
    GARNER v. GERMANIA LIFE INS. CO.
    
      N. Y. Common Pleas; General Term,
    
    
      June, 1885
    Insurance.—Action on life policy.
    One who has taken out an insurance policy, payable at his death, and expressed to be in trust for his children, but who does not deliver the policy to them as a gift, but keeps it in his own possession, and pays the premiums upon it out of his own moneys, has a right to surrender it, and take out a new policy in consideration of the surrender, in favor of another person.
    
    Appeal from a judgment.
    Ann Garner and other children of John Lindemann, deceased, by his first wife, brought this action against this defendant and others, to recover upon-a life policy which John Lindemann had taken out in his lifetime and had surrendered in consideration of a new policy, expressed to be payable to his second wife.
    The facts are stated more fully in the opinion.
    
      Horwitz & Hersfield, for the plaintiffs, appellants.
    
      Salomon & Dulon, for the defendants, respondents.
    
      
       See note on p.21 of this volume.
    
   Daly, Ch. J.

—The facts of this case are as follows: On September 24,1863, John Lindemann obtained from the defendants a policy upon his life to the amount of $3,000, upon the payment of an annual premium of $89.34, which insurance was declared to be in trust for his children—Johan Lindemann, Emilia Lindemann and Anna Lindemann, the children of a former wife—he being at the time of this insurance married to a second wife. He kept the policy himself. Twice daring his life he gave it to one of the children to take it to the defendants’ office and pay the premium, who, after doing so, returned it to her father, who kept it in his desk in his store. The testimony is that he told her to go to the life insurance company and say to them: “Mr. Lindemann, your father, sent you to pay this policy.” She assumed the policy to be a paper which he gave her that she did not open. She said that her father was sick, and that he told her that it was the children’s policy; that he said : “I feel very bad, and I don’t think I will live another year.” She testified that he was always telling the children they would have it; and that they would say : “ Well, papa, we have a stepmother and that he would say: “I have saved for you. My life is insured in the Ger-mania Life Insurance Company.” That this was said the last time that she went to pay the premium, which she declared to be in 1878, and that he then said, “I send you down with this ; I have to pay it for your benefit,” giving her a paper which she did not look into, but handed in at the window of the insurance company, which was handed back to her and which she returned to her father, and supposed was the policy. She testified that he died a year afterwards, and that, just before he die 1, he said : “Annie, I may not live to pay another policy.” She was mistaken as to having made this payment in 1878 ; for the premium due on September 24, of that year, was not paid, and the company gave Lindemann the notice which is required by statute (Laws of 1877, c. 321, p: 342), that unless it should be paid within thirty days thereafter the policy and all payments under it would become forfeited and void. The premium was not paid, at least as a premium under that policy, but within the thirty days,—that is, on September 28, 1878, four days after the premium was due,—Lindemann, with the consent of the company, surrendered the policy and took out a new one payable to his wife, in which it was declared, first, that it was issued by the defendants in consideration of the representations made to them in the application for it; second, that §1,429.44 was paid on the delivery of it by Louise Lindemann, the wife of John Lindemann ; third, upon the further consideration of the payment annually of $89.84, on or before September 24, of each and every year. The policy declared that upon these considerations the company insured the life of John Lindemann in the sum of $3,000 for the sole use of his wife Louise Lindemann.

It appears that a dividend to Lindemann of $20.70 became due on September 24,1878, on the iivst policy ; that there was a receipt of the payment of this dividend, signed by Lindemann, which bore date September 26, 1878, two days after the dividend was dne; and two days before the date of the new policy.

Doremus, the secretary of the company, testified that he would not say that this dividend was not applied in part payment of the premium that was paid at that time on the new policy for the benefit of Mrs. Lindemann. He said that the dividend was paid on the same day that the new policy was issued by them; and that he had no doubt that this dividend formed part and parcel of the payment of the premium on that policy, which was issued upon the surrender of the former one. He testified that the books showed that this dividend was paid at the same time that the premium was paid; and, further, that when the former policy was surrendered it was canceled by striking out the signatures of the officers; that before he signed the new policy he had it before him, lying on his desk, for some time on the day upon which it was issued.

There is some discrepancy arising from the difference in the dates of the receipt for the dividend and of the new policy, and the point is taken by the plaintiff, that, as it appears by the evidence that the premium was paid at the same time that the dividend was received, and the new policy bears date two days after the date of the receipt for the payment of the dividend, it follows, that the premium on the old policy was paid before the new policy was issued; and, as Lindemann died before the next premium became payable, that the beneficiaries under the old policy were entitled to the insurance. But this discrepancy is not material, for assuming the fact to be that the premium of $89.34 was paid two days before the issuing of the new policy, it would not, in the view I shall take of the .law, affect the case, the first policy having been surrendered up and canceled.

In issuing the new policy, all the premiums paid upon the former one, amounting, as has been stated, to $1,429.44, were allowed as part of the consideration for the issuing of the new policy, which was upon the same terms as the former one, namely, the payment thereafter of an annual premium of $89.34. Lindemann was then fifteen years older, when the premium would ordinarily be higher, and the secretary of the company testified that the new policy would not have been issued upon the terms that it was, unless the former policy had preceded it, had been in existence, and had been surrendered. On the death of Lindemann, which occurred, as has beén said, before the second premium became due upon the new policy, the company paid the $3,000, the amount of the insurance, to Mrs. Lindemann. Upon the assumption that it was wrongfully paid to her, the present action was brought by the beneficiaries under the old policy to recover it from the defendants, and upon the facts above stated the complaint was dismissed, from which the plaintiffs appeal.

