Mutual Life Insurance of New York v. Pacific Fruit Co.

HENSHAW, J. This action was brought by the plaintiff against the appellant and respondent to compel them to inter-plead their claims to $1,480, the proceeds of two life-insurance policies, plaintiff paying the money into court to abide its decision. The appellant and respondent thereafter filed their respective pleas. After trial the court made its findings and awarded judgment to the respondent. ' This appeal is from the judgment and from the order denying appellant’s motion for a new trial. The essential facts are the following: Plaintiff issued to Michael T. Brewer, the then husband of -the appellant, two paid-up policies of life insurance, aggregating the sum of $1,480. These policies were by their terms made payable to the appellant. Brewer was indebted to the respondent the Pacific Fruit Company in the sum of $2,134.37, evidenced by his promissory notes. In January, the notes remaining unpaid, appellant and her husband, by an instrument in writing absolute in form, transferred and assigned to said respondent the policies. The court found that the policies were transferred to said respondent as security for the indebtedness of Michael T. Brewer. Brewer died in December, 1898, leaving the indebtedness to respondent unpaid. During all the time after the assignments were made up to the time of the death of Michael T. Brewer, nearly thirteen years, the policies remained in the possession of the respondent. *480 Appellant pleaded that the statute of limitations had barred a recovery upon Brewer’s debt. The court failed to find upon that plea. The case, it will be observed, is in its essential facts identical with that of Conway v. Supreme Council, 131 Cal. 437, and 137 Cal. 384. By these decisions it is held that, as under section 2911 of the Civil Code a lien is extinguished by the lapse of time within which, under the provisions of the Code of Civil Procedure, an action can be brought upon the principal obligation, the pledgee who has been guilty of such laches as to allow his remedy upon the principal obligation to become barred loses his lien. In the Conway case in 131 Cal. it was held that the court should have found upon the plea of the statute of limitations, which was there interposed, and for its failure so to do the judgment was necessarily reversed. The same situation is here presented. In the case of Zellerbach v. Allenberg, 99 Cal. 69, the attention of this court was not directed to section 2911 of the Civil Code. In Commercial etc. Bank of San Jose v. Hornberger, 140 Cal. 16, all that is decided is, that if the original debt has been kept alive by judgment or in any other equally enforceable form, the pledgee’s lien continues, and under the facts of that case that the statute of limitations had not run against the principal obligation within the meaning of section 2911. The points decided, therefore, are in harmony with the interpretation given in the Conway eases. It should be remarked that section 2911 was designedly passed to change the former rule respecting the continued existence of a lien after the statute of limitations has barred the remedy upon the principal obligation. Thus the proposed Civil Code of New York (the Field Code), from which admittedly so many of the provisions of our own code have been taken, provided (sec. 1605), in accordance with the common rule: “A lien is not extinguished by the mere lapse of the time within which, under the provisions of the Code of Civil Procedure, an action can be brought upon the principal obligation.” Our own codifiers industriously changed this language, and declared that a lien is extinguished by such lapse of time. We have thus adopted a rule contrary to that existing at the common Law (Taunton v. Goforth, 6 Dowl. & R, p. 384), and contrary, *481 therefore, to the authorities of those states where the common-law rule has not been abrogated by express statute. The judgment and order appealed from must be reversed and the cause remanded, with directions to the trial court to find upon the plea of the statute of limitations interposed by .appellant, and, if that plea be well taken, judgment in her favor should follow accordingly. McFarland, J., Lorigan, J., and Van Dyke, J., concurred. On April 9, 1904, a rehearing was denied. Beatty, C. J., •delivered the following dissenting opinion, in which Shaw, J., concurred:—•