McElroy v. John Hancock Mutual Life Insurance

Fowler, J., delivered the opinion of the Court. The John Hancock Mutual Life Insurance Company of Boston, Massachusetts, on the 23rd of May, 1877, in consideration of the payment of an annual premium of $118 insured the life of Paul E. Dorsey in the sum of $2,000 for his own benefit. The policy was made subject to the laws of Massachusetts, which provide “ that notice of the claim and proof of death shall be submitted to the Company within ninety days after the decease.” On the first of June, 1877, the insured assigned the ¹⁴² policy to his brother, Daniel Dorsey, of Baltimore, and the assignment was duly assented to by the company. ' Daniel Dorsey, the assignee, died in the year 1885, and in the same year on the 14th of August his will was admitted to probate in the Orphans’ Court of Baltimore City. By this will he devised and bequeathed all the rest and residue of his estate to his son, Joseph Dorsey, and his daughter, Annie J. Dorsey, and to them in trust for his two grandchildren.

The proportions of the estate devised to each and the particulars of the trust are not important to be considered here. It is sufficient to say that nowhere in the proceedings in the Orphans’ Court as, to the estate of Daniel Dorsey does it appear that the policy assigned to him was distributed or even mentioned in the inventory. The estate of Daniel Dorsey having been fully administered, and the executor, Joseph Dorsey, having passed his final account, he, as executor, assigned to himself individually the policy with the assent of the company and also with the full consent of all the beneficiaries. It appears from the evidence that at the time of this transfer the two grandchildren being minors, and having no means with which to pay their share of the premiums, and the remaining person interested in the policy, Annie J. Dorsey, being also unable to pay her share of maintaining it, it was agreed by all the parties in interest that the assignment should be made to Joseph Dorsey, and that he should pay the premiums out of his own money and that upon the death of the assured the proceeds of the policy were to be divided according to the respective interests.

This assignment to Joseph Dorsey was fully ratified and adopted by the minors after they arrived at age. It is admitted that all the premiums were duly paid up to and including that due on 22nd of May, 1894. The premium due the 22nd of May, 1895, was not paid, but the payment of the premiums prior thereto, it is admitted, kept the policy in force until the 22nd of May, 1896. The premiums paid by Joseph Dorsey with his own money amounted to $1,002.00, and the whole amount of premiums actually paid is. equal or nearly so ¹⁴³ to the face value of the policy.

In 1891, Joseph Dorsey became insolvent, and the plaintiff, James W. McElroy, was appointed his permanent trustee in insolvency. Joseph Dorsey died in May, 1895, and although his sister knew he had gone into insolvency, she took out letters on his estate in order to get at a box in the Safe Deposit Company which he and she, during his life, had held jointly, and she testifies that she attempted to collect the insurance claim because she supposed that was the proper way to do it. However, this fact is of no importance except to explain how it happened that she, as administratrix, and not the trustee in insolvency, took the initial steps to obtain payment of the policy, and furnished proof of death. The insured died at the Home of Incurables in the State of New York on the 19th of June, 1895; but this fact was unknown to Miss Dorsey for nearly a year, so that it was impossible for her to comply literally with the provision of the Massachusetts law which required proof of death to be given “ within 90 days after the decease.” But as soon as she received information of the death of the insured she notified the local agent of the company and he sent her blanks for proof of death which she filled up.

These were objected to and returned to her because they were not correct, and other blanks were sent to her by the company and these were also filled up and sent to the company, in whose hands they have remained ever since. On the 16th of October, 1896, about four months after the proofs were furnished, a letter from the local agent in Baltimore was received by her containing the information that the company would recognize no claim under the policy, proofs not having been submitted in accordance with the Massachusetts statute applicable thereto, and that the company did not consider that she had any interest in the policy. Whereupon she consulted counsel, who appealed to the company to settle the claim without regard to technical objections. But this appeal was in vain.

