HUTUAI,LIFE INS. CO. V. WATSON.
653
MUTUAL LIE'll: INs.
CO. OF NEW YORK 'II. WATSON,
Adm'x,and another.'
(Oi1'cuit Oourt, 8. D.G6O'l'gia, E. D. February 28,1887.)
L
COMPETDOY'Oll' WITNESS-"TRANSACTIONS WITH DECEASEDPERSON-LIlI'E §8854-REV. ST. U.'S. § 858.
IN-
On the trial of a bill of interpleader,oetween a life insurance company and the administratrix of a deceased policy-holder, and a claimant of the fund due on the policy, under an alleged assignment, the assignee is to testify to any transactions with the insured in the life-time of the latter, eIther 1 by the law of Georp;ia, (Code, § 8854,) or Rev. St. U. S.§ 858. . . .
I.
GA)lING;-"])rrUR¥s"-DELIVERY.' .'
.. If" under, the guise of a contract to deliver goods.ata future day, the real
intent be to speculate in the rise or fall of prices. and the goods are not to ,bl' delivered, but one party is to pay to the other the difference between the COIltract price and the market price of the goods at the date fixed for executing thecontra.ct,· the whole transaction ill nothing more than a wager, and is null and voili; following Irwin v. WiUiar, 110 U. 8. 499, 4 Sup. Ct. RllP. 160· IN ACTION-WRITING.. '.' , ,
··
An assignment of a chose in'actionfn Georgia, to be'valid, must be in: Writing, . , , lNTlIlRPLEADER'-COSTS-DAMAGES-LIl.!'ElNSURANCE...:.cODE GA.
"
Where the agents of insurance company show' act.ive sympathy.with one who cll!-ims, the proceedll o'f a policy, against the legal representative of the insured, and refuse to pay any part of the same until such claimant i.
2850.,
1 Respecting the admissibility of testimony concerning transactions with P!'1'IOns,see-. Monongahela Nat. Bank v. Jacobus, 3 Bup. Ct. Rep. 219. Robertson v. Mowell, (Md.) 8'Atl. Rep. 278; Carey v. Fairchild, (pa.) 9 AtL Rep. 82!l; Kisterboclt v. Lanning, (Pa.) ,7 At!. Rep. 596; HigiPns v. Butler, Id. 276; Buck v. Rich, (Me.) 6 Atl. Rep. 871; Jackson v. Payne, (Pa.) Id.340; Brant 'Y. Dennison, (Pa.) 6 Atl. Rep. 869; Grand United Order Odd Fellows J. S. Ass'nof Baltimore v. (Md.) Id. 044; Richardson v. Davis, (Vt.) ld. 287; Palmateer v. Tilton, (N. J.) Id. 106;. Warren v. Bteer, (Pa.) Id. 4, and note; Heydricks' Appeal,CPa.) 1 Atl. Rep. 81; Welch v. Adams, (N. H.) Id. 1, and note. Crawford v. Moore, 28 Fed. Rep. 824; Charlotte v. Boutter, Id. 783. Union R. & T. Co. v. Bhacklet, (IlL) 10 N. E. Rep. 896; Lerche v. Brasher, (N. Y.) Id. -68; Conklin v. Snider,(N. Y.) 9 N. E. Rep. 880; Louisville, N. A. & C. R. Co. V. ThorllP'lion, (Ind.) Id. 867, and 8 N. E. Rep. 18; Treleaven v. Dixon, (Ill.) 9 N.E. Rep. 189; <J<>mer v. COmer, (111.) 8 N.. E. Rep. 796; McClure v.Otrich. Id, 784; Vigus v. O'Ban· non, Id. 778; In te Wilson, (N. Y.) Id. 731; McConnell v. Huntington, (Ind.) Id. 620; Wolfe v. Kable, Id. 55!); Barnard v. Barnard. (Ill.) Id. 320;, Freeman v. Easley, (111.) 1 N. E. Rep. 656; Kelly v. Burroughs, (N. Y.) 6 N. E. Rep. 109; Spencer v. Robbins, {Ind.) 5 N. E. Rep. 726 i Ebert v. Gerding, (Ill.) Id. 591; Forgerson v. Smith, (Ind.) 3 N. E. Rep. 866, and note; Comingv. Walker. (N. Y.) Id. 290. Rhodesv.Pray (Minn.) 82N. W. Rep. 86; Pendill v.Neuberger, (Mich.) 31 N. W. Rep. 177; Donnell v. Braden, (Iowa,) 80 N. W. Rep. 777; Harrington v. Samples, (Minn.) Id. -671; Seligrllan v. EsmteofTen Eyck, (Mich.) 27 N. W. Rep. 514; Belden v. Scott, (Wis.) Id. 856; Barlow v. Buckingham, (Iowa,) 26 N. W. Rep. 58; Cotherman v. CotherUlan, {Mich.) 25 N. W. Rep. 467; Samson v. Samson, (Iowa,) Id. 238; Brown v. Bell, (Mich.) N. W. Rep. 824; Inre Disbrow's Estah, Id.624; Crowe v. Colbuth, (Wis.) Id. 478, .and note. . . Roche v. Ware, (Cal.) 12 Pac. Rep. 284. Brown v. Moore, (S. C.) 2 S. E. Rep. 9; Kennemore v. Kennemore, (B. C.l IS.E. Bep. 881; Booth v.McJilton, (Va.) Id. 137, and note; Harper's Adm'r v. McVeigh's Adm'r, Id. 193; Hutzler v. Phillips, (B. C.) Id. 502. .' . Hill v. Helton, (Ala.) 1 Bouth. Rep. 340; Ellis v. A,lford, <Miss.) Id. 155; Harris v. :Bank of JacksOllVille. (Fla.) Id. 140. .' . . Harris v. Beinsheimer, (Tex.) 3 B. W. Rep. 807; Gilder v. City of Brenham. Id. 809; Worthington,v. Miller's Adm'f, (Ky.).Id. 682; Waters v. Davis, (Ky.) 2 S, W.Rt,>. 695; Park v.Locke, (Ark.) Id. 696; Batesv.Forcht, (Mo.) 1 S. W. Rep. 120; Hays Y. Hay.. (Tex.) Id.89ii. .
