New York Life Insurance Co. v. Nashville Trust Co.

Life Insurance New York Company et al. Nashville Trust Term, 1955.) December (Nashville, April 27, Opinion 1956. filed July 20, Rehearing Denied Edwards, Nashville, Chambliss, J. C. & Chambliss for Brown, Chattanooga, appellant. Davis, Harris, Howard, &

Hooker, Keeble, Dodson & Min- A. Newman and Noevbll & Hunt, Boult James appellees. Nashville, iok, Justices,

Prewitt dissented. Swepston, and opinion delivered the Burnett Mr. Justice Court. Com- was filed the Insurance

The bill in this cause pany against Company as and defend- others, Trust Company seeking Trust ants, recover certain Nash- it holds as successor trustee to the funds which beneficiary Company, which under ville Trust was policies, issued in bill, life insurance as described two payable to the Nash- and on Thomas Buntin the life C. Company instrument trustee under a trust ville Trust February 16, 1928. dated agreement

The beneficiaries under trust made individual defendants to this suit former are the wife Thomas C. Buntin their three children.

Thomas C. Buntin, who likewise an insured, was disappeared insurance his home man, Nashville, subsequently brought by Tennessee, and suit was Company against complainant Nashville Trust In Company, appellant, surance was against Company rendered full for amount policies. reported case is This in 178 Tenn. 437, 159S.W. styled, 2d and is York 81, New Insurance Life Company. v. Nashville Trust As result of this suit, Company paid 1942, on March 10, Insurance expenses trustee $59,438.40,from which certain and costs paid paid were and the net balance the trustee later trustee, turned over to the successor defendant present suit. money

Thomas Buntin, the C. insured which that paid, was found alive June his iden- tity brought verified June This suit imme- diately purpose recovering thereafter and the net balance of the funds in the hands of the successor trustee. sought grounds:

The relief suit is based on five (1) (2) (3) mistake, fraud, the defendants have unjustly (4) newly been enriched, evidence discovered (5) and trustee defendant holds the funds in its as constructive for trustee the Insurance hands Com- pany.

To this bill the defendants demurred which with the original substantially and amended demurrers raised points, these to wit:

517 complainant right action has 1. whatever That year ten the six statute limita- either is barred tions ; action in the be-

2. That the Circuit judicata parties is on the merits; res tween the same mistake made; 3. actionable has been no That pro- original were facts as to in the 4. That all proceeding; ceeding attacked this and cannot be allegations not sufficient of fraud there are 5. That pleaded; pleaded That which show mistake; no facts against charge either there is of fraud

7. That beneficiary. trustee demurrers sustained the defendant’s

The Chancellor injunction kept an bill. He force dismissed the paying enjoin trustee out successor litigation. appeal 'money sea- pending An been has this sonably perfected, been briefs have excellent able arguments have matter We heard. now filed for determination. study thought, much we case,

In after have been overruled. We should demurrers think the extrin here committed Buntin is think the fraud closely very is known as allied what it True, sic. all insofar we wherein courts, intrinsic fraud Throckmorton, v. have followed U. S. able find, been 25 P. Cohn, 129, 91 Cal. 93; 25 Pico v. 61, L.Ed. 98 U.S. to this L.R.A. 336. We are committed P. by Keith intrinsic as is shown if rule the fraud is though Alger 71. We feel that fraud Tenn. S.W. stated, hereinafter reasons case, instant in the brings the rule Hazel-Atlas less within more or Hartford-Empire Glass Co. Co., v. 322 U.S. 238, S.Ct. well-recognized L.Ed. rnle of 1250, wherein recognized again the Throckmorton case and others was Supreme by the United States. place money by

In it is first conceded all that sought by appellant money by being now is held growing trustee successor out of lawsuit New York Company Company Insurance v. Nashville Trust Life reported money in 437, 159 178 Tenn. S.W.2d This paid was that Thomas on contract had with C. Buntin they pay agreed the Life Insurance wherein principal “upon policies receipt amount these proof of due the death of Thomas C. Buntin”. As reported by opinion, prepared shown which was proof the late Chief Justice G-rafton in that Green, along lawsuit and the inferences there with the seven- year presumption (which simply statute, the common- any rule law of evidence and has no more force than might other evidence which turn untrue, out 251) Jones, D’Arusment 72 Tenn. warranted this finding in Court, case, that in under such circumstantial prior evidence the insured that died to March 8, expiration great date insurance. In that weight great put store fact of wills being sent St. home from to two of his Louis relatives; unstability himself; Buntin the suicide of Buntin’s things clearly father and of that kind which convinced Court, that Buntin lawsuit, that was dead. twenty years policies now, It after the had matured turns out again Buntin is alive, married family. raising and is another The trial court re- ported case committing did not consider that Buntin was any question fraud on them. The there whether or circumstances tlie Under facts and not Buntin was dead. jury, affirmed case the court introduced reported opin- appellate courts as was shown the In- It is he was dead. true ion, concluded that proof Company effect to the offered certain surance (all later turned of which he had here and there been seen showing incorrect), fraud, of this was not a but out to attempt merely showing that sub- show, a or an it was policies lapsed, sequent Buntin was time that he committed a has It now turns out that seen alive. upon gross the Insur- well as the Court as Company. By knew then, acts one ance his judg- twenty years anything after this until later and of caused this Court it became he fooled final, ment dead) (that as when Buntin a mistake of fact reach he was alive. matter of fact a page said: is 654, 31 Am.Jur., 232,

In Sec. adversary his withdraw induces an “Fraud which presenting prevents an available him defense, from action which the in the cause of action defense proper regarded a judgment has been obtained, judgment.” equitable against ground relief (Emphasis ours.) juris- many cases then cited number

There are Buntin In instant case in the this dictions United States. by hiding fraud on Court and committed a out prevented the Insur- available defense to his action actually This alive. was not he was ance until 1953. discovered recently, very Supreme has

