Steele v. Connecticut General Life Insurance

52 N.Y.S. 373 | N.Y. App. Div. | 1898

Follett, J.:

On the trial of this action the defendant expressly admitted that all the allegations of the complaint were true, except this allegation: “ While said policy was in possession of this defendant, the plaintiff herein offered to pay the amount due this defendant on said note, including interest to that date, and asked that, upon the making of such payment, the policy in qirestion be delivered to this plaintiff, all of which transactions transpired before the commencement of this action, and the defendant herein refused so to do.”

The defendant’s president was a witness on the trial, and admitted that he received a letter from the plaintiff’s attorney dated April 14, 1897, in which the plaintiff offered to remit by. express, in legal tender, the amounts due on the two notes in case the defendant would deliver the policies, to which proposition the defendant made no answer. This evidence is undisputed, so all the allegations of fact in the complaint were admitted or proved to be true. The defendant, on the trial waived the defense interposed to policy No. 17523 for $2,000, that the insured died from alcoholism, and stood solely on the defense that the action was pending in the Superior Court of the State of Connecticut, brought by George D. Bissell for the recovery of the amount of that policy; and the only defense interposed to policy No. 18498 for $3,000 was payment April 22, 1897, to George D. Bissell, the Connecticut administrator.

But two questions are involved in this action :

(1) Is the action pending in the Superior Court of Connecticut on policy No. 17523 a bar to this action on that policy ?

(2) Is the payment of April 22, 1897, of policy No. 18498 to the Connecticut administrator, a valid payment as against this plaintiff ?

The first questions to be considered are the rights and liabilities existing between the defendant and Herbert A. Steele at the date of his death, which rights must be determined by the policies and by their assignments. The assignments are alike, except the dates and amounts, and the following is a copy of one of them:

“ No. 295. Loan on Policy No. 18498.

“ Connecticut General Life Insurance Company.

“ $600. Hartford, Conn., October 23, 1893.

“On Demand, for Value Received, I promise to pay to the order of the Connecticut General Life Insurance Company, at its office in Hartford, Connecticut, Six Hundred Dollars, with interest payable semi-annually. And as security for this loan, I hereby assign, transfer and set over to the said Connecticut General Life Insurance Company of Hartford, Connecticut, all right, title and interest of, in and to its Policy No. 18498 on the life of myself for $3,000 ; and it is agreed that, if any premium, or installment of premium on said Policy shall not be paid when due, or if any installment of interest shall remain unpaid thirty days after it becomes due, or if ' said loan shall not be paid within thirty days after demand made personally, or by mail, then, in either such case, the Company is hereby authorized, without notice to the undersigned, to cancel and annul said Policy, by paying its cash surrender value (computed by the general rules of Company then in use) as satisfaction in full of said Policy, first deducting therefrom the principal, interest and any costs due on this loan, and any other loan by said Company on said Policy, the balance, if any, to be paid to the legal owners of the equity in said Policy, which said payment I hereby agree to accept in full payment and satisfaction of said Policy.

“ Witness my hand and seal, the day and year first above written.

“ HERBERT A. STEELE, [t. s.]

“ Witnesses present:

“ F. V. Hudson.”

It will be observed that the assignment is not an absolute one, but is merely by the way of security, and does not vest the defendant with the absolute legal title to the policies. The assignment contains a defeasance, and also a promise by the defendant to pay the difference between the amount due on the policy and the amount ■due on the note, whenever the relations between the parties created by the assignment are terminated.

On receiving proofs of death of the insured, the liability of the defendant to pay the amounts of the policies became fixed (assuming that it had no defense), and the administrator of the insured had the right to recover the difference between the amounts due on the policies and the amounts due on the notes, in an action brought without first tendering the amounts due on the notes, or without actually acquiring possession of the policies.

