Liebing v. Mutual Life Insurance

BOND J. This is the second appeal in this ease. On the former appeal the question presented was the propriety of an adverse instruction, under the constraint of which plaintiff took a nonsuit with leave to move to set it aside. The evidence in the case and the points then in judgment are set 'out in 269 Mo. 509. Upon the remand of the former appeal the pleadings were reformed, and submitted, among other issues, the applicability of the statutes of Missouri to a loan agreement made by the assured with defendant, secured by a pledge of the policy in suit. The loan agreement, of date October 12, 1904, was to the effect that the Mutual Life Insurance Company of New York lent to Frederick W. Y. and Mary S. Blees, the sum of $9550. From this amount the company deducted the sum of $4291.50 as premium to September 29, 1905, and $468 as interest thereon. This agreement also contained the following: “The receipt of the foregoing amount as a loan is hereby acknowledged upon the pledge as hereinafter set forth in Policy No. 1207072 in said company. And the said parties of the second part agree to repay the said sum of $9550 to the company at its head office, Nassau, Cedar and Liberty Streets, in the City of New York, on the 29th day of September, 1905. “In consideration of the amount of said loan the parties of the second part hereby assign, transfer and set over all of their right, title and interest in and to said Policy No. 1207072 issued by said company on the life of Frederick W. Y. Blees, together with any and all moneys which may be or become payable under the — 130 — same, to the company as collateral security for the payment of said loan with interest; the said parties 'of the second part will forever warrant and defend the title of the said company to the said policy. “In the event of default in the payment of said loan on the date hereinabove mentioned, the company is hereby authorized at its option, without notice and without demand for payment, to cancel said policy, and apply the customary cash surrender consideration then allowed by the company for the surrender for cancellation of similar policies, namely, $9550 to the payment of said loan with interest, the balance, if any, to be payable to the parties entitled thereto on demand, or the company may at its own option renew said loan for one year or less period on the written request of any one of the parties of the second part hereto, and with-' out any further notice to any one of the parties of the second part.” The policy pledged for this loan agreement was issued on September 29, 1901. When the above loan agreement was sent to the home office of the defendant in New York and accepted, and after the deductions as therein provided for, a check for the remainder, drawn upon the American Exchange Bank of New York, was forwarded to the assured and subsequently paid. No further premiums were ever paid on the policy nor was the loan paid at its maturity, to-wit, September 29,1905. Thereafter, on November 15, 1905, the defendant exercised the right under the loan contract to foreclose the pledge of the policy and applied the full cash surrender value to the extinguishment of the loan and cancellation of the indebtedness and the policy. Frederick W. Y. Blees, the assured, before his death on September 8, 1906, and before making the loan, assigned the policy in question to his wife, who jointly with him executed the loan agreement. About six years after the death of her husband, the wife, who had remarried, brought the present action. On the trial the court gave a peremptory instruction to find for plaintiff, re131 suiting in a judgment for $92,069.28. Defendant duly appealed. II. The decisive question now presented relates to the action of the trial court in excluding all evidence as to the laws of New York. Defendant pleaded that the loan agreement and pledge of the policy was a contract made in New York and governed by its laws, which were also pleaded in defendant’s answer on the last trial. The trial judge took the view that this .contract and pledge were covenants subsidiary to the policy and not independent and, therefore, as much under the restrictions of the applicatory statutes of.this State (R. S. 1909, sec. 6946) as the policy itself. That view was in accord with the former decisions of this State.. [Head v. Ins. Co., 241 Mo. 403, and cases cited.] This case has been reviewed by the Supreme Court of the United States (N. Y. Life Ins. Co. v. Head, 234 U. S. 148), but that court did not deem it necessary to the conclusion there expressed, to rule upon the relation of a loan agreement to the contract contained in the policy — i. e. whether subsidiary or independent — since its view, that the loan agreement before it was not subject to the terms of the forfeiting statute of Missouri (R. S. 1909, sec. 6946), was based upon the postulate •that the State of Missouri could not control “all subsequent agreements” by the parties to a policy of insurance taken out in that State, if entered into “in other jurisdictions by persons not citizens of Missouri and lawful when made.” [N. Y. Life Ins. Co. v. Head, supra, l. c. 165.] To the extent that the loan contract (whether subsidiary or independent as to a policy) in the Head case was not subjected to the non-forfeiting statute (R. S. 1909, sec. 6946) governing the policy, the previous rulings of this court were disapproved. While the parties to the loan agreement in the Head case were non-residents of Missouri, that fact was not a determining one in the decision of the Su — 132 — preme Court of the United States; for in the subsequent decision of N. Y. Life Ins. Co. v. Dodge (38 U. S. Sup. Ct. Rep. 337) it distinctly appeared that the assured Dodge and his wife, the beneficiary, were at all times citizens and residents of Missouri, and that they borrowed money on a pledge of the policy, sending it and the loan contract to New York for acceptance according to the agreement signed by them in Missouri. In disposing of the issue arising on that state of facts, it was said, page 339: “That the policy when issued to Dodge became a _ Missouri contract, subject to its statutes, so far as valid and applicable, is undisputed and clear. The controlling doctrine in that regard was announced and applied in Equitable Life Ins. Co. v. Clements, 140 U. S. 226; N. Y. Life Ins. Co. v. Cravens, 178 U. S. 389, and Northwestern Life Ins. Co. v. Riggs, 203 U. S. 243. In each of those cases the controversy related to the interpretation and effect of an original policy — not a later good-faith agreement between the parties. We held that to the extent there stated the State had power to control insurance contracts made within its borders. With those conclusions we are now entirely content; but they do not rule the question presently presented. Here the controversy concerns the effect of the state statute upon agreements between the parties made long after date of the policy and action taken thereunder; their essential fairness and accordance wit’. New York laws are not challenged. “Considering the