The United States Hartford-Empire supra Co., Co. v. Hazel-Atlas Class [322 said: 1000], S.Ct. 238, 64 U.S. where the occasion demanded,

“But has where en- judgment ‘manifestly forcement unconscion- Talbott, 225 651, able’, U.S. 657, S.Ct. Pickford they power L.Ed. wielded the [This opinion without hesitation. statement in the quoted recognition which is now follows a rule cases.] other Throckmorton case and related “Every element the fraud here demands disclosed power equity exercise aside historic to set begotten fraudulently judgments. simply This of a wit obtained with aid ness who, on evidence, the basis of after-discovered possibly perjury. guilty is believed to have been nothing even if we Here, consider Hartford’s but deliberately planned sworn we find admissions, carefully only executed scheme to the defraud Appeals. Patent Office Circuit but the Court of Cf. [141 Holmes, Marshall 589, 12 v. U.S. 35 L.Ed. S.Ct. supra. 870] complete scheme, Proof of the and of its up date, success to is conclusive. States Cf. United equities supra. Throckmorton, And have intervened through fraudulently procured patent the transfer of judgment purchaser. Hop to an innocent Cf. Ibid; v. Hebard, kins U.S. S.Ct. L.Ed. * *“ * tampering with the administra- Furthermore, justice indisputably tion of in the here manner shown single litigant. injury involves far more than an to a wrong against up pro- a It is the institutions set safeguard public, tect and the in which institutions complacently consistently cannot be tolerated frcmd good society. Surely with the order be cannot of preservation integrity judicial proc- that of diligence litigants. always wait ess must agencies pub- public demands that the The welfare impotent they always justice must not so that lic deception helpless be mute and victims of fraud.” (Emphasis ours.) Supreme

This was suit wherein judgment, States set aside authorized United Appeals which to, them Circuit Court of or directed prior years judgment ten entered them some had been brought the expired, etc., thereto and the term had judgment Throck- as under the rules contended aside to set morton case The bill filed and others. The having fraud. been obtained conspiracy at- entered into fraud consisted pub- torneys companies of one and officials of the journal describe lished article which would in a trade an process remarkable advance under consideration as machinery. fashioning glass certain the art strength article held Court on the of this Circuit patent reversed. was valid District Court and the District Court At the time the matter was tried attorneys received information Hazel-Atlas Glass attorneys sev- one of Hartford’s had Clark one lawyer years previously eral Hartford admitted publication. at- Hazel-Atlas was the true author attempt verify torneys the truth time did not at that hearsay story on and the case but relied won opinion grounds. reversed other After the Circuit Court investigation ground, made was the District on this man- affairs. The which determined the true state of 1932. was entered in In 1941 of the Circuit Court date quoted present just was above, commenced suit, committed result that due fraud therein with the to the suit was reversed. Picture the of Buntin related acts in this just quoted case and the facts of case from. We cannot see that case last above fraud in the quoted from is as extrinsic as is instant fraud in the case, Buntin case. The Buntin not discov- was fraud- of years many paid ered money until and the after judgment was it and was this whs rendered fraud question. discovered later now the That opin- was not the Court and is not the basis before reported. ion as 178 Tenn. 159 S.W.2d heretofore The rationale of these decisions, Throckmorton adversary and Pico, is that in course trial opportunity by per has the cross-examination show jury forgery every likely and that in there case opinion to be among a difference of the witnesses which may by rigid be shown cross-examination. The rationale par further is that where there has been fair trail, opportunity have present ties had fair the situation, then reopened the final final cannot very good and obvious reasons. But in instant opportunity pre there not a and honest fair things sent twenty years which were discovered later. certainly, No one would doubt if it dis could been covered at originally the time this case was tried, that Buntin was any judg alive there would have been guess ment in it rendered then. We would if that Buntin contempt had been found then he would'have been held severity. right of Court limit Is it that he years say: can now come in later, court, “Well, I’ve your got money, you do what want to it, about there is you nothing anything can do with me about it else”. right Is then that someone that he else, has made bene ficiary policy, keep money1? Ms under should cer this It tainly go belongs, seems to that it should where it us back part which is left and that those who not entitled participate to it should not be allowed further to in it. argued appellees It was that no fraud here imagine has been committed. We cannot could how acts long ago, be more Court, fraudulent. This in a time Harrison, 49 Smith v. Tenn. 230 said: “Fraud vitiates and avoids all transactions, human judgment private from solemn of a court con- to a tract. It is as a odious as fatal in court law equity. thing as in court It ais indefinable any arbitrary fixed and definition. In multiform phases shapes, and subtle it baffles definition. It part equity said, indeed, that it doctrine of fraud not it, to define lest the craft of men should find ways committing might fraud which evade such a general definition. In its most it sense, embraces all concealments ‘acts, omissions, or which involve legal equitable duty, breach trust or confidence justly injurious reposed, and are to another, or advantage undue an and unconscientious is taken page judicial 6f another.’ pro- Bouv.L.D., 613. A ceeding generally binding per- while rem, all free sons, is no more fatal taint of fraud than proceeding personam, an individual contract. poisons exist, When once shown to alike the contract treaty diplomat, citizen, sol- emn court.” stayed

