that, therefore, the remainder was a contingent one. We answered that, when said will was executed, named greatgrand-children were in being, with present capacity to take; that, therefore, though, it could not then be known that any of these greatgrandchildren would be living when the life estate in the grandchildren lapsed, or that later born ones would not then be in esse, yet the remainder was vested; and we said that, “unless something not yet discussed avoids it, the greatgrandchildren took title on the day the testator died.” The effect is that there was a vesting in the class known as greatgrandchildren, though no one could tell who, if anyone, would be in the class when the time for distribution came. On this line of decisions, it follows title was sufficiently vested in each of the brothers, because it was agreed that one of the four in their class should at some time have full title; and the fact that it could not then be known which one in the class would be such ultimate beneficiary, does not prevent a sufficient vesting of title in the class.
VI. I take it, on the authority of Stewart v. Todd, that, assuming the contract here to be on sufficient consideration, it would be enforced against heirs. If, then, it is not enforcible, it must be because the wife of a party to this contract is attacking it. I have already attempted to show that, when Charles
Since it must be conceded that decedent in his lifetime had the right to give his property away, or to sell it for any price that pleased him (Lunning v. Lunning, [Iowa] 168 N. W. 140; Metler v. Metler’s Admr., 19 N. J. Eq. 457), it would seem that the death of the seller could not deprive a purchaser from him of property sold to him, to be delivered after death, merely because decedent had been more provident than is one who throws his property away or parts with it for an insufficient price. One can contract as to what shall be done after he die. McKinnon v. McKinnon, (C. C. A.) 56 Fed. 409; In re Estate of Neil, 35 Misc. Rep. (N. Y.) 254; and Page on Contracts, Section 397. If there be the right to sell if he yield possession, the sale must surely be as effective where, in addition to the purchase price, he demands and obtains the additional privilege of using the property without cost to himself until he shall die. If, had he not exacted this additional benefit, the property was lost to his wife, how can it be retained for her because he obtained an enlargement of the price by the retention of possession ?
VIII. But assume that here is a broken contract to make a will, does it follow therefrom that this creates a will, and that, therefore, these defendants are in the position of seeking to deprive the distributive share of a widow by what amounts to an attempt to take it from her by will? That can be. true only if, on breach of a contract to will, a will results. „ Such a con
“There is nothing peculiar about contracts to make provisions by will. An actual contract must be shown. The parties must have been competent. Their minds must have met on a certain and definite agreement, unless the facts imply a promise which would sustain an action on quantum meruit.” Rood on Wills, Section 54.
The inquiry of the majority whether the agreement here be “the equivalent of a contract to make a will” is, then, an immaterial inquiry. For, if it be conceded to be such contract, and to have been breached, not a step is taken towards putting these defendants in the position of one who is basing his rights upon a testament. As said in Stewart v. Todd, 190 Iowa 283, where it is true that the writing cannot be enforced as a testamentary instrument, it may, if on consideration, be enforced as a valid and binding contract. To the same effect is Baker v. Syfriit, 147 Iowa 49, 55. This means that a will 'can be a contract, too. But though a will may sometimes be dealt with as a contract, and though a deed or other paper executed as a will may be a testament, even if not in the usual form of wills, it has never been held that a contract to make a will, or any other contract which is not executed with statute formality, can be substituted for a will, or be treated as being a will,, either for
Because of this very remarkable pronouncement by the majority, this point, that here there is no will, cannot be overemphasized.
IX. Availing itself of the statement that, up to a certain point, sufficient consideration has been merely assumed, the majority finally declares that there is something defective in the consideration.
It is not denied that mutual promises may be a sufficient consideration. It cannot be denied that here there were mutual promises. For the contract recites that the consideration is “the service of each of us rendered in the business of life insurance or of the income to be derived therefrom and of mutual stipulations herein contained.” It is not denied that such a writing imports a consideration. It cannot be denied that such service was rendered. What is intended is a claim that the contract is injuriously affected because complete performance of part of the mutual undertakings is impossible. It is said:
“In some respects, the contract on its face attempted the
I have said all I can about the alleged impossibility of performance. That assertion of impossibility is but a repetition of the assertion that no contract can work to deny this widow a distributive share, and that no attempt has been made to do so, except to assert a will. If these be not sound positions, there is no impossibility.
9-a
Upon the alleged impossibility rests a claim of partial failure of consideration. There is no such issue in the case. It is true the petition alleges that “said contracts are null and void, for the reason that they are without consideration and contrary to public policy,” and “as a transfer of property are without consideration, and colorable only.” This is a plea that the contracts are nudum pactum; that there is no consideration. Such a plea does not raise failure of consideration, or impossibility to give the full consideration. Such failure and part failure are matters which, under Section 3629 of the Code, must be “specially pleaded. ” It is said, in 13 Corpus Juris 741:
“A plea of partial failure of consideration in an action on a sealed instrument reciting a consideration is bad. And at common law partial failure of consideration could not be set up as a defense, unless the transaction was fraudulent in its inception; defendant was obliged to resort to a cross-action to recover his-damages, unless he could show an entire failure of consideration. ’ ’
While it is true the same text declares that now, either by statute or judicial determination, it is generally permitted to interpose the defense of a partial want of consideration, or of failure of consideration in the action on the contract (thus preventing circuity of action), of course that does not say that a denial of all consideration in a written instrument which imports a consideration is a good plea to raise a partial lack of or a failure of consideration. The text referred to makes that
X. I concede freely it may not be as clear to others as it is to me that the decision here is an absolute impairment of the right of contract. But I do think that all minds might agree that it is at least a most serious question whether there has not been such impairment. It would seem that the least that could be done by the majority would be to give some recognition that such a Federal question exists, to the end that, if the view now prevailing be here adhered to, an opportunity be given to have the Supreme Court of the United States consider this case.
