Connecticut Mutual Life Insurance v. Van Campen

Life Insurance—Assionment of Policy by Married Woman. A married man who had a policy of insurance on his life payable to his wife, acting as attorney for his wife, assigned it in due form to one N. to secure a debt. If. paid the premiums on the policy for several years, and then, at the direction of the husband and wife, surrendered it to the insurance company, receiving in its place a paid-up policy. Thereafter the wife assigned the policy to one C. for a valuable consideration. N. bad possession of the old policy until its surrender to the company, and thereafter had possession of the new policy. At the time of the assignment to If. Laws N. Y. 1840, c. SO, and Laws 1873, c. 831, preventing a married woman who has children from assigning a policy of insurance, were in force,, hut after this disability was removed by Act If. Y. 1879, the wife ratified the assignment to If. before making that to C. It did not appear, however, that the wife agreed to the assignment for the purpose of paying the debt. Meld, that the-assignment to N. was valid and effectual to the extent that it entitled him to receive from the proceeds of the new policy the sum paid by him for premiums pro the old policy.

Appeal from special term, New York county. Action bv the Connecticut Mutual Life Insurance Company against Mary R. Van Campen, Harriet Eads, and Sarah A. Nichols to determine the rights-of the defendant to the amount due on a life-insurance policy. The opinion of O’Brien, J., at special term is as follows: “Both parties claiming the-fund in this case have equal equities, and under such circumstances one of two innocent parties must suffer by reason of the wrong or fraud committed by a third person. The plaintiff seeks to obtain a discharge from the conflicting claims of the defendants to a policy of insurance issued by the plaintiff in 1874, on the life of John H. Ery, which was payable to his wife, Margaret. Thereafter, and in September, 1874, John H. Ery, claiming to-act as the attorney of his wife, assigned the policy to one John M. Nicliolsto secure a promissory note for $2,207. In March, 1880, the policy, having become forfeited by lapse of more than one year without payment of any premiums, was accepted by the insurance company by way of surrender, and a new paid-up policy for $3,095, the policy in controversy, was issued. At the time of this transaction Ery and Margaret, his wife, addressed a letteir to John M. Nichols requesting him to take and surrender the old policy them in his possession to the company, and receive the new paid-up policy to be issued in its place. Long after these transactions Margaret Fry assigned the policy in question to the defendant Mary Van Campen in consideration of $3,095. On the faith of tills latter assignment Harriet Eads, another of the defendants, loaned to Mary R. Van Campen the sum of $2,593, and now appears as claimant of the policy to the extent of her advance, and Mary R. Van Campen claims the balance. To determine the rights of the parties to the fund, the equities being equal, resort must be had to the rule that the legal title which is prior in point of time must prevail. Unless, therefore, there was a valid legal assignment of the policy by Margaret Fry to Nichols, the other claimants would be entitled to the fund by virtue of the assignment of the policy duly and regularly executed by Margaret Ery to Mary Van Cam-pen. The question, then, is, was the policy duly assigned to John M. Nichols, either absolutely or as a security for moneys loaned or premiums paid outlie policy? It is not disputed but that in September, 1874, Nichols paid the premium on the policy, amounting to $274.64, and on the same day, claiming-to act under a power of attorney from his wife, John H. Ery assigned tile-policy to Nichols to secure the payment of tiis note. Thereafter Nichols appeared to have paid the premiums on the policy for the years 1875, 1876, and' 1878. The amount for which the new policy was issued was determined by the surrender of the old policy, and the amount of premiums paid thereon. The new policy thus owes its existence to the old policy, having been kept. .alive and in force for a certain period by the payment, of premiums arid by a surrender thereof to the plaintiff. Substantially, therefore, the new was a substitution for the old policy, and, if the title to the latter by assignment vested in Nichols, he was equally vested with the title to the new policy. It has been urged with much force, assuming that the wife by power of attorney ’had authorized the assignment by the husband, that the same is invalid for the reason that she was under a disability created by Acts 1840, c. 80, and Acts 1878, c. 821, which prevent a married woman having children from assigning a policy of insurance. There are two answers to this objection: First, that the wife alone or her personal representatives could seemingly take advantage of such disability in order to avoid the assignment; secondly, after such disability was removed by chapter 248 of the Laws of 1879, the assignment, being at most voidable, and not void, was ratified by the wife. •In the ease of Smillie v. Quinn, 90 N. Y. 497, it is said: * But if she does not seek to avoid the assignment and reclaim the policies, or to secure the moneys due upon them,-she could not be compelled to. * * * It will do her no good, and do her family no good, if creditors or strangers are permitted to come in and assert the invalidity of the assignment for the purpose of sweeping away the amount of the insurance.’ See, also, Frank v. Insurance fío., 102 N. Y. 267, 6 N. E. Rep. 667. The act of 1879 conferred full power upon the wife to assign, even though there were children, provided the husband consented to the assignment. The wife by letter of February 24, 1880, ratifies and recognizes the prior assignment made by her husband while assuming to act as her agent. It is well settled that a subsequent adoption or ratification is equivalent to a prior authority,. The original assignment to Nichols is acknowledged in form according to the statute, and the notary’s certificate states that the original power of attorney was produced. In this case, therefore, after the disability was removed .by the act of 1879, instead of seeking to avoid the assignment, the wife expressly ratified it, and it seems difficult to escape the conclusion.that it made, the assignment of the old policy to Mr. Nichols valid and effectual. It is conceded, however, that the assignment was not an absolute one, but was given as security originally for a note of the husband. Undoubtedly upon the strength of this assignment Nichols paid the premiums for the subsequent years. But neither from her letter of 1880 nor the other evidence in the case.is it shown that the wife agreed to the assignment for the purpose of paying the note of the husband. Holding the assignment, however, as collateral security, and producing his checks and the company’s receipts, thus raising the presumption that he paid the premiums with his own funds, and thus kept the policy alive, he (Nichols) should be entitled to credit for such payments necessarily made to preserve the policy. It should be remembered, moreover, that Nichols at all times was in possession of the old, as he subsequently came into and retained possession of the new, policy, which circumstance, using reasonable care and diligence, the defendants claiming th.e fund would have discovered. My conclusion, therefore, is that the assignment t.o Nichols was valid and effectual to the extent that it entitled his administratrix to the sum paid for premiums, and that only the surplus remaining should be paid to one of the other defendants, Harriet Eads. Judgment accordingly.” From a judgment in favor of Sarah A. Nichols, Harriet Eads appeals. .,