.REPORTER.
sat.isfl ed., although SUCh. cl.aim is for .a portion only, it is e.vidence of bad faith, . $.e meaning of section 2850 of (,jode of Georgia, aJ,1dthe company may be proceeded against for "25 per cent. damages, and counsel fees. 5.
And this is especially true where the policy stipulates that "the company will not notice any assignment of its policy until a duplicate or certified copy shall be filed in the home office," and where the company , . it has no notice of such. aasi8nmeXLt. and no such duplicate has been
SAME-A,eSJGNMENT OF POLJOy-STIPULATION.
(SyllabuB bU th6 CoUrl.)
'Ill Equity. 'Bill for interplea<ier. Alex. Proudfit, for plaintiff.' . .- ,.__ ' Hardeman &: Davis, De88au&: Bartlett, and Garrard &: Meldrim, for defendants.
SPEER, J. This iSa bill for interpleader. The averments are that GeorgeE. Watson ,insured his life for the sum of $2,0.00 with complainante., ;He died on thetwentY,-t4itdday of October, 1885. Several years prior to his death, and before his intermarriage with Sallie E. Watson, he indorsed on the pOlley an assignment in these words: "J hereby assign my interest tIie, WIthin policy to J. W. Hinson. [Sign,edl ' .· · .' "GEO. E. WATSON." After his death, this policy was found among his effects, and was taken charge of by Sallie E. Watson, who qualified as his administratrix. She made proof ·ofthe dea.th of her husban4, but the company refused to pay'her unless she would .agree that the sum of $801.73 shoul4 be paid to Hinson, this J;ehJ.g the a,mount to secure which, he insists the assignment was made: .,:Mrs. Watson refused to recognize this claim, or the validity of the assigriment, and brought suit for the face value of the policy, 25 per cent,'Qlln:lages, and $200 counsel fees, under secti9n28500f·fhe:Code of GeorgIa, relating to refusals by insurance companies to, pay. their policies when due. Hinson also threatened snit, and notified ,the company not to pay the policy to Mrs. Watson... The are' those usual in, bills' of interpleader. An order has been passed, permitting the company to .pay into court the sum of $2,000, which tpey admIt to be due policy, and theaction& at law have been enjoined to await the determination of this cause. . The questions to be determined are:. First. Is the demand of Hinson, and the li:ijege<! a.sfiignment of ,the policy to secure the same, valid? Certain orlll'and v\'Titten e'videncehas been introduced, subject to tqe decision pf' tAo ,court as to its. cQmpetency, and, tpe testimony of IIinson, taken before the examiner, is offered. This is objected to by Mrs. 8,58 9f Statutes is 'Cited., It provides : '. "In thecaurts:of the United States no witness shall be ,excluded in any,action on account of?olor, or, in anYllivll action, is 'a party to orinin the iSsue tried; proVided'tliat, in actions' eX!!Clltq;cs, .adrninistratolill'l orguardianll,' lin which' jUdgment Jllay;be rendered for or against them, nei ther party shall be allowed to testify against the other as to ally transaction ·with, or statement by, the-testator, intestate, or ward, unleflS called to testify thereto by the opposite party, or required to testify thereto by
in
or
llUTUAL LIFE INS. CO. V. WATSON.
