Case Name: KATZ v. OHIO NATIONAL BANK, Exr, etc
Court: Ohio Court of Appeals
Jurisdiction: Ohio
Decision Date: 1933-04-21
Citations: 14 Ohio Law Abs. 661
Docket Number: No 2277
Parties: KATZ v OHIO NATIONAL BANK, Exr, etc
Judges: HORNBECK, PJ, and KUNKLE, J,. concur.
Reporter: The Ohio Law Abstract
Volume: 14
Pages: 661–665

Head Matter:
KATZ v OHIO NATIONAL BANK, Exr, etc
Ohio Appeals, 2nd Dist, Franklin Co
No 2277.
Decided April 21, 1933
Wilson & Rector, Columbus, for plaintiff in error.
Hedges, Hoover & Tingley, Columbus, and Charles Krumm, Columbus, for defendant in error.

Opinion:
BY THE COURT
" Prom such judgment of the trial court error is prosecuted to this court.
The testimony taken before the trial court is contained in the bill of exceptions filed in this court. There is little dispute as to the facts.
The pertinent facts as disclosed by the bill of exceptions may be briefly stated as follows:
Leo Katz, the husband of the plaintiff in error, Stella M. Katz, was a prominent business man of Columbus, Ohio. In June of 1924 he made an application to the Huntington National Bank of Columbus for a loan of $50,000.00. The Huntington National Bank agreed to make this loan to Mr. Katz provided he executed a mortgage on a certain 99 year leasehold held by him on certain property on North High St., Columbus, Ohio, and also took out two policies of life insurance on his life with the Midland Mutual Life Insurance Company in the aggregate sum of $50,000.00, and assigned same to the bank as collateral security.
The mortgage on the leasehold was executed by Mr. Katz and his wife, the plaintiff in error herein, and the policies of life insurance were secured on June 27, 1924. On that date Mr. and Mrs. Katz executed a series of notes to the Huntington National Bank aggregating $50,000.00 and on the same day delivered the mortgage on the leasehold estate on the North High Street, Columbus, Ohio, property and also executed and delivered to the said bank assignments of the said life insurance^ policies.
Mrs. Katz was named" as beneficiary in these policies of life insurance.
The assignments of the life insurance policies made concurrently with the securing of the loan from the bank were executed by both Mr. and Mrs. Katz and they thereby assigned and transferred unto the Huntington National Bank of Columbus all of their right, title and interest in said policies of life insurance upon the life of Mr. Katz and the insurance company was authorized by such transfer upon the maturity of the policies to deduct from the proceeds thereof the amount of the indebtedness thereby secured and pay the same to the said Huntington National Bank; the balance of said policy, if any remained, to be payable as designated therein.
Both of these policies of life insurance contained a'provision that the beneficiary should not have by reason of the provisions of the policies any vested interest thereunder and that the insured might, before maturity change the beneficiary in the policies. These policies were kept in full force during the life time of Mr. Katz and no change of beneficiary was made therein. Mr. Katz died in October of 1927 and when he died there had been no change, as above stated, made in the beneficiary designated in either of said policies and the assignments of the policies above referred to made by Mr. and Mrs. Katz to the said Bank were in full forc'e and effect.
The record discloses that at the time of the death of Mr. Katz he was indebted to the Huntington National Bank upon the notes signed by himself and wife in the sum of between $35,000.00 and $36,000.00.
These policies were paid by the insurance company in November of 1927. They were paid at a meeting at which a representative of the insurance company; a representative of the Huntington National Bank; Mr. Jones, an officer of the Ohio National Bank, the executor of the last will and testament of Mr. Katz and Mrs. Katz were present. The check issued by the insurance company in payment of these policies was made payable to the order of Mrs. Katz. She immediately endorsed the check and turned the same over to the assignee of the policies, namely, the Huntington National Bank which bank deducted the amount then due it on the same notes and turned over to Mrs. Katz the difference bteween the amount of said indebtedness and the value of the life insurance policies.
