Matlack v. Mutual Life Insurance, 180 Pa. 360

180 Pa. 360 | Pa. | 1897

Lead Opinion

Opinion by

Mr. Justice Fell,

We find nothing in the testimony in this case to sustain the conclusion that there was a conspiracy to deprive the plaintiff of the benefit of the insurance on her husband’s life, and nothing on which a finding of fraud can rest. All of the persons who in 1869 took part in the transaction now under investigation, except the plaintiff, are dead, and her knowledge of it is limited to the signing of a transfer of the policy. We are left mainly to inference in determining the intentions of the parties and the means employed to carry them out. The transaction in its inception was not an unusual one, and there is nothing in the manner in which it was subsequently carried out to give rise to a suspicion of unfair dealing or of intentional wrong.

If we confine our view to the occurrences of April 18, 1869, when the plaintiff’s policy was surrendered and a new policy was issued to her husband and assigned by him to the bank, there is ground for the conclusion of the learned master. This however is only a partial view of the transaction, and a very imperfect one. We should start with the occurrences of February 16, when the assignment from her was procured. On that day the Seventh National Bank held the note of her husband, George D. G. Matlack, for $1,278.83, dated January 28, 1869, at four months, and he induced her to assign to the bank as collateral a policy of insurance on his life for her benefit, issued by the Mutual Life Insurance Company of New York. The purpose of the assignment was evidently to secure his note held by the bank and to enable him to obtain additional loans. On February 19 the bank discounted for him a note for $500. The entry in his bank book shows that collateral was given with this note. What was done by him and the officers of the bank with reference to the assignment could not be shown, because of the death of all the parties. The policy had been delivered to him by the plaintiff on February 16, and it was afterward with his papers at the bank. The most reasonable supposition, and one entirely consistent "with the established facts, is that the bank discounted the last note under the belief that the assignment was valid, and returned the assigned policy to him when it was learned that it was ineffectual to transfer his wife’s interest. When the next quarterly premium on the policy fell due, April 18, 1869, it was not paid, and the policy lapsed. A new policy was issued, payable to the executors, administrators or assigns of Matlack, and this policy he assigned to the bank.

The strongest assumption against the defendants which it is possible to draw from the testimony is that the premium due April 18 was left unpaid, with the design that the policy should lapse and a new policy which could be transferred should be issued. We cannot leap from this assumption to the conclusion that a moral wrong was contemplated and an undue advantage taken' without ignoring the real intent and purpose of the parties. The plaintiff had already divested herself as effectually as she could of all interest in the policy, and transferred it to the bank to aid her husband in his business affairs, and this arrangement did nothing more than carry out in another form the agreement that the bank was to have the policy as security, to which she had expressly assented by signing the transfer. It was apparently the means adopted after the insurance company had refused to recognize the transfer or it had been found invalid for purely legal reasons, to give effect to the intention of the parties. The bank got only what the plaintiff had agreed that it should have, and the insurance company acted with liberality in doing what it was not required to do, and what it could have no other motive for doing than to protect the interests of the insured. In looking back at this transaction after twenty-four years it must be remembered that at the time Matlack was bankrupt. He was unable to pay his notes or to pay the premium on his policy, and neither the bank nor the insurance company had the slightest notice of the claim now set up, that the assignment was procured by means of threats and coercion.

When however the plaintiff’s policy was forfeited for nonpayment of the quarterly payment due April 18, there was to the credit of the policy an amount of reversionary insurance, the cash value of which was more than sufficient to pay the premium then due. This reversionary interest had at her request or that of her husband been applied by the company to the payment of premiums for two years immediately preceding the forfeiture. Under the ruling of this court in Girard Life Ins. Co. v. Mutual Life Ins. Co., 97 Pa. 15, the insurance company could not under the circumstances forfeit the policy, and the forfeiture cannot now be sustained. The assignment, whether valid or not, was not used to divest her interest, and the forfeiture was ineffectual to do so. The second policy bore the same number and was for the same amount and at the same rate of premium as the first, and it was in part purchased by the use of the reversionary insurance that stood to the credit of the first policy. We agree with the learned master that this policy was a substitute for the first policy, and that having been received by the bank with knowledge of that fact it was impressed with a trust in favor of the plaintiff.