I do not see upon what ground this action could be maintained. Lindemann effected the insurance for the benefit of his children, and whatever interest they may have had in it, ■ the existence of that interest or the continuance of it depended upon the payment of the annual premium, which on his part was a voluntary act, he being under no legal obligation to continue the payment of it (Clark v. Durand, 12 Wisc. 223; Gambs v. Covenant Mut. Life Ins. Co., 50 Mo. 44; Swift v. R. P., &c. Ass’n, 96 Ill. 309; Landrum v. Knowes, 22 N. J. Eq. 594).

If, after he had taken out the first policy, he had delivered the instrument to the beneficiaries, or to any one of them, or to any one to hold in trust for them, it would, according to certain decisions, have vested in them the right to the insurance, although he should afterwards, with the consent of the company, take out a new policy, for the same amount and at the same premium, for the benefit of some one else (Lemon v. Phoenix Life Ins. Co., 38 Conn. 294; Ricker v. Charter Oak Life Ins. Co., 27 Minn. 193; Pilcher v. N. Y. Life Ins. Co., 33 La. An. 322).

Whether these cases were correctly decided or not —which has been questioned, or at least as respects two of them (Union Mut. Life Ins. Co. v. Stevens, 19 Fed. Rep. 671)—it is not material here to inquire, as Lindemann never parted with the policy, but kept it in his possession until it was surrendered to the company and the new policy taken out ; showing by this circumstance, and by the fact that he, and not the beneficiaries, paid all the premiums, that he did not, as was said under like circumstances in Bickerton v. Jaques (12 Abb. N. C. 25), intend to place the insurance irretrievably beyond his own control; and the fact that the person who has obtained an insurance upon his life for the benefit of children or others, keeps the instrument himself, and alone pays the premiums, has in other cases been regarded as sufficient to show that the beneficiaries, under such circumstances, have no vested rights in the policy, and that the insurer has the right to surrender it, and, if he thinks proper, to take out a new one payable to other beneficiaries (Union Mut. Life Ins. Co. v. Stevens, 19 Fed. Rep. 671; Clark v. Durand, 12 Wisc. 223; Kerman v. Howard, 23 Id. 108; Foster v. Gile, 50 Id. 603; Gambs v. Covenant Mut. Life Ins. Co., 50 Mo. 44; Sanford v. Sanford, 45 N. Y. 723, 726).

There is no reason why this should not be so. The creating of such an insurance for the benefit of children or others is a mere gratuity ; for although there is a duty upon parents to maintain children during their minority, this a provision to take effect for their benefit after the parents’ death.

There may be many reasons why the right to transfer such an insurance from one beneficiary to another, even in the case of children, should exist. In the course of years their pecuniary condition may be materially improved, by marriage, success in business, or other causes ; so that it may be more desirable and just that others who have claims upon the insurer, and who are in greater need, should have the benefit of the sum secured by the insurance, instead of those for whom it was originally intended. When, therefore, the insurer keeps the policy entirely in his own possession, he alone paying the premiums, he should, with the consent of the insurance company, have the same right to revoke, alter or change, that he would have in respect to a will; for, like the provisions in a will, it is a gift that is to take effect upon his death. He may, of course, put an end to it by ceasing to pay the annual premium; but there is no reason why his right should be limited to this ; and that where, for reasons satisfactory to him, he desires to transfer the benefit of it to another, that he should have to lose all the premiums he may have paid over a long course of years, and be compelled to pay for a new policy the increased premium consequent upon his increase of years.

An insurance taken out and kept in this way is distinguishable from what has been held in cases where a wife, under the act of 1840 and subsequent acts (Laws of 1840, ch. 80, p. 59), causes the life of her husband to be insured for her sole use, either for a definite period or for the term of his natural life, and in case of her death before the decease of her husband, makes the amount of the insurance payable to her children. It has been held, that such an insurance, within the intent of the statute, is so exclusively for the benefit of the wife and children that she cannot even assign her interest in it, nor traffic with it in any way (Barry v. Equitable Life Ass. Soc., 59 N. Y. 587, 593; Eadie v. Slimmon, 26 Id. 9).

And also that the surrender of such a policy by the husband after the death of the wife, with the assent of the company, is absolutely void ; and that, notwithstanding such a surrender, the policy may be enforced against the company for the benefit of the children (Whitehead v. N. Y. Life Ins. Co., 63 How. Pr. 394).

And that where the payment of the annual premium is allowed, by a collusive arrangement between the husband and the company, to lapse, that a new policy may be taken out upon the same terms as the former one, for the benefit of the husband’s creditor, that such a transaction is also void; and upon the death of the husband, that the insurance is payable to the wife, and not to the creditor of the husband, under the new policy.

These cases, I say, are distinguishable because, by the operation of the statute, the insurance is so exclusively for the benefit of the wife that neither she nor her husband can transfer it to another. Nor can that end be effected through a collusive arrangement between the husband and the company by which the payment of the annual premium is allowed to lapse. But where, in my judgment, as in the present case, the husband alone pays the premiums and keeps the policy in his possession, he may put an end to it by ceasing to pay the premiums, or if he thinks proper, surrender the policy, with the assent of the company, and convert it into a policy payable to some other beneficiary.

This is all that there is in this case. There is nothing in the evidence showing any collusion or fraud on the part of the company. They simply recognized the right of Lindemann, who had the policy in his own possession, and had paid the premiums upon it, to surrender it and take out a new one at the same rate of premium for the benefit of his wife, instead of the former beneficiaries; and, in the absence of any fraud or collusion, there is no ground that I can see for holding that they were wrong in paying the amount of the insurance to the widow, upon the new policy, and should be compelled to pay it to the children under the old one.

The judgment dismissing the complaint should, in my opinion, therefore, be affirmed.

Allen, J., concurred.  