author: Steversok, V. C.

text:
    Michael Wolfstern and Abbie Wolfstern v. The Pennsylvania Railroad Voluntary Relief Department, The Pennsylvania Railroad Company and Mary E. Somers, sometimes known as Mary E. Reilly.
    [Decided August 31st, 1909.]
    1. Though the scheme of a railroad company organizing an association for the benefit of its employes to establish a fund to pay death benefits is violative of the General Insurance law, it does not affect the contract between the railroad company and an employe, but the contract, in the absence of legislation on the subject, is enforceable.
    2. Where the bill by the parents of a deceased member of a benefit association composed of the employes of a railroad company, organized by it for the establishment of death benefits, against the person designated by the employe as beneficiary, alleges that the object of the association was the establishment and management of a fund for the payment of death benefits, and sets forth only two of the regulations of the association and a part of a third, any doubts arising as to the legal or equitable rights of the parties, on account of the difficulty of discovering the terms of the contract because of the failure to set forth all the regulations, must be resolved in favor of defendant.
    3. A railroad company organized an association for the establishment and management of a fund for the payment of accident, sick and death benefits. The dues payable by the employes of the railroad company were taken from their wages as a. voluntary contribution. The railroad company agreed absolutely to pay the benefits according to the contract, in consideration of the payments made by the employes, whether such payments were sufficient or not.—Held, that the fund created, though deemed a trust fund for the benefit of the employes and their beneficiaries, could not be controlled by the employes, except possibly in equity to prevent a diversion of the fund or to secure an equitable distribution thereof on the winding up of the scheme.
    4. A railroad company organized an association for the benefit of its employes, to establish a fund to pay accident, sick and death benefits. An employe desiring to become a member had to apply therefor and designate the beneficiary to whom the death benefit should be payable, and the beneficiary so named, on the approval of the superintendent, was entitled to the death benefit, provided good reasons were given for the designation. An employe applied for membership, and designated one as beneficiary whom he described to be his wife. The designation was
      approved.—Reid, that the beneficiary so designated, though not the wife of the employe, was entitled to the death benefit as against the employe’s parents.
    On motion to dismiss bill under rule 213.

      Mr. Maximilian T. Rosenberg, for tlie motion.

      Mr. J. Merritt Lane, contra.

   Steversok, V. C.

The question to be determined is whether the bill sets forth any equitable cause of action on behalf of the complainants. The first party named as defendant in the title of the cause is a mere bureau or department of the Pennsylvania Eailroad Company. The bill was amended so as to strike out this supposed party. The actual contest in the cause is between the complainants on the one hand, and the defendant Mary E. Somers on the other. These parties are rival claimants to a death benefit ($500), payable by the Pennsylvania Eailroad Company on account of the decease of an employe. The complainants are the parents of the deceased employe; the defendant Mary E. Somers is the beneficiary designated by the employe and represented by him to be his wife.

The present motion is made solely on behalf of the defendant Mary E. Somers, and it does not yet appear that the Pennsylvania Eailroad Company desires or intends to interpose any defence to the complainants' suit, or to contest its liability to pay the death benefit in dispute to one or the other of the two parties claiming the same.

The relations of the Voluntary Belief Department established by the Pennsylvania Eailroad Company to the -company itself and to the employes of the company who become members of this department, are disclosed to some extent in the opinion of Vice-Chancellor Bergen in the case of Pennsylvania Railroad Co. v. Warren, 69 N. J. Eq. (3 Robb.) 706. The scheme which seems to be a combination of a sick benefit society and a life insurance company, has been adopted by several of the larger railroads of the country. In some states the courts, probably basing their decision upon views of the essential nature of insurance contracts and insurance business which do not obtain in this state, have held that this scheme in its entirety does not involve the prosecution of insurance business. Donald v. C. B. and Q. R. R. Co. (1395), 93 Iowa 284; 33 L. R. A. 492, 496; Johnson v. Philadelphia and Reading Railroad Co. (1894), 163 Pa. 127; 29 All. Rep. 854.

The law of New Jersey in regard to the character of business such as this relief department is organized to prosecute, may be ascertained from the following cases: State v. Taylor (1893), 56 N. J. Law (27 Vr.) 40; S. C. affirmed, Id. 715; Goldenstar Fraternity v. Martin (Court of Errors and Appeals, 1896), 59 N. J. Law (30 Vr.) 207; Holland v. Supreme Council, &c. (1892), 54 N. J. Law (25 Vr.) 490, 493; see note to Penn Mutual Life Insurance Co. v. Mechanics Savings, &c., Co., 38 L. R. A. 1, 40; 1 Bac. Ben. Soc. & L. Ins. §§ 50, 51, 52.

No legislation in New Jersey has been cited which relieves the defendant corporation from the operation of our General Insurance law. P. L. 1902 pp. 445; 446, §§ 88, 89. Whether, in case the whole scheme of the relief department of the defendant corporation is violative of the letter and policy of our insurance laws, that fact can in any way affect the equities claimed by strangers to the contract between the defendant corporation and its employes, is a question which has not been raised in this ease and will not be considered. Whatever may be the relation of this relief department to the insurance laws of the state, the contract with which we have to deal is plainly enforceable between the parties, and will be regarded as enforceable in this court at the suit and on behalf of any party for whose benefit the contract was made.

1. The contract in this case is in writing and consists of the application of the employe of the defendant corporation, the acceptance of the superintendent of the relief department, an officer of the corporation, and the regulations of the relief department approved by the board of directors of the defendant corporation.

The -written application expressly refers to the regulations and incorporates them into the contract. While the bill alleges that the object of the relief department as expressed in the regulations is the establishment and management of a fund for the payment of accident and sick benefits to the employes of the Pennsylvania Eailroad Company, and death benefits to “the relatives (of such employes) or other beneficiaries specified in the applications of such employes,” only two of the regulations and a portion of a third are set forth. It may be that no more light would be thrown on this case if the entire book of regulations had been presented to the court in the bill of complaint, but if any doubts arise as to the legal or equitable rights of any of the parties to this suit on account of the difficulty of discovering the exact terms of the contract, the solution of such doubts, I think, must be in favor of the defendants. Omnis presumptio contra proferentem.

2. In this case we have to deal with contract relations pure and simple, unaffected by any special charter from the state, or any provisions of a statute regulating the creation and operations of benevolent associations, or quasi benevolent insurance departments of corporations. No legislation has been cited at the argument qualifying the above statement. This characteristic of the case before the court distinguishes it from numerous cases such as Britton v. Supreme Council of the Royal Arcanum, 46 N. J. Eq. (1 Dick.) 102; Supreme Council, &c., v. Bennett, 47 N. J. Eq. (2 Dick.) 39; reversed, Id. 563; American Legion of Honor v. Perry, l40 Mass. 590, 592; Grand Lodge A. O. U. W. v. Connolly, 58 N. J. Eq. (13 Dick.) 180. On account of this distinction these cases, and similar ones, in my opinion, are destitute of a large part of the force attributed to them by counsel for the complainant in his oral argument and brief.

3. While the Pennsylvania Eailroad Company in this relief fund scheme offers to its employes the opportunity to enter into certain contract relations with the company, under which, in consideration of regular payments made by them, sick and accident benefits may be paid to themselves, and death benefits may be paid to their relatives and appointees, it does not appear that the employes of the company who enter into the offered contract with their employer become members of any fraternal organization or acquire any right to govern or control the operations of the relief department, or the investment or expenditure of its moneys. The employes pay their stipend, which is taken from their wages as a "voluntary contribution,” and. in case the contributions of the employes with legacies, gifts and interest on investments shall not bo sufficient to enable the company to make the payments called for by its contracts, the company itself supplies the deficit. Conceding that the funds of the relief department are held by the Pennsylvania Railroad Company as a trust fund for the benefit of the so-called members of the relief department, it seems to be a guaranteed trust fund. Beyond the possible right of the employes who make these contracts with their employer to come into a court of equity to prevent a misappropriation or diversion of the trust fund, or to secure its equitable distribution in case of the winding up or abandonment of the scheme, no right of the employes to intervene in the administration of the fund is apparent. The employer agrees absolutely to pay the sick, accident and death benefits according to the contract, in consideration of the payments made by the employes, whether those payments with any increase from interest or contributions from outsiders to the fund shall be sufficient for the purpose or not.

Conceding that the moneys contributed by the employes constitute a trust fund, the object of the trust is to enable the employer to carry out his contracts. No provision is made for distributing any possible surplus among the contracting employes or any other beneficiaries. If the regulations expressly provide for the distribution of such supposed surplus, no such provision is set forth in the bill. Inasmuch as the employer stands liable to supply any deficiency, it would seem that it has the right to appropriate any surplus. We may surmise that as a matter of fact the stipends which the employes are asked to pay and which are fixed by the employer, are as nearly as possible placed at a figure which will prevent the accumulation in the course of years of a large surplus to which the legal title, and, so far as appears in this case, the equitable title, would be vested in the employer. It seems to be entirely possible, however, that if large numbers of employes of the Pennsylvania Railroad Company should from time to time enter into this peculiar contract, and subsequently leave the employ of the company, a substantial surplus fund might be accumulated. It may be that a question can be raised whether there is or is not, strictly speaking, a fund held in trust by the Pennsylvania Railroad Company for the satisfaction of these contracts which it makes with its employes, but no such question has been raised in this case, and no such question will be considered. It will be assumed that a trust fund is exhibited in this case, out of which the payments which the Pennsylvania Railroad Company is absolutely bound to make under its contracts with its employes are primarily to be made.