In case A. should give his note by which he promised to pay $1,000 on the death of B. to his representatives, and delivers the note to B., and afterwards B. should borrow of A. $500, payable on demand, and should turn out A.’s note to him as collateral, I apprehend that in case of the death of B., before he paid the $500 note, A. would become liable to pay the difference between the notes to the administrator of B., though he had not first paid B.’s $500 note and secured the physical possession of the note given by A. It is no defense to a note or obligation for the maker to allege and prove ■— true, I made the note or obligation, and I am liable thereon for some amount, but I am in possession of it. In an action on a negotiable instrument the plaintiff must produce it on the trial, or account for it; but if it should turn out that the instrument sued on was actually in the custody of the defendant, that fact would be no defense to him if any liability were shown to exist on the instrument. So in the case at bar, the action was just as well brought and the liability of the defendant was the same, as though the policies had been in the physical possession of the plaintiff when the action was begun. As appears by the statement of facts preceding this opinion, this action was begun by a personal service of the summons April 21, 1897, on the Superintendent of Insurance, which, service was as effectual, in all respects, as though it had been made personally on the president of the defendant within this State. It is so well settled that it hardly requires the citation of - an authority, that a chose in action follows the person of the owner, and its legal possession is deemed to be in an intestate at the place of his residence, no matter where the evidence of the chose in action may be; and in case letters of administration are granted in the State where the intestate died, he is invested with power to take all dioses in action wherever the evidence of them may be, and receive the amounts due on them from the debtors, wherever they may reside; but in case the securities are in a foreign jurisdiction and are not voluntarily surrendered, if he seeks to recover them by action, an ancillary administrator must be appointed who must bring an action to enforce them in the foreign jurisdiction. (Matter of Prout, 128 N. Y. 74.) But in case the debtor is found within the State where the original letters of administration were issued, an action may be maintained against him even though at the time the security is not within the State, but within the debtor’s possession or in the possession of a-third party, unless the third party has some interest in it. A foreign insurance company doing business in this State is, for the purpose of an action brought to enforce its policy, deemed to be an inhabitant of the State, and service upon it by delivering a writ to the Superintendent of Insurance is as effective as though personally served on the defendant. (New England Mut. Life Ins. Co. v. Woodworth, 111 U. S. 138; Sulz v. Mutual Reserve Fund life Assn., 145 N. Y. 563, 571.)

At the date (April 21, 1897) when this action was begun by the personal service of the summons upon the Superintendent of Insurance the policies were not in -the possession of the Connecticut administrator, but were in the possession of the defendant as collateral security for the notes of the intestate. When this action was begun the rights of the parties were fixed, and the subsequent commencement of an action in the Superior Court of the State of Connecticut by the ancillary administrator appointed in that State did not divest the Supreme Court of this State of jurisdiction. So far as the Supreme Court of this State is concerned no rule of comity or inter-state law is involved in this action. It may well be that the courts of Connecticut may refuse, under the rules of comity, to entertain the action subsequently brought by an ancillary administrator in that State. But I know of no authority holding that the courts of this State, having first acquired jurisdiction of an action brought by the principal administrator, should yield their jurisdiction to the courts of another State in which an action has been subsequently brought by an ancillary administrator. My conclusion is that the subsequent commencement of the action in the Superior Court of Connecticut by the ancillary administrator to recover the amount due on policy No. 17523 is no defense to this action ■ to recover the amount due on that policy, less the amount for which it is held as security.

Merrill v. New England Mut. Life Ins. Co. (103 Mass. 245); Sulz v. Mut. Reserve Fund Life Assn. (145 N. Y. 563), relied on in the court below, do not seem to me decisive of the case at bar. In Merrill’s case the insured was a resident of the State of Illinois, where he died and where his domiciliary administrator was appointed and first began an action on the policy. The policy was then and for years had. been pledged as security for a loan with an uncle of the insured, who resided in the State of Massachusetts, who took out ancillary letters in that State, and afterwards brought an action against the insurance company to recover on the policy, alleging his personal interest in the policy and also his interest as ancillary administrator. The insurance company interposed as a plea in abatement the pendency of the action in the State of Illinois. The plea was held bad upon the ground that Merrill, the Massachusetts plaintiff, had title to and possession of the policy and that the Illinois administrator could not maintain an action on the policy in Illinois as against the Massachusetts administrator without first paying the loan to .the Massachusetts administrator, for which the Massachusetts administrator had the right to hold the policy. In that case the court distinctly recognized the principle that, in case a third party had not held an interest in the policy when the action was brought in Illinois, the Illinois administrator could have recovered. In that case the ancillary administrator had the better title and the better equity, and it is distinctly held that the pledgee, having an independent title and possession of the policy, could, by a suit 'in his own name, or in the name of the Massachusetts administrator, if he had been a third party, have recovered on the policy, and that neither the Illinois administrator nor the Massachusetts administrator could have defeated the action. In Sulz’ case the domiciliary administrator was appointed in the State of Washington and the ancillary administrator in the State of New York. The Washington administrator brought an action to recover on a policy of insurance which was in his possession in that State. Afterwards the ancillary administrator brought an action on the same policy in this State. Among other defenses the action ¡lending in the State of Washington by the domiciliary administrator was pleaded, and it was held that the ancillary administrator could not recover.