At this same meeting the Huntington National Bank released the policies from the assignment and retransferred all their rights under ithe policies to Mrs. Katz and also executed an assignment of the mortgage which it held on the 99 year leasehold estate on the North High Street property and the notes which had been paid by the insurance money to Mrs. Katz without recourse. .
Mrs. Katz subsequently filed her claim with the executor of the last will and testament of her husband, namely, the Ohio National Bank, for allowance in the amount so paid to the Huntington National Bank out of such insurance money. This claim was allowed. In October of 1930 she also at the request of the executor released the assignment to her of the mortgage on the leasehold estate on the North High Street property without prejudice to her rights against the estate. In January of 1931 the defendant in error, the executor, disallowed the claim and this litigation is the result of such disallowance.
In brief plaintiff in error claims that she was a surety on the notes in question and. that she is therefore subrogated to all the rights of the bank.
Counsel upon both sides ably presented this case in oral argument and have supplemented the oral argument with unusually exhaustive briefs.
The briefs contain a discussion of the pertinent facts and citation of many authorities from the courts of this and sister states and also decisions of the United States Courts.
We have examined these authorities with care, but shall not attempt to discuss the same in detail. We shall content ourselves with merely announcing the conclusions at which we have arrived after a consideration of such authorities and the evidence.
These two policies of life insurance were taken out primarily for the benefit of the bank as security for a loan it was about to make to Mr. Katz, and one of the conditions of making the loan was that* these policies should be secured.
It is apparent to us that without the desire of Mr. Katz to secure the loan the insurance would not have been taken out and doubtless the loan of the bank to Mr. Katz would not have been made without the insurance policies. Had Mrs. Katz refused to join in the assignment of. these policies Mr. Katz had the right to change the beneficiary as the policies so expressly provided. The beneficiary interest of Mrs. Katz could only vest upon the death of her husband and as she had previously made an assignment of all of her interest in the policies her vested interest could only relate to the surplus remaining after the payment of the notes given to the Huntington National Bank and which notes were secured by the assignment of the said policies.
Without attempting to discuss the law in other jurisdictions, we can not escape the conclusion but that the rule as announced by our Supreme Court in the case of Oettinger v Sparks, 109 Oh St, 94, is decisive of this case.
Counsel for plaintiff in error attempt to distinguish the case in the 109th Oh St from the case at bar. There are some elements of distinction between the two cases it is true, but upon a careful study of this case we think the reasoning of our Supreme Court in the Oettinger case is decisive of the matter here presented for consideration. Some reflection has been made upon the conduct of the executor in regard to certain advice it gave Mrs. Katz; upon its original allowance of this claim and its subsequent rejection of the claim after Mrs. Katz had released her mortgage interest on the leasehold property on North High Street. Such criticism may not be unwarranted in part but we do not think that Mrs. Katz thereby changed her legal status as to the funds arising from the insurance policies. If this be true then such acts can have no legal effect upon the determination of this case.
Judge Robinson in rendering the decision of the Supreme Court in the Oettinger case says:
"The right of Richard P. Sparks as beneficiary of this insurance contract, at the time he joined with the decedent in assigning the benefits to the superintendent of the relief department, was a mere expectancy, which might have been defeated at any time by the decedent ceasing to comply with the terms of the contract, by her designation of another next of kin within the degree of first cousin, or by assignment to the superintendent of the relief department, and, while Richard P. Sparks might have withheld his consent to the assignment of benefits to the superintendent of the relief department, he could not have prevented decedent from accomplishing the transfer by the simple process of herself designating the superintendent of the relief department as her beneficiary to the extent of her indebtedness. He, therefore, by this assignment parted with nothing that he had dominion over or any right which he could retain against her will. The assignment of a mere hope or expectancy that decedent would keep" the policy in force and in his favor was not the assignment of any right or thing vested in him, and furnished no consideration for the agreement of the decedent that he be subrogated to the rights of the Improvement Company under the mortgage."
We are of opinion that the reasoning of our Supreme Court in the above mentioned case is decisive of the issues in the case at bar.
The judgment of the lower court will therefore be affirmed.
HORNBECK, PJ, and KUNKLE, J,. concur.
BARNES, J, dissents.