655
thEl court.. In all other respects, the la)Vs of the .state. in which the cpurt. is held shall be the rules of decision as to the competency of in the courts of the United states in trials at common law, and in equity and admiralty." The attitude and charac;lter oBhe parties before the court places. them within the operation of this rule of evidence. Mrs. Watson is the administratrix of the estate of her deceased husband. J. W. Hinson is pressing for what is equivalent to a judgment against the estate for $801. 73, with interest. Manifestly, congress felt that. the general rule, permitting parties to testify on their own motion, was disadvantageous to the representatives of deceased persons. Page v. Burnatine, 102 U. S. 668. The rule is practically the same in Georgia. Code, § 3854. This provides that, "where one of the original parties to the contract or cause of action in issue or on trial is dead, or is shown to the court to be insane, or ,where an executor ,or administrator is, a party in any suit on a contract of his testator or intestate, the other party shall not be permitted to testify in his own favor." Flournoy v. Wooten, ,71 Ga. 168. He may testify as to facts which do not confront theinterestl;! of the dead man's estatewherEl the testimony of the'latter, if in life, might protect them. Gabbet v. Sparks, 60 Ga. 5 8 5 . , Counsel for Hinson cites Crawford v. Fed. Rep. 830, in support of hi,s ,competency. There the circllit of the United States, in a suit filel1 by the widow and minor: childrern of John Monroe against Moore, permitted the latter ,to testify as to a rescission of a contract with the deceased husband and father. It will. be observed, however, that this was not a suit by "the administrator or executor," in the restricted language of s!Jction 858 of the Revised Statutes. They also cite Potter v. National Bank, 102 U. S. 163. There a witness, who was interested in the issue, but not a party to the record, was permitted to testify to statements of the testator touching the subject-matter in controversy. The supreme court very clearly point out the distinction between that (lase and, this. "A witness may be ip.terested in the issue, without being, a party thereto,-a distinction which seems to have been recognized in all the statutes to which reference has, bee# made." ld. 164. , Here Hinson is not only he is a party. And in J.fonongahela Nat. Bank v. JacobU8,109 p. S. 277, 3 Sup. Ct. Rep. 219, the administrator had been completely eliminated. The liability of his intestate. had become thed by judgment. "The real issue," say the court, "'wal? between thebank.and Jacobus;" and they admitted the testimony under the first clause of section 858, and not under the second clause, Dn which Hinson must base his title to competency.. Hirison is, for these reasons, adjudged incompetent. to testify to any transaction with Watson, his testimony is not considered, and the validity or invalidity Df the assignment has been determined by, the rest of the evidence. It is insisted that all of the written and oral evidence before the court shows that the dem,and of Hinf;!()n against Watson is based upon losses, resulting from buying and selling contracts for future delivery of cotton. 'fhis undeniable. Tile accounts renq.ered and put in evidence,
656
FEnERAL REPORTER.