Buntin out so he hid could not found way years. many this It is obvious course that policies were he knew these insurance he is existence, certainly presumed right known He so. had policies' when he change these the beneficiaries change shortly left, before he leav- he did to; wanted company payable benefit of ing for the trust them after children. Then then her for life and wife his years his twenty discovered. thereabouts actually he was when fraud, This was after-discovered fraud, for this kind of seems us it alive, found opportunity in to show this the trial there was %ohen clearly equity twenty years nearly should before, judgments agamst grant obtained such fraud relief twenty years really until discovered later. not which are imposed upon very Court, toas this Courts, Our being hidden into Buntin out cmd defrauded fooled fifty-odd opinion upon rendering dol- thousand an money paid. the here Under circumstances was in ías Kentucky go along when said: with the we * * “* interpretation refinement technicalities of or permitted will not be of distinction should not power jus- exercising to do court embarrass ” Metropolitan New York v. Ins. Co. tice. Life Ky. Meyers, 1194, 109 S.W.2d Clearly judicata plea should have of res or case now whether issue been overruled. The by active has defrauded Tom Buntin extrinsic fraud not causing Company, thereby Insurance the Courts and the money say paid to the bene should be Courts to deliberately by his Buntin. And also that ficiaries of keeping wilfully himself hidden out he has simulated a chain of circumstances has manufactured death and persuade which was calculated to and did evidence and. had committed suicide. this State he Courts heretofore was whether tried issue or not In the case there dead. issue he was under facts twenty-odd years ago law “whether ease decided prior (the not Bnntin had died to March date policy expired value) without issue in the previous certainly seems trial”. us an It that this is independent any action and not involve retrial does disposed think issues of in former case. We question directly Copeland Copeland, determined speak 555,wherein this 609, 177 Tenn. S.W.2d Court, ing through Mr. Creen, Chief Justice said: plea judicata merely

“A res available be- subject cause matter two suits same. The is the cause of action in the suits must two be the same. Mr. expresses Freeman the rule thus: “ already subject identity ‘As we have seen, mat- estoppel by judgment. ter is not essential to in de- So termining whether causes of action are the same, identity subject matter the transaction they controlling out a of which not arise, factor. subject distinguished The matter of action an must be subject from the of since the action, cause matter of may yet actions the same the two be the causes may entirely rights be action different. New in the subject may same matter intervene the two between Judgments, p. actions.’ Freeman on Edition, Fifth 1434.”

And then it well said: too, ‘ * * ‘ * generally principles it is held of res judicata may not be invoked sustain and that fraud, may obtained fraud collusion not be application as for the used a basis doctrine judicata.” (Judgments) res Am. Jur. p. We are satisfied that under the authorities in this up trust should State constructive set to take right- apply money it where court and which is fully belongs. obligation insurance con- under money ob- upon an was was which the recovered tract pay ligation Buntin is the death of Buntin. paid only money be- reason the dead, and against the Courts him the fraud committed cause of Company. us against seems to It the Insurance holding now this fund the trustees now therefore conduct and active it due the unconscionable hold fraud part con- It us thus a on the of Buntin. seems placed upon the fund. structive trust should he Ap analogous situation the Circuit Under an peals Brown v. New the Ninth for Circuit this: York 152 F.2d said Life, policies nothing “Appellant paid insurance for the gratuity. they innocent of her were She is and as to perpetrated by as but the lower court herself, pointed even widow a trustee ex out, maleficio paid property pur no consideration for the who has misappropriated funds, fruits, or for their with chased may property, or the fruits thereof, not hold such que against real owner. A trust, cestui who good person, ac unless he or has in faith third she subsequent quired interest, notice value without resulting misappropria seeking any from the benefit particeps criminis however innocent tion, becomes a authority beginning.” Citing fraud in Jurisprudence, Story’s Equity 14th therefor, Ed., Keyes, Perry case Vorlander Trusts and the 8 1 F.2d 67. Cir., sound. cases Akers 191 Our v. Gillentine,

This is Schlickling, 26 231 369 and Fehn S.W.2d v. 35, Tenn.

527 Tenn.App. support con- 608, 37, 175 will such a S.W.2d structive out of the trust funds here held. very likewise statute

We are confident that of Buntin limitations did not run herein. The fraud was not known until he found bearing treating

“Most of the cases of the right statute limitations constructive recognized principles trust have soundness applied above stated and have from the statute imputed knowledge by date of actual cestui of wrongful holding.” Bogert 4 on trusts, sec. p. Haynie 213; 24 v. Tenn. 42 Executor, Hall’s Haynes 427; Swann, Am. Dec. Tenn. and in supra. Gillentine, Akers v. appellee

The case relied York New Life Ins. Eastman, Co. v. & Chittenden Iowa point. quote N.W. 96, 99, 11 233, not We L.R.A.,N.S., briefly case: question the case

“In before us the whether Jarvis distinctly contemplation was dead was within the parties expressly proof both for it was recited in of loss he had been absent more than seven years, had not been heard of within that time. The only question parties controversy between money determining whether insurance should paid dead, was as whether Jarvis was and the plaintiff liability by voluntarily paying conceded In the or concealment, claim. absence of fraud knoioledge controversy being means as to fact equally party, payment accessible to each is con- Emphasis clusive.” ours. concealment fraud or there was no

Thus it is seen that merely anything was the Iowa case—it kind in or of that payment. voluntary Metropolitan Ins. Co., Steele v. The case of Life as is likewise cited 787, 821, 61 A.L.R. N.C. S.E. 408, posi authority. authority the case, is no for too, This only appellee. thing involved in this case The tion power im had whether not lower court policy giving pose upon beneficiaries under a proof money upon presumptive get bond to years. exactly the the case is Otherwise of seven death reported is herein in 178 Tenn. It same proposition authority all for the now before us. at Mays Sovereign Camp, 151 Tenn. etc., The case point 40 A.L.R. likewise not 271 S.W. question was whether here. involved that case provided company not when insurance has an seven-year presumptive apply period shall not of death expired against expectancy public full has until policy. company This insurance held against public policy. provide was not could so it provide The Insurance did not have to against being on it or its contract committed fraud being a on court. That what the courts are committed protect if fraud is here committed we are to for, rights that are those defrauded. is it for these reasons that we think

So, the demurrers should have been overruled. The case reversed and proceedings further remanded for consistent with this opinion. paid out The costs of case are to funds in hands trustee. Swbpston, Justices, dissent.