Is the bank entitled to credit for the premiums paid? For twenty-four years it paid the premiums and preserved the policy. These premiums were paid in good faith, in reliance on its title, and without notice of the claim that the plaintiff now sets up, that the assignment was improperly procured. During the . whole of this time she knew that if the policy was still in force it was by reason of the payments made by the bank, and for six years before her husband’s death she knew exactly what had been done in relation to the policy, and why it had been done, and she remained silent. To permit her now to take the whole fund would be grossly inequitable. It is not the case of payment by a volunteer having no claim or color of interest, nor by one who used his money in an attempt to carry out a scheme of fraud and should be denied repayment of the money so expended. It is the case of payments made in good faith under belief of ownership of the policy as collateral and for the joint benefit of the holder and the beneficiary. The equity of the bank is certainly as clear as was that of the holder of the policy in McCutcheon’s Appeal, 99 Pa. 138, who was held to be entitled to a return of the premiums paid by him. In Downey v. Hoffer, 110 Pa. 109, and Ruth v. Katterman, 112 Pa. 251, the holders of wagering policies were allowed to retain the amounts paid by them to keep the policies alive.

We are of opinion that the learned master was correct in his first finding upon this subject, and that the decree recommended in his first report should be entered against both defendants, and that the costs should be borne equally by the plaintiff and the defendants. With this modification the decree is affirmed. And now, March 22, 1897, it is ordered, adjudged and decreed that the Seventh National Bank of Philadelphia do pay to Theodosia Matlack the sum of $5,036 with interest from March 15, 1893, less the sum of $1,574.58 with interest thereon averaged during the periods that this amount was paid by the said Seventh National Bank as premiums; and that the Mutual Life Insurance Company of New York pay to the said Theodosia Matlack a like sum, this decree to be marked satisfied upon the receipt by the plaintiff from either of the parties defendant of the sum herein named, the costs to be paid one half by the plaintiff and one half by the defendants.

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Dissenting Opinion

Mr. Justice Mitchell dissenting:

The plaintiff was not a competent witness against the bank. The latter represented the title of the husband who was dead and whose interest had passed to the bank. It was moreover a creditor of the husband and held the policy only to secure its debt, and to the extent necessary for that purpose. If any balance remained (as this court holds that there did) it prima facie belonged to the husband’s estate and his creditors. By her own evidence the wife is now allowed to take it away from them. If the policy had been on the endowment plan and had become due and payable to the husband in his lifetime it cannot be pretended that the wife would have been a competent witness against him to claim the money, on the ground that the policy was a substitute for one wrongfully obtained from ber. I cannot see how his death makes her any more competent against his estate than she would have been against him. The bank is his assignee for value, and represents his interest, and as against it she is not a competent witness under the plain letter of the statute.

But I would go farther and not only reverse this decree, but dismiss the bill, first for laches, and secondly as to the bank, on tbe merits. The laches, involving a delay with full knowledge of the facts for twenty-four years, and until all the parties charged as at fault in the original transaction were dead, is too clear to need enlargement upon. As to the merits it is now practically conceded that, on the ground on which the decree was rested by the master and the court below, it cannot be sustained, and the plaintiff has no claim to any part of the money from either defendant. But this court finds that as there were accumulated dividends on the first policy, the cash value of which was sufficient to pay the premium due April 18, 1869, tbe forfeiture of the policy by the insurance company was unauthorized. Accepting this conclusion as to the insurance company on the authority of the very unsatisfactory case of Girard Co. v. Mutual Co., 97 Pa. 15, there still remains the entire absence of knowledge on the part of the bank of any such reserved dividends, or the other circumstances of the cancelation or forfeiture of the first policy. Of such knowledge there is not a scintilla of evidence. The only facts that the master finds, with any relevancy to this point, are the cashier’s letters of April 14 and April 17, 1869, and the indorsement “ premiums on former policy, same number, paid in full to April 18, 1869.” But the most strained construction cannot make any more out of these than a knowledge on the part of the bank, which is admitted, that there was a policy in favor of Mrs. Matlack, which she had assigned to the bank by a transfer which the insurance company for technical reasons refused to approve, and a subsequent accomplishment of the same result in due form, acceptable to that company. The master finds expressly that the bank had no knowledge of any circumstances of coercion or fraud by her husband against Mrs. Matlack; the first transfer was not used solely because not satisfactory to the insurance company; and when that objection was overcome and the second policy was issued, the bank took it without either knowledge or notice of the first policy having been improperly forfeited, or of anything irregular in the issue of the second. I am unable to see any ground, in law or equity, on which the bank can be held liable, except for a possible residue after payment of its debt in full with interest, and no such residue is even claimed to exist in the ease.

Williams, J.,

I agree with my Brother Mitchell in the views expressed by him, and dissent from the judgment rendered for both the reasons he has given.