and the correspondence between the parties, all show this' to be t:rue j and it is no longer open to question that transactions of this character are void, and that contracts based thereon cannot be enforced in a court ofIaw. They are nothingmor:e nor less than wagers. irwin v. Williar, 110 U. S. ,499,.4 Sup. Ct. Rep. 160j Ounningham v. National Bank of Augusta, 710a. 400. Inthe. latter case, Mr. Justice BLANFORD, for the court, with much felicity;prasents the dangerous character of these illegal agreements. "But that learned judge, "is the transaction termed' futqres?' Iqs this:" One person says that I will sell you cotton at a certain time iri the ftlturefor a certain price. You agree to pay that price, knowing that you deal with has no cotton to deliver at the time, but with theuIlder,standing that, when the time ,rives for delivery, you are to pay'him the difference between the market valu,e of that cOtt0l1 and the price you agreed to pay, if cotton declines, an,d; if cptton advances, h<:J is to pay you the differei1ce between what you promi;sed to give and the advanced market price. If this is not a specnlati6n on chances,--'-awageriIig and betting between the parties,then we are unable to understand the transaction. A betting on a game 'offaro, brag, or poker cannbt be mote hazardous, dangerous, or uncertain. Indeed, it may be said ,that these apimals are tame, gentle, and submissive, compared to .. 'The law has caged'them, and driven them to their dens. They have been outlawed,whilethis ferocious beast has been allowed to stalkabout iIi' open mid-day, with gilded signs and flaming advertisements, to lure the unhappy victim to its embrace of death and .destruction. What ,are some of the consequences of these speculations on 'futures?' The faithful chroniclers of the day have informed uS"as growing directly oufof these nefarious practices, that there ,have been bankruptcies, defalcations of public officers, embezzlements, forgeries, larcenies, and death. Certainly no one will contend for one moment that a transaction fraught with such evil conseq1.lences is not immoral, illegal, and contrary. torublic policy." Hinson urges his demand agaInst the 'policy, because, he insists, in 1883 Hinson & Blount assigned "to him their account against Watson; but in 1882 he had returl:l.ed the policy with the assignment thereon to .ItS possession by the and his representative seems never to have been questioned, and possession is prima facie evidence of a right to claim the proceeds. May, Ins. 395. Besides, the account of Hinson& Blount a'gajnst Watson was merely a chose in action,and no proper evidence has been furnished that it has oeen legally assigned to Hinson. Such an assignment, to have been valid, must have been in writing. Turk v. Oook, 63 Ga. 681. There the supreme court of Georgia, Chief J ustice. WARNER delivei'ing the held that, wherepartnership assets were divided, a'nd. the acco.unt l!gainst the defendant was taken by the plaintiff the division, t9at he took no Sl.1Ch interest l.)-s would entitle 'him to a suit thereon, it liot having been assigned in writing. This construction placed on section 2244 of the Code of Georgia, and is 0'0 this court. See, also, Planters' Bank .v. Prater, 64 Ga. 613, where the decision just cited was reaffirmed. Therefore Hinson
MUTUAL LIFE INS. CO. '17. WATSON.
6,157
cannot recover against the insurance company or the administratrix of Watson. The remaining question is, have the complainants subjected themselves to pay damages to Mrs. Watson for their refusal to pay the amount due on the policy within 60 days after proof of death? The law of Georgia on this subject is found in section 2850 of the Code, which provides: "The several insurance companies of this state, and foreign insurance companies doing business in this state, in all cases when a loss occurs, and they refuse to pay the same within sixty days after a demand shall have been made by the holder of the policy on which said loss occurred, shall be liable to pay the holder of said policy, in addition to the loss, not more than twenty-five per cent. on the liability of said company for said loss; also all reasonable attorney's fees for the prosecution of the case against said company: provided, it shall be made to appear to the jury trying the same that the refusal of the company to pay said loss was in bad faith."
It is said that the refusal of the company to pay Mrs. Watson was not in bad faith. This will depend upon the consideration of the evidence, and largely upon the consideration of the terms of the policy. It is very evident that Douglass' & Johnson, agents of the company, were: rather biased toward the claim of Hinson. They did not stand with that rigid perpendicularity which is to be expected of a stakeholder. 'The following correspondenrle, which is in proof, will show this to be true. "EXHIBIT D. "AGENCY AT SAVANNAH, February 10,1886. .. Samuel Walker, Esq., Milledgeville, Ga.-DEAR SIR: We inclose herewith a receipt sent to us from the above-stated Co. for the amt. due under No. 220,664, Geo. E. Watson. As you will observe by reading the policy, all such claims are payable at New York, and this will be paid at once when the Co. is placed in the possession of the policy and the inclosed receipt, signed by Mrs. Watson, adm'x, and J. W. Hillson, assignee. You maybe assured that until this is done the payment Will not be made, and the only delay which has occurred or could have occurred in making the payment has been ma4e by your refusal to comply with the conditions of the policy, and under which over 2,000,000,000 have been paid by this Co. "Yours, truly, etc., JOHNSON & DOUGLASS. "EXHIBIT C. "Received, New York. - - - , 188-, from the Mutual Life Insurance Co. of New York, - - - dollars. in full for policy No. - - - , and the profits thereon, now terminated by the death of - - - . "Policy, $-'- - . JOHN W. HINSON, Assignee. " Additions, $---. "EXHIIHT E.
"AGENCY AT SAVANNAH, March 6, 1886. "Mess. Hardeman & Davis, Macon, Ga.-DEAR 8IR: We inclose herewith receipt for claim under the Watson policy, already signed by Hinson. assignee. If you will have it signed also by Mrs. Watson. and return it to us with the policy, a draft will be sent by the Co., payable to their joint order, as soon as the receipt and policy reach the Co. The amount found to be due Mr. HinBon will be paid to him, and the balance remitted to you for Mrs. Watson. "Y6urs, trUly, JOHNSON & DOUGLASS." v.30F\no.9-42
658
FEDERAL REPORTER.