4. The following are the important features of this relief fund scheme, which must be considered in determining the nature of the legal and equitable relations of the three parties to it, viz., (1) the employe (in this instance William Wolfstern) who sees fit to apply for "participation in the benefits of the relief fund,” or, in other words, to apply to have the Pennsylvania Railroad Company enter into a prescribed contract with him; (2) the employer, the Pennsylvania Eailroad Company, and (3) beneficiaries and possible beneficiaries who under the terms of the contract shall or may receive the death benefit.

(1) ETo employe has a right to be admitted into so-called membership of the relief department, or, in other words, to have his employer, the railroad company, enter into the prescribed contract, or any other contract with him. ETo employe can be elected to membership by his co-employes. The absolute right to approve, the application in every case remains with the Pennsylvania Railroad Company. There are obvious reasons of policy which would prevent the railroad company from arbitrarily excluding any of its employes, i. e., from arbitrarily declining to enter .into the prescribed contract with such employe. All the legal and equitable rights, however, of all parties arise out of the written contract between the employe and his employer, the Pennsylvania Railroad Company, which each party is absolutely free to make or not as he sees fit.

(2) The applying employe must make his application. in writing according to a prescribed form, which has a blank in which lie "may designate” the beneficiary to whom upon his decease a death benefit shall be payable. The employe, however, is not obliged to designate such beneficiary. The blank may remain unfilled if the superintendent of the relief department, the representative of the defendant corporation, sees fit to approve the application in that form.

(3) If no beneficiary is designated to receive the death benefit the same then is payable as prescribed in rule No. 29. In this instance, if William Wolf stem’s application had not designated a beneficiary—if the blank had not been filled in—the death benefit payable under his contract would belong to his father and mother, the complainants in this suit.

(4) Rule 28 prescribes that

“the applicant may in his principal application, or subsequently in the prescribed form, designate a beneficiary or beneficiaries who shall upon the approval of the designation by the Superintendent of the Relief Department be entitled to receive his death benefit; provided that good. and sufficient reasons must be given for such designation of other than relatives or legal representatives.”

We find in this rule 28, taken in connection with rule 22, which is partly quoted in the bill of complaint, a somewhat singular series of concentric propositions.

(a) As we have seen, the opportunity of an employe to enter into a contract is, so far as legal obligations are concerned, absolutely within the will and discretion of the employer. There is nothing in this whole scheme as disclosed by the bill which obligates the Pennsylvania Railroad Company to make one of these contracts with any of its employes, and rule 22 expressly provides that the application, i. e., the application as a whole, must be approved by the superintendent of the relief department. The absolute power to approve or not to approve of any application would seem to include the power to dictate the designation of the person or persons to receive the death benefit.

(5) The contract expressly provides that the designation of a person to receive a death benefit must in every case be approved by the superintendent of the relief department. This provision seems to have no legal force so far as the original application is concerned, for reasons which have been stated above. But the contract provides for the substitution of the beneficiary by others from time to time at the will of the member, and in regard to all sucli substitutes the rule requiring the designation to be approved by the superintendent is necessary in order to give the Pennsylvania Bailroad Company through its officer, the superintendent, absolute control, the right to veto any change of beneficiary which the employe may desire to make.

The original designation of a beneficiary to receive a death benefit and the substitution at any time of any future beneficiary, is thus absolutely within the control of the Pennsylvania Bailroad Company acting through its superintendent. The object of this provision seems to be apparent. It operates to protect the employe, and no doubt often to protect the duly designated beneficiaries of employes from unwise and improvident substitutions.

(c) When it is perceived that the original designation of a beneficiary is entirely subject to the approval of the superintendent of the relief department, and any substitution in like manner is subject to the approval of this officer, it is not quite clear what legal force can be given to the proviso to rule Ho. 28 above quoted, requiring “good and sufficient reasons” to be given for the designation of any beneficiary “other than relatives or legal representatives.” This proviso in terms applies with equal force to an original designation and a substituted designation, and yet both the original designation and the substituted designation are in all cases subject to the approval of this same superintendent.

Let us assume, however, that the requirement of “good and sufficient reasons” has some legal force and effect. Let us suppose that in the case of relatives and legal representatives the superintendent is under a legal obligation to give his approval of a substituted beneficiary in the absence of reasonable objections. If such be the case then where the applicant designates as the beneficiary one who is not his relative or his executor or administrator, the superintendent cannot in any way or in any court be compelled to give his approval of the substitution merely because no reasonable objections are apparent; the superintendent may refuse to approve unless “good and sufficient reasons” are presented to him. It is not the absence of objections but the affirmative presentation of “good and sufficient reasons” which entitles the employe to the approval of the superintendent. This rule is also applicable to the designation of a beneficiary when none was named in the original application.

Whether there is any practical value in the legal distinction above drawn, it is hardly worth while to consider. The object of the proviso is perfectly plain. The Pennsylvania Eailroad Company does not propose to go into a general life insurance business with its employes. It does not hold itself out to them to issue policies on their lives payable to any person whom the assured may select. 'This life insurance business is carried on by the Pennsylvania Eailroad Company with a limited class, viz., its employes, and practically for the benefit of another limited class who may be described generally as the relatives of the employes. This proviso to rule Eo. 28 distinctly notifies all employes of the company, who contemplate entering into this peculiar contract with their employer, and paying out their money for the advantages to he secured thereby, of the limitations controlled by their employer upon their power to designate a beneficiary who can receive the death benefit according to their contract.

5. Having in view the essential nature of the contract presented to this court by the complainants’ bill, we now come to the facts of this particular case which give rise to the particular question to he answered. William Wolfstern, an employe of the company, now deceased, in his lifetime made his written application in due form for participation, &c., and this application was approved by the superintendent of the relief fund. The application named as the beneficiary to receive the death benefit, the defendant Mary E. Somers, who was described Wolfstern as his wife. The claim of the complainants in this case may be summed up in the proposition that when William Wolfstern died there was then living no beneficiary designated by him with the approval of the superintendent of the relief department. It is insisted on behalf of the complainants that the formal approval of the superintendent of the designation of Mary E. Somers was nugatory and void on account of the fraud practiced by William Wolfstern upon the Pennsjdvania Eailroad Company. The alleged fraud consisted in the representation that Wolfstern made that the designated beneficiary was his wife) when in fact she was not his wife, but the wife of another man.

Wolf stern agreed in his application that “any untrue or fraudulent statement made” by him to “the medical examiner or any concealment of facts” in the application, should forfeit J all rights and benefits with certain exceptions which need not be specified.

It may be that the express misrepresentation made by William Wolfstem in his application to the effect that Mary E. Somers was his wife should not be deemed a “concealment of facts.” It is noticeable that the effect of untrue or fraudulent statements is only dealt with when such statements are made to the medical examine]'. The common form employed iir the prescribed application to many benefit societies appears to have been avoided in this case.

The complainants do not insist that by virtue of the above-quoted provisions any forfeiture was effected. Such a result would involve the failure of their entire case. The claim on behalf of the complainants is that the contract between William Wolfstem and the Pennsylvania Railroad Company is valid, but that it contains no valid designation of a beneficiary to receive the death benefit.

The complainants are not asking to have the contract between Wolfstem and his employer declared void on the ground of fraud. They have no standing in court to ask for any such decree—a decree which would destroy the basis of their claim. On the other hand, the Pennsylvania Railroad Company has not in any way by a cross-bill in this case, or otherwise, denied its liability to perform its contract according to its plain written terms.

I am unable to perceive any equitable right in the complainants to have any part of the written contract between William Wolfstem and the Pennsylvania Railroad Company to which they (the complainants) were entire strangers, set aside on account of fraud practiced by William Wolfstem upon the railroad eompanjc This view, I think, is sustained by the opinion of the court of errors and appeals in the case of Tapper v. Supreme Council of the Royal Arcanum (1900), 61 N. J. Eq. (16 Dick.) 638, 644.

The false representation made by Wolfstern to the effect that Mary E. Somers ivas his wife could not injure the other so-called members of the Pennsylvania Railroad Yoluntary Relief Department. If Wolfstern had told the superintendent the truth in regaid to the relations between himself and his proposed beneficiary, any one of various results might have followed. The superintendent might have regarded the selection of this particular beneficiary as an appropriate recognition of moral obligations resting upon Wolfstern, and with that view he might have approved Wolf stem’s application and Wolf stern’s designation therein contained. On the other hand, the superintendent might have declined to approve Wolfstern’s designation, and thereupon Wolfstern might have declined to enter into the contract which called upon him to make periodical payments from his wages.