Peewitt Tomlinson, Justice (concurring). opinion

I ma- am accord with the written jority by point Burnett. there is one Mr. Justice But concurring emphasize. which I like Hence, would opinion. agree,

All must intent of seems to the true me, that contracting parties money the was that insurance the provided payable for the insurance would be contract only policy. By during if Buntin died the life of reason of fraud, Buntin’s re- the Court was tricked into quiring Company pay the Insurance to this insurance on finding a that Buntin so die. It is did now admitted living, money he is and that of this in $30,000 some is possession par- those beneficiaries who were not ties to fraud, but whom to Buntin intended benefit by means of his fraud. only question,

The difficult I it, as see is whether the fraud of is so Buntin intrinsic as to defeat suit of subsequent independent the Insurance in these proceedings procure a instituted to return of what is money. left of that nothing

If the fraud amounts to more than false evi- nega- dence introduced to establish affirmative tive of the which issue Court to determine, it is Perjury forged a signature, course. intrinsic, noth- ing appearing, category. else would within fall this But, majority opinion, as said in there exists in such sit- opportunity a uations fair for the introduction of testi- mony contradictory testimony, perjured of such op- cross-examination there is afforded an additional portunity expose the fraud. hand,

On other if the fraud is a character which prevented litigant has interposing the defrauded from only suit, in the it is extrinsic available defense way nothing in defrauded else fraud —the which— subsequent independent may party in chan- recover an proceedings, cery I the law. understand may line de- be of kind close to the fraud so marcation extrinsic between intrinsic and as to make which side of the line the difficult determine may possess question in falls. fraud Some acts fraud coming within the definition of In characteristics each. ought plight, fraud intrinsic characteristics subsequent prevent independent equity proceedings ordering the return to the defrauded party property he was defrauded, of the of which beneficiary posses- fraud still deprived by party defrauded sion, if, fact, question only peculiar of its nature law defense. correct rule of available That Judgments, C.J.S., made clear seems sec. pages in its discussion of extrinsic where- fraud, 740-742, that in it rule to be declared the something actually ‘'‘the fraud not be must was potentially in issue in the unless the inter- case, position prevented by ivas or con- defense fraud opposite party.” (Emphasis supplied.) duct of Keeping mind, rule it now be that in let recalled that disappeared simply party wherein a this not by expected would was unheard those who be years. period for a There etc., seven hear, was no against Company, unless of action Insurance cause policy; is, within Buntin died within life that disappearance. eighteen after his Almost imme- months surreptitious evilly diately after self-made his conceived, disappearance, Bnntin concocted a canse of action cleverly very simulating tbe suicide. occurrence of per That was, se, simulation suicide of bis evidence and, under death, circumstances related in deci- conclusively sion of suit, this Court former almost required finding policy was that Buntin died while the Company in force, unless the Insurance could that show being he still lived. The evidence was, concocted it what only that was the available defense Insurance to the Com- pany. The decision in 178 Tenn. dis- S.W.2d 81, Company closes that fact the Insurance unsuccess- fully power everything did within its for to find Buntin, apparently, convinced, was his suicide simu- lated. having

Buntin, however, concocted a cause of action against Company, and, token, Insurance same having support furnished evidence conclusive in thereof body equivalent (or by proof) unless his live could, produced, cleverly cunningly effect, then did set only support not about to furnish more evidence bogus deprive but, cause action, addition, only Company this Insurance of defense available completely to defeat it. He did this devices which identity, concealed whereabouts, his fact that his just disappear he existed. He more did than years. deliberately successfully seven He made it appear by fraudulently conceived devices mentioned beginning he had died at the seven- almost year period. deliberately This conceived to prevent interposing Insurance only Company, the the defense, to end that Insurance it, money would “fleeced” the of its benefit of deserting. wife and he children whom was perfectly premeditated scheme executed did This and Company only deprive its available the Insurance well it extrinsic sense, therefore, was defense. In that being such, the Insurance Com- And as intrinsic fraud. majority pany set reasons in the is entitled for all the out opinion to I think. suit, maintain this

Neil, (concurring). Chief Justice given greatest due to This case has concern me importance, issue, whether the fraud the fact that and My at tentative view involved is intrinsic or extrinsic. (1) beginning fell intrinsic and with- was judgments category of obtained that had been in the testimony; complainant (2) had false and that since against power own contract it within its the fraud grant Chancery the re- could not the insured the complainant prayed lief for. words, In other jurisdiction privileged court of the to invoke against folly guarding protect in not own it from its complained wrong of.

Upon thorough authorities, and examination especially I feel constrain- counsel, the excellent briefs disagree able Chancellor concur ed with the and Tomlinson that the fraud with Burnett Justices practiced Life New York Insurance extrinsic. it were If was both intrinsic clearly jurisdic- fraud, intrinsic court would e. i. intrinsic otherwise, But if case. it were tion of money complain- out of which the extrinsic, Chancery ant was is within the reach defrauded require restitution Court, then court should equitable fund under the doctrine a constructive trust arises for the one is defrauded. benefit of the who beneficiaries of the who contracts, The insurance by have been enriched the fraud Buntin, insured, legal equitable upon no or claim even this fund though wrong imputed by no is to them. It Mr. is said Chancery, Gibson, Gibson’s Suits in Ed., 3rd Section “any wrong equitable legal right done to be re- a will Equity, dressed in unless other some exclusive has ’’ jurisdiction. complainant In the instant case the counsel for the rightfully money belongs contends that “this to'the New Company” gross York Life Insurance because of the Pomeroy’s Equity Jurispru fraud of the insured. In dence, 5th at Ed., Section said: party legal property,

“If one obtains the title only by fraud or violation of confidence or of fidu- ciary any but in relations, other unconscientious man- equitably property ner, so that he cannot retain the really belongs equity another, carries out theory equitable ownership, legal, by aof double impressing property constructive trust good favor of the one is in who conscience entitled equity it, and who is considered as the beneficial ’’ owner. my opinion It well-considered that the court should money decree trust now in should be held Company. the benefit of the York New Life Insurance injury The will suffer beneficiaries no as result complainant’s sustaining decree because the bill, money equit- legal is not retain theirs to matter right. able complainant appealed unyielding rule

