Case Name: Susan M. Morgan and Others, as Surviving Trustees under the Last Will and Testament of Dayton S. Morgan, Deceased, Respondents, v. The Mutual Benefit Life Insurance Company, Appellant, Impleaded with William O. Morgan and Others, Defendants
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1907-05-01
Citations: 119 A.D. 645
Docket Number: 
Parties: Susan M. Morgan and Others, as Surviving Trustees under the Last Will and Testament of Dayton S. Morgan, Deceased, Respondents, v. The Mutual Benefit Life Insurance Company, Appellant, Impleaded with William O. Morgan and Others, Defendants.
Judges: 
Reporter: Appellate Division Reports
Volume: 119
Pages: 645–663

Head Matter:
Susan M. Morgan and Others, as Surviving Trustees under the Last Will and Testament of Dayton S. Morgan, Deceased, Respondents, v. The Mutual Benefit Life Insurance Company, Appellant, Impleaded with William O. Morgan and Others, Defendants.
Fourth Department,
May 1, 1907.
Insurance — assignment of life insurance to secure premiums advanced toy another—-payment to assignee to amount of lien.valid against beneficiaries — party — assignee of policy may sue — process —nonresident claimants served by publication.
When a policy of life insurance issued by a foreign corporation authorized to do business in this State has' been assigned by the insured as security for . premiums advanced toy the assignee by an assignment which vests title in the assignee, a payment by the insurer-to the assignee to the amount of the lien for premiums advanced discharges the liability of the insurer -on the policy to that extent although the next of-kin of the insured are suing the insurer in another State to recover upon the same policy.
Although the beneficiaries may reinvest themselves with title to the policy by paying the amounts due to the assignee for premiums advanced, that fact does not deprive the assignee of the right to collect the amount from the insurer. v
.The fact that there are conflicting claims toy beneficiaries living in other States to the. insurance moneys and that suits are there brought or threatened is not a sufficient reason for requiring th.e assignee suing the insurer to bring in the .non-resident beneficiaries claiming adversely.
A life insurance policy issued toa resident by a foreign corporation authorized to do business in this State and not payable in any specific place is “ personal property within the State” within the meaning of subdivision. 5 of section 438 of the Code of Civil Procedure, and a resident assignee-having a lien thereon for premiums advanced may serve non-residents having adverse claims by. publication and the judgment will be binding upon all parties so served.
. Spring and Robson, JJ., dissented, with opinion.
Appeal by the defendant, The Mutual Benefit Life Insurance Company, from an order of the Supreme Court, made at the Erie-Special Term and entered in the office of the clerk of the county of Erie on the 26th day of October, 1906, denying the said defendant's motion to vacate an order theretofore entered directing service of the summons herein upon certain defendants by publication.
• Louis L-. Bab’coch and Ghauncey J. Hamlin, for the appellant.
- Joseph II. Morey and Morris Morey, for the respondents.

Opinion:
Kruse, J.:
The defendant insurance company, although it lias been properly served with the summons, attacks the order directing the service by publication of, the summons upon its non-resident' 'codefendants,, upon the .ground that such service will not be effective and a judgment so obtained will not be binding upon the defendants served in . - that manner. ' -
The action is brought - upon a life insurance policy of $5,000, / issued by the insurance company. and delivered in, -this State to a resident thereof, who assigned. the same with the consent of the insurance company in- the State, the assignee also being a resident thereof. ' The policy is now in the State and held and- 'owned, as the complaint alleges,, by the plaintiffs, who are .trustees'under the • will of the assignee and are likewise residents of the State. The' • assignment was made as collateral security .for premiums advanced by the assignee upon the policy, amoun ting to about the sum. of - $,4,500, and which is the. sum claimed by the plaintiffs, leaving due to the beneficiaries about $5.00, to which the plaintiffs make no claim. The"beneficiaries are'made'-codefendants with the insurance company'. ' They. are all non- residents of this State, residing in the ' States of California, Iowa, Missouri a'nd Colorado., The insurance company is a foreign corporation incorporated under the laws of the State of New Jersey, hut does business in this State under a license issued by the Superintendent of Insurance, and is subject to the laws of. this State as regards-the business done libre, having, made' deposits,of securities with the Superintendent of Insurance for the protection, of its policyholders and appointed him as its agent and attorney,- upon whom all process may be served the same . as though the insurance company were a- domestic corporation..
