Court Opinion

ID: 8770016
Source: CourtListenerOpinion
Date Created: 2022-11-26 12:40:03.835875+00
Date Added: 2024-06-11T17:02:09.103240
License: Public Domain

WADDILL, District Judge
(dissenting). I am unable to concur with the majority of the court in the view above expressed, believing as I do, that the case is controlled by the decision of the Supreme Court of the United States in Burt v. Union Central Insurance Co., 187 U. S. 362, 23 Sup. Ct. 139, 47 L. Ed. 216, and hence that the judgment of the lower court should be affirmed.
NOTE. — The following is the opinion of McDowell, District Judge, in the court below:
MeDOWKLL, District Judge. The first question is whether this court must, in deciding the question of liability ol' the insurance company, be guided by the principles of “general commercial law” (Carpenter v. Insurance Co., 16 Pet. 495, 511, 10 L. Ed. 1044 ; Washburn Co. v. Insurance Co., 179 U. S 1, 16, 21 Sup. Ct. 1, 45 L. Ed. 49; see, also, Sias v. Insurance Co. [C. C.] 8 Fed. 187, 188), or by some other rule. In the charter of the insurance company here, which is embodied in an act of the Legislature of Wisconsin, is the following clause: “Sec. 4. Persons who shall hereafter insure-with the said corporation, and also their heirs, executors, administrators and assigns, continuing to be insured in said corporation, shall thereby become members thereof during the period they shall remain insured by such corporation, and no longer.” it is argued that, in cases where the policy is payable on the death of the insured, this clause makes the heirs, executors, administrators, or assigns of one who had insured his own life for the benefit of his estate and assigns members of this (mutua!) insurance company. On this construction of this section counsel for the claimants found a contention, rather difficult to express briefly, that the rights of the parties here are to be ascertained as they would be by a Wisconsin court.
Tile best conclusion 1 have been able to reach is that, even if this construction of the above-quoted charter provision be sound, this court must here be guided by the principles of the general commercial law. But, partly because of this contention, and partly because of other deductions made by counsel for claimants founded on their construction of this section of the charter, it seems advisable to here (lisc-uss somewhat fully the meaning of this section. In this discussion I shall consider only the (possible) application of this section to cases where the policy is made payable on the death of the person whose life is insured. It is possible that this section was intended to apply only to cases where the policy is payable at a fixed future date, which may not arrive for a considerable time after the death of the person whose life is insured. But it seems unnecessary to consider the meaning of the section as applied to such cases; lor in the case at bar the policy is payable on the death of the person whose life was insured, and if this section applies to both classes we are here only concerned as to its application in cases such as we have here.
(1) Where A. insures his own life for the benefit of his “heirs,” executors, admiuislrators, or assigns, and then assigns the policy to Z. (assuming the circumstances to be such as to make this permissible), it may be (A. still living) that Z. becomes a member of the society; but, if so, I incline to the opinion that Z., upon the assignment being made, becomes a member, not as the “assign” of one “who has insured with the corporation,” but because he has become the assured — because he has become, within the meaning of the charter. Hie person who has “insured with the corporation.”
(2) Where A. insures his own life for the benefit of his executors, administrators, or assigns, and dies, having made no assignment of the policy to any si ranger, the construction put on section 4 by counsel for claimants is that on A.’s death his personal representatives and heirs become members of the society. Parenthetically, it should here be said that, if this be the true construction, it seems to me that it is, in the case at bar, the executors, and not the children, who would become members. But I find myself unable to agree thru *446this is the proper construction. The theory of life insurance, in case the policy is payable as it is here, is that the sum promised to be paid by the insurer will be paid as soon as reasonably may be after the death of the person whose life is insured. Hence I can see no reason why the personal representatives or devisees or distributees of the decedent should become members of the society. Their only interest is to forthwith collect the insurance money. Again, they do not continue to be insured. And under this section it is only the personal representatives or heirs, continuing to be insured, who become members.
(3) The case where this section seems to subserve a useful purpose, if it applies at all, is where A. (having an insurable interest) insures the life of B. for the benefit of A.’s successors in interest or assigns, and then, having made no assignment, dies, leaving B. living. I find nothing in the charter which forbids one to insure the life of another, where, impliedly, such insurance is not forbidden by statute or the policy of the law; and section 20 of the amendment of March 15, 1870, clearly contemplates such insurance. In such case, A. dying (B. living), the successors in interest of A. can “continue to be insured,” and there is good reason why the charter of this mutual insurance company should provide that A.’s successors in interest shall become members, with a consequent voice in the management of the company.
