Case ID: ad_64/html/0558-01.html
Source: Caselaw Access Project
Author: {"author": "Jenks, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Charles Morschauser, as Sole Surviving Administrator, etc., of Hester Halliwell, Deceased, Appellant, v. James W. Pierce, Respondent.
    
      Life insurance policy on ike life of a husband — when assigned to his wife it passes on her death to her administrator — its exchange for a paid-up policy and: its sale by her administrator-r-the consent of the husband is not necessa/ry thereto.
    
    A policy of insurance issued to a husband upon his life and made payable to his legal representatives, which is subsequently assigned by the husband to his wife, her executors, administrators and assigns, passes upon the death of the wife, intestate, while still owning the policy, to her administrator.
    Where her administrator surrenders the policy to the insurance company and receives in exchange therefor a paid-up policy, payable to him as administrator or to his successor, an assignment of the paid-up policy executed by the administrator in good faith to a bona fide purchaser for a sufficient consideration is valid even though, the administrator fails to account for the consideration received by him.
    The fact that the assignment of the paid-up policy executed by the administrator was made without the assent of the husband, the assured, does not render the assignment invalid under the provisions of chapter' 248 of the Laws of 1879, which provides that a policy issued upon the life of a husband for the benefit of his wife shall be “assignable by said wife with the written consent of her husband, or in case of her death by her legal representatives, with the written consent of her husband,” as the original policy was not issued upon the life of the husband for the benefit of his wife but for the benefit of his legal representatives.
    
      Appeal by the plaintiff, Charles Morschauser, as sole surviving administrator, etc., of Hester Halliwell, deceased, from a judgment of the Supreme Court in favor of the defendant, entered in the office of the clerk of the county of Dutchess on the 18th day of February, 1901, upon the décision of the court, rendered after a trial before the court without a jury at the Dutchess County Trial Term, directing a sum of money, the proceeds of an insurance policy, in the hands of a trustee for the parties to the action, to be paid to the defendant.
    
      Charles F. Cossum, for the appellant.
    
      Allison Butts, for the respondent.
   Jenks, J.:

This action is to determine which party is entitled to the proceeds of a policy of life insurance paid by the insurance company to a trustee to abide the event. Halliwell took out the policy in 1876 for $5,000, payable upon his death to his legal representatives. In 1886 Halliwell duly assigned the policy to Hester, his wife, her executors, administrators and assigns. ■ Hester died intestate owning the policy. Baker, her administrator, surrendered the policy to the insurance company in consideration of a paid-up policy for $1,628, payable to him as administrator, or to his successor. Baker, as administrator, assigned the paid-up policy in 1886 for $300, and through several similar assignments the policy is held by the defendant. Baker died, and was succeeded as said administrator by this plaintiff and by the husband of Hester. The assured died in 1900, and both the plaintiff, as sole surviving administrator of Hester, and the said defendant, by virtue of the said assignment of the policy by Baker and the successive assignments based thereon, claimed the insurance moneys. The plaintiff contends that the first assignment of the policy by Baker, as administrator, was fraudulent and collusive, invalid, without consideration and ultra vires. The learned Special Term decided against the plaintiff, who now appeals.

