Case ID: ad_48/html/0321-01.html
Source: Caselaw Access Project
Author: {"author": "Merwin, J. :", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Emily E. Dunham and Mary M. Pettingill, Appellants, v. Francis E. Fitch, as Committee, etc., of Charles T. Fitch, an Incompetent Person, and Sarah J. Fitch, Respondents.
    
      Life insurance policy — assignment of—action by one assignor, claiming her assignment to have been invalid, against the assignee who collected the claim— leave to sue granted on the trial nunc pro tunc.
    Where a policy of insurance, payable at the death of the insured to his wife, or, in the event of her dying before the husband, to her children, is assigned by the insured and by his wife and children, as collateral security for a debt of the insured, and after the latter’s death the committee of'the assignee brings an action, as committee, against the insurance company for the entire amount of the policy and obtains payment thereof, one of the daughters of the insured residing in another State, who claims that the assignment of her interest in the policy was invalid because her husband did not join therein, may maintain an action against the committee in his representative capacity to compel him to account for such share, where it appears that all the children of the insured acquiesced in the committee’s right to receive the entire fund from the insurance company, and that, after he had collected it, he claimed to act officially with respect thereto, having a concededly valid assignment as to a part, and claiming it to be valid as to the whole of the fund.
    
      Semble, that on the trial of an action, improperly brought without leave of the court, such leave may be granted nunc pro tunc.
    
    
      ■ Appeal by the plaintiffs, Emily E. Dunham and another, from a judgment of the Supreme Court in favor of the defendants, entered in the office of the clerk of the county of Chemung on the 9th day of March, 1898, upon the report of a referee dismissing the complaint.
    On or about the 5th of August, 1865, the Connecticut Mutual Life Insurance Company issued its policy of insurance in the sum of $5,000 upon the life of John F. Gillette of South Creek, Penn., payable at the death of Gillette to his wife, Phebe C. Gillette. In case, however, of the death of the wife before the husband the amount was payable to her children. The' premiums were to be all paid within ten years and were so paid by John F. Gillette. The policy was payable at the city of Hartford, Conn. Phebe C. Gillette died in September, 1893, leaving her surviving three children, the two plaintiffs and. the defendant Sarah J. Fitch. John F. Gillette died June 7, 1895.
    On July 12, 1873, John F. Gillette executed and delivered to Charles T. Fitch his note for $1,565.37 payable in one year after date with interest. This note contained a confession of judgment, and upon this a judgment was entered in the court of Common Pleas of Bradford county, Penn., on the 18th of August, 1876, for the sum of $1,566.62 in favor of Fitch against Gillette.
    On the 28th of August, 1876, Gillette and his wife and the three children executed and delivered to Charles T. Fitch an assignment of all their right, title and interest in the said policy of insurance. This. assignment was indorsed upon the policy and was absolute in terms. It was made, as the referee finds, and accepted for the purpose of securing the payment of the indebtedness represented by the judgment and for no other purpose, and in consideration of such assignment Charles T. Fitch satisfied of record the judgment on the 4th of September, 1876, and held the assignment in the place and stead of the security afforded by the judgment.
    Charles T. Fitch resided in Yates county in this State, and on 'the 19th of July, 1877, he was duly declared a lunatic by the County Court of that county, and Francis T. Fitch was duly appointed committee of his person and estate, and has since been acting, as such committee. As such lie took possession of the policy, and assignment and retained them until the payment to him of the amount thereof. After the death of John F. Gillette and on the 23d of May, 1896, Francis T. Fitch, as committee, brought art action-1 in the Supreme Court against the insurance company to recover the amount of the policy. The company put in an answer-, the case came to trial and judgment was ordered for the full amount and entered on the 7th of December, 1896. On December 11, 1896, the company paid the full amount of the judgment to the plaintiff therein, or his attorney, and the policy and assignment were surrendered to the company.
    The present action was commenced on the 19th of March, 1897? In the complaint it was alleged among other things that, at the time of the execution by plaintiffs and delivery of the assignment, each? of the plaintiffs was a married woman residing with her husband, and that under the laws of the State of Pennsylvania, where they resided and the assignment was executed, a married woman had no-power to assign or dispose of her personal property or dioses in. action ; that the husbands of the plaintiffs did not join in the assignment or consent thereto, and that as to the plaintiffs the assignment, was void ; that the insurance company had paid the full amount of the policy to the committee, and he had duly delivered up and surrendered the policy with the assignment thereon. -It was also-alleged that the debt, as security for which the assignment was-given, had been fully paid by John F. Gillette. A demand upon the committee for an accounting was also alleged and a refusal by-him to account.
    In his answer the committee alleged, among other things, that the assignment was given to secure to Charles T. Fitch the payment tollina of whatever sums John F. Gillette then owed or might' thereafter owe to him ; that the defendant as committee had regularly-settled with John F. Gillette, and there was due "and owing fro nr Gillette to the defendant as such committee on the 4th of May, 1894, the sum of $3,369.84. A willingness to settle with the plaintiffs: was also alleged.
    The referee found that, at the time of the execution and delivery-of the assignment, the plaintiff Dunham resided with her husband? in the State of Pennsylvania, and that under the laws of that S'tate.she had no power without the consent of her husband to make the: assignment, and that her husband did not consent; that the indebtedness the assignment was given to secure,, being .the debt represented by the judgment, amounted on December 11, 1896, to the sum of $3,309.45, being the sum of $10.27 in excess of the shares of the plaintiff Pettingill and the defendant Sarah J. Fitch in the insurance moneys. As matter of law, he decided that the assignment "by the plaintiff Diinham was void and that she is still the owner and entitled to one-third interest in the policy or the proceeds thereof; that Francis E. Fitch, as committee, is not liable for the share of the plaintiff Dunham in such proceeds, but 'is only liable individually if at all; that neither of the plaintiffs have made out a cause of action against either of the defendants, and the complaint should he dismissed. Judgment was accordingly directed.
    
