23 S.W.2d 922 | Ky. Ct. App. | 1930
Affirming in part and reversing in part.
There are two issues to be determined on this appeal: (1) Who is entitled to the proceeds of a $10,000 insurance policy; and (2) the validity of an attempted disposition of property in anticipation of early death? To answer the first question it is necessary to decide whether an insurance policy should under the evidence be reformed, or whether there was a valid parol assignment of the policy. The second one requires a decision whether there was a gift causa mortis or a nuncupative will.
We may observe at the outset that while there is much evidence in the record that was heard through incompetent witnesses, and though during the taking of depositions many objections were made before the examiner, the incompetency of the evidence was waived through failure to file written exceptions with the court in the manner prescribed by sections 586 and 587 of the Civil Code of Practice.
For many years the appellee, L.F. Harrel, and his brother, Zephaniah Harrel, were partners conducting a general store and owning other property in Rockport, *471 Ohio county. The appellee owned four-fifths of the business and furnished the operating capital, but his duties as a railroad official kept him in Mississippi most of the time and his brother managed the store. They had reciprocal wills and insurance on their respective lives payable one to the other. Zephaniah Herrel died in 1923, leaving a widow, a son, Ray Harrel, and a daughter, Nora Harrel Walker, an appellant herein. His widow received $12,000 in insurance and a small bequest under the will, and each of the children received $500. His brother received the remainder of his property. However, it appears that appellee actually received only his brother's one-fifth interest in the business, less $160 necessarily paid to settle the estate.
When his father died, Ray Harrel, who was then about 22 years old, was clerking in a bank in the village. His uncle shortly thereafter employed him in his store. After some months, the young man having demonstrated his trustworthiness and business capacity, his uncle suggested that he would take him in partnership in the business; and a written partnership contract for five years was entered into on May 12, 1924, to be effective as of February 1, 1924. Ray Harrel acquired a two-sevenths interest in the business, for which he executed his note for $4,000 to his uncle. It was provided by the contract that Ray should look after the store and other local business interests of his uncle, should be furnished a dwelling house and merchandise from the store, and at the end of the year there was to be an equal division of the profits; Ray's share to be applied to the satisfaction of his store account, payment of interest on his note, and the remainder put back in the business. The uncle's share was to be kept in the business also. It was understood and agreed that this partnership should be conducted and the relations should be the same as those existing between Ray's father and his uncle.
1. Ray Harrel's father had had a $5,000 insurance policy issued on the life of his son, and Ray had been carrying a $10,000 policy under the United States government plan of insurance for soldiers. The beneficiary named in both policies was his father, but after his death Ray had his uncle named as the beneficiary in both policies. The uncle had no knowledge of this before the partnership *472 was formed. It was provided in this partnership agreement that:
"It is further understood and mutually agreed herein that Ray Harrel who is carrying $15,000.00 life insurance with L.F. Harrel as beneficiary shall be privileged to pay the premiums on this insurance out of the firm's money, charging same up to his individual account as he does his merchandise as long as the policies remain payable to L.F. Harrel, which shall be the case as long as this contract stands, unless mutually agreed to the contrary. It is further understood that L.F. Harrel has a policy of life insurance upon his life, being No. 169009, in the New England Mutual Life Insurance Company, of Boston, which is made payable to Ray Harrel as his beneficiary, which shall remain so as long as this contract remains in force unless he should die sooner in which case full amount of said policy is to be paid to Ray Harrel, beneficiary, as is also the case in the insurance of Ray Harrel as above stated."
