Philbrick v. Puritan Corporation

WELCH, J. This action was commenced in the district court of Tulsa county upon a promissory note and to foreclose a real estate mortgage given to secure the same. From a judgment and decree of foreclosure the defendants have appealed. The parties in error are referred to' herein as defendants and plaintiff, respectively, as they appeared at the trial. Plaintiff’s petition was in the usual form employed in such actions, with the note and mortgage set out as exhibits. Defendants’ answer admitted the execution of the note and mortgage, but sought to defeat the action upon the ground that the aforesaid instruments were “wholly void and absolute nullities in that the same are and constitute a contract of insurance; and these defendants allege that said plaintiff,. the Puritan Corporation, is a foreign corporation, and that prior to the making and entering into said insurance contract the plaintiff corporation had not and did not first comply with the laws of the state of Oklahoma pertaining to insurance contracts and insurance business, having failed to obtain a permit to transact such business therein from the Insurance Commissioner, or the State Insurance Board of the State of Oklahoma, pursuant to 1923 Session Laws of Oklahoma, chapter 101, page • 167, Senate Bill No. 292, and that thereby these defendants specifically alleged that they owe the plaintiff nothing.” In this connection the note sued upon contained the statement that to the principal sum of $4,000 there should be “added the payments of the premiums on the policy of life insurance representing insurance on the life of said obligor referred to in the mor,t-gage hereinafter mentioned.” There ■ was also a provision that interest should ■ not be charged on the premiums. The mortgage was given to secure the^ above and, according to the provisions thereof, “to secure further the payment or repayment of the premiums on a policy of life insurance, application number .98354, dated the 15th day of October, 1928, issued 'by the Morris Plan Insurance Society on the life of________.-----* * *” The mortgage further provided that the principal sum, the interest thereon, and the premiums were payable to the holder of the mortgage in 175 equal, consecutive, monthly installments of $44 each; and all premium payments were understood to be included in the principal amount of the note. There is the further provision as follows: “That the mortgagors will take out in companies and through brokers to be designated by the mortgagee and keep in full force and effect at all times, until said indebtedness and interest and all sums, payments, and charges secured hereby shall be fully paid, said insurance on the life of the mortgagor insured, and pay, repay or' *490 reimburse the mortgagee for the premiums on such life insurance by making the installment payments aforesaid. Such life insurance shall be payable to the mortgagee wjjo shall have full power to assign said recited poiicy of life insurance to any assignee of said obligation or purchaser of the premises at any sale hereunder. The amounts paid for the premiums of said insurance shall be a further charge and lien upon the premises described in this mortgage and shall be recovered in any foreclosure suit and included in any judgment or decree rendered in any action, as aforesaid, and collected, and the lien thereof enforced in the same manner as the principal debt hereby secured. “As additional security for the payment of the indebtedness, interest, sums, payments and charges hereby secured, the mortgagors hereby assign unto the mortgagee all that said recited policy of life insurance, and all moneys to become payable thereunder, to hold unto the said mortgagee. * * *” A stipulation was filed wherein it was agreed that the plaintiff corporation had not complied with any of the insurance laws of the state. Thereupon plaintiff moved to discharge the jury and to try the case to the court, which motion was sustained over defendants’ objections. Upon completion of plaintiff’s evidence, the court, on its own motion, rendered judgment for plaintiff upon pleadings and the evidence, which included the life insurance policy above referred to and the application therefor signed by defendant O. R. Philbriek. This action of the court is here for review. Before considering the foregoing assignment, it becomes necessary for us to dispose of certain other alleged errors brought here by this appeal, as follows: First, the action of the court in discharging the jury; second, the order of the court overruling defendants’ demurrer to plaintiff’s evidence. While the present case is one in equity and not triable by a jury ás a matter of constitutional right (see. 19, art. 2, Const.), it is an action for the recovery of money and ordinarily triable to a jury as a right granted by section 350, O. S. 1931. Here, however, the statute does not apply. The action has resolved itself into one wherein the relief sought is that which only a court of equity can grant. The amount sought to be recovered is not controverted; and the defendants, by their answer, seek equitable relief, the annulment of the instruments as constituting a contract in violation of positive law and against public policy. They do not dispute the amount of the debt, but seek to avoid payment of the whole thereof on the one ground that the contract creating the same is void. Thus, when that question is determined, nothing remains to be done except to enter judgment for the full amount claimed by plaintiff, or to deny any recovery. In such ease the action is not one for the jury, for there is no issue as to the amount of recovery, and therefore does not come withip the provisions of section 350, supra. These views conform to the former expressions of this court. We held in Moore v. Stanton, 77 Okla. 41, 186 P. 466, as follows: “Where, in an action on a promissory note and to foreclose a mortgage executed to secure payment of same, defendant admits execution of the note and mortgage, and by eross-complaint sets up a defense involving the application of equitable doctrines, and seeks affirmative relief that only a court of equity can give, such defendant is not entitled to a jury trial.” That rule applies in all respects to the question here considered.' See, also, Dean v. McMichael, 168 Okla. 536, 33 P. 1086. There is yet another reason to sustain the trial court’s action in discharging the jury. The only issue brought out by the pleadings in this case was that of the validity of the mortgage contract, and, more specifica’ly, whether it was against public policy and in violation of positive