Assuming that the false representation made by Wolfstern which, it must be borne in mind, was in the original application at the very origin of the contract relations between Wolfstern and his employer, induced the superintendent to give his approval of the designation of a beneficiary, which approval otherwise he would have withheld, at any future time this superintendent or some other superintendent with knowledge of all the facts might have ratified the approval formerly given.

Without going into the question whether after the death of the employe it is competent for the Pennsylvania Railroad Company to set aside any part of this contract on the ground that the employe in his application made false statements, which were the basis of the approval by the superintendent of the employe’s designation of a beneficiary to receive the death benefit, if seems to me that no advantage of any such false representation can be taken by any party other than the Pennsylvania Railroad Company. This railroad company is carrying on a life, health and accident insurance business, and its policy apparently is to prevent the scope of such business from extending beyond the limitations defined by the interests of its employes. It would be hard to establish a standard by which to determine what are good and sufficient reasons for approving the designation of a beneficiary to receive a death benefit under one of these contracts. The judgment of the superintendent seems to be the only practicable test. If a designation, either original or substituted, once has received the approval of the superintendent, is it possible that the railroad company or anyone else could thereafter, at any time before or after the death of the member, allege that the designation was invalid because in fact the reasons given to the superintendent for the designation were not "good and sufficient?” It would open the door, I think, to litigation which should be discouraged if the action of the superintendent of the relief department in approving either an original or a substituted designation could be challenged by a stranger to the contract, either in the lifetime of the employe member or after his decease. All the provisions making it plain to the employes of the railroad company that the original designation of the persons to receive the death benefit, and especially all substituted designations, are subject to the approval of the superintendent, should, in my opinion, be construed in accordance with their evident purpose. They are, I think, honest notices, the object of which is to inform all the employes of the railroad company of the principles which would guide the employer in exercising its discretionary control over the designation of beneficiaries to receive death benefits. Ho employe could go into this insurance scheme in ignorance of the fact that the policy of the company is to confine the payment of death benefits, apart from exceptional cases, to relatives of the insured employes. The proviso to rule 28 above quoted, whatever its legal force may be, practically would tend to prevent disappointment, dissatisfaction and complaints.

We have seen that the complainants, in order to establish their right to this death benefit, must show that when Wolfstern died there was no beneficiary living whose designation had been approved by the superintendent. As a matter of fact there was such approved beneficiary, viz., the defendant Mary E. Somers. The designation, because of any fraud practiced by Wolfstern, was not void, but only voidable at most under well-settled rules of law.

6. I have endeavored to deal with this case as it was argued, assuming the case so argued to be precisely the case presented by the bill of complaint. The argument has assumed that the false representation made by William Wolfstern procured the approval of the superintendent to the designation of the defendant Mary E. Somers as the person to receive the death benefit, and that if such false representation had not been made the superintendent would have declined to approve such designation. The exact allegation in regard to that matter is that if the superintendent “approved the designation of Mary E. Somers by the said William Wolfstern, it was approved by him under false and fraudulent representations, to wit, that the said Mary E. Somers was the wife of the said William Wolfstern.” It does not follow from this proposition that if the exact truth had been told the superintendent would not have given his approval for reasons which he would have deemed “good and sufficient.” Wolfstern may have preferred to make the false representation rather than to tell the whole truth, when either course would have been equally effective in procuring the desired approval.

The bill alleges on information that when Wolfstern made his false representation he “knew that he could not give any good and sufficient reason for the designation of said Mary E. Somers as his beneficiary,” and further alleges on information “that no good or sufficient reasons were or could have been given” for such designation. Whether these propositions are to be regarded as relating to facts to be taken as true on this motion, which is equivalent to a demurrer, or mere speculations or opinions in regard to the probable action of the mind of the superintendent under certain conditions, is a question susceptible of considerable legal and metaphysical argument. If the- defendant Mary E. Somers should file an answer joining issue on these propositions I think that the litigation thereby set in court would illustrate the impolicy of allowing these parties to attack this contract between Wolfstern and his employer upon the grounds set forth in this bill of complaint. The bill tenders as an issue to be tried the question whether in fact there were good and sufficient reasons for the action in the way of approval which the superintendent saw fit to take. The theory of the bill seems to be that the court of chancery in determining the controversy between these parties will adjudicate whether or not there were good and sufficient reasons for tlie approval of the designation of tlie defendant Mary E. Somers, and tlie goodness and tlie sufficiency of any alleged reasons must therefore be determined either b}' the judgment of the court or by the judgment which the court may conclude the superintendent would have made or ought to have made.

If the language of the proviso is to be taken literally, the important matter is not whether in fact there were good and sufficient reasons for approval, but whether such reasons were “given” presumably to tlie superintendent. If in such case Wolf stern might have stated good and sufficient reasons to the superintendent for the approval of his designation, but, from a motive of convenience, or delicacy, or pride, preferred to state a false reason, it would seem to be a strange result if the complainants on that account could now have this court declare such designation void. If in fact a good and sufficient reason existed the presumption is that the railroad company would, upon learning the truth, leave the original approval of its superintendent undisturbed or even expressly ratify the same.

A careful study of the objects and practical workings of this insurance department of the Pennsylvania Eailroad Company, it seems to me, must greatly strengthen the conclusion that if after the death of an insured employe anyone has a right to defeat the payment to the beneficiary designated by the assured and approved by the superintendent, on account of any-false representation made by the assured or false “reason” given by him to induce the superintendent to approve his designation, such right must be confined strictly to the Pennsylvania Eailroad Company. Whether after the death of the assured employe it is competent for the railroad company to disavow or annul the approval of its superintendent, on the ground that such approval was obtained by fraud, is a question not raised in this ease.

An order will be advised dismissing the bill as to the defendant Mary E. Somers, with costs.


source: Caselaw Access Project

author: Stevenson, Y. C.

license: Public Domain

text:
    Hall Lace Company v. Lawrence Javes et al.
    [Decided October 16th, 1909.]
    1. The case of Jersey City v. Cassidy, 63 N. J. Eq. (IS Diek.) 759 was examined and followed in this suit.
    2. Where the question is whether the restraint should be continued against the labor union defendant as well as against the body of its members, and the sole objection to the injunction is that it is unnecessary, and the objection is urged because of the erroneous notion that the vacation of the injunction is a “vindication” of the defendants, who have been subjected to its operation, comparatively slight evidence of the usefulness, or necessity of the injunction is sufficient to sustain it until the final hearing.
    On motion for an injunction to restrain complainant’s operatives and their labor union from causing complainant’s employes to break their contracts of service and from preventing, by intimidation, &c., persons willing to be employed by complainant from entering into its service, &c.

      Mr. Thomas G. Haight, for the motion.

      Mr. Pierre P. Cook, contra.

   Stevenson, Y. C.

In the above-stated causo I have hot examined closely the terms of the restraining order, inasmuch as no criticism of them has been made by counsel for the defendants. The restraint, seems to follow substantially the form prepared by me in the similar case of Jersey City v. Cassidy, 63 N. J. Eq. (18 Dick.) 759, a typographical error being corrected. The word “to,” which is the first word in the second line on page 760, should be stricken out, and a comma inserted in place thereof.

It is conceded that the restraint may properly be continued against a large number of the individual defendants, in all fifteen, as my notes indicate. These men are members of the defendant union, The Chartered Society of Amalgamated Lace Operatives of America. The only question which remained for determination by the court at the conclusion of the last argument was whether the restraint should be continued against the union as well as against this substantial body of its members. I have re-examined the case, and especially the affidavits to which counsel particularly called my attention, and my conclusion is that there is enough of a case made out to make it proper that the injunction should stand against the union. This conclusion is reached with the principles in view which I have heretofore stated in Jersey City v. Cassidy, supra, and in other cases controlling the maintenance of an injunctive order in situations like the one now presented to the court. When defendants do not claim that the injunction restrains them from doing anything which they have a right to do, or which they desire to do—■ when the sole objection to the injunction is that it is unnecessary, and the objection is urged because of the erroneous notion that the vacation of the injunction is a “vindication” of the defendants, who have been subjected to its operation, comparatively slight evidence of the usefulness or necessity of the injunction is sufficient to sustain it until the final hearing. Even if the injunction should be dissolved the defendants are not “vindicated,” but stand charged with wrong-doing until the final hearing, when, if they are innocent, their “vindication” will come.


text:
    Metropolitan Life Insurance Company v. John Hooppel et al.
    [Decided October 16th, 1909.]
    1. The term “beneficiary,” as used in insurance, means such person as should stand in the capacity of the beneficiary according' to the established course of the insurance business of the company with its policyholders when the policy becomes payable.
    2. The rule that, where a life insurance policy payable to a specified beneficiary had been in force for several years and the beneficiary is changed, the original beneficiary is entitled to receive from the proceeds the value of the policy at the time of the change, does not apply' to industrial insurance.
    3. An industrial policy and the application made a part thereof provided that the company would pay the person designated in the fifth condition therein set forth on receipt of proofs of death, &c., a stipulated sum. The fifth condition, however, did not contain a specification of the beneficiary, but only an enumeration of persons, to any one of whom the company might pay the sum stipulated in the discharge of its obligation, provided in support thereof the company could subsequently produce the policy and a receipt for the amount paid, signed by the party receiving it. The application, however, designated the insured’s husband as beneficiary, and it was the company’s custom to permit policyholders to change the beneficiary; it providing a printed blank for that purpose.— Held, that the original beneficiary designated in the application had no vested interest in the insurance during the life of the insured, and, she having changed the beneficiary in accordance with the company’s custom and appointed another, the latter was entitled to the entire proceeds of the policy.
    Interpleader. On final hearing between contesting claimants to the fund.

