Ledebuhr v. Wisconsin Trust Co., 112 Wis. 657

Ledebuhr v. Wisconsin Trust Co.

112 Wis. 657 | Wis. | 1902

Marshall, J.

The record before us presents some singular features. We are unable to discover, with certainty, the *660theory upon which the court proceeded in deciding either matters of fact or of law. Notwithstanding the insurance association conceded its liability on the certificate and paid the money called for by it into court, and the plaintiff, by the terms thereof, if any. one, was entitled to the fund the-same as if his name were written into the certificate as beneficiary, subject to the burden of paying certain debts of the testator mentioned in the will, and the action was at law, costs being recoverable by some party to the action as a matter of right, it was held that the certificate was void absolutely, costs were denied to any party, the money was ordered turned over to the administrator with the will annexed to be administered as part of Krueger’s estate, and the association was discharged from further liability. The judgment cannot be justified upon the doctrine of cases holding a life insurance certificate or policy good as a claim against the company though the designation of the beneficiary under it is void because in violation of some statute prohibiting such a designation, or of sound public policy, because the learned court held the certificate void absolutely. Under the circumstances it was quite considerate of the rights of the association that it was let out of court without further liability than the $1,000 paid upon the certificate. The money, evidently, was not paid as a mere donation to-be disposed of by the court according to equity. The court did not sit to decide the controversy upon the facts as a mere tribunal of arbitration. The rights of the parties were submitted to it for an adjudication on the law applicable to the undisputed facts. Plaintiff was rightly in court or he was not. The action was at law. Some one was entitled to the insurance money as a matter of right, and the judgment should have been rendered accordingly, with the statutory incident as to costs, which the court had no authority to withhold.

The plaintiff, if entitled to the insurance money at all,. *661was entitled to it under the certificate, not under the will. The certificate contained a power of appointment by will as to who should be the beneficiary thereof. That power was executed, the plaintiff being named as beneficiary. The establishment of the will was of no significance to him except as showing a valid exercise of the power. Upon the will being established appellant stood for all purposes as if his name were written into the certificate in place of the power of appointment. The principle is familiar that the appointee under a power takes under the instrument creating the power, not under that executing it. His title rests upon the act creating the power and takes effect as if created by the original instrument. Doolittle v. Lewis, 7 Johns. Ch. 45; 18 Am. & Eng. Ency. of Law, 925. An eminent text-writer states the rule thus: It is a rule of universal application that, “ when one takes an estate by the execution of a power, it is, to all intents, as if he took by the deed which created the power, and his conveyance had ,been inserted in that, instead of coming to him mediately through the one holding the power.” 2 Washb. Real Prop. (5th ed.), 690.

Erom the foregoing it is easily seen that appellant’s position was not that of beneficiary under the will of Krueger, but under the certificate. The jurisdiction of the county court was a proper resort for the establishment of the will; but if appellant, because of his appointment in the will, legally became the beneficiary of the insurance money, he had no more right to resort to the probate court to recover the same because he was beneficiary by testamentary appointment, than he would have had had he been named as such in the certificate. Assuming that he was properly named as beneficiary, the claim under the certificate formed no part of the estate of Krueger for administration in the probate court, and the decision as to the jurisdiction of that court over the subject of this action was erroneous or immaterial.

It is not claimed that any statute or rule of public policy *662stood in the way of Krueger making appellant the beneficiary of his insurance. So it would seem that the concession of liability on the part of the association waived any defense that could have been made to his claim, and entitled him to recover. But he was so entitled regardless of such concession. If the naming of the plaintiff as beneficiary at all, or in the manner adopted, was a mere violation of a by-law, the insurance contract, for the purposes thereof, -waived such by-law. The principle is well established and has been frequently applied by this and other courts, that in the absence of fraud the provisions of a certificate or policy of insurance will prevail over any mere by-law with which it may conflict, even though the application for the certificate or policy expressly stipulates that the by-laws of the company issuing it constitute a part of the insurance contract. Morrison v. Wis. O. F. M. L. Ins. Co. 59 Wis. 162; McCoy v. N. W. M. R. Asso. 92 Wis. 577, 583; Davidson v. Old People's M. B. Soc. 39 Minn. 303; Union M. F. Ins. Co. v. Keyser, 32 N. H. 313.

