Case ID: nys_21/html/0010-01.html
Source: Caselaw Access Project
Author: {"author": "O’BRIEN, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

ELSBERG v. SEWARDS.
    (Supreme Court, General Term, First Department.
    November 18, 1892.)
    1. Evidence—Letters and Memoranda. In an action after the death of the insured to determine conflicting claims-to his policy of life insurance, letters written and signed by deceased, or a memorandum made by him, are not admissible by a party claiming under him, if shown not to have been communicated- to the party claiming adversely.
    2. Insurance—Assignment of Policy to Creditor. Where, a life insurance policy is assigned by the insured to a creditor, “as his interest may appear, ” the burden of proof is on such creditor to show the extent of his interest.
    3. Same—Interest of Assignee. A life insurance policy provided that the “claims of any creditor as assignee shall not exceed the amount of the actual bona fide indebtedness of the member to him at the time of his death, * * * and this certificate, as to all amounts in excess thereof, shall be void. ” Held,, in an action by the executrix of the insured against a creditor, to whom the policy had been assigned, “ as his interest may appear, ” to obtain the amount thereof in excess of such interest, where-the full amount of the policy has been paid into court'to abide the result of the action, that such provision is not available by defendant to defeat the right of plaintiff to such excess.
    Appeal from special term, New York county.
    Action by Rebecca Elsberg, executrix of Albert Elsberg, deceased, against Samuel D. Sewards, impleaded, etc.. Judgment for defendant. Plaintiff appeals. Reversed.
    Argued before VAN BRUNT, P. J., and O’BRIEN and LAWRENCE, JJ.
    John Alex. Beall, for appellant.
    W. W. Gage, for respondent.
   O’BRIEN, J.

This action was originally brought by plaintiff, as executrix of Albert Elsberg, deceased, against the Mutual Reserve Fund Life Association, David M. Koehler, and Samuel D. Sewards, to determine the conflicting claims made to two life insurance policies issued by said association upon the life of Albert Elsberg,—one for $2,000, and the other for $500. The life association made an application for leave to pay the money into court, and for a discontinuance of the action as a'gain'st it, which was granted, and the amount of the two policies was deposited, and so remained, subject to the order or decree of the court in this action. The defendant Koehler was not served, for the reason, which was made to appear upon the trial, that he had no interest in the policies; the same, after his indebtedness was paid, having been assigned to the defendant, Sewards, who alone answered and defended the action. It will thus be seen that at the time of the trial the question presented for determination was as to the conflicting claims of the plaintiff, as executrix, and Sewards, as creditor, of Albert Elsberg to the money paid by the life association into the court. The plaintiff, suing in her representative capacity as executrix, which was not denied by the answer, asserted that the amount due Sewards, for which the policies were assigned to him, did not exceed $1,500. The answer claimed that there was due a sum far in excess of the amount deposited,, and that Sewards was entitled to the whole amount thereof.

According to the terms of the policies, which upon the trial were offered and admitted in evidence, it appeared that the same were issued to secure the payment to the defendant, Sewards, of an indebtedness-due him by the plaintiff’s testator, and were made payable to “Samuel D. Sewards, creditor, as his interest"may appear.” There was a further provision in the policies as follows: .

“An insurable interest, existing at the time of the assignment or transfer, must be shown by all claimants at time of claim hereunder, and claims by any creditor as beneficiary or assignee shall not exceed the amount of the actual bona fide indebtedness of the member to him, existing at the time of said death, together with any paj'ments made to the association under this certificate or policy of insurance by such creditor, with interest at six per cent, per annum; and this certificate or policy of insurance, as to all amounts in excess thereof, shall be void.”'