The policy does not seem to fix a particular place of payment by its terms. ' . ' ' ' •
The insurance company admits its liability upon the policy.upon, which the plaintiffs' cause of action is based.,. It contends, however, • that there are conflicting claimants to the insurance -moneys and sets, up in its answer, the pendency of another'action by its codeféndr ants against it in the State of California to recover upon the same policy. The question which the defendant insurance company seeks to have determined upon this appeal is whether a judgment so obtained against it and its codefendants will be binding upon its codefendants as between itself and them, and so protect the insurance company in paying out the moneys due upon the policy in accordance with the judgment which may be rendered in the action.
The motion to vacate the order of publication was made on the same papers upon which the order was granted. Whether the defendants upon whom such substituted service was directed to be made have been served does not appear, nor is there any suggestion in the record that they may not appear and waive any infirmity in the order, if any there be, or that they have not already done so. Under these circumstances it may well.be doubted that the question raised by the, insurance company is properly before the court 'for determination. JSTeither is it at all certain that the action may not proceed against the insurance company alone in the event that the plaintiffs will be unable to obtain service of the summons upon its codefendants, or that they do not voluntarily appear in the action. It is true that the plaintiffs have made them parties defendant, and the judgment demanded Indicates that the relief sought is to declare a lien upon the policy of insurance and the moneys due thereon, to the amount of the plaintiffs' claim. If the plaintiffs • have not the legal title thereto, but only an equitable interest therein, very likely the individuals who have the legal 'title áre required to be made parties to the action with the insurance company. (Steinbach v. Prudential Ins. Co., 172 N. Y. 471.) The facts set forth in the complaint, however, seem to warrant the conclusion that the defendants impleaded with the insurance company, while proper parties, may not be necessary parties to the action, and if so the action may proceed without them. Although the assignment was made and the policy is now held as security for the payment of moneys advanced by the assignee as premiums upon the policy, still if the assignment vested the title thereto in the assignee, payment by the insurance company to the plaintiffs of the amount due them thereon would be a satisfaction and discharge of the claim to the extent of such payment,
The complaint .alleges the-assignment of th'e policy to the plaintiffs' .testator, .and. further alleges that .the plaintiffs are now the holders and lawful owners of the policy as security for the payment' of the moneys paid as therein, stated, amounting to the stun named. . The mere fact that the assignment was made as collateral security, . and that the. beneficiaries therein named may reinvest themselves. . with title to the policy by paying the. amount due to the plaintiffs, does not deprive them.of the right to'collect the amount due to them, from the insurance company. The claim is a direct liability against the insurance company. The fact that there are conflicting claimants to the insurance.moneys or that there are suits threatened, or- have since the commencement of this action been brought' against the insurance company in other States, is not sufficient reason for requiring the plaintiffs to'bring-in all other persons claiming adversely to them' as parties to this action, nor to refrain from proceeding in this action against the insurance company without them. If embarrass-', inent arises to the. insurance company from, conflicting claimants residing in different States and bringing actions therein upon the same claim, it is tli'e necessary result of going out of the State where it was. incorporated into- other States' and doing business therein,, and voluntarily submitting itself to the conditions imposed by the laws of the particular State in Which it carries on the bnsi- • ' ness.' It is no answer to such actions that a judgment obtained against it may-not protect it against claims of other persons not' ' parties to the suit, although, as a matter of comity, proceedings- in • an action may be stayed-where there is a pending action in another State .in Which the controversy between the parties may be adj.udicated. (Sulz v. Mutual Reserve Fund Life Assn., 145 N. Y. 563 ; Douglass v. Phenix Ins. Co., 138 id. 209, 221.)
Assuming, however, that the insurance company may at this time ' and-in this manner question the validity of. the order, we are of opinion that the order was properly granted. The non-residence of the defendants directed to be served by publication ayd the inabil- . ity to serve personally in this State is-cohceded. The insurance' company urges that the subject-matter of the action is not specific • personal property Within the meaning of subdivision 5 of section 438 of the Code'of Civil Procedure, and, therefore, the judgment would be inoperative, since,non-residen;ce alone is' insufficient to' authorize the order for substituted service. (Montgomery v. Boyd, 60 App. Div. 133.)