The has an great forum the common law to the of conscience. High Chancery Court of has continued erected, and purpose doing justice for the where there is to exist, Pomeroy, adequate remedy law. is- said at It authority, recognized by “Constructive trusts universal working equity purpose of out raised for the justice.” right ever 155. Moreover we are Section great by pronouncements truth “that of a reminded ’’ justice delights justice. Equity doing ? what And by Ulpian, great centuries Boman, It was defined perpetual ago; the constant will allot “Justice is to every Wigmore to man his due.” in his “Pano- Dean Systems” Ulpian Legal speaks rama of World’s of lofty as “the author that definition.” this It principle my I that rest decision in this case. complain-

I with concur Mr. Justice Barnett that the repelled ground ant should not be from court on the that deprived jurisdiction it is of the court’s to frustrate issuing policy pro- because it failed to make practiced upon against fraud that it. It vision refusing all would result relief in cases of fraud party complaining wherein had failed to take notice express provision against of it in the contract and make every it. It is fundamental contract that “Neither party anything delay done, do, has nor will hinder, compliance defeat a faithful with contract his part.” Chancery, Gibson’s Suits in 3rd Section Ed., foregoing

For the reasons I feel constrained hold complainant’s that bill should be sustained. Swepston, Justice (dissenting).

My solely upon part dissent based majority opinion question which relates the- (cid:127) of whether this fraud was intrinsic or extrinsic. majority great opinion I think the reflects a deal of study part on the writer I think his conclusion justified opinion would in the Hazel-Atlas Glass Company, Supreme decided the United Court, States except it is out of line with our own case. I am opinion, majority opinion opens up however, that the stability judg- Box of Pandora’s troubles destroyed. ments will be In the case above to, referred majority opinion, as stated in the fraud consisted of conspiracy attorneys entered into and officials companies published one of to have in a trade journal process an article which would describe the under consideration as a remarkable advance in the art glass fashioning machinery. certain The Circuit Court Appeals strength on the of that article held that the patent clearly appears Thus valid. that this fraud judicial process reaching entered into the court in judgment. Therefore under all of our authorities in Tennessee it Dockery, evidence. was intrinsic Thomas v. App. 695, 33 Tenn. 702, 703, S.W.2d 598. “Ex- trinsic is to said consist of conduct or occurrences extrinsic or collateral the issues examined and deter- distinguished mined things action”, in the from those part composing which are a of the chain internal the process adjudication. of setting

Likewise the fraudulent conduct Buntin in stage appear to make it that his occurred death had although because, was intrinsic evidence the Insurance contrary, offered evidence to the this Court strength very reached the conclusion Buntin’s among things other that he fact conduct was dead. in suggested is It one member the Court that the both evidence in is instant case intrinsic and ex- According two it is definition of the above trinsic. impossible evi- to be correct. The such statement for outside the that it occurred is extrinsic tlie sense dence extrin- is not definition of but that within courtroom was conduct extrinsic because it it must be evidence; sic to the issues examined collateral Court. or occurrences any am see difference between fraudu- I unable to newspaper in the Hazel-Atlas article Glass lent any for forged or other case, document in the case testimony arising perjured subor- out of matter that party to There is suit. witness nation of hazy opinion weak and a rather statement [322 said U.S. case where the Court Hazel-Atlas Glass simply 1001]: case of a “This is S.Ct. judgment on the who, obtained with aid a witness possibly evidence, believed after-discovered basis of perjuryThe guilty that trouble with been many cases of after-discov- statement that there absolutely question no ered evidence where there is question testimony perjured into the entered or case, forged. There therefore no document setting justification in that aside more admittedly false above referred to on ease account any newspaper than would be in other case item there appeared unequivocally where after the decision party suborned trial that the successful had witnesses forged procured entered into the had documents leading formation chain circumstances to the judgment. court’s

This not bound follow the decision of the Court Supreme question ain of this nature United States contrary go treating all to and do so to our cases intrinsic and of the distinction between extrinsic evi- in Tennes- the distinction and in effect abolish dence judg- destroy repose result of which would see, the designed floodgates litigation open up ments and ground judgments same that aside on to set former alleged procured by in fact fraud when extrinsic were according intrinsic. to all our definitions the fraud was opinion we should reasons am the For I that these bury past Buntin Thomas as in fact dead, let dead contemplation of the insurance con- within was dead laws of tract and the Tennessee. opinion have I am bill should

In conclusion that ground I been dismissed on alone. Otherwise opinion. majority to find with the no fault PREwxtt, (dissenting). Justice questions presented ones of law raised herein are

by grounds of are in substance the demurrer, as follows: judgment

(1) adjudicata, That is res the former is conclusive as to the Buntin his death reason period years; unexplained (2) of seven absence year present barred ten suit is six and (3) facts averred as limitations; statutes former suit this cause were considered fraud adversely complainant, and there are and determined against charged facts of defendants alleged fraud of beneficiaries, Buntin trustees imputable (4) defendant; not attributable or to said justify would a trust no facts are averred which being imposed upon funds held Bank, defendant being as a funds held result of valid that said payment 10, 1942, the date of March since complainant adversely any action have been held 538 year

by by it is barred the six and ten statute limita- (5) only alleged tions; that mistake was that the erroneously Courts concluded Buntin was dead, which prior judg- mistake was intrinsic and foreclosed only a ment as issue in cause, direct and likewise the averred to are facts be fraudulent intrinsic fraud by the in foreclosed the former cause. Chancery Now there be can no doubt that .Court right grant judgments against relief has which have through been obtained accident mistake. fraud, See Chancery, Gibson’s in Edition, 814, Suits Fourth Section page 659. complainant

In this connection the relies Fidelity Mutual Insurance Clark, v. Life appears 64, U.S. 51 L.Ed. 19, S.Ct. 91. It that this distinguishable was a case, but case relied on is because the one at bar the defendant beneficiaries charged conspiracy herein are with no or fraudulent acts whatsoever. principles