      Mr. James Benny, for the defendant John Hooppel.

      Mr. Andrew J. Steelman, for the defendant Mary E. Cooling.
   Stevenson, Y. C.

My conclusion in this case is that the fund should be answered to the defendant Mary E. Cooling.

1. The important facts are as follows:

The policy, which bears date May 21st, 1883, upon the life of the deceased, Mrs. Mary A. Iiooppel, was issued by the Metropolitan Life Insurance Company to Mrs. Iiooppel in pursuance of its scheme of industrial insurance. The contents of Mrs. Hooppei's written application for the policy, and of the policy itself, are sufficiently disclosed for the purposes of the present examination in the opinion of Mr. Justice Van Syckel in Metropolitan Life Insurance Co. v. Schaffer (1887), 50 N. J. Law (21 Vr.) 72. When this policy was issued the evidence shows that the company had established, and were maintaining, the custom of permitting their policyholders to substitute a beneficiary for the one named in the application. It provided a printed blank for the purpose entitled “Change of Beneficiary” to be executed by the holder of the policy, and duly witnessed. The inference is that in most cases the blank was filled.'out and witnessed by an officer of the insurance company. Mrs. Iiooppel, in her application in 1883, in the proper blank named as the “person to whom benefit is to be paid” the defendant John Hooppel, whom she described as her husband. Unquestionably if Mrs. Hooppel had died while conditions remained unchanged, the defendant John Hooppel would have been the only person in existence who could plausibly claim to be the beneficiary. But on November 26th, 1888, an agent of the insurance company, at the request of Mrs. Hooppel, filled out one of the blank forms entitled “Change of Beneficiary” above mentioned, and,the same was thereupon signed by Mrs. Hooppel and witnessed by the agent, and thereafter remained in the possession of the company until Mrs. Hooppei’s death. By this instrument Mrs. Hooppel undertook to substitute her daughter, the defendant Mrs. Cooling, for her husband as “the beneficiar}1-.” The paper, in part, reads as follows:

“I do hereby request and authorize said company in the event of my death to pay over the proceeds of said policy to Mary E. Hooppel (now Mary E. Cooling) my daughter * * * instead of the person or persons designated in the application for said policy.”

The insurance company accepted this so-called “change of beneficiary” and on the strength of it Mrs. Hooppel went on for years paying her premiums.

Mary A. Hooppel, the holder of the policy, with whom the insurance company made this contract, died January 16th, 1907, having until her death had possession of the policy, and thereupon the defendant John Hooppel, claiming to be the husband of the deceased, and also “the beneficiary” within the meaning of the contract of the insurance company, took possession of the policy and presented the same to the company with proofs of death and demanded payment. The insurance company finding the “Change of Beneficiary” on file, declined to pay. The defendants, the husband and daughter of the deceased, not being able to agree in regard to the payment of the money, this inter-pleader suit was instituted, and the fund, after deducting complainant’s costs and counsel fee, which remains in court to be awarded to one or the other or both of these claimants, is less than $300.

2. The contract of the insurance company in respect to the very vital question to whom the company is legally bound to pay the amount of the policy is singularly obscure. In the Schaffer Case above cited Mr. Justice Van Syckel states (at p. 74) that “there is no contract or agreement to pay to the beneficiary named in the application.” The company in its policy agrees “to pay to the person or persons designated in Condition Fifth” therein set forth, upon receipt of proofs, &c., the stipulated sum. But when we turn to condition five we do not find a specification of the person or persons to whom the stipulated sum must be paid; we find only an enumeration of persons to any one of whom the company may, in discharge of its obligation, make a payment of the stipulated sum provided in support of such payment the company can subsequently produce the policy and a receipt for the amount paid, signed by the party who received the same. We find the contract of insurance in this case not only in the policy which Mrs. Hooppel received and kept in her possession, but also in the application for the policy signed by her and retained by the insurance company. The policy refers to the application and makes it “part of this contract.” notwithstanding the attempted wholesale incorporation in the policy of this complex paper, containing many words which do not import any contract obligation on the part of anybody, it may not follow that every proposition contained in the application must be deemed as a promise on the part of both of the contracting parties, or the one of them to whom the proposition can be attributed most naturally or plausibly, or with the least possible disregard of common sense. Taking the two clauses of the policy above referred to, viz., the express agreement of the company to pay, and the enumeration of persons to any one of whom a binding payment under conditions stated maj' be made by the company, in connection with the appointment of the beneficiary contained in the application, the result seems to be that the legal obligation of the company is either—■

(1) To pay the amount of the policy to any member or member of any of the classes of persons named in condition five, or

(2) To pay such amount to “the beneficiary.”

If the legal obligation of the company is to pay the amount of the policy to the beneficiary, then, carrying out the suggestion of Mr. Justice Yan Syckel in the Schaffer Case, the terms of condition five, so far as they warrant payment to a relative or connection of the deceased, “operate as an appointment both by the assured and the beneficiary of persons, any of whom are authorized to receive payment of the sum agreed to be paid.” This view seems to be more consistent than the other view above stated with the theory of the contract as a contract of life insurance, rather than a contract for a burial fund. It would be put to a test if a relative, not the beneficiary, should bring an action at law in his own name against the insurance company, and the company should defend on the ground that while the policy provided for paying the amount thereof to a relative, such relative merely acted under an appointment on behalf of the beneficiary, and that the beneficiary alone could sue at law in his own name. If by naming a party as the beneficiary in the application the assured merely adds an extra person to those enumerated in condition five to whom a binding payment under the conditions stated can be made by the company, the words employed are certainly inapt and misleading. The party so nominated in no proper sense, especially having in view the common nse of insurance terms, could be called “the beneficiary.” The language of the application where the beneficiary is styled as the “person to whom benefit is to be paid” is also inappropriate. The description should not be of a person to whom the so-called benefit is to be paid, but of a person who by the appointment is merely added to the numbers of eligible persons to whom the company can make a binding payment under certain specified conditions, or rather make a payment which, under certain specified conditions, subsequently will be binding upon all parties concerned—all parties who were “lawfully entitled” to receive such payment.

Perhaps a third theory of the legal obligation of the insurance company under this peculiar contract is tenable, viz., that the company enters into a legal contract with every person coming within the enumeration of condition five which can be legally enforced by such person in an action at law, while the equitable title to the money, to whomsoever it may in fact be paid, is deemed to be vested in the beneficiary. One difficulty, perhaps insurmountable, in the way of this theory is perceived when it is considered that it permits “any relative by blood or connection by marriage,” a brother-in-law, for instance, to maintain an action at lawr on the policy in his own name. The insurance company in the policy expressly agrees “to pay the person or persons designated” in condition five, the amount of the policy upon production of proofs of death. There is no requirement here that the person to whom the payment must be made must produce the policy. The company can discharge all its contract obligations by paying to any relative or connection by marriage, husband or wife of the deceased, the amount named in the policy, provided subsequently when such payment is challenged it can produce the policy and a receipt signed by the party to whom the payment was made, and who, of course, comes within the enumeration of condition five.

Perhaps also a legal theory of this insurance contract is tenable which makes it enforceable in an action at law brought by the beneficiary or his executor or administrator, or in the absence of any beneficiary by the executor or administrator of Mrs. Hooppel, the party with whom the contract was made, while at all times and under all conditions the insurance company has the right under condition five to discharge itself from all liability to the party “lawfully entitled” by making payment in the manner therein prescribed. Such a theory would not permit a relative, husband or wife of the deceased, as such, to maintain an action at law for the amount of the insurance, although supported by a tender of the policy for surrender.

3. Whatever may be the true theory of the legal obligation of the insurance company and of the legal and equitable rights of “the beneficiary” under this insurance contract, the result so far as concerns the present case seems to me to be the same. The awarding of this fund to the defendant John Hooppel or to the defendant Mary E. Cooling, or of a portion of the fund to each of these two claimants, depends upon the true construction to be placed upon the term “the beneficiary” in the contract of the insurance company which is contained in the application and in the policy. The defendant John Hooppel makes no claim to this money as husband of the deceased, although it would seem that the insurance company, when he took the policy to its office and demanded payment, might have made a binding payment to him, taking from him a receipt which with the surrendered policy would protect such payment in the future from all attack. The defendant Mary E. Cooling makes no claim as daughter, although it would seem also that the insurance company after obtaining possession of the policy might have made a binding payment of the amount to her and insured the validity of such payment by filing her receipt for the same with the surrendered policy.

