53 Wash. 523 | Wash. | 1909
On the 13th day of April, 1900, the appellant was the owner of a paid-up policy of insurance, for the sum of $2,000, issued by the respondent upon the life of appellant’s husband, payable to the appellant, upon the death of the insured, in ten annual installments. This policy on the date mentioned had a cash surrender value of $781. On that date the appellant, her husband, and their children, borrowed the sum of $781 from the respondent, and agreed to repay the same on September 19, 1900. As security for the payment of such loan, the appellant, her husband, and their
“In the event of default in the payment of 'said loan on the date hereinabove mentioned, the company is hereby authorized at its option without notice- and without demand for payment, to cancel said policy and apply the customary cash surrender consideration then allowed by the company for the surrender for cancellation of similar policies, viz., $781, to the payment of said loan with interest, the balance if any to be payable to the parties entitled thereto, on demand.”
Upon the maturity of the debt, by the agreement of the parties, the date of payment was extended to March 19, 1901, and the interest was paid to that date. Two interest payments were made, the first in the sum of $16.93, interest to September 19, 1900; the second, $19-53, interest to March 19, 1901. The first interest payment was deducted from- the sum loaned. The second was paid as advance interest, in order to secure the extension of the date of payment to March 19, 1901. No other payments were made or tendered, either of interest or upon the principal. On May 2, 1901, the respondent cancelled the policy, claiming to act pursuant to the stipulation in the assignment. On June 11, 1904, the insured died, and on July 15, 1907, this action was instituted, charging» that the respondent had wrongfully converted the policy. On June 23, 1904, the respondent, in answer' to the appellant’s inquiry of date June 16, 1904, as to the status of the policy,' advised her that it had cancelled the same for nonpayment of the loan, on the 2d day of May, 1901. This was' the first communication between the parties subsequent to the extension agreement of September, 1900. The case was tried to the court, and resulted in a judgment in favor of respondent. From such judgment, this appeal has been taken. Among other things the court found, “that on said 13th day of April, and said 2d day of May, 1901, the sum of $781 was the full cash surrender value of said policy.”
The view we take of the case will dispense with the necessity of considering these propositions separately. We think the applicable principles of law áre well settled. It is true, as the appellant urges, that the general rule is that a contract , whereby the pledged property becomes forfeited to the pledgee for the nonpayment of the debt at its maturity, is void on the ground of public policy. Denis, Contract of Pledge, § 302. The reason for the rule is that, in .most instances, the disparity between the amount of the loan and the value of the security is so great as to make such a contract unconscionable. It is a rule proceeding from equitable principles and, like other equitable rules, where the reason ceases the principle fails of application. It is competent for the parties to the contract to stipulate that the pledgee may buy the securities at private sale at the market price, in case of default in payment of the debt, or that he may sell at public or private sale with or. without notice, and that he may become the purchaser. Denis, Contract of Pledge, § 311; Edwards, Bailments, § 284; In re Martens, 144 Fed. 818; Toplitz v. Bauer, 161 N. Y. 325, 55 N. E. 1059; Williams v. United States Trust Co., 133 N. Y. 660, 31 N. E. 29; Manning v. Shriver, 79 Md. 41, 28 Atl. 899.
In such case, the pledgee is treated as the trustee of the pledgor, and is held to the rule, of good faith. Not only did the parties stipulate in the assignment, that- the cash surrender value of the policy was $781, but, at the time of the trial,
In Du Brutz v. Bank of Visalia, 4 Cal. App. 201, 87 Pac. 467, 469, the insured and his beneficiary had assigned a policy drawn for $5,000, as collateral security. The assignee converted it into a paid-up policy drawn for $2,850, pursuant to one of its provisions, without the knowledge of the assignors, and applied it on the debt which the policy was pledged to secure. Under the assignment, the assignee might have paid the premium and kept the policy alive for the full amount of $5,000, but it chose to exchange it for a paid-up policy. At page 468, the court said:
“The debt was due, and to have put the policy up and sold it would have been an idle thing, as it could not have brought more than its face value, the assured being still alive.”
See, also, Palmer v. Mutual Life Ins. Co., 38 Misc. Rep. 318, 77 N. Y. Supp. 869.
We have seen that, for more than three years before the death of the insured, no payments were made on the loan, and
Finally, the appellant urges that the one extension of the date of payment was a waiver of the clause in the assignment. The authorities cited in support of the contention announce the familiar equitable principle that, where a party is misled to his disadvantage by the acts and conduct of another, the party misleading him will not be permitted to make a claim not in harmony with his acts. The failure of the appellant to redeem the policy before its cancellation did not result from any misconduct on the part of the respondent. She had the option to pay the debt and redeem the policy. Failing in this we cannot, under the facts and circumstances in this case, hold the respondent liable in damages.
The judgment will therefore be affirmed, and the respondent will recover its costs.
Rudkin, C. J., Fullerton, Crow, Mount, Chadwick, Morris, and Dunbar, JJ., concur.