The set out in above Gibson’s Suits in Chan- cery recognized just and also the case cited above on general jurisdiction proposition this contro- verted defendants, but it is contended them though charged even the facts herein fraud, constitute' only the same would amount to acts intrinsic and not principle fraud, extrinsic and further under the of res adjudioata, rights parties been settled suit cannot maintained. Company,

The defendants contend the Insurance prior proceeding, position took the that Buntin join voluntarily young left Nashville to woman, prove actually undertook to he alive as late as January, 1935. fact been insist had defendants that where question may passed npon

judicially not be factual incorrectly merely reopened been because it had decided Doug Vaughn, King 16 Tenn. 59; in former suit. See v. Douglas, wherein 156 Tenn. las v. S.W.2d stated: pertinent. general principles We find “Certain judi- Dictionary following’ res definition of Bouvier’s Gregory given by Molesworth, cata, Hardwick, Lord by best: writers the considered some 626, 3 Atkins, though necessarily question is in effect ‘When a decided they express parties suit, to the not in terms between question in as themselves cannot the same raise between ” any any form.’ suit in other other Complainant was ex- that the of Buntin fraud insists kept deliberately disappeared him- he and trinsic disappearance away, as result self and that of his no had in the Circuit Court as a defendant opportunity testimony the beneficiaries meet of contended because the outside act the insured. It is keep- much extrinsic fraud as that his was as an conduct away ing party, or from the the unsuccessful witness recognized extrinsic which fraudu- court, both of acts. lent Alger, 1,

The in the of Keith 114 Tenn. Court case v. discussing 85 the various 77, after cases 24-25, S.W.71, involving intrinsic said: extrinsic and perfectly

“It one is clear that allowed should be by judgment procured any which to enforce practices catalogued Cohn, Pico v. the fraudulent supra [Pico 25 970.], P. Cohn, 129, v. Cal. and supra [98 v. Throckmorton, 65, U.S. United States practices; or other but it L.Ed. similar fraudulent 93], equally there at some time clear that must be an end litigation, parties and that the to a record, privies general, thereto, not, should be allowed retry judgment the same issues after final and correctory appellate proceedings. exhaustion of Carried there be no ultimate, would end such retrials. The case second could be a third, retried third a fourth, and so on ad finitum, and ’’ nothing ever would be settled. Dockery, App.

A still later case Thomas v. 33 Tenn. recognizes S.W.2d intrinsic Alger, and extrinsic fraud rule and relies Keith v. supra. Appeals make statement: ruling

“Under Keith weight authority that has become final adjudícala may in the full sense res not be set aside allegation proof falsity on of the internal procured. evidence, which it was See discussion Chattanooga Company, App. Noll v. Tenn. Ch. 38 S.W. Sharp Kennedy, App. 287, 290, 13 Tenn. 170, 176. litigation “The reason for rule must be brought a to would close; it never terminate if each party successively reopen judgment by could the last charging false evidence.” pronounced by majority

The law, as the a of cases, equity will not relieve for fraud which leads to an erroneous after a trial otherwise fair, only party prevented but in where has cases the been having fair But it a trial. seems that the intrinsic only party pre- rule case where has been having reasonably vented from fair trial. or Whether prior not Buntin had to March 8, 1933, died was the previous company issue trial. The was not misled by by disappearance, mailing the will B or of ontin’s him to his relatives. any day complainant without court,

The has had misapprehension or belief as facts mistaken to what Courts. it not convince the were, but could complainant policies by on Bun- The insurance issued desig- tin’s between life constituted contracts it and whereby Company agreed nated trustee thereunder, proof pay said amounts of death certain Buntin. in Tennessee is insurance

The to the effect that rule companies may expressly protect themselves from unexplained liability presumptive created death, Mays they v. J-f see fit In the case of absence, to do so. W., 151 Sovereign Camp O. 604, W. Tenn. S.W. 620, 1266, A.L.R. said: 34, it was right company insurance has a

“An to contract the risk we extent assumed, to the nature and society, operated why good see no reason benefit profit, cannot, the interest its members not for liability physical actual contract limit its presumptive period life after the death, or death expired. expectancy words, insured has In other why exclude, contract, cannot we see no reason liability presumptive death; reason and no valid any why contract sense us as occurs to such policy public State.” offends the Metropolitan In Redwine Insurance case of Life question Company, Tenn. 156 S.W.2d proceeds a certain to whether or not arose as beneficiary, payable policy to a named insurance were beneficiary estate of deceased. named 542 disappeared away

had more and remained seven than years. company insisting right The pnt np indemnity estate of deceased an bond protect beneficiary ap- the event that the named peared policy. claimed benefits of the This Court page page said 178 Tenn. 85, at 156 S.W. 2d at 390: presumption disap “The common law of death from pearance years for seven well C.J.S., established. 25 page Death, sec. 16 6, 1055, and Am. Jur., Death, sec. page policy

24, The Insurance drafted the knowing Language requiring this rule. a bond could Sovereign Mays Camp, have been inserted. See Tenn. 604, 34, S.W. 40 A.L.R. 1266. In that case only provision proof of ‘actual’ would death upheld.” sufficewas

In see York this connection New Insurance Co. v. Life Eastman, Chittenden & 134 Iowa 98, 613, N.W. 96, following language 11 L.R.A., 233, wherein N.S., used: judgment

“Had been secured in an action authority represent rights administrator with persons proceeds policies, all interested in the judgment such would have been conclusive as to company death of pay- and the Jarvis, not, could after ing judgment, the amount of such have recovered back money paid discovering essential fact issue case, death of wit, had Jarvis, adjudicated. erroneously been would have been that fact.” conclusive as to In this we connection refer to the case of Steele v. Metropolitan Company, Insurance 196 N.C. 408, Life 61 A.L.R. S.E. wherein it was held policy beneficiary not be re- of a life insurance could recovering quired, tbereon, condition as a of protection indemnity give the bond for and of the reappearance company, of in insurance the event of the the of who had been declared dead because insured, the seven-year presumption The rule. said: presumption years’