The sharp question is simply which of these two claimants must be deemed “the beneficiary” within the meaning of this contract of insurance. The contract of the company contained in the policy is not to pay a sum of money at the date of the contract, or at a specified date thereafter, it is a contract to pay to a certain person or certain persons a sum of money upon the death of Mrs. Mary A, Hooppel, which event would certainly occur at some time in the future, but might occur at any time during a long and undefined period. Payment at a future time is contemplated by this contract, and sucia payment is provided for thereby. The contract is not to make actual physical payment to the beneficiary named in the application, as Mr. Justice Van Syekel points out. Such beneficiary might be dead. When we consider that when these words were employed and this future payment was contemplated and provided for, the insurance company had in full operation a system by which its policyholders from time to time changed their beneficiaries, it seems to me that according to a well-settled rule for the construction of contracts, and according to common sense the conclusion is inevitable that the term “the beneficiary” meant such person as should stand in the capacity of the beneficiary according to the established course of the insurance business of the company with its policyholders at the time in the future when the amount specified in the contract would become payable.

It is worth while to note that the “change of beneficiary” executed by Mrs. I-Iooppel did not undertake merely to appoint the daughter in the place of the husband as a person to whom a valid and binding payment might be made by the company, provided the company took her receipt and stood ready to produce the policy in support of its action in making such payment. The language is quite different from that employed in the application. The instrument positively instructs the company to pay the proceeds of the policy to the daughter. The paper seems to assume that the company had obligated itself theretofore to pay the amount of the policy to the husband who was named in the application as the beneficiary, and undertakes to substitute a new beneficiary to whom the proceeds of the policy are in any event to be paid.

4. We must now deal with the proposition that Mrs. Hooppel, the assured, was not capable under our law of substituting her daughter for her husband as the beneficiary in this policy. The law on this subject which has been very fully discussed by counsel is very far from settled. The authorities in different jurisdictions are conflicting. It seems to be conceded that the leading case in this state is Landrum v. Knowles, 22 N. J. Eq. (7 C. E. Gr.) 594. In my judgment, the law which interferes with the right oí two contracting parties to remodel, change or abolish their contract obligations as they see fit, merely because a third party, a stranger to the contract and its consideration, will be benefited by the performance of it in its original form, should not be extended. I think the decisions in Mew Jersey support this view. If the rule laid down in Landrum v. Knowles, and therein applied to the ordinary form of life policies where the beneficiary is named, and the insurance company promises to pay the stipulated sum to such beneficiary, is applied to this present case, it would be necessary to determine how to apportion this small sum of money between the original beneficiary, the defendant John Hooppel, and the substituted beneficiary, the defendant Mary E. Cooling. Mo surrender value of this policy has been proved, and the intimations are that it had no surrender value when the attempted substitution was made. The original beneficiary had the full value of this policy for five years. During that period in the event of the death of the assured, according to one of the views above expressed, he would have been equitably entitled to the amount of the policy no matter to whom the insurance company might actualty pay the same in discharge of its entire liability. Whether there is any satisfactory and equitable way of apportioning the amount of this policy between these two successive beneficiaries, I shall not undertake to discuss, because, in my opinion, the rule laid down in Landrum v. Knowles must be confined to life policies where a definite beneficiary is named to whom the amount of the policy is expressly made payable, and ought not to be applied to these industrial contracts of insurance which are collected either by “the beneficiary,” or an executor, or an administrator, husband or wife, or relative by blood or connection by marriage of the assured, and which are entered into by the parties while the insurance company is maintaining the custom of permitting its policyholders from time to change their appointment of the beneficiary originally made in their applications. I can see no final gift of the amount of the policy, or any portion of it to the person named as beneficiary in the application. The course of business with reference to which this contract was made permitted a succession of beneficiaries. Contemplating this course of business, the nomination of John li. Hooppel as the beneficiary, does not indicate any absolute donative purpose on the part of the assured-when she made her contract with the company. An essential element of a gift is conspicuously wanting. The only donative purpose which can be attributed to Mrs. Hooppel when she entered into this contract with the insurance company was to donate the amount of the policy in the event of her death, while the policy was in force, to her husband unless prior to her death she should make up her mind to donate that amount to some other beneficiary. It may be conceded, that, in analogy with some of these decisions, which give the third party a vested interest in a contract to which he is an utter stranger, a vested equitable interest might be established on behalf of the defendant John Hooppel which would give him some proportionate share of the amount of the policy. To recognize any such equity would, I think, require an extension of the law of judicial decision in a direction toward which it should not proceed, as I have already indicated, and might involve industrial insurance in difficulties which would impair its usefulness. The main object of a large proportion of these small industrial policies is to provide money not for the use of “the beneficiary” or other person who may be empowered to collect the same, but to pay the burial expenses of the deceased. This well-known fact sharply distinguished these industrial policies from ordinary life policies where the amount is intended to be paid to the beneficiary for his own use. The application to these little policies of the principle or theory that something is vested in “the beneficiary” while the policy stands payable, or possibly payable, to him—that some irrevocable gift has been made to him by the party who contracts with the insurance company and pays the entire consideration of the contract, would produce inconvenient results if the policy should remain outstanding as in this case over fourteen years, and during that period in order to accomplish the real purpose of the insurance three or four or more changes of beneficiary should.be made. The difficulty of apportioning $300 according to any equitable principle in a ease like tins among four or five different parties, including perhaps executors of deceased beneficiaries, is apparent. Whatever may be true in the ease of ordinary life insurance policies or certificates of benefit societies, where the beneficiary is named and the amount of the insurance is intended to go to him for his own use, I fail to find in the ease of this industrial insurance policy anything to indicate that Mrs. Hooppel at any time made a gift or conveyance of a “vested” right to her husband when she made her application and took out this policy. Mrs. Hooppel entered into this contract with the course of business of the insurance company in view, and that course of business, I think, determines -the meaning of the phrase “the beneficiary,” which was employed in the contract which she accepted from the company. There being no controlling decision on this subject, I am unwilling to recognize any equity on the part of the defendant John Hooppel which could prevent the assured and the insurance company, these two contracting parties, from changing the beneficiary who would be entitled to receive the entire amount of the policy as they might from time to time see fit.

5. The question has been argued in this ease whether the law of Hew Jersey or the law of Hew York applies to this ease. Each side of this question has been sustained by citation of authorities. I shall not undertake the determination of this matter because it has not been shown that the law of Hew York, as contained in statutes or the decisions of the courts, is in any degree different from the law of Hew Jersey upon any proposition which is controlling in this case.


author: Garrison, Y. 0.

text:
    Dennis J. Sullivan, next friend, &c., et al. v. John F. Maroney et al.
    [Decided June 11th, 1909.]
    1. An assignment by insured of a life policy payable to her children, if they survived her, which they did, otherwise to her estate, was ineffectual against her children, who alone could assign their interest.
    2. A life policy being made payable to certain beneficiaries, their interest can be divested in favor of other beneficiaries only in the manner provided by the policy for such a change; so that, the method provided by the policy for change of beneficiaries not being pursued in any respect, an instrument, in form simply an assignment, signed by insured, to whose estate the policy was payable only if her children, the beneficiaries, did not survive her, which was not the case, could not change the beneficiaries.
    3. The rights of parties between themselves as to the proceeds of a life policy, depending on -whether there was a change of beneficiaries, are not affected by the insurance company not contesting the question of change of beneficiary, but admitting its liability to some one.
    Hoard on bill, answers, replications and proofs in open court.
    This is a bill filed by tire next friend of four infants to secure the proceeds of a life insurance policy.
    The defendants are the life insurance company and those who claim adversely to the complainants. The life insurance company defaulted, and a decree pro confesso has been taken against it. The facts are stated in the opinion.

      Mr. J. Merrill Lane, for the complainants.

      Mr. Marie A. Sullivan, for the answering defendants.
   Garrison, Y. 0.

John P. Maronei'- was a life insurance agent doing business in Jersey City. Edward and Margaret Cahill, husband and wife, were people of the working class living in Jersey City. Marie Schaefer, subsequently married to McCabe, was a sister of Maroney’s wife.

In January of 1906, Maroney induced the Cahills to take out $12,000 worth of life insurance, $6,000 on the life of each. These policies were as follows: On the life of Margaret, $3,000 in the Equitable Insurance Company, payable to Edward; $2,000 in the State Life Insurance Company of Indianapolis, payable to the four children of the parties (the complainants); $1,000 in the State Life aforesaid, payable to Edward. On Edward’s life, $3,000 in the Equitable Insurance Company, payable to Margaret; $2,000 in the State Life Insurance Company of Indianapolis, payable to Margaret; $1,000 in the State Life aforesaid, payable to Margaret.