It is true that some stress is laid upon the fact that the policy at the time of the death of the insured was in the State of Washington, but that does not seem to be a controlling fact. The case was decided upon the theory that the domiciliary administrator had a right of action on the policy, and having obtained jurisdiction of the defendant in an action first brought, that the principle of comity between States required that the courts of this State should refuse to entertain jurisdiction of the action subsequently brought by the ancillary administrator. This would seem to be an authority, not in favor of the defendant, but in favor of the plaintiff. But so far as I know it has never been held that in case there are two persons, either of whom has the right to maintain an action for the recovery of a chose in action, and one brings an action against the defendant and acquires jurisdiction over the defendant, a subsequent action brought by the other person in another State is a good plea in bar or in abatement to the action first brought.

The underlying question is whether, as between the litigants, the policies are exclusively Connecticut assets ? The defendant insists that they are, because it is a Connecticut corporation and because the policies were in its possession when the intestate died and when the domiciliary and ancillary administrators were appointed, and payable in Connecticut. The ancillary administrator is, as the term implies, one who is subordinate or auxiliary to the principal or domiciliary administrator. (Perkins v. Stone, 18 Conn. 270; Merrill v. New England Mut. Life Ins. Co., 103 Mass. 245 ; Schouler Ex. & Adm. §§ 163, 167, and cases cited.) An ancillary administrator is appointed in a foreign jurisdiction to enforce the rights of the estate in that jurisdiction, because a domiciliary administrator is not recognized by the courts of a foreign State. But when, by contract or by statute, a liability of a debtor resident in a foreign State is enforcible in the courts of the State where the domiciliary administrator is appointed, there is no occasion for the appointment of an ancillary administrator to enforce such right of action, and if one is appointed, he does not acquire a right to enforce the cause of action to the exclusion of a domiciliary administrator, who first brings an action on the contract in a court which acquires jurisdiction of the debtor before the ancillary administrator reduces the chose in action to possession or takes any steps to enforce the liability thereon.

In Perkins v. Stone (supra) A., an inhabitant of Connecticut, sent a quantity of paper to a firm in Boston, Mass., for sale on commission. A. died before the firm accounted, and 0. was appointed administrator of the estate of A. by the courts of Connecticut. 0., finding one of the firm of commission merchants in Connecticut, brought an action against them, alleging that they had violated their duty and wasted the paper. It was contended there, as here, that because the paper was in the possession of the defendants in the State of Massachusetts it was a Massachusetts asset, and that an action could not be maintained in. Connecticut to recover its value or damages for wasting the paper. But it was held otherwise. The case differs from the case at bar in the fact that an ancillary administrator had not been appointed in Massachusetts; but that fact has no effect on the right of action of the domiciliary administrator, unless, perhaps, the ancillary administrator has reduced the right of action to his possession before suit brought by the principal administrator.