“The death after seven ab- of disappeared been has sence who and has of one inquiry, diligent rea- in from, heard after search and applies in- who son authorities, and those years presumption long has been seven sured. The jurisdiction. obtains The which in this law, the common interpreted reference to insurance is in contract of subject. existing pertinent laws in laws the The they part if of the contract as were force become jury expressly incorporated. issue the The found bringing the the dead at that insured was date By jury estab- verdict this action. insured is fact so lished that the in dead far as rights parties The below are concerned. court impose plaintiff giving power bond, had judgment.” in the set forth in line The with rule above statement laws were in force time is these at State writing among them contract insurance, seven-year presumptive being rule became a incorporated expressly part as if it were of the contract policy. into company pointed had desired

As above if so out present easily provi- placed it could have in the cause question requiring proof policy in of actual sion against guard company such can contin- death. provision policy. gencies by in its such The Insurance further contends if the seven-year presumption only thing been had in the nothing paid case, policies would have been because the lapsed company on March 1933. The insists that perpetrated by because disappearing of fraud Buntin sending grandfather back documents to his uncle, amounted to notes, suicide the Court was saying misled into insured dead, when, he was fact, alive then and is alive now, and that the chargeable beneficiaries are with his fraud. The con- fiduciary is tention not because sound relation existed Company between the Company Buntin, and and the by disappearance any not deceived his or of his subse- quent acts. even if Furthermore, Buntin’s conduct was by such that our very Courts it, were misled issue presented we are concerned with now was at the adversely former trial of case, and been has rendered plea to the adjudicaba Insurance and the of res good. is why

There is present another reason bill in the ten-year maintained and that stat- cannot.be ute of which is limitation, contained 8601 of in Section the 1932 Code and as follows: years against guardians,

“Ten adminis- executors, public judgments. trators, on and officers, —Actions against guardians, executors, administrators, sheriffs, public clerks, other and officers on their actions bonds, judgments and decrees courts of record any government, or other or state and all other cases expressly provided not shall be commenced within for, years ten after the cause of action accrued.” question The whether or not Buntin’s acts are chargeable running defendants so as toll the guilty the statute of were limitations. defendants any They or insured. are not with the collusion they grantees obtained Buntin, even fraudulent company benefits from their virtue of a proceeding herein the affirmed In the this Court. party. Hidell, Boro v. insured was not even a See 80, 99, Tenn. S.W. opinion, of some the absence

We are that in part defendants, fraudulent concealment on the complainant’s any has been it action, had, cause of if ten-year barred limitations. statute of any- regardless Finally, complainant insists that wrong thing equity else suffer without will not good remedy, equity, conscience, that in insists money paid honesty decency, it is entitled prior judgment. under the says Chancery in his Section

Mr. Gribson Suits remedy,” ‘‘equity wrong will not without a suffer a rights complainant’s injury must be a civil apply equity legal equitable, can interests, before maxim. Chancery many There are Courts of instances wherein principles well-recognized legal prevented by equity, good enforcing conscience and claims which honesty For honest debt instance, should be enforced. an six-year admittedly unpaid, by may be barred but may orally solemnly promise limitations. One statute of may pay but of frauds another, the statute debt successfully promisor, interposed if be favor writing. promise not such reduced to required equity follow were If not courts stability in the administration would there law, justice. opinion I am of the therefore that the law in case at bar was settled this Court in the case of Nashville Trust Company, v. New York Insurance Life supra, adjudicaba and the in said res presented, binding issues herein us. opinion I

Furthermore, am of the suit of com- plainant is barred the statute of limitations, and that the suit should be dismissed as was held the Chan- cellor. except concurs, as to Statute of

Swepston, Justice, limitations.

On Petition to Rehear Burnett, Justice. petition

A raising rehear has been herein filed four points, (1) reargument ques- to wit: is had on the main presented originally tion that the insured fraud of the Buntin (2) was intrinsic and extrinsic; that we erred overruling year the defense of ten the six and statute (3); inadvertently part limitations; that we said that sought “newly of the relief discovered evidence” (4) wrong saying that we were that Buntin changed beneficiary “shortly his he left.” before very carefully

We have read, best of our ability analyzed, 34-page petition to rehear as well all as pur- authorities cited therein. To intents all poses, any particular question and so far as is raised questions argued herein, these were raised, briefed, and length original hearing. at questions at the Two raised particular significance are of no insofar decision is concerned. question argued

The first reargument that is is a ably originally question that so made on the of whether

547 extrinsic. intrinsic or or not in case was tire evidence this page is said 33 bnt it brief, This is conceded on the manifest mistake which rendered we “made manifestly (Gibson’s erroneous the decree of Conrt 1319)”. Chancery, Sec. Suits petition this the Hazel-Atlas

The main is attack on' prac- argued It ease. that in that case attorney. party In ticed successful person man case, Buntin, instant insured, in it. who concocted scheme and who was successful change beneficiary right Buntin reserved the beneficiary policy. has interest he his When did so party real in interest. Association Buntin is the hut Life this 96 Tenn. S.W. In that case v. Winn, said: Court * *

“* beneficiary acquires no vested interest occurs. Until event until death of the assured this right owing place, of revocation takes to the reserved to the assured, the benefi- the condition ciary expectancy, depending upon the will a mere has * * * expectancy And this of the assured. does act * ** property right. dignity not rise to (that policy in such where assured assured beneficiary) being right change real has the possibly party it follows that ‘no harm can interest, giving his admissions’ ”. result from full effect to Shepardizing Upon find case we this has been opinions by number this date, down followed, years. during one case, last In such Court Scruggs, page 374, 172 Tenn. at 112 S.W. Merritt v. among referring case, to the 2d Winn 825, 827, things said: other such, beneficiary