Some time in the early part of 1926, Ray conceived the idea of exchanging this government insurance for a standard policy. He consulted John H. Barnes, a banker and intimate friend of his father and himself, and talked with other friends about the advisability of the change. When his uncle, L.F. Harrel, came to Rockport, he, Ray, and Mr. Barnes conferred together about the matter, and it was agreed by the three of them that the government insurance should be dropped and a policy for $10,000 secured through Mr. Barnes as agent in the New England Mutual Life Insurance Company. It is clear from the evidence that this substitution was intended to take the place of the government insurance payable to Mr. Harrel. The application for the new policy was written by Frank Barnes, a son of the banker, signed by Ray Harrel, and witnessed by John H. Barnes. This application stated that the beneficiary should be the applicant's estate, and the policy so provided. Frank Barnes, who actually prepared the application, for some unaccountable reason did not testify. A short time later L.F. Harrel and Ray were in the bank, and Ray requested Mr. Barnes to secure the policy that he might show it to his uncle. It appears that the papers of the partnership firm, of Mr. Harrel and of Ray Harrel, personally, were kept in the bank for *473 safe-keeping. The policy was produced, and Ray said to his uncle: "Now, here, Uncle Doc, is the policy I have had written to take the place of my government insurance, and I want to turn it over to you; it is yours, for your benefit." Mr. Harrel took the policy and turned it over to Mr. Barnes to keep for him. During this conversation Ray called the attention of his uncle to a clause in the policy relating to the right to borrow money upon it and indicated that such a provision made it a better policy. It does not appear that any other part of the policy was called to the attention of Mr. Harrel. Mr. Barnes testified that Ray had told him that he wanted to take out the new policy payable to his uncle in place of the government insurance, and, referring to the conference of the three, stated: "That was the agreement, that the beneficiary of the new policy was to be the same as that in the government insurance at the time the contract was made." It is further shown by a number of witnesses that Ray, upon several occasions, stated that he was carrying the insurance as a protection for his uncle. This uncontradicted evidence, coupled with the written agreement respecting the carrying of $15,000 life insurance payable to L.F. Harrel as beneficiary, seems to the court to show conclusively that the intention was to have the New England policy made payable to the appellee rather than to Ray's estate.
It is not disputed that policies of insurance, when the evidence warrants, may be reformed upon the ground of mutual mistake. See Insurance Co. of North America v. Evans,
But it is argued that the insurable interest of Mr. Harrel is only the extent of Ray's indebtedness to him, and he can collect no more. It appears that the principal of the $4,000 note had been reduced to about $2,400. In addition to the $5,000 policy alluded to, the appellee also received on account of his nephew and as his named beneficiary about $1,350 as the proceeds of what is commonly referred to as the "bonus insurance" allowed veterans of the World War. *474
It is conceded that the relation of uncle and nephew is not in itself sufficient to constitute an insurable interest. Hess' Adm'r v. Segenfelter,
All this insurance was carried by Ray, as he often stated, as a protection for his uncle, who he declared to be his benefactor and best friend. He was indebted to his uncle and intended the proceeds of his insurance to satisfy that indebtedness as well as to protect him from any other loss by reason of his death. Moreover, it was in accordance with his written agreement. The uncle had kept his part of the bargain, though he was not in debted to his nephew in any sum. Appellee was entitled to the entire proceeds. 37 C. J. 569.
Not only the original government insurance, but the policy involved in this case, was taken out by the insured himself, who individually paid the premiums; and in such state of case the beneficiary need not have an insurable interest. Allen's Adm'r v. Pacific Mutual Life Insurance Co.,
It follows, therefore, that the judgment of the lower court with respect to this insurance policy is correct.