Was the payment by the defendant to the ancillary administrator of policy No. 18498 on the 22d of April, 1897, a defense to an action on that policy ? I think not. As before stated, the plaintiff in this action had a right to maintain an action on that policy in the courts of this State, provided jurisdiction of the defendant could be acquired, which was acquired by the service of the summons on the 21st day of April, 1897. The jurisdiction so acquired was as effectual for all legal purposes as though service of the summons had been made personally upon the president of the defendant in this State, and the defendant was charged with legal notice of the action from the moment that service was made; and when, on the 22d of April, 1897, it voluntarily paid policy No. 18498 to the Connecticut ancillary administrator it had notice of the commencement of this action. This plaintiff having the right to maintain the action and the courts of this State having acquired jurisdiction, the ancillary administrator not having acquired possession of the policies when the action was begun, could not thereafter on acquiring possession of the policies settle either cause of action involved in an action brought by the principal administrator. But aside from the question of legal notice, this defendant had actual notice that this action had been begun. April 12, 1897, on the day of the date of the summons and on the day it was mailed to the sheriff of the county of Albany for service on the Superintendent of Insurance, the plaintiff’s attorney wrote the defendant that an action had been begun, which letter the defendant received and acknowledged April 13, 1897. The defendant’s president was sworn as a witness for the defendant on the trial, and he testified that he received the letter of April 12, 1897, and answered it on the next day, and that he assumed that the plaintiff’s attorney stated the truth when he wrote that an action had been begun on the two policies. This being the state of the case, the defendant’s president, when he paid over to the Connecticut administrator on the 22d o'f April, 1897, the amount due on policy No. 18498, had both legal and actual notice that this action was then pending in the courts of the State of New York for the recovery of the amounts alleged to be due on both policies, and the defendant is in no position to assert that it paid the Connecticut administrator in good faith, and without notice of the pendency of the action. I think that no defense was established to either of the policies.

Perhaps attention should be called to two or three facts which, in my judgment, are found contrary to the evidence. In the 8th. finding the learned trial court found that the intestate left certain personal estate besides the insurance policies in the State of Connecticut. I find no evidence tending to support this finding. In the inventory filed by the Connecticut ancillary administrator is this entry : “ J. H. Faguns, mortgage, 3,500.00.” The Connecticut administrator testified on the trial: “ I found on searching the land records there was a mortgage of $3,500.” “ There was a mortgage

of $3,500 on some South Main street property that he sold. I don’t know where that mortgage was. That was upon property there.” The date of the mortgage was not given, and it is not pretended that the intestate owned this mortgage or any personal property-situated in the State of Connecticut at the time of his death, except the policies of insurance deposited with the defendant as security for loans. In the 12th finding it is found: “ It does not appear that he (the Connecticut administrator) knew that any administrator other than himself of the deceased had been appointed,” referring to the date when he received payment of policy No. 18498. The proof is that, on or before April 2, 1897, the Connecticut administrator was personally served with a petition filed in behalf of the plaintiff in this action showing that she was appointed administrator March 2, 1897, which petition was accompanied by a show cause order, pursuant to which the Connecticut administrator appeared in the Probate Court. In the same finding (12th) it is found that the defendant did not know April 22, 1897, when it paid the Connecticut administrator one of the policies and delivered the other, that the suit had been begun in the State of New York.

As before stated, the defendant had at this time legal notice and also actual notice by the letter of the plaintiff’s attorney of April 12, 1897, which the defendant’s president testified that - lie received on the thirteenth and believed to be true. In the 13th finding it is found : “ There is no evidence that the defendant in delivering said policies and in making payment, as it did, acted in any way in collusion with the Connecticut administrator, or with any other purpose than to legally and properly discharge its obligations under these policies.” This finding of fact is not sustained by the evidence. The defendant neglected to comply with repeated applications made by the plaintiff’s attorney for copies of the policies in its possession and of the assignments under which it held them. It neither furnished copies nor gave any reason why it did not. When the plaintiff’s attorney offered to send the amounts due on the notes, in legal tender, in case the defendant would deliver the policies to the express company, it neglected to make any reply. On the 22d of April, 1897, on the very day that it delivered the policies to the Connecticut administrator and paid one of them to him, the defendant’s president wrote to the plaintiff’s attorney discussing the case as still an open one, without intimating that the Connecticut administrator had called on him three days before and had offered to pay the amounts of the notes and had demanded the policies. This letter was written on the very day that the defendant surrendered the policies to the Connecticut administrator and paid one of them, but whether it was before or after the conclusion of that transaction, does not appear. The defendant in its answer to the suit in the Superior Court of Connecticut on policy No. 17523 does not set up as a defense that a previous action had been begun on the same policy and was still pending in the courts of the State of New York, the only defense interposed to the Connecticut suit being the one withdrawn in this State, that Herbert A. Steele died of disease induced by the rise of narcotics and alcoholic stimulants.

The judgment should be reversed, and a new trial granted, with costs to the appellant to abide the event.

All concurred.

Judgment reversed and a new trial ordered, with costs to appellant to abide the event.