      Dix W. Smith and E. J. Baldwin, for the appellants.
    
      Gabriel L. Smith, for the respondents.
   Merwin, J. :

The main question in this case is, whether the referee correctly held that there could be no recovery in this action against Francis E. Fitch, as committee, for the one-third which, as the referee held, belonged to the plaintiff Dunham.

The argument on the part of the respondents seems to be that, if the assignment by Mrs. Dunham was invalid, then the committee had no right to collect her share, and, therefore, is not liable for her •share, although he did in fact collect the whole as committee under ;a judgment against the insurance company awarding him as committee the full amount.

The subject of the action is thé fund collected by the committee as such, by virtue of an assignment of the policy executed by all the.parties in interest, including the plaintiffs, to Charles T. Fitch before the appointment of the committee. The plaintiffs in their complaint assert their right to obtain two-thirds of the fund upon two theories, one, that the assignment, so far as they were concerned, was invalid under the laws of Pennsylvania, the husbands not having consented to it; the other, that the debt, for the payment of which the assignment was made as security, had been fully paid. The defendant Sarah J. Fitch was the owner of the other one-third interest, and' was a proper, if not neeesssary, party to the final disposition of the controversy. She, however, upheld the committee-in his claim to the fund to the extent of the entire debt against. Gillette.

It appears that the committee in his efforts, after the collection: of the money, to settle with the plaintiffs claimed to act officially as to the fund, and that the amount of the debt dñe to him 'as-, committee, and for which he claimed payment out of the fund,, exceeded two-thirds of the fund.

The plaintiffs, soon after the- death of Mr. Gillette, notified the; company not to pay the policy or any part thereof to; the committee. In their notice to the company no claim was made that the; assignment of either plaintiff was invalid, nor, so far as it appears,, was there any such claim made until after this suit was commenced, or any notice to the committee of such claim.

The action is not for a wrongful taking. ■ It is to determine the ownership of a fund in the committee’s hands, some portion of which in fact belongs to the estate he represents. In the complaint it is assumed that the insurance company had a right to pay the whole to the committee. It is alleged that, upon the payment, the committee “ duly delivered up and- surrendered ” the policy and assignment, so that, if the plaintiffs, or either of them, had the right to consider the act of collecting as a conversion, they have not done so. They in effect assume that the money has been properly collected by the committee, and, if so, it is lawfully in his hands. The committee as such claimed the possession of the whole, and ’ alleged a willingness to account as such. ■

The committee in collecting the policy was acting in the line - of his duty, and he was acting for the benefit of the estate, in asserting his claim to hold the fund to the extent of the entire debt owing from Gillette. It was important for the estate that the extent of its right should be determined.

The committee had a valid assignment of two-thirds of the fund, and claimed that the assignment was valid as to the whole. He had a right as committee to bring the action against the company. (Code, § 2340.) Having obtained the fund as committee, no good reason is apparent why an action to determine the ownership of the fund should not be maintainable against him in the same character.

In De Valengin's Administrators v. Duffy (14 Pet. 282) it was, Held that when ah executor or administrator in his representa-' 4ive character lawfully received money or property in fact not ■belonging to the estate, he may be compelled to respond in the same . '■character to the true owner. (See, also, Wall v. Kellogg’s Executors, 16 N. Y. 385; 11 Am. & Eng. Ency. of Law [2d ed.], 943.) Ho good reason is apparent why this principle should not be applied to the case in hand.

But it is said that the action was brought without leave of the . court. That- does not appear. No question on that subject is raised Hy the answers of the defendants or was raised at the trial. If no ;such leave was in fact given, and the question had been raised at the ¡trial, it would have been competent for the court, on proper application, to have granted leave nunc pro tune. (McKernan v. Robinson, 84 N. Y. 105.) It was not a part of the cause of action. The defendants are not, I think, in a position to justify the dismissal of the complaint upon this ground. We must assume that the committee is properly in court. (Hackley v. Draper, 4 T. & C. 614, 631.)

The committee having as such received the fund, and still holding' St in that capacity, the action was, I think, maintainable against him in the same capacity, and the referee erred in holding to the contrary. A reversal as to the plaintiff Dunham must follow. As -such reversal would open the question of the validity of the assignment by her, the proper disposition of that question and of the case, in the contingency of the assignment being found to be valid, would call for a new trial as to all the parties. ' '

All concurred, except Smith, J., not sitting. ,

' Judgment reversed, referee discharged, and a new trial granted, costs to abide the event.