2. The evidence shows that it was agreed by the appellee and his nephew that each would make a will naming the other as beneficiary, and that Mr. Harrel had executed such an instrument. Ray, however, had neglected to do this, although upon one or more occasions he stated his intention to do so. He went to Louisville in April, 1927, for a minor surgical operation. Serious developments resulted, and members of his family were sent for. He also had Mr. Barnes, his banker and business adviser, to come to Louisville for the purpose of making his will. When Mr. Barnes arrived, however, Ray was unconscious. On the day before his death, T.J. Adams, the superintendent of the Masonic Widows and Orphans Home of Kentucky, an old friend of the family, was present with two of Ray's aunts, and others. According to Mr. Adams, this occurred:
"There was five or six of us in the room, and he says to me: 'Bro. Adams, I am much worse today and I am afraid I am not going to pull through. . . . If I pass away I want Uncle Doc to have all that I own because I know he will take good care of Aunt Alice.' One of his aunts, I think it was Mrs. Campfield, was on one side of the bed and his other aunt and myself were on the other side, and Mrs. Campfield asked me if that should be put in writing, and I said: 'I don't think it is necessary because there are so many witnesses here to that statement.' I didn't want to excite him in any way. Ray said: 'Bro. Adams, you know I am in sound mind and memory.' I said: 'Yes, Ray, I am sure you are,' and he said: 'Bro. Adams, I know you will see that my wishes are carried out.' "
According to one of the aunts, before Mr. Adams arrived, Ray said to her:
"Uncle Doc has made me a partner, he has been the best friend I ever had, and we will have everything *476 fixed just like father and he did. I want him to have everything I have for I know he will take care of Aunt Alice."
Mrs. Campfield, another aunt, testified that on this occasion Ray said:
" `Bro. Adams, if anything happens to me I want everything I possess to go to Uncle Doc; he has been the best friend I ever had, and I know he will take good care of Aunt Alice,' and he said: 'Bro. Adams, you know I am in my sound mind and know what I am doing, and I want you to see that my wish is carried out.'
"Q. What did Adams say: did he agree to do that? A. He said: 'I will do the best I can' or something to that effect."
Ray Harrel owned some real estate and had a policy of insurance taken out by his father some years before in the Order of the Golden Cross for $2,000, payable to his father. It is not claimed by the appellee that this property passed to him, but it is claimed that the foregoing statements of Ray Harrell constituted a gift causa mortis of his interest in the partnership business. It is argued that while delivery is a constituent and requisite element of a gift inter vivos, without which the title does not pass, in a gift causa mortis, since the donor may recover possession and reclaim the title in the event of his recovery, delivery serves merely as evidence and is not a constituent element. No delivery was required under the civil law, but it is requisite under the common law. 28 C. J. 689. Foreign authority is cited by appellee in support of the proposition, as well as a statement in Moore v. Shifflett,
Whatever may be the character of the act or purpose of delivery, this court has always recognized the necessity of a delivery of some sort. In the recent case of Drake v. Security Trust Co.,
"But whether the gift be one inter vivos or causa mortis, to be valid and pass title to the thing donated, it must be accompanied with a delivery of that thing, either actual, constructive, or symbolic; and if the transaction is not completed by such delivery during the lifetime of the donor, thereafter it cannot be completed for him by any one, for if he contemplates such completion after his death the transaction is necessarily testamentary in its nature. A gift, whether inter vivos or causa mortis, if completed, must take place during the life of the donor, while a testamentary disposition of property necessarily takes effect only after the death of the testator."
In Combs v. Roark's Adm'r,
It is further contended that since partnership property is in the joint possession of the partners, a constructive delivery results when the donor clearly evidences his purpose and renounces dominion over such property, which, it is claimed, was done by the deceased. It is true that a delivery may be constructive, as well as actual or symbolical, according to the nature and character of the thing given. Morgan v. Williams,
The essence of the principle applied in all cases is the vesting of title before demise. As a partner appellee may have been in possession of the partnership property, but it is inconceivable that this young man intended to part with title to all his estate or vest same in his uncle unless and until he should die. He undertook to constitute Mr. Adams as his agent or representative to carry out his wishes after he should "pass away," and did not consider him as the agent of his uncle receiving a gift in præsenti. There are many authorities sustaining this conclusion cited in the annotations in 3 A.L.R. at page 923. *479
We cannot escape the evident fact from the circumstances proven that this was at most a nuncupative will, which under the statute is ineffectual.
The chancellor erred in sustaining it as a valid transfer of the property to appellee.
The judgment respecting the insurance policy is affirmed, and is reversed as to the other issue.