Section 438 of the Code provides that an order directing the service of a summons upon a'defendant without the State, or by publication, may be made where the defendant is not a resident of the State, and also, among others :
5. Where the' complaint demands judgment, that the defendant be excluded from a vested or contingent interest in or lien upon, specific real or personal property within -the State; or that such an interest or lien in favor of either party be enforced, regulated, defined or limited; or otherwise affecting the title to such property."
The Statutory Construction Law (Laws of 1892, chap. 677, § 4) defines the term personal property as follows: " The term personal property includes chattels, money, things in action, and all written instruments themselves, as distinguished from the. rights- or interests to which they relate, by which any right, interest, lien or incumbrance in, to or upon property, or' any' debt or financial obligation is- created, acknowledged, evidenced, transferred, discharged or defeated, wholly or in part, and everything, except real property, which may be the subject of ownership. The term chattels includes goods and chattels." -
It is, however, Urged on behalf of the insurance company that the subject-matter of this action is not personal property having a. situs within tliis State. As has already been pointed out; the insuranee company, although a foreign corporation, incorporated under the laws of the State of Mew Jersey, does- business in this State under a license issued by the Superintendent of Insurance and is subject to his supervision the same as a domestic insurance company. (Ins. Law [Laws of 1892, chap. .690], § 25, as amd. .by Laws of 1896, chap. 845.) It is required to keep securities on deposit with the' Superintendent of Insurance to be held in trust for the benefit of the policyholders. (Ins. Law, § 26.) It is also required to execute and file a written appointment of the Superintendent of Insurance as agent and. attorney in this State upon whom " All lawful process '.in any action or proceeding against the corporation may be served with the same effect as if it was a domestic corporation. Service upon guch attorney shall thereafter be deemed service upon the corporation." (Ins. Law, § 30.) The policy was issued in the State to a resident thereof, and was assigned by him with its consent to another resident, of the State who .died a resident thereof,.leaving the policy as an asset of his . estate, and is -now ih the State, held and owned by trustees of his will appointed by, and under the control of the courts of ' this State. It .is'payable in the State although, not in express terms, and the securities deposited by the insurance company are held by .the Snperintendent'of Insurance as security therefor. Under these ' ' circumstances we think the insurance company must be regarded as an inhabitant of the State so far as all matters in the suit are concerned, and the: situs of the subject-matter 'of the action as' within this State. ' , .
The question of .the situs of intangible rights and claims of this character have frequently arisen in attachment proceedings and judgments based thereon' attacked for want of jurisdiction, where personal service of process was not made Upon the parties against or upon whose right or claim such process or adjudication was made.. We are well aware that the decisions .upon that' question may not .be in accord (20 Cyc. 1036, Í037), and we shall, not . attempt to. reconcile them. The courts of our own-State have frequently passed upon the question, and .the following cases , may serve as types of two classes, one where the. proceeding has .been held ineffective and void, and the. other where- the proceed-. . ing lias been- held valid. ' (Douglass v. Phenix Ins. Co., 138 N. Y. 209 ; National Broadway Bank v. Sampson, 179 id. 213 ; India Rubber Co. v. Katz, 65 App. Div. 349; Lancaster v. Spotswood, 41 Misc. Rep. 19 ; affd., 86 App. Div. 627.). In the-first two cases it-was held upon the state of facts as there presented, that the attachment proceedings and -adjudication based thereon was -not effective, while upon another state of facts somewhat different' , -the last two cases held the attachment. good and the proceedings valid. The • facts of the two- classes of cases are alike in many respects;; wé need nót stop to point out the precise difference.. We assume that they are in entire-harmony and accord, but think that the facts in this case are quite analogous to those in the last two • cases' and that this case is within that class where- the attachment was upheld and the seizure thereunder effective. The. question has been quite recently before the United States' Supreme Gourt in two .cases; (Harris v. Balk, 198 U. S. 215; Louisville & Nashville R. R. Co. v. Deer, 200 id. 176.) In the Harris case a resident of Morth Carolina who was owing another resident of that State went temporarily to Maryland and while .there was garnisheed .by the creditor of the man whom he was owing in an action brought . in a court of that State, the principal defendant therein being served with process, by publication according to the laws of that State. Judgment was entered and the garnishée paid the same. After the garnishee's return to the State of Morth Carolina he was sued by his creditor in that State. He pleaded the Maryland judgment and payment thereof ás a defense, but the Morth Carolina court refused to recognize the judgment and payment so made and ' directed judgment against him. The United States Supreme Court reversed the judgment of the Morth Carolina court and held that, under the full faith and credit clause of the Federal Constitution • the Maryland judgment should have been recognized and that the payment thereof extinguished the original debt; Mr. Justice Pbckham saying (p. 223): " We can see no reason why the attachment could not be thus laid provided the creditor of the garnishee could himself sue in that State and its laws permitted the attachment." -.