circumstances recited above, w¿ think competent parties consummated the loan contract now relied upon in New York where it was to be performed. And, moreover, that it is one of a kind which ordinarily no state by direct action may prohibit a citizen within her borders from making outside of them. It should be noted that the clause in the policy providing ‘cash loans can be obtained by the insured on the sole security of this policy on demand,’ etc., cer — 133 — tainly imposed no obligation upon the company to make such a loan if the Missouri statute applied and inhibited valid hypothecation of the reserve as security therefor as defendant in error maintains. She cannot, therefore, claim anything upon the theory that the loan contract actually consummated was one which the company had legally obligated itself to make upen demand. ’ ’ The court then referred to its previous ruling in the Head case (234 U. S. 149) reciting the fact under which is held the loan contract in that case to be free from the control of the non-forfeiting statute of this State (R. S. 1899, sec. 7897; R, S. 1909, sec. 6946) although the policy itself was a Missouri contract, and concluded the discussion, viz: “Under the laws of New York where the parties made the loan agreement now before us, it was valid; also it was one which the Missouri Legislature could not destroy or prevent a citizen within its borders from making beyond them by direct inhibition; and, applying the principles accepted and enforced in Insurance Company v. Head, we think the necessary conclusion is that such a contract could not be indirectly brought into subjection to statutes of the State and rendered ineffective through a license authorizing the insurance company there to do business. As construed and applied by the Springfield Court of Appeals, Section 7897 (R. S. Mo. 1899) transcends the power of the State. To hold otherwise would permit destruction of the right — often of great value — freely to borrow money upon a policy from the issuing company at its home office and would, moreover, sanction the impairment of that liberty of contract guaranteed to all by the Fourteenth Amendment.” Although meeting with a sharp dissent, the foregoing ruling is paramount and imperative on this court in all cases like the present, subject to review by the Supreme Court of the United States. — 134 — III. The question, therefore, to he ruled is whether the loan agreement and pledge of the policy in the instant case are governed by the laws of New York. This is determinable by the principles of law governing the making, the validity, the interpretation and the enforceability of contracts made under circumstances such as are shown in the record. Absent any contrary intention, the validity, obligation and interpretation of a contract relating to personal property, are governed by the law of the place where it is made. It is generally true that the place of performance governs matters connected therewith and that the remedy depends upon the law of the place where suit is brought. [2 Elliott, Contracts, sec. 1110 et seq; Scudder v. Union Nat. Bank, 91 U. S. 406; Ruhe v. Buck, 124 Mo. l. c. 183 et seq; Tremaine v. Dyott, 161 Mo. App. l. c. 221.] No contract can be consummated until the final act essential to its obligation is performed. [2 Elliott, Contracts, sec. 1115; 5 R. C. L., p. 935, sec. 26, and cases cited under note 8.] If, therefore, the act creating the obligation of a contract is performed at a particular place, the contract must be said to have been made at that place; for until the act done there the parties are not bound. [1 Elliott, sec. 62.] It is also true that “when it appears upon the face of the contract that' there is to be a good-faith performance thereof in some jurisdiction other than that of the lex loci contractus, or that it is made with reference to the laws of some other place, then it is to be construed according to the law of the place with reference to which it is made. When the terms or nature of the contract show that it was to be executed in another country or state, then the place of making the contract becomes so far immaterial, and the law of the place where the contract is to be performed governs in determining the rights of the parties.” [2 Elliott, Contracts, sec. 1119.] It is clear that “if the place where the contract is made is also the place where it is to be performed, there is, ordinarily, no doubt as to the application of the — 135 — rule, for then the lex loci contractus and the lex solutionis are the same.” [5 E. C. L., p. 934, sec. 25, and oases cited under note 6.] Applying the foregoing principles of law, as far as invoked by the facts in the present case, there can be no escape from the conclusion that the loan contract and pledge of the policy were both consummated and to be performed in the State of New York. It is evident that the loan contract did not become a binding obligation until it was delivered to the defendant (appellant) in the State of New York and assented to and accepted by it there. It is also apparent from the portion of the loan contract quoted above that the promissors therein (plaintiff and her husband) agreed “to repay the said sum of $9550 to the company at its head office, Nassau, Cedar and Liberty Streets, in the City of New York on September 29, 1905.” Necessarily, therefore, the place of performance of the loan contract and the accompanying pledge of the property, were fixed by the agreement itself in the State of New York. These facts made it a New York contract and performable in that State, just as fully as if the parties had recited in haec verba that the laws of New York should govern an agreement entered into in that State and contracted to be performed in that State. The recital of such an agreement is the only difference as to the loan agreements between the case at bar and the recent decision of the Supreme Court of the United States in N. Y. Life Ins. Co. v. Dodge, supra. But inasmuch as such a recital was not necessary in the present case, in view of the fact that the contract itself was not made until the defendant became a party to it in New York, where it was also specifically agreed it should be performed, there is no point of essential distinction between the facts in judgment in this case and those presented in N. Y. Life Ins. Co. v. Dodge, supra. It necessarily follows that conformity to the ruling in that case requires the judgment in the instant ease to be reversed and the ■ cause remanded for the error of — 136 — the trial court in excluding the proof of the New York laws. On a new trial an opportunity will be afforded to determine the issue as to whether or not the defendant complied strictly with the terms of the loan agreement and conformed strictly to the laws of New York in the cancellation of the policy and the extinguishment of the loan indebtedness. The judgment is reversed and the cause remanded. It is so ordered. The foregoing opinion of Bond, C. J., in Division One is adopted as the opinion of Court in Banc; Walker, Baris and Williams, JJ., concur; Woodson, J., dissents.