Harrison's Administrator v. Northwestern Mutual Life Insurance

Rowell, C. J. This is assumpsit on a policy of insurance procured by the intestate on his own life, payable to> his executors, administrators, or assigns. As the case is presented, it must be taken that the intestate procured the policy for the purpose on his part of immediately assigning it without consideration to- Mary A. Gleason, then of Rutland but now of New York, who had no insurable interest in his life; that the policy was assigned accordingly in duplicate under seal, executed by both of the parties, for an expressed valuable consideration, and the policy and one-of the assignments delivered to the assignee, who has ever since kept the same; the other assignment being sent to [477] the defendant company; that the intestate paid all the renewal premiums during his life, and that the assignee paid the last renewal premium; that since this suit was commenced, the assignee has properly brought suit on the policy in her own name as assignee in New York, which suit is -still pending; and that the suit at bar was not brought at her request nor for her benefit, but against her will and interest, on the ground and claim that the assignment is void, and that therefore she has no interest in the avails of the policy. This is not a wagering policy, as claimed by the defendant, for by the law of this State, as shown by Fairchild v. Northeastern Mutual Life Association, 51 Vt. 613, a policy procured by a man on his own life, in which he has an insurable interest, for the benefit of one named therein who has no such interest, and who' makes no outlay in the matter, is not a wager; and by parity of reason, such a policy assigned to such a person, though taken out for that purpose, is no wager. But the defendant says that though the policy is valid, the plaintiff ought not to be allowed to recover upon it if the assignment is good, for then he would have no right to the money if recovered, and no right to sue for it without the consent and against the will and interest of the assignee, and that therefore the defendant has a right to contest the plaintiff’s title, and to show the assignment good, and thereby to defeat the action, in order to protect itself from1 the danger of having to pay twice. It is true as a general proposition, that in a suit at the common law, a plaintiff who has the legal interest in the subject-matter of the litigation, cannot be defeated by showing- an equitable ownership of the entire subject-matter in a third person. This proposition is based upon the ground that [478] a judgment against the defendant will protect him against the claim of the equitable owner. But when it will not protect him, he may contest the plaintiff’s right to sue by setting up the equitable ownership in defence. This is expressly recognized in Hackett v. Kendall, 23 Vt. 275. That was an action by the bearer, on a promissory note, the equitable interest in which was in the assignee in bankruptcy of one who was the equitable owner of the note when it was given, and who sold and delivered it to the plaintiff before suit brought, without the knowledge or consent of the assignee, who never knew of the existence of the note till the trial below. The Court said that the defendant could question the right of the plaintiff to sue, for the purpose of protecting himself from a subsequent suit in the name of some one having a better right, and who had not acquiesced in that suit; but that he could not go beyond that. But in the circumstances of that case, the Court thought the defendant was in no danger from the assignee, 'and the plaintiff had judgment. The same principle is recognized in Fletcher v. Fletcher, 29 Vt. 98. That was also an action by the bearers, on a promissory note. The defendant claimed that the plaintiffs had no right to- the note, and consequently no right to sue upon it. The Court said that as the defendant did not deny that he owed the note and should pay it to somebody, it was immaterial to him to whom he paid, or who recovered upon it, provided that when paid or recovered upon, it would bar any further claim by others; that to that extent and for that purpose, but no farther, it was competent for him to contest the plaintiffs’ title and their right to sue. Sanford v. Huxley, 18 Vt. 170, was assumpsit on a note payable to the plaintiff or bearer in neat stock. The defendant pleaded equitable ownership in one Gibson. But the Court [479] said that as the note was payable to the plaintiff and not negotiable, the right of action was in him; and as it was not claimed that the action was prosecuted without the privity and against the will of Gibson, the plea was no defence.. So in New York under the Code, an assignee, in order to recover, must have a title that will protect the defendant against the assignor. Hays v. Hathorn, 74 N. Y. 486. The principle of these cases applies here, and necessitates a reversal, unless we can say, as the plaintiff claims, that the assignment is void for want of consideration. But we cannot say that, for if it was a gift, as it may have been, a consideration is not essential to its validity. Watson v. Watson, 69 Vt. 243, 39 Atl. 201. We 'take no note of the plaintiff’s offer to show revocation, for if the assignment is revocable, as to- which we say nothing, it cannot, as the case is presented, be taken to have' been revoked. Reversed and remanded.