. The question was again presented in Louisville & Nashville R. R. Co. v. Deer (supra). In that case it appeared that the. ' railroad company did business and was liable to service and suit in the State of Florida, and was owing a resident of the State of Alabama. The creditor of the latter brought. suit in Florida, in which the .railroad company was summoned as garnishee, the Alabama creditor,' the principal defendant therein, being served by publication only. A judgment was recovered; the railroad company paying the sum due thereon into court. Thereafter the Alabama creditor brought suit against the railroad company in the State of Alabama. The;Alabama court refused to recognize the Florida judgment and'the payment made thereon, and upon appeal to the United States Supreme Court that judgment was reversed, it being held that the Florida judgment was valid against the Alabama creditor, and that the Alabama court should have given full faith and credit thereto under the provisions of the Federal Constitution. It would seem, therefore, that under these decisions of the United States Supreme Court, • a claim for moneys due upon this policy from the insurance company to its non-resident codefendants would be subject to an attachment in this State' by á creditor of such nonresident codefendants, for they themselves could sue the insurance company in this State upon their claim, and, if so, their creditors could attach the claim. . So that whether the plaintiffs are creditors of the insurance company or of the non-resident codefendants, or merely have a lien, it would seem to follow that the claim' based upon the policy and the moneys due thereon has such a situs in this State as to. enable the courts of this State to pass upon and subject it to their jurisdiction by the proper process. Even if our local laws as declared by the courts of this State aré inadequate to subject such a claim to seizure under a warrant off attachment, yet that is not decisive of the question involved in this case since this proceed-' .ing is not an attachment. If the subject-matter of this suit and the cause thereof is specific personal property within the State, although not attachable it-may be acted upon by the courts of this State, and the adjudication thereof be binding upon all- the; parties to the suit as a judgment in rem. ,.
The suggestion is'made that the insurance, company having been incprporated under the laws of tlie State of Mew Jersey, it's domicile is' there, and this suit may be maintained in the courts of that State. Undoubtedly that is true, but it also has at least a, quasi domicile in this State.'. The very purpose of requiring it to deposit securities' and appoint.the Superintendent of'Insurance as its agent and attorney was to secure its policyholder^ and subject the company and its property within this jState to the jurisdiction of our courts. In the case of .New England Mutual Life Ins. Co. v. Woodworth (111 U. S. 138), where it appeared that the husband' of the insured commenced an action in the"State of Illinois against the . insurance company organized under the laws of "the State of Massachusetts upon a policy of insurance, the insured .having died in the State of Mew York, the plaintiff thereafter going into the State of Illinois and taking the policy with him, it was- held that the action was maintainable in the Ulinois court, and that the company might be regarded as present and an'inhabitant of the State wheredt,bad an agent upon whom, pursuant to the laws of that State, process, might be served. . That case was cited with approval, and' 'the principle applied in the case of Sulz v. Mutual Reserve Fund Life Assn. (supra).
If such an action as this is not maintainable in the courts of this State, and the insurance company may resist payment on the policy without making all of the persons' claiming an interest in the moneys due, thereon parties to the suit, serving them personally With process, it is difficult to see how the company can be compelled to pay at all, unless all of the persons are in accord and unite in one suit or voluntarily appear therein, since the claimants reside in five different -States. Certainly there is.no more reason for bringing the action in the California court than here.' '
Tlie order should be affirmed, with ten dollars costs and disbursements. *
. All concurred, except Spring and Robson, JJ., who dissented in an opinion by Spring, J.
See U. S. Const, art. 4,"§ 1.—[Rep. . .