Hinson promptly signed the receipt, as might readily have been expected, under the circumstances. The company was strangely oblivious of the terms of its own policy. No record of any assignment to Hinson, or to any person, was in its home office, or in the hands of its agents. They had assented to no assignment; and yet, by the plain terms of the policy,no assignment without such record and assent was binding on them. The policy contains this clause: "The .company will not notice any assignment of this policy until a duplicate or certified copy thereof shall be filed in the compallY's home office. The company will not assume any responsibility for the validity of the assignment."
Here notice of the assignment and of the assent of the company was absolutely required, and without these requisites the assignment was invalid. May, Ins. 396; Stevena v. Warren, 101 Mass. 565. That able court say: "The only question to be determined in regard to the ·. rillhts of the parties is whether the assignment of the policy by the assured in his life<-time, without the assent of the insurance company, conveyed any right in law or in equity to the proceeds when due. The court are all of tbe opinion that it dill not."
And the first ground given for this opinion is that it was contrary to the express terms of the policy itself. See, also, for analogy, Warnock v. Davia, 104 U. S. 775, citing, with approval, v. Warren, swpra. What,foundation, therefore, has thE' insurance company to stand upon, when it insists that its refusal to pay the widow and administratrix of its dead was in good faith?, It was in bad faith, not only because of the active sympathy of its agents with an outsider attempting to obtain the fund, but bec!lUseof the most cursory construction of its contract of insurance, where it pledges the company not to notice such an R8signment. I think that this is a proper case for damages, so far as it is developed by the evidence, and it is decreed that the respondent Sallie E. Watson, as the administratrix of her deceased husband, be paid the sum of $2,000, now in the registry ofthe court, and that she do recover of the complainant all costs incurred by her, and that Hinson be enjoined as prayed for. There being no prayer in the answer or by crossbill which .will justify the court in decreeing damages against the insurance company, it is ordered that the injunction be dismissed, as to the said Sallie E. Watson, administratrix, and that·she be allowed to proceed at law for her damages, and counsel fees in this behalf incurred.
ELGIN NAT. WATCH CO. EWIN NATl WATCH CO. 'IJ.
1.'.
MEYER. others. 1
{j59
MEYER
(G"itrcuit Oourt, E. D. Missouri, E. D. April 22,1887.) ASSIGNMENT FOR BENEFIT OF CREDITORS-By PARTNERSHIP.
Under the Missouri statutes. a conveyance by a member of a firm of in<lividual property, in payment of a firm debt. will not be invalidated by or considered a part of a general assignment made by the firm a day or two later.1
In Equity. Dym-, Lee &: EUis, for complainant. Krum &: JfYM8, for defendant. BREWER, J., (orally.) In the case ofthe Elgin National Watch Company against Henrietta Meyer and others, the bill is framed for the purpose of invoking that line of decisions in the federal courts to the effect that where an insolvent debtor, with a single intent, and at about the same time, executes several instruments disposing of his entire property, they are to be considered as tantamount to one general assignment. That line of decisions has been followed since I have been on the bench, bv myself, under protest, not believing it to be a true construction of the MisBOuri statutes; but I have hitherto been alone in that view, so far as the various federal judges in this state are concerned. I am glad to say, however, that I have one with me now who thinks as I do as to the proper construction of the statute. Be that as it may, the facts in this case are that the firm of Eisenstadt & Co. executed a general assignment for the benefit of creditors. One or two days before, individual members of that firm , having individual property, conveyed that property in payment of some of the firm debts. In one case, at least, the purchaser paid into the partnership the difference between the amount of hiE debt and the purchase price. . Now, in equity, the finn property is looked upon as a primary fund for the payment offirm creditors; individual property, as a primary fund for the payment of individual creditors. It is doubtless true that the individual property may be reached for firm debts, if the firm property is insufficient, but it is only a secondary liability; and it is also true that, if the individual property is not sufficient for the individual debts, the individual's interest in the finn property may be reached for the payment of such debts; but in each case the primary fund is the fund of the debtor, -in the one case of the partnership,-the partnership assetsjand in the other, ofthe individual member ofthe firm,-his individual property. It is therefore to be regarded that the individual property of the individual debtor iain his control, and not subject to the control of the firm. The firm, as cannot reach it. 29 Fed. Rep. 225. A partner has the right, as sp:sinst his individual creditors. to convey his individual property in. satisfaction of firm debts. Gallagher's A.ppeal, lPa.) 7 A.tL Rep. 237. I
1 See