law. Such question is one for the court and not for the jury. Huber v. Culp, 46 Okla. 570, 149 P. 216. There it was held: “It is a question for the court to determine, as a matter of law, whether a contract is or is not against public policy.” Defendants insist that the intention of the parties is controlling of the question whether the contract violated the insurance statutes, and that the question of intention is for the jury to determine. They rely upon the decision in Waldrep v. Exchange State Bank, 81 Okla. 162, 197 P. 509. That was not an equity case. It was for the recovery of damages for conversion. A written instrument came in question and it was assailed on the ground of fraudulent intent of the parties, and it was properly held that the question of intent was for the jury. We hold further that the court did not err in overruling defendants’ demurrer to plaintiff’s evidence. We have set out above the full purport of such evidence, especially that portion tending in any manner to favor defendants’ theory of the case. In so far as the transaction may have constituted an insurance contract, the evidence merely reveals an agreement wherein the defendants agreed to insure the life of one of them as *491 further security for the loan. This was ac- - complished through what appears to be a wholly independent insurance company. We know of no law in this state prohibiting a mortgagee from requiring and accepting such an insurance policy as further security for a loan. We think, under a majority of the decisions, the plaintiff had an insurable interest in the life of defendant Philbrick (37 C. J. 395, sec. 63) to the extent of the debt, and plaintiff was made the beneficiary only to that extent. While the insurance premiums were pay-' able to the plaintiff, and were secured by the mortgage, plaintiff’s evidence disclosed that they were remitted in full to the insurance society. We are not acquainted with any rule of law prohibiting the parties from so securing the payment of such premiums. Defendants strongly contend that the policy issued by the Morris Plan Insurance Society was merely a form of reinsurance. They say the case of M., K. & T. Trust Co. v. Krumseig, 77 Fed. 32, is in point, and fully sustains their position. AVe cannot so agree. There the mortgagee shared in the profits of the insurance company by accepting a portion of the premiums paid by the mortgagor. In addition to that circumstance, officers of the mortgagee corporation admitted that the mortgage was designed as a combination loan and insurance contract. Here the evidence of the plaintiff showed that the defendants were required to furnish life insurance with the plaintiff as beneficiary to the extent of the amount of the loan, and required that the policy be issued by a designated insurer, the premiums on such policy to be secured by the mortgage, paid direct to the mortgagee, who thereupon transmitted the same to the insurer. These facts alone are insufficient to make the mortgage transaction an insurance contract, and are insufficient to destroy plaintiff’s cause of action in foreclosure. The demurrer to plaintiff’s evidence was therefore properly overruled. The evidence of the plaintiff makes out a clear ease showing a right to recover. The defendants’ answer admitted execution of the note and mortgage, and alleged no defense except the allegation, in substance, that the note and mortgage were void in that they constituted a contract of insurance, while the plaintiff, a foreign corporation, had not complied with the laws of the state of Oklahoma, pertaining to insurance contracts and the insurance business, and were therefore unauthorized to engage in the insurance business or make insurance contracts. The plaintiff admitted that it had not complied with the laws of the state essential to engaging in the insurance business, or entering into insurance contracts. No other facts whatever were asserted by the defendants in defense to plaintiff’s action. The note and mortgage sued upon did not constitute an insurance contract, .as we have heretofore seen. Therefore it was immaterial that plaintiff had not complied with the insurance laws of the state. There is no contention that the note and mortgage were illegal or invalid for any other reason. The defendants in no manner sought to amend the answer. The defendants in their opening statement at the commencement of the trial stated, in substance, that the plaintiff was generally “doing an insurance business,” and referred to the details of the newspaper advertising campaign of plaintiff as indicating that the plaintiff company held itself out as engaging in the insurance business, and referred to certain attorneys at law and agents who represented both the plaintiff corporation and the insurer corporation. At the conclusion of the trial the defendants offered to prove in a general way the things stated in the opening statement, which offer was refused. It is clear that many of the things stated in the opening statement were immaterial in view of the issue raised by the pleadings, which was purely an issue of law as to whether the note and mortgage constituted an insurance contract. It is also clear that all of the fact details mentioned in the opening statement were made in line with the defendants’ assertion in their answer that defendants’ contract with plaintiff was in truth and in fact a contract of life insurance. There was no allegation in the answer under which the details 'set out in the opening statement would be material There was no allegation that the defendants had in any manner been misled or imposed upon by any act or statement of the plaintiff or any of its agents or representatives. There was no error in refusing the offer of proof, as they had no bearing on the single issue of law involved. It is worthy of note that at the conclusion of the defendants’ opening statement the trial judge called attention to the fact that the stated details had not been in any manner asserted in the answer, to which the defendants then replied, in substance, that they relied upon the defense asserted in the answer, thus indicating no desire to present any amendment. Since the answer presented *492 only the legal defense concerning the asserted or contended invalidity of the note and mortgage, and having concluded that such contention is not well taken, it follows that the trial court did not err in rendering judgment for the plaintiff, and that judgment is affirmed. MeNEILL, O. J., OSBORN, V. O. X, and BAYLESS and CORN, JX, concur. GIBSON, J., concurs in part and dissents in part. PHELPS, X, dissents. RILEY and BUSBY, JX, absent.