The policy is regarded as a chose in action with all the ordinary incidents belonging thereto, and as such may be assigned either as collateral or absolutely as the payee may elect.” (Steinback v. Diepenbrock, 158 N. Y. 24, 30.) The policy was payable to Hester, her executors, administrators and assigns, and passed like any other chose in action, upon the death of the owner, to the person entitled to take the personalty. (Geoffroy v. Gilbert, 5 App. Div. 98,102; affd., 154 N. Y. 741, and cases cited.) It is regarded as an asset of her estate (Johnston v. Smith, 25 Hun, 171; Matter of Knoedler, 140 N. Y. 377; Griswold v. Sawyer, 125 id. 411, 414), and Baker as her administrator took the unqualified legal title to it as he did to all personalty not specifically bequeathed notwithstanding that he held as a trustee for the creditors and for those entitled. to distribution. (Blood v. Kane, 130 N. Y. 514.) Ho point is made against the exchange hy Baker of the first policy for the paid-up policy, which was payable to him as administrator. But Baker, with the title to the policy as administrator, could make an assignment in good faith to a bona fide purchaser (2 Williams Exrs.. 120, and cases cited; Leitch v. Wells, 48 N. Y. 585, 595), even though in so doing he violated his duty. (Leitch v. Wells, supra.) A mere sale or transfer of such an asset by an administrator, which would result in realization of its fair money value, was not, in the terse words of Yeomae, J., in Gibbs v. Flour City Nat. Bank (86 Hun, 105), “in contravention of the trust which they held, but a step in its execution.” It certainly was not the affair of the assignee to see whether the consideration money was honestly applied by the executor (2 Williams Exrs. 122; Scott v. Tyler, 2 Dick. 725; Leitch v. Wells, supra, and authorities cited; Gibbs v. Flour City Nat. Bank, supra), and the administrator’s failure to account in no way affects the assignment or inculpates the assignee. Aside from the contention that the assignment was in violation of a statute hereafter noticed, the question then is whether the plaintiff established fraud, collusion or bad faith in the assignment by' Baker to Bedell, and thereby opened the way for equity to follow. (2 Williams Exrs. 122, 124, and eases cited.) The learned Special Term, Keogh, J\, presiding, decided that the assignment was not fraudulent, but in good faith and for a good and sufficient consideration. I think that such decision is with the weight of evidence. Indeed, there is nothing in the record to. indicate that the assignee did not take in perfect good-faith. Even if the appellant had been permitted to show that such assignee was the wife of a client “ at the office ” occupied by the administrator and by Aclierly, who acted as his .attorney, that fact in itself has no controlling weight. Nor was it established that the consideration paid for the assignment was insufficient. The assured lived for four years after the assignment of the policy. It is true that one witness testified that if the insurance company were to purchase this policy, they would pay for it about eighty per cent, possibly $650. But he admitted that such a purchase is exceptional, and only made when the assured needs the funds for maintenance and a valid release can be obtained from all parties in interest. On the other hand, a disinterested witness, who was an insurance agent, testified that, the fair cash value of this policy was $300, and that it was not the practice of insurance companies-to pay cash surrender values on their policies.

In Whitehead v. New York Life Ins. Co. (102 N. Y. 143), cited by the appellant, the policies were with' the wife as the party assured, the contract was said to be “ about the husband but not with him,” and the wife was held to have a vested interest in the policies at the moment of their delivery, so that the husband could not surrender the policy to the company without her consent, and his act in so doing .was not within his power. Butin the case at bar the contract was with the husband, who subsequently assigned to the wife, her executors, administrators and assigns, and upon her death the title vested in her administrator.

It is objected that the assignment by Baker, as administrator, to Bedell, being without the assent of the husband, was in violation of the provisions of chapter 248 of the Laws of 1879, which reads as follows: “All policies of insurance heretofore or hereafter issued within the State of New York upon the lives of husbands for the benefit and use of their wives, in pursuance of the laws of the State, shall be, from and after the passage of this act, assignable by said wife with the written consent of her husband, or in case of her death by her legal representatives, with the written consent of her husband, to any person whomsoever, or be surrendered to the company issuing such policy, with the written consent of the husband.” I think that the statute does not apply. The original policy in this case was not issued'upon the life of the husband for the benefit of his wife, but for the benefit of his legal representatives, which must be taken to be his executors and administrators. (Geoffroy v. Gil bert, supra.) The ¡statute in question was passed in furtherance of the legislation, beginning with the enabling - act of-' 1-840'(Chap-. 80), which permitted the wife, to insure, the husband’s -life for -her benefit or for that her children, but which went no further in enlarging her legal capacity in such respect. And the purpose of both the act of 1873 (Chap. 821) and of the said act of 1879 was to permit her to assign such a policy under the limitations therein provided. (Miller v. Campbell, 140 N. Y. 457, 460.) The¡ language of the statute wherein the legislative intent must be sought, helped by the laws of interpretation (McKuskie v. Hendrickson, 128 N. Y. 555, 558), is neither obscure nor doubtful, and it is not our province to legislate under the plea of statutory construction upon the principle that it were beneficent or wise to extend the purview of a law. This statute only contemplates and only applies to a policy that in terms assures the wife, and cannot be extended to this case where the interest of the wife is but a property right acquired by her through an ordinary assignment made many years after the original 'issue of the policy.

The judgment appealed from must be affirmed, with costs.

Goodrich, P. J., Woodward, Hirschberg and Sewell, JJ., concurred.

Judgment affirmed, with costs.