(4) It is unnecessary to consider the case (assuming it to be a permissible hypothesis) where A. insures the life of B. for the benefit in the first instance of Z. Here in effect it is Z. (A. paying the premiums for Z.) who insures the life of B., and we have in principle the case last above considered. ,
In the case at bar McCue insured his own life for the benefit of his executors, administrators, or assigns. By will he left the benefit of the policy to his children and appointed, executors. Under this state of-fact I am led to the conclusion that neither the executors nor the children have become members of the insurance company. If the construction that I put on section 4 be correct, it seems to me that there can be no shadow of foundation for the contention that this court must construe the contract here according to some supposed doctrine of the Wisconsin courts, rather than according to the doctrine of the general commercial law.
It follows that, if there be a decision, not a mere dictum, of the Supreme Court of the United States, fairly covering the exact question here presented, such decision is in this court absolutely binding. Burt v. Insurance Co., 187 U. S. 362, 23 Sup. Ct. 139, 47 L. Ed. 216, seems to me to be incontestably such a case. In that case Wm. E. Burt insured his own life under a policy the stipulations of which were in all material respects like those of the one at bar. The policy in case of death was payable to Anna M. Burt, his wife, if living; otherwise to his executors, administrators, or assigns. Shortly thereafter the insured and his wife assigned a half interest in the policy to S. M. Burt and H. R. Burt, who were creditors of the assignors. Thereafter Wm. E. Burt killed his wife. He thereafter, while under indictment, assigned the remaining half interest in the policy to said S. M. Burt and H. R. Burt. Wm. E. Burt was subsequently convicted of the murder of his wife, and was executed therefor. S. M. Burt and H. R. Burt, who were not only the assignees of the policy of insurance as above stated, but were also the sole heirs of Wm. E. Burt, sued at law on the policy. The petition, which set out.the above facts, as well as some others to be mentioned, was demurred to. The trial court sustained the demurrer, and this judgment was affirmed by the Circuit Court of Appeals (105 Fed. 419, 44 C. C. A. 548), and again by the Supreme Court (181 U. S. 617, 22 Sup. Ct. 945, 45 L. Ed. 1030). There was in the petition an allegation that, notwithstanding the indictment and conviction, Wm. E. Burt did not commit or participate in the murder, but that, if he did, he was at the time insane.
As to this allegation, wherein the Burt Case is unlike the case at bar, it is sufficient to say that it was held that the judgment of the court which convicted Wm. E. Burt was based on a legal ascertainment that he was sane and that he was guilty of murder, which precluded further inquiry, it follows, therefore, that it was necessary in that case to decide identically the same question in principle which is presented in the case at bar. In neither the Burt Case nor here was there an express stipulation forbidding the company to contest its liability. It is true that in the opinion in the Burt Case it is said that “public policy forbids the insertion of a condition [the so-called “incontestable *447clause”] wlieh would tend to Induce crime, and, as it forbids the introduction of such a stipulation, it also forbids the enforcement of a contract under circumstances which cannot be lawfully stipulated for.” It may be, as is insisted by counsel, that this language can be properly regarded as a dictum, as there was in the Burt: policy no clause of the character thus declared to contravene public policy. But this leaves the facts in the Burt Case in principle the same as in the ease at bar, and the question necessarily decided there was the one presented here. On the express ground that “it cannot be that one of tlie risks covered by a contract of insurance is the crime of the insured,” and that “there is an implied obligation on his part to do nothing to wrongfully accelerate the maturity of the policy,” it: was there decided that the plaintiffs could not recover.
There is a doctrine, supported by some more or less persuasive authority, to the effect that, where public policy forbids the enforcement of a life insurance policy in behalf of those who claim under a felon and would otherwise be tlie beneficiaries, the court will seek a hand capable of taking and will enforce the policy for the benefit of such person. It seems to me that: there are two reasons why this doctrine, if sound, cannot apply here:
(1) As I construe section 4 of the charter, there is no force in the contention that either the executors or the children of the insured have become members of the company and have acquired a right otherwise than through and under the insured.
(2) As I read the opinion in the Burt Case, it requires this court to hold that the parties to the contract of insurance here did not contemplate the possibility that the insured might commit a capital felony, and thereby bring about his own death, and that therefore the contract does not embrace the contingency of the death of the insured thus brought about. “It cannot he that one of the risks covered by a contract of Insurance is the crime of the insured.” Again, in making the contract of insurance, the insured impliedly obligated himself “to do nothing to wrongfully accelerate the maturity of the policy.”