On the 3rd of November the company wrote counsel that it had nothing to add to its letter of October 16 to his client, and that there was ¹⁴⁴ no defect in the formal proofs. This correspondence was closed on the 24th of November, 1896, by a letter from the company saying that it had nothing further to say regarding the matter. Miss Dorsey, as administratrix of her brother, and as surviving trustee under her father’s will, made another effort to collect the amount she considered justly due on the policy, and through the second attorney she consulted she ascertained that the plaintiff, James W. McElroy, was trustee in insolvency of her brother, and was the proper person to prosecute a suit for the recovery of the insurance money. The plaintiff testifies that in February, 1897, he became aware for the first time of the existence of the policy, and of the death of the insured; that this information came to his knowledge from Miss Dorsey’s “ visit to the office of his associate; that witness took up the matter, and upon investigation found that Joseph Dorsey had applied for the benefit of the insolvent law of this State in 1891, and that witness was his trustee; that he put himself in communication promptly with the company.” On the 9th of February, 1897, two days after learning the facts we have just stated, Mr. McElroy wrote to the local agent in Baltimore informing him that he had only recently learned of his interest in the policy and asking him if the proofs of death furnished by Miss Dorsey as administratrix, etc., were in due form; and if not what was necessary to be done by him as trustee in order to collect the insurance money.

The agent forwarded this letter to the company at Boston, and in a few days Mr. McElroy received a reply in which the company says: “ You are correct that Miss Dorsey filed the papers to prove the claim under this policy and claimed the money. The papers in themselves we think are correct enough, but the company has decided not to recognize the claim under this policy, and Miss Dorsey has placed it in the hands of John H. Thomas, etc. We think it might be well for you to see Mr. Thomas, and see whether Miss Dorsey is intending to enter suit as intimated in his letter. Until this matter is settled we are unable to give you any definite information in regard to this case.” ¹⁴⁵ Mr. McElroy replied that unless some satisfactory arrangement for settlement could be made he would enter suit. He was then informed for the first time by the company that according to the provisions of the Massachusetts statute, under which the policy was issued and continued in force, “ there was strictly speaking no claim, the proof not having been filed within 90 days of death.” But the company closed their letter with an offer to settle both the claim of the trustee and of the administratrix by the payment of the sum of $652, declaring, however, that it was under no legal obligation to pay this sum.

This suit was brought in the usual form by the plaintiff as trustee in insolvency of Joseph Dorsey to recover the amount claimed to be due on the policy. The defendant pleaded the general issue. We have stated the facts at length which were offered in evidence by the plaintiff, for the reason that at the close of his case the learned judge below instructed the jury “ that under the pleadings in this case the plaintiff has produced no evidence legally sufficient to enable him to recover, because the undisputed evidence shows the trustee in insolvency has no such interest in the policy sued on as enables him to maintain this suit.” There are two other questions which, though not passed upon below, we will consider and dispose of because they will necessarily arise in a retrial of the case, and if the contention of the defendant company be correct as to these other questions it would be useless to order a new trial even though there may be error in other rulings of the Court. Lycoming Fire Ins Co. v. Langley, 62 Md. 215 .

The first of these questions is, were the proofs of death under the circumstances of this case sent to the company in time; and second, if not was there a waiver by the company of the requirement as to furnishing proof of death within 90 days after death? The verdict and judgment were in favor of the defendant on the instruction of the Court, and the plaintiff has appealed. ¹⁴⁶ i. Has the plaintiff trustee such an interest in and title to the policy sued on as entitles him to bring this suit? It is manifest from the evidence we have fully stated that Joseph Dorsey, the plaintiff’s insolvent, held the entire legal title to the policy.

This he held under the assignment by himself as executor to himself in his own right. But he was also entitled absolutely as one of the .residuary legatees under his father’s will to an undivided fifth. In addition to holding the entire legal title by assignment and the beneficial interest as legatee, the insolvent was also entitled to an absolute interest in the proceeds of the policy to the extent of the premiums paid by him for the other beneficial owners of the policy. It is not important now to ascertain with exactness the extent of such interests of the insolvent, but it is sufficient that he had such substantial interests in the subject of controversy, and of this there is no doubt under all the evidence in the case, and the law applicable to it. 'Nor do we think there can be any doubt that the interests in, as well as the legal title to, the policy which were vested in the insolvent passed to the plaintiff as trustee under the