The premiums on all these policies, taken together for the first year, amounted to $315. Maroney, who attended to all of the business, and acted as agent in the entire transaction, testifies that he secured the money to pay the premiums from Marie Schaefer (now McCabe) by an agreement between her and the Caliills, which was that she was to pay these premiums and was to have assigned to her all of the policies excepting the policy for $1,000 on the life of Edward, payable to Margaret, issued by the Stale Life Insurance Company. He also says that she was to pay $35 more than all of the premiums—that is to say, she was to pay $350 instead of $315, and that this extra $35 was to go to Mrs. Cahill; and further, he says that it was agreed that she should pay all of the debts of Margaret Cahill which were owed by the latter at the time of her death; and further still, he said that, as part of /the agreement, $200 out of any insurance collected on the life of Margaret was to be paid to Edward. He asserts that he obtained the money to pay these premiums from Miss Schaefer shortly after the time that the policies were taken out in 1906, and that it was at that time that the agreement was made.

In January of 1907 Mrs. Cahill was seriously ill of the disease of which she died on the 2d of March, 1907, and while in bed she signed assignments of the policy in question, and at or about the same time Edward Cahill signed assignments to Marie Schaefer of the $3,000 policy in'the Equitable Life and the $1,000 policy in the State Life, on the life of Margaret, payable to him.

No assignments were ever procured from Margaret on the $3,000 policy on Edward’s life payable to her, issued by the Equitable, or of the $2,000 policy in the State Life on the life of Edward, payable to her, nor of the $1,000 policy in the State Life on the life of Edward, payable to Margaret. The last-named policy was not to be assigned, but was agreed to be kept up for the benefit of Margaret, according to Maroney’s testimony.

This controversy concerns the $2,000 policy in the State Life Insurance Company, of Indianapolis, Indiana, issued on the 16th of January, 1906, on the life of Margaret, payable to the four children.

Although Maroney and Schaefer each testify that the agreement was made and the premiums paid over by her to Maroney, and by Maroney to the company, in January or Eebruary of 1906, it is very difficult for me to believe this. I incline to the opinion that no payment was made to the company for the first year—probably Maroney’s commissions were sufficient to at least satisfy the first year’s premiums—and the fact, I believe, is that the first payment was actually made at the beginning of the second year, which was the time when the assignment was obtained.

Undoubtedly these policies were taken out by Maroney in a spirit of speculation. There is not the slightest pretence that the Cahills were ever in the position to take out any such amount of insurance, or to pay for any insurance at all out of their meagre means. At the time that the assignments were obtained from Margaret Cahill and from Edward Cahill, Margaret was a very sick woman, and was dying, and shortly afterwards died. It will be observed that assignments were only obtained for those policies which were upon her life—no assignments were obtained upon the policies upon the life of Edward.

Part of the agreement, Maroney says, was that the debts due by Margaret Cahill at her death should be paid by Miss Schaefer, as a portion of the consideration; and he also says that it was agreed that $200 out of the insurance collected upon Margaret’s death should go to Edward, her husband. It is inconceivable to me that any such agreements were made in January of 1906, when, so far as it appears, Margaret was in good health and there was no reason to suppose that she would either die soon, or would die before her husband.

However this may be, the taking out of the policies was a pure speculation, as was the participation therein of Miss Schaefer. As has been before stated, Margaret Cahill died on the 2d day of March, 1907, and the policy of $3,000 on her life in the Equitable has been collected by Miss Schaefer, as has the $1,000 policy in the State Life. It will be recalled that each of these policies on the life of Margaret were payable to Edward, and were by him assigned in January of 1907, by virtue of the alleged agreement of January, 1906, to Miss Schaefer.

The assignment of the policy in suit is in the following terms:

“EOEM OF ASSIGNMENT OTHERWISE THAN AS COLLATERAL SECUBITT. To he attached to and retained with the policy for use as evidence when required.
“For one dollar, to me in hand paid, and for other valuable, consideration (the. receipt of which is hereby acknowledged) I hereby assign, transfer and set over all my right, title and interest in Policy No. 149,191 on the life of (myself) Margaret Cahill issued by The State Life Insurance Company of Indianapolis, Indiana, and all money which may be payable under same to Marie Schaefer of Hoboken, N. J., whose P. O. address is 612 Washington Street, and for the consideration above expressed I do also for my executors and administrators guarantee the validity and sufficiency of the foregoing assignment to the above-mentioned assignee, her executors, administrators and assigns; and the title to the said policy will forever warrant and defend.
“In Witness Whereof, I have hereunto set my hand and seal, this 19th day of January, 1907.
“Margaret Cahill.
“Edward Cahill.”

Tbe policy provisions wbicb are material are in tbe following language:

“The State Life Insurance Company of Indianapolis, Indiana, hereby insures the life of Margaret Cahill, of Jersey City, State of New Jersey (hereinafter called the insured) and agrees to pay the sum of Two thousand dollars at the Home Office of the Company at Indianapolis, Indiana, to Dennis, Edward, Katie and William Cahill, her children, share and share alike (or to such other beneficiary or beneficiaries as may be designated by the insured as hereinafter provided), if living, otherwise to the insured’s executors, administrators or assigns, upon receipt and approval of proofs of the death of the insured, this Policy being then in force, less any indebtedness of the insured or beneficiary to the Company.”
"Assignment. This Policy may be assigned upon written approval of the President, but the Company will not assume any responsibility for the validity of any assignment.”
"Change of Beneficiary. The insured may, at any fime during the continuance of this Policy, provided the Policy is not then assigned, and subject to the rules of this Company regarding assignments and beneficiaries, change the beneficiary or beneficiaries by written notice to the Company, at its head office; such change to take effect on the endorsement of the same on the Policy by the Company.”

The bill sets out the issuance of the policy; the death of Margaret Cahill; the fact that the policy is in the possession of John Milton, who claims to hold the same on behalf of Marie Schaefer, now McCabe, and John E. Maroney; and that there has been no valid assignment or valid change of beneficiary which, in law, deprives the complainants (the four children named in the policies as beneficiaries) of their rights thereunder, and prays that it may be so adjudged.

The defence rests upon' the assignment heretofore quoted.

It will' be observed from a reading of the policy that the contract was, upon the death of Margaret Cahill, to pay the insurance money either to the four children, if they were living at the time of their mother’s death, otherwise to the mother’s executors, administrators or assigns.

There were, therefore, always two sets of interests in this policy—the beneficiaries (who would get the money if they were living at the death of the insured), and the representatives of the insured (to whom the money would come if the insured outlived the beneficiaries). Each of these interests was undoubtedly subject to assignment. Feither one could, in my view, assign anything excepting that which would come to that one; and the assignment of neither could possibly impinge upon the rights of the other. In other words, the beneficiaries, if of age, could undoubtedly assign their interests under the policy, and the insured could undoubtedly, as against her estate and so as to bind it, assign that interest—i. e., the interest which would come to her estate.

It is provided that the policy may he assigned upon written approval of the president, and it is claimed by the complainants that this assignment was not approved in writing by the president, and this is so. It might be material to determine this question if it affected any issue in the suit, but in my view it does not. It is not necessary for me to determine whether this assignment would be effectual against the personal representatives of Margaret Cahill, because in the present juncture they have no interest. The four children outlived their mother, and, therefore, are entitled to the proceeds of the policy as against the representatives of the mother, or anyone to whom the rights of such representatives had been assigned. It is, therefore, immaterial to determine whether this assignment should be recognized in default of the written approval of the president of the company, because, whether recognized or not, it does not affect the issue.

The authorities are numerous—and, ■ with the exception of Wisconsin, unanimous—that in an ordinary life policy the interest of the beneficiary is vested and cannot be divested by an assignment of the policy by the insured. 49 L. B. A. 787.

It seems perfectly plain, upon principle, that where the contract of A is to pay B upon the death of C, that C may not, by any assignment of that contract, cause the money due thereunder to be paid to anybody but B, or B’s assignee. And so the cases hold. See the'cases in the notes last cited at p. 740; to which add Cyrenius v. Mutual Life Insurance Co., 145 N. Y. 577; and a statement to the same effect in Golden Star Fraternity v. Martin (Court of Errors and Appeals, 1896), 59 N. J. Law (30 Vr.) 216.

The contention of the defendants, however, is that this assignment must be treated as if it effected a change of beneficiaries, and substituted in the place of the four children (the beneficiaries named in the policy) Marie Schaefer (the person named in the assignment).

I cannot accede to this argument, and, in fact, do not think that there is anything to support it. The paper, in form, is an assignment. It is made by a person who has an assignable interest, and carries that interest. The interest, as has been pointed out, was contingent but assignable. It does not purport in any way to make a change of beneficiaries, or to affect their interests. The method of change of beneficiary is pointed out in the contract, and that method was not pursued in any respect. It is not even attempted to be shown that it was effected according to the rules of the company, as required, or that any written notice thereof was given to the company, or that it took effect by endorsement on the policy of the company, all of which are requisites.

I think it entirely clear from the authorities that where a contract of insurance is made payable to certain beneficiaries their interests therein can only be divested in favor of other beneficiaries by changing the contract in the manner in which the contract points out that it must be changed to effect that result. American Legion of Honor v. Smith (Vice-Chancellor Van Fleet, 1889), 45 N. J. Eq. (18 Stew.) 472; Travelers’ Insurance Co. v. Grant (Vice-Chancellor Pitney, 1896), 54 N. J. Eq. (9 Dick.) 217; A. O. U. W. of New Jersey v. Gandy (Vice-Chancellor Grey, 1902), 63 N. J. Eq. (18 Dick.) 692; Pennsylvania Railroad Co. v. Warren (Vice-Chancellor Bergen, 1905), 69 N. J. Eq. (3 Robb.) 706.