We are unable to determine definitely from the record whether the court decided that the designation of appellant as beneficiary was a violation of the by-laws of the association only, or a violation of the charter, or whether it was a violation of both. But if the charter itself required the beneficiary to be named in the certificate, then the rule applies that the defense of ultra vires cannot be used to defeat a claim against a corporation, unless the contract involved is wholly executory and there are no grounds of equitable estoppel in the way, or it is prohibited by statute or sound public policy. When a corporation violates its organic act, it commits an offense against the sovereignty of the state, which only the state can punish by proceedings to forfeit its charter, in the absence of some other method provided by statute. That doctrine has become firmly established, and early cases not wholly in harmony therewith must be *663considered to have been displaced by the later development of the law. John V. Farwell Co. v. Wolf, 96 Wis. 10; McElroy v. Minn. P. H. Co. 96 Wis. 317; Hubbard v. Haley, 96 Wis. 578; Bigelow v. C., B. & N. R. Co. 104 Wis. 109, 112; National Bank v. Whitney, 108 U. S. 99; Prescott Nat. Bank v. Butler, 157 Mass. 548; Martindale v. K. C., St. J. & C. B. R. Co. 60 Mo. 508; Baker v. N. W. G. L. Co. 36 Minn. 185; Gruber v. Grand Lodge, 79 Minn. 59; Matt v. Roman Catholic M. P. Soc. 70 Iowa, 455; Bloomington M. B. Asso. v. Blue, 120 Ill. 121; Martin v. Stubbings, 126 Ill. 387.

The adjudications that might be cited to support such doctrine are very numerous, even in cases precisely like the one before us. In Matt v. Poman Catholic M. P. Soc. it was held that a mutual benefit society cannot, after receiving assessments upon a certificate of insurance issued by it, defend against liability thereon on the plea of ultra vires. In Bloomington M. B. Asso. v. Blue, a defense was made to the certificate upon the ground that the society had no right to name Rlue as the beneficiary; that he was neither named in the way, nor belonged to the class of persons, provided for by the charter of the insurance company. In deciding the case the court said:

“So far as he [Blue] is concerned the contract is an executed one. ... We think the law on this question is well settled that such a defense cannot be made available. Where the contract has been fully performed by the party contracting with the corporation, and the corporation has received the benefits from such contract, it cannot invoke the doctrine of ultra vires to defeat an action brought against it on such contract.”

It was contended in that case that, since the law creating the corporation authorized the issuance by it of certificates or policies of insurance for the benefit of the relatives of the person insured, it inferentially prohibited the making of any other persons beneficiaries. But the court held otherwise, *664deciding that an absolute statutory prohibition, or a clear violation of some public policy, is essential to enable an insurance company to defend against its insurance contracts upon which it has received benefits, on the plea of ultra vires. In a review of the authorities by Mr. Niblack, in his work on Benefit Societies, at section 13, though recognizing, as the fact is, that they are not all one way, he concluded that the great weight thereof is in support of the doctrine stated.

It follows that the insurance society had no defense to the certificate, and appellant was entitled to recover thereon under the power contained in the certificate. He took the legal right to the claim represented thereby as completely as if his name were written into the certificate as beneficiary without the accompanying obligation to pay the debts of the testator named in the execution of the power. It will be noticed that appellant was not, under the execution of the power of appointment, to be the appointee upon his paying the debts as specified by the testator, but he was made the appointee with the understanding that he would pay such debts. The appointment and a realization upon the certificate will carry therewith an obligation to pay the debts specified in the execution of the power of appointment, which any one interested, by the remedy suited to his case, may enforce.

It appears that this appeal is only from those parts of the judgment to the effect that the administrator with the will annexed, The Wisconsin Trust Company, is entitled to the insurance money as part of the estate of Krueger, awarding the same to it accordingly, and dismissing the plaintiff’s complaint without costs to either party. Those parts of the judgment referred to must be reversed, and the cause remanded to the trial court with directions to so shape the judgment as to adjudge that appellant was, at the time of the commencement of the action, entitled to recover accord*665ing to the prayer of the complaint and is entitled to the money paid into court upon the certificate, and to order the payment thereof accordingly; and to further adjudge that he is entitled to recover his taxable costs of contesting with said company the right to said money, costs to be paid out of the estate of Krueger.

By the Court — So ordered.