XI. One of the things claimed by the plaintiff as partnership property is the proceeds of insurance policies, in $58,000. I am utterly unable to see why she should be permitted to prevail as to this, no matter what is done about the general contract. This insurance was effected upon the lives of each of the four contracting parties, by policies in terms made payable to the other three brothers, or survivor of them. The insurer is liable to no one but the beneficiaries thus specifically named. The widow of the deceased can have no possible claim against the insurer. There is no contractual relation between them. As said, I cannot conceive on what theory she is permitted to share in the proceeds of this insurance, which, in any view, is the property of someone other than herself, — is an obligation that can rightfully be paid only to others than herself.
XII. I have to say further, the evidence in this record demonstrates positively and unequivocally that the widow knew of and acquiesced in and profited by the joint arrangement evidenced by these contracts, and for many years. In my opinion, she should be held to be bound by an estoppel, as was the widow in the Allbright case, 103 Iowa 98, where there was less foundation for the estoppel than there is here.
I would reverse.
Rehearing
Supplemental Opinion on FuRtheR Reheaeing, Septembee 28, 1921.
“That plaintiff’s deceased husband carried life insurance in the amount of $58,000.”
Paragraph 11 averred that the three defendants had collected such life insurance and appropriated the same to their own use. It was not alleged that the plaintiff was the beneficiary of the policy; nor was any other fact pleaded as a basis for the claim that the insurance proceeds belonged to her, either in whole or in part. The trial court filed a lengthy written opinion in the case, comprising apparently a complete discussion of all points presented for his consideration. No reference is made therein to the item of insuraiice. The opening argument of plaintiff, as appellee, purports to be a full discussion of the case; but no reference is contained therein to the insurance. However, the decree entered by the trial court did in terms declare the insurance proceeds to be a part of the partnership property. The implication from such finding would naturally be that the plaintiff was entitled to recover the one-eighth part thereof. The only disclosure of the detailed facts pertaining to such insurance is to be’ found in the answer of the defendants, appellants here, and in the evidence in their behalf. It is to be said
The undisputed facts, as they appear from the pleadings and the evidence of the defendants, are that the “life insurance” in question was payable to the three brothers, appellants herein. It appears that similar insurance was carried upon the life of each member of the firm in favor of the other three members thereof. The undertaking of the insuring company was to pay the death loss upon any life to the other three members of the firm. Such form of insurance was legitimate. Each member of the firm had an insurable interest in the life of every other. The expense of the insurance was borne by the beneficiaries. It appears also that the insuring company held all these policies as security for loans negotiated to the firm. The method of collection of these policies upon the life of decedent was that the insuring company applied the full proceeds as a credit upon the indebtedness owed to it by the firm and the members thereof. It is manifest, therefore, that, upon the face of the insurance contract, the three defendants had the legal right to the proceeds of the ‘ ‘ death loss. ’ ’ They and they only could have maintained an action therefor against the insurance company. If there be facts aliunde which would equitably impress a trust, nevertheless, upon these proceeds in the hands of these defendants, it was incumbent upon the plaintiff to plead and to prove such facts. Nothing of that kind was attempted by her. The manifest objective of her petition was to obtain an adjudication that the contract under attack was ineffective to bar her right of distributive share. The emphasis of the litigation was concen
We reach 'the conclusion, therefore, that the item of “life insurance ’ ’ proceeds should be eliminated from plaintiff’s recovery, and that the decree entered below should be modified to that extent. In all other respects, the petition for rehearing is overruled.
II. The appellants urge upon us very earnestly that the effect of our holding here is to overrule prior decisions, and therefore to deprive appellants of their property without due process of law, in alleged violation of the Constitution of the United States. The premise upon which such plea of unconstitutionality is based, is negatived by the opinion complained of. It does not purport to overrule prior decisions. Appellants’ contention to such effect is argumentative only, and is not sustained ■by us. Moreover, if the premise were conceded, and if it were deemed correct to say that the overruling of a prior decision by an appellate court of a state is a violation of the Constitution of the United States, such point would have been just as available to the appellants in their original argument as in their petition for rehearing. No such point was therein made.
We are asked to recognize the point now made, as presenting a Federal question. If we could properly do so, as a matter of sincere deference to the higher court, or as a matter of courtesy to the distinguished counsel, we should not be reluctant to make such declaration as would enable a review of our decision by the higher court. But judicial candor compels us to say that we see no Federal question involved. The decree below will be modified as above indicated, and otherwise affirmed.