It follows that the insurance company is under no obligation to pay the sum demanded to any one. Hence there can be no power in this court to apply the doctrine contended for. It also follows that we are not concerned to ascertain the public policy of the state of Wisconsin, and that much the greater part of the exhaustive and admirable brief of the learned counsel for the claimants cannot be considered by this court. It can, as I think, only be considered by the Supreme Court when asked to overrule the Burt Case.
The question of estoppel can be very briefly disposed of. The insured, at the time tlie policy was issued, gave his note, payable in (i months, for $427.50: the amount of the premium for 18 months. This note was payable, not to the company, hut to the local solicitors personally. They in turn executed their note for the same amount, due at the same time, to the personal order of T. A. Cary, the state agent of the company, to which the note of the insured was attached as collateral, and both notes were sent to Mr. Cary. He thereupon sent the amount of the premium in cash to the company. The company had no knowledge concerning the making of the notes. After the charge of murder liad been made against the insured, and while he was in jail on the charge, but while still protesting his innocence, he paid the note by checks drawn to the order of “T. A. Cary, Gen'l Agt.” It seems to me that the payment by air. Cary to the company, long before (.he murder, completed the contract, absolved the insured of any liability to the company for this premium, and left Cary personally the creditor of the insured. In other words, even if there were otherwise room for a possible application of the doctrine of estoppel, there is here no foundation for such claim. The company in no sense received any premium payment after the charge of murder had been made against the insured.
From the.foregoing the necessary conclusion is that neither the executors nor the children have a right to recover.
As to the premium money, T am of opinion that it should in part be ordered paid to the executors. The death of the insured came about under circumstances not contemplated by the parties to the contract, and hence is a contingency not covered by the contract. Quoad such a death there is no contract, and the consideration, except for the insurance .from March 15, 1904, until *448February 10, 1905, should be returned. Between the dates mentioned there was a contract and a risk by the company. In the judgment to be entered I shall apportion the fuud in the registry as thus indicated.
We are now brought to the consideration of some questions rather technical in character. This proceeding was instituted in the state court, from which it was removed to this court, by a bill in equity and attachment served on a garnishee. The legatees, children of the insured, are the complainants, and the executors, alleged in the bill to be claiming as against the children the right to enforce the policy, are made defendants. Counsel have agreed, as they are interested only in securing a speedy determination on the merits, that no objection will be founded on the mere misarrangement of misjoinder of parties, and that either or both the executors and the children may be considered as parties plaintiff. However, I call attention to these facts because of their bearing on the question as to whether it is the law side or the equity side of this court on which this controversy should be determined.
■ From what has already been said it seems clear that we cannot hold this a case in which the executors, having the (apparent) legal right to recover, are forbidden by public policy to take, and that the children have a beneficial, as distinguished from a legal, interest entitling them to sue. As a matter of law, I think that the (apparent) right to sue'is vested in the executors, and in them only. Schouler, Ex’rs and Adm’rs (2d Ed.) pp. 318-321, 326; Code 1904, §§ 2706, 2708. It follows that this is in its essential nature an assertion of a cause of action which is purely legal, and not equitable in character.
It is believed that the state statute (section 2964, Code 1904), which authorizes the prosecution of a purely legal cause of action by bill in equity and attachment, does not, on removal, give the federal court on its equity side jurisdiction of such an action as is the one at bar. That the existence of the lien of an attachment (acquired only at or after the institution of the suit) does not change this result seems to be established by the following authorities: Scott v. Neely, 140 U. S. 106, 11 Sup. Ct. 712, 35 L. Ed. 358; Cates v. Allen, 149 U. S. 451, 13 Sup. Ct. 883, 977, 37 L. Ed. 804; Hollins v. Brierfield, 150 U. S. 371, 378, 14 Sup. Ct. 127, 37 L. Ed. 1113; Putney v. Whitmire (C. C.) 66 Fed. 388; Tompkins v. Catawba Mills (C. C.) 82 Fed. 782; Bank v. Prager, 91 Fed. 692, 34 C. C. A. 51; Viquesney v. Allen, 131 Fed. 21, 65 C. C. A. 259. Under these cases, if I read them correctly, the lien which can give a federal equity court jurisdiction must have been in existence prior to the institution of the suit.
It follows that this cause would regularly be ordered docketed on the law side of this court and the (proper) plaintiffs required to file a declaration. Under the agreement of counsel this course is not necessary. The jury has been waived by proper stipulation. As the court is to decide the case, the bill can, under the agreement, be treated as a declaration filed by the proper parties, and the judgment of the court entered in the common-law order book.
The answer of the defendant company contains what is in effect a plea of payment into court under sections 3296,' 3297, Code 1904. Under the facts here, this defendant should be adjudged its costs.