In addition, plaintiff’s counsel offered in evidence two letters, in the-handwriting of the deceased, signed by him, and bearing date six months before bis death; also a memorandum made by him four months before his death,—which, under objection, were, we think, properly excluded, because not shown to have been in any way communicated to the defendant; nor were they admissible as declarations against interest, having been offered by the plaintiff to establish a claim by the deceased in the fund. The plaintiff also offered in evidence a statement made by the defendant’s son, under his instructions, and which was shown to be a statement of notes held by defendant, which he wished to have renewed by Elsberg, the deceased, furnished by defendant in answer to a request by letter from Elsberg to the defendant. When questioned in reference to this statement, as to whether it did or did not show the condition of the indebtedness between the parties at the time, the defendant answered that this statement was only made for the purpose of showing the identity of certain notes, and did not embrace the account between the parties. While, therefore, only a partial account, we are inclined to think that it was admissible in evidence as tending to show the way, or the circumstances out of which, the indebtedness arose. However, it in no way prejudiced the plaintiff, because, though admissible, it did not go to the extent of showing what was the condition of the account between the parties, and could not be regarded as an account stated; it but appearing to be what the witnesses stated with reference thereto, that it was a statement merely of notes due, in respect to which arrangements looking towards renewals thereof were pending. Such being the situation of the parties upon the pleadings and the evidence at the close of plaintiff’s case, the defendant moved to dismiss the complaint, and for a judgment in his favor for the full amount deposited, which motion was granted, and the decree subsequently entered, from which this appeal is taken.

We are of opinion that it was error to dismiss the plaintiff’s complaint upon the proofs as they stood. She had made out a prima facie case, entitling her to the moneys realized upon the policies, subject, however, to any claim of the defendant creditor as the same should be made to appear. No doubt the learned trial judge was influenced by the provision which we have quoted in full from the policies, that for any excess over such creditor’s claim the policy should be null and void, and therefore concluded, upon the proofs, that the defendant alone would be entitled to the amount, and that it would follow- that the plaintiff had no interest therein. We think, however, that a consideration of the parties to the suit, and of this provision of the policies thus invoked, will lead to the conclusión that it should be given no weight in an adjudication between the parties then before the court. It is true that, had the association remained a party, and defended, making the point that the plaintiff had no interest in excess of what was the actual indebtedness, this condition in the policy as to such association might be available. We say advisedly “might be available,” because it is not entirely clear that, as against the plaintiff, resort could be had to this condition. Its evident purpose is to protect- the company against a creditor’s speculating upon the life of a member beyond what is actually due him. Where, therefore, the assignment from the member to one claiming to be a creditor is absolute in form, thus leaving no claim in favor of the member, the company is only liable to the creditor to the extent of his bona fide debt. That this must be the correct view is apparent if we consider the results to the member of the payment to the creditor of his entire- indebtedness before the policy matured by death or limitation of time. It could not then be held that, because there was no indebtedness, the association would be free from any obligation to pay the member. The true construction, we think, therefore, of this provision, is that it was intended to protect the company against creditors or other persons speculating in policies of the company issued to members. But the company, by payment into court of the full amount of the policy, having waived not only that condition, but all others, such condition was not available in the defendant’s, Sewards’, behalf, to defeat the right which the plaintiff might have in the policies; in other words, the life association alone had the right to insist upon that condition, and its waiver and payment do not give the defendant the right to take the benefit of it, and claim the surplus over his debt, on the ground that;plaintiff had violated or failed to perform any condition. That was a right in favor of the company, which was not assigned, to the defendant, Sewards, and the effect of the payment into court by the company was not only a waiver of the condition, but an admission that it had no interest in the fund, which was deposited to the credit of the action, with a view of having the respective rights of the plaintiff here and the defendant, Sewards, thereto determined.

The question, therefore, presented, having in view the admissions in the pleadings, was, what was the extent of Sewards’ interest as creditor in such fund? We think that the burden of showing the extent of his interest was upon him, and that, after prima facie case made out by the plaintiff, upon production of the policies of insurance, the affirmative of this issue was upon such defendant. If, however, we assume that the affirmative was upon the plaintiff of showing the actual indebtedness to Sewards, and thus to establish her interest and title to the surplus, and that for failure of proof the complaint should have been dismissed, we are yet of opinion that it was error, in the absence of any evidence to support the defendant’s claim to the fund, to decree that the entire amount thereof belonged to him. This, in effect, was to hold that, because the plaintiff’s complaint should be dismissed for want of proof, the defendant, without having given any proof, was entitled to a judgment upon the merits for the whole amount. As we have seen, his interest in the policies was as a creditor, as the same should be made to appear; and it could only be upon its having appeared that he was entitled to the whole amount that he could obtain a judgment upon the merits in his favor. Upon the whole case, therefore, we think that this error alone requires that the judgment should be reversed, and a new trial ordered, with costs to abide the event. All concur.