“In the case, death of before the company the of the death insured would the authorize recognize policy.” the insured as sole of the owner Every opinion member of this Court has written an profit reargue anything It will this case. question argued it as we have backward and forward again majority time and time of the are well we ground that satisfied our feet on firm we and that right the reached conclusion. We must the overrule point petition. first raised in the point by petitioners The nest raised the is that pleas the statute of limitations should have sus- been petitioners It tained. seems us that have misconceived applies finding rule as it to our in this attack case. No finding majority is made on of the is that Bank holding possesses the funds that it now a constructive conception petitioner trustee. It is the statute started to when the run were funds received the Bank. argument (a) This overlooks two well-established facts, money that when bank received this the Insurance Company had no cause action and could not into come court then because Buntin’s fraud was not discovered (b) until himself Buntin was located, whole present discovery basis lawsuit is of Buntin uncovering alive and thus of the which he com- mitted the Insurance the Court, wrongful money it is this fraud retention of the that the bank held as constructive trustee. Gillentine, v. Our of Akers 191 Tenn. 231 S.W. fully clearly and 369, 371, 2d sets forth what the law under such situation.

“In most cases wherein statute limita- tions has been relied on as a defense courts ‘have imputed applied from the date statute of actual or wrongful holding.’ knowledge of the the cestui p. Haynie Bogert, supra, Ex’rs, Hall’s 953, 213; Sec. v. Haynes Swann, 53 Dec. 427; Am. Tenn. 560.” Tenn. opinion the distinction later in that same then

And applicable particularly again this is in view made, and peti- misconception apparent of the matter This tioners here. Court said: ordinary dealing in the with

“If we were creditors the recordation of the deed would sense the date of though applicable. we Here have determined that allegations a constructive is herein trust under very of such foundation is an made out. trusts necessarily inequitable holding it wherein adverse he bound until of this follows that one is not learns wrongful holding of learned it reason- or could ’’ diligence. able . page Actions, Limitation 165, 34 Am. of sec. Jur., In said: 132, it is country, authority weight

“By judicial in this of equity, obtain well suits to in actions at law as as in damages against of for fraud relief ignorant person injured either time, for a remained fraud or because because of the concealment imply concealment, such character to as applicable limitations commences of the statute bar discovery only or from when with reason- run to ought discovery diligence, to have been a able there ’’ constituting the fraud. the facts petition petitioners the cases of cite Boro v. In this Thompson, Howell 120 961; 122 Tenn. S.W. Hidell, 80, 550 396,

95 Tenn. 32 309; Barnes, S.W. Barnes v. 157 Tenn. 8 481; S.W.2d Harris, and Lee v. Tenn. authority position. S.W.2d for their All these good applicable cases are law and to the ruled facts there any way on but the facts cases none of are in these applicable similar in the facts instant case. through In Boro case the court there found agent complainant knowledge an had the fraud years brought. before suit This a con- is not structive trust case. In the Howell case the statute is limitations involved but the not in that case did facts rights involve a constructive trustee of the cestui against such trustee. In the Barnes case it said that of fraudulent absence concealment an action to brought mistake of correct a a deed must within years after accrual of action. That is cause nothing the case here. In the v. Harris Lee case there merely involved is similar that here. That case held that in the absence of fraudulent concealment that the 10-year applied. statute present

Some intimation made that we in attempting graft interpretation on another limitation statute. This far from true. As'is shown quoted the citation of as authorities, in the Akers v. Gil goes lentine case, that rule far 24 back as or as Tenn., years. right, more 100 than It bound is to be the sensible equitable rule. petition attempts castigate here somewhat this holding way supra, Court in one in Akers v. Gillentine, denying petition and in a for certiorari in the same case reported App. as Tenn. 372. A S.W.2d analysis reported, close and careful of those two as cases, clearly will the show casual that even reader the Court language Appeals expressly by held that the case clear reported the law as in 191 Tenn. was S.W.2d that case as frame of bill in case insofar alleged. was concerned wherein a trust was constructive allegations Appeals of a In Court case after applied alleged the law had constructive trust been alleged they there remanded and case was as were Appeals proof as well as the Court Chancellor complainants (1) had failed found a fact that applied prove proceeds were to the that of the note purchase (2) the note was not involved, land that security, (3) pledged to the bank as there collateral Thus involved. after such was no constructive trust Appeals very finding case the Court of Court seven-year dealing properly applied with statute, possession, such statute held that land and year running before bill more was than started absolutely point This must be overruled as we filed. correctly original in the that divided confident opinion. question sought we that

The next raised among original opinion said in of our the outset newly things “on that the on was other case was based ques this evidence”. Our recollection is discovered argued contradicted tion bar. Whether it was at the original opinion reading herein casual of our not a opinion nothing clearly with the shows had do merely preliminary way state It one the other. was opinion. statement With this ment drafts concerning point likewise overruled. the matter this point petition is that this

The last raised in inadvertently majority opinion Buntin said that in the “shortly beneficiary changed A left”. he before had reading majority opinion casual will show nothing this fact had in the world to do with the determi- nation of the proposi- case. Time of course is a relative changing beneficiary, tion. The which was done years prior some two the time Buntin left, had no weight way one other as far as determination present of this case was concerned. We did not intend any way that it have effect one or the other deter- possible only purpose mination of this case. that it could have and did have in the determination was to right show that Buntin had the under the terms of his policy change beneficiary whenever he saw fit and exercising right change beneficiary. this did he they As to times and dates were not mentioned and we did not consider them material and do not now insofar as this is concerned. For as said above in our reference supra, Assurance Winn, Co. v. having Buntin Life right change beneficiary his he party real interest. petition

We have read and re-read herein and carefully authorities and reconsidered the matter. As a nothing reargument whole portion but a aof what argued was so well in the first instance. We are satisfied right that we have reached the conclusion. In view this petition fact to rehear must overruled.

Case Details

Case Name: New York Life Insurance Co. v. Nashville Trust Co.

Court Name: Tennessee Supreme Court

Date Published: Apr 27, 1956

Citation: 292 S.W.2d 749

Court Abbreviation: Tenn.