And I do not find that there is anything in the contention of the defendants that the company, by not contesting the question concerning the change of beneficiaries, has altered in any way the rights of the parties as between themselves.' If the provisions required by the contract, or by the charter, constitution, by-laws or statute laws regulating a beneficial order, which make part of their contracts, have not been complied with, the change has not taken place—the properly named beneficiaries have not been displaced; and the fact that the company, or the order, pays the money into court, or admits its liability to pay, cannot affect the question. The question always remains, who are the beneficiaries—and they must be named in accordance with the contract, including therein, of course, that which is held to be part of the contract in the cases where the whole contract is not comprised in one paper, certificate or policy.

This is directly decided in our own court (A. O. U. W. of New Jersey v. Gandy, supra, and Pennsylvania Railroad Co. v. War ren; supra), and is in accordance with sound reasoning and other authorities. Freund v. Freund, 218 Ill. 189; 75 N. E. Rep. 925; Sangunitto v. Goldey, 8b N. Y. Supp. 989; 25 Cyc. 893, 894.

Equities, of course, may arise which prevent the application of the normal rule. (Eor such an instance see Supreme Council Catholic Benevolent Legion v. Murphy (Vice-Chancellor Pitney, 1903), 65 N. J. Eq. (20 Pick.) 60.) But they emphasize and do not weaken the rule.

The righteousness of the decision thus far announced would seem to me to be undoubted, were it not for the opinion in the case of Landrum v. Knowles (Court of Errors and Appeals, 1871), 22 N. J. Eq. (7 C. E. Gr.) 594, and the construction that may have been, or may seem to have been, placed upon it in the following cases: De Ronge v. Elliott (Vice-Chancellor Dodd, 1873), 23 N. J. Eq. (8 C. E. Gr.) 493; Brown v. Murray(Vice-Chancellor Stevens, 1896), 54 N. J. Eq. (9 Dick.) 596; Locomotive Eng. Association v. Winterstein (Vice-Chancellor Reed, 1899), 58 N. J. Eg. (13 Dick.) 198; Spengler v. Spengler (Vice-Chancellor Stevens, 1903), 65 N. J. Eq. (20 Dick.) 178.

It becomes necessary, therefore, to carefully consider the case of Landrum v. Knowles, and I have taken occasion to get excerpts from the original papers and briefs so as to get at the very point decided.

The policy in that case recited that in consideration of the premium paid by Lucy A. Landrum and of the annual premium to be paid thereafter, they did assure the life of Samuel Landrum, her husband, in the amount of two thousand dollars,

“for the sole use of the children of the said Lucy and Samuel * * * And the said Company do hereby promise and agree to and with the said assured, their assigns, well and truly to pay or cause to be paid the said sum insured to the said assured, their assigns * * * at the death of Samuel.”

It recites that the policy is accepted “by the assured” upon certain conditions. It is further recited that “in case the said Lucy A. Landrum shall not pay the said annual premiums * * * the said company shall not be liable to the payment of the sum insured.” It is recited in the policy “if assigned, notice to be given the company, and the party to whom the policy is transferred must sign all premium notes with the assured.”

It is quite evident from the reading of this policy that Lucy A. Landrum was the assured; and with this in mind, I think we can clearly understand the opinion of the court of errors and appeals, and clearly see that it does not apply to a different kind of insurance contract, and does not run counter to. the well-nigh unanimous decisions regarding assignments of policies made payable to beneficiaries. The policy was taken out in 1850. In 1860 Lucy Landrum, with the assent of her husband, assigned this policy to KnoAvles in payment of debts due to him by her husband. Lucy paid the premiums due on the policy up to 1860. Knowles paid the premiums afterwards for nine years, when Landrum died. The chancellor decreed that the children were entitled “to the cash value of the policy of insurance in question * * * at the time the policy ceased to be kept alive by the payment of the premiums by Lucy A. Landrum' * * *” and that the balance of the money owing on the policy was to be paid to Knowles. This was affirmed by the court of errors and appeals upon the theory that, from the facts, it was evident that Mrs. Landrum, the assured, took out this policy upon the life of her husband, payable to herself, for the use of her children as a gift to the children, and that so long as she kept up the payments she was continuing to increase, so to speak, or keep alive, the gift to the children; but that when she assigned this policy, in which she was the assured, she thereby indicated her intention no longer to continue the gift, and only so much would be allotted to the children as had then been given —that is, the cash surrender value of the policy at that time.

Many, if not all, of the cases which comment upon this case of Landrum v. Knowles make the mistake of supposing that the money Avas payable to the children, and the chief-justice, himself, in his opinion, makes this mistake. The policy plainly shows that the money was not to be paid to the children, but was to be paid to “Lucy A. Landrum, the assured.” The policy recites that it is for the sole benefit of the children, and much, if not all, of the reasoning of the case revolves around this difference. Lucy A. Landrum having taken out a policy in which she is the assured, and which provides that the money is to be paid to her, as the assured, has it stated in the policy that it is for the benefit of her children. It may well be that one who is thus constituting one’s self a voluntary trustee will only be held to be trustee to the extent that the gift is effectuated; but the reasoning which would apply to such a situation would not apply to a case where the policy was payable to the beneficiaries. In such a case, as has been before pointed out, no assignment by anyone excepting the beneficiaries can affect their interest, and their interest can only be changed by the substitution of new beneficiaries in accordance with the terms of the contract or the laws of the order, if it be a beneficial order.

There was no point in the brief for the children in the Landrum Case that this policy was, as against them, not assignable —in fact, in counsel’s third point he concedes unquestionably that it was assignable. The point he made was that the assignee stood in the place of the assignor as trustee for the children. However this may be, I am clear that the decision in Landrum v. Knowles should not be held to extend any further than the exact facts comprised in it. If we confine that case to the right of a person to whom the money is to be paid—the assured, in other words—to assign that interest, we are at liberty to place Hew Jersey in harmony with all other jurisdictions, so far as I know, excepting Wisconsin, in the holding that an assignment of an insurance-policy made payable to beneficiaries by any other persons than the beneficiaries cannot affect their interests.

That this is the proper holding seems to me to be beyond dispute.

The complainant makes the further contention that Marie Schaefer had no insurable interest in the life of Margaret Cahill, and that, therefore, the assignment is void. In other jurisdictions there is authority for this contention, and a very strong argument can be made that such, under the authorities, should be the law of Hew Jersey; but I find it unnecessary to consider or decide this question because of my opinion with respect to the other points involved, which is dispositive of the case.

In conclusion, I find that the assignment, if considered good, notwithstanding that it was not upon “the written approval of the president,” carries only the interest which the assignor had, and that was the interest, as against her own estate, to receive the payment if she outlived her children. That assignment was not in any sense a change of beneficiary, and cannot be so considered.

Since the insurance company has, by not answering, and by the effect of the decree pro confesso, admitted it owes the money, the decree should provide for the payment of that money to the complainants, with costs against the answering defendants.


author: GrAERISOK, Y. C.

text:
    Michael Kiernan et al. v. The Mayor and Aldermen of Jersey City and Henry Byrne.
    [Decided June 10th, 1909.]
    1. Equity has jurisdiction to protect and enforce legal rights in real estate, which defendants deny, if the court finds that the right exists and that complainant has not an adequate remedy at law or the threatened damage is irreparable.
    2. Where complainants claimed title to land which defendant city alleged was a duly dedicated street, they could not maintain a suit to enjoin defendants from laying sewer pipe in the street, complainant’s remedy by ejectment being adequate and the damages not being irreparable.
    Application for preliminary injunction. Heard on bill and proofs, and answer and proofs.
    . Messrs. Collins & Corbin, for the complainants.

      Mr. Warren Dixon, corporation counsel, for the mayor and aldermen of Jersey City, defendants.
   GrAERISOK, Y. C.

This is a bill to restrain the defendants from laying sewer pipe through certain lands.

In 1854, one Brinkerhoif was the owner of certain lands in' Jersey City. He conveyed to one Kiernan. Kiernan sold to S. W. and Joel I. Hoyt, who gave to him a mortgage dated the 12th of February, 1868. Kiernan, on the 23d of September, 1880, began a foreclosure suit on this mortgage, and on the 8th of August, 1881, purchased the property at sheriff’s sale under the foreclosure decree.

Kiernan died, and his wife, by will, became the owner of the property, and upon her death her heirs-at-law succeeded to her rights and are the present complainants.

The projected line of sewer pipe runs through a portion of the land above mentioned.

The complainants seek an injunction to prevent the pipe from being laid as projected.

The city claims that the projected line of pipe runs through a portion of the lands which had been dedicated to the city under the name of York street. It shows by its proofs that about 1855 a plot of the lands in question was made showing York street, and that this map was filed’ in October of 1868; that in 1814, S. W. and J. I. Hoyt, the owners of the property, filed another map thereof also showing York street. The complainants contend, with respect to the first map, that it was made after Kiernan purchased from Brinkerhoif and was not made by Kiernan, and therefore does not bind him; that as to the second map, it was made by the Hoyts while they were owners, but subsequent to the time that they had mortgaged the same to Kiernan, and that the mortgage was subsisting and unpaid at the time of the dedication. They therefore claim that, as to them, the dedication is ineffectual, which is so, if they have not, by acquiescence or ratification, shown an intention to join in the dedication, or so conducted themselves as to be bound by it.

To this the city responds that in the foreclosure of the mortgage, which the Hoyts had given to Kiernan, the latter made Jersey City a party, and, in the bill, recites many conveyances made by the Hoyts in which. York street, as shown on the map aforesaid, is mentioned, and that the map aforesaid is constantly mentioned in the bill of complaint in describing mortgages and deeds; and, further, that in the said bill of complaint, Kiernan charges that the city, on or about the 16th of April, 1870, took proceedings for the opening of Corneliuson avenue, describing the land purported to be covered by Corneliuson avenue, and naming “York street as proposed” as one of the stations, and charges that the said land included in the said proceedings with respect to Corneliuson avenue was a portion of the land included in the mortgage, and that the mortgagee has not released or discharged any portion of the said mortgaged premises; and, further, that by virtue of the proceedings the city claims to have some claim to the land above described, namely, the land included in the proposed Corneliuson avenue; but the complainants charge that the city, if it has any claim, has it subsequent to the mortgage aforesaid.

It will be observed in passing that the proceedings which the city took were in 1870, and were, therefore, prior to the dedication map made by the Hoyts in 1874.

The city contends that Kiernan, the mortgagee, by this bill, discloses that he had complete knowledge of the Hoyt dedication map of 1874, and, by specifically charging, as against the city, a lien only with respect to Corneliuson avenue under proceedings begun before the Hoyt map acquiesced in or ratified the dedication of “York street as proposed” on the Hoyt map; that, by only challenging such rights as the city claimed in proceedings begun before the Hoyt map was filed, the complainants showed an intention to acquiesce in and ratify the dedication of the streets as shown on the Hoyt map. There is no charge in the bill challenging the city’s right to the streets shown on the Hoyt map.

The effect of the foreclosure and of the recitals of the bill, &c., is differently construed by the complainants.

The city further shows, by its proofs, that on an official assessment ma.p made in 1894, this property appears with York street delineated as on the earlier Hoyt map, and that since that date (1894) the lands have been assessed to the owners on each side of York street—that is, the lands were divided into two plots, one on each side of York street, and York street was recognized in the tax assessments as a street and not assessed for. It further shows that the owners, seeking a reduction of these taxes, had them referred to the Martin act commissioners, which, the city claims, was a further recognition by the owners of the existence of the street.

It will be seen from the foregoing that the question is whether the city has a legal right to treat the land in question as a street and place sewer pipes under the soil thereof: The city contends that it has ; the complainants, that it has not.

The contest is purely over a legal right. The complainants contend that their legal right, though formally disputed, is yet clear on facts which are not denied and legal rules which are well settled; and, therefore, this court should protect and enforce it.

It is true that this court has jurisdiction, under certain circumstances, to protect and enforce legal rights iñ real estate; and that it will, in such cases, exercise its jurisdiction, notwithstanding that the defendants may raise a question as to the legal right of the complainant, if the court finds, upon the facts and the law, that the complainant has the legal right he asserts and that it is a proper case for the interposition of equity. Hart v. Leonard (Court of Errors and Appeals, 1886), 42 N. J. Eq. (15 Stew.) 416.

But the cases and circumstances in which this jurisdiction is exercised are those in which the remedy at law is inadequate or the threatened damage is irreparable. Delaware, Lackawanna and Western Railroad Co. v. Breckenridge (Vice-Chancellor Emery, 1896), 55 N. J. Eq. (10 Dick.) 141; affirmed, Id. 593; New Jersey Junction Railroad Co. v. Woodward (Chancellor Magie, 1900), 61 N. J. Eq. (16 Dick.) 1.

I do not stop to consider whether certain -of the classes of cases set forth in Hart v. Leonard are examples of or exceptions to the rule; they are cases where one, under color of statutory right, attempts to appropriate the land of another without complying with the conditions precedent, eases to stay waste, to prevent multiplicity of suits, to protect contractual rights in real estate, and to protect one’s dwelling from injuries rendering its occupancy insecure or uncomfortable. The complainants’ case here does not fall within any of these classes, and they must, as has been before pointed out, show that the legal remedy is inadequate, the threatened damage irreparable.

The case of Delaware, Lackawamw, and Western Railroad Go. v. Breclcenridge, supra, is dispositive of this question. In that case the same subject-matter was involved, namely, pipes laid under the surface of the soil. It was there held that the remedy by ejectment was adequate, and the damage was not irreparable.

Both upon reason and authority, therefore, the complainants fail to show a proper case for the exercise of the jurisdiction invoked.

Much stress was laid at the argument and in the brief of the complainants upon the cases which hold that the exerciser of the right of eminent domain will be held to a strict compliance with all conditions precedent, and that a court of equity will protect the landowner against the improper exercise of such right. This is undoubtedly the law, but is inapplicable to the case at bar. The city in this case is not attempting to take this land for a street in virtue of any statutory right, or by the exercise of any power of eminent domain, but is claiming a legal right to take the street by virtue of dedication.

So far as this case is concerned, if the city has not the legal right which it claims is vested in it by virtue of the dedication, it has no legal right whatever. If it has that right, its conduct is justified. Whether or not it has that right is a legal question which, in this case, should be left to the determination of the legal tribunals, since the remedy there is adequate, the damage which is threatened not being irreparable.

I shall deny the application for a preliminary injunction in this suit.


author: Gaeetson, V. C.

text:
    John Schuhardt v. Catherine Wittcke.
    [Decided September 29th, 1909.]
    1. Under P. L. ISOS p. 5SJ/ § TO, respecting unsatisfied judgments at law, defendant’s dower right is applicable to the payment of the complainant’s judgment against her.
    2. So, also, is a certain sum of money deposited in a trust company in a special account credited “A. Conrad, Trustee for Katie Wiltske” (the defendant), the same being the avails of a check which she received from a fraternal or beneficial order of which her husband was a member at the time of his death.
    Heard on bill, answer, replication and proofs in open court.

      Mr. Marshall W. Van Winkle, for the complainant.

      Mr. Warren Dixon, for the defendant.
   Gaeetson, V. C.

The pleadings and proofs show that the complainant, on the 2d day of December, 1895, procured a judgment in the supreme court against the defendant for something over six hundred dollars, which is unpaid, and upon which execution unsatisfied has been returned.

The husband of the defendant died on the 18th day of April, 1909, intestate, and at the time of his death was seized in fee of a parcel of land in Jersey City, New Jersey, in which the defendant was entitled to her dower.

The complainant’s contention is that this dower right is applicable to the payment of his judgment against her; and such is the law. Tenbrook v. Jessup (Vice-Chancellor Grey, 1900), 60 N. J. Eq. (15 Dick.) 234. This case was decided when paragraph 88 of the Chancery act (Gen. Stat. p. 386) was in force; but it .applies to the present situation because the existing act (P. L. 1902 p. SOI/. § 70) is similar in this respect to the former act.

The proofs further show that the husband of the defendant was a member of a fraternal or beneficial order called the Royal Arcanum, and that upon his death the said order paid to her, as his widow, the sum of $3,000—that she caused the check received by her for- this amount to be cashed on or about April 30th,” 1909, and retained out of the same $500, and that the balance was deposited in the Commercial Trust Company of Jersey City by one A. Conrad, in a special account credited “A. Conrad trustee for Katie Wiltske.” Subsequently, $300 was withdrawn, leaving $1,300 and accumulated interest in said account at the time of the suit.

■ The complainant contends that this money or credit so held in trust for the defendant is applicable (under the terms of the statute before cited) to the payment of his judgment, and I find that it is.

The defendant contended that it was not; basing her contention upon the theory that she had proved that the “trust had been created by, or the fund so held in trust has proceeded from, some person other than the defendant.” The quoted language is from the statute, and specifies what is excepted from the operation of the act.

The defendant- sought to prove her contention by citations from the constitution and by-laws of the Royal Arcanum. The cited portions dealt with the objects and purposes of the order, and showed that it was intended to furnish funds to the dependents of members, and the argument of the defendant was that such funds when furnished at the death of the member to the named dependent remained impressed with a trust in such dependent’s hands and were not 'reachable under the statute.

I cannot perceive the force of this argument. Whatever may be the purposes and objects of the order and the intention of its founders and members, the effect of its contract and conduct in this ease was precisely similar to ordinary life insurance. It engaged to pay under certain circumstances to the defendant a certain sum of money upon the death of her husband. The husband died, and the Eoyal Arcanum paid her the money, ■which then became hers, and she then put this money in the hands of a trustee for her own benefit. Such a trust created by a person for her own benefit is within the language and operation of the act.

A decree will accordingly be advised for the complainant.