Opinion · Court of Appeals of Texas
Smith v. Schoellkopf
68 S.W.2d 346
- Type
- Opinion
- Court
- Court of Appeals of Texas
- Jurisdiction
- Texas
- Date
- 1934-02-01
- Topic
- general
HIGGINS, Justice (after stating the facts-as above). The questions presented by Mrs. Smith are stated in her brief as follows: “(1) Whether the insurable interest of a partner under the conditions alleged in the pleadings can extend beyond the termination of the partnership so as to entitle him to receive the proceeds of a policy as a creditor when the plain provisions of the policy and contract of insurance, which have been complied with, provide that the insured shall at all times have the right to change the beneficiary without the consent of the beneficiary named in the policy. “(2) Whether or not when the insured has used all the means within his power and control to avail himself of his contractual right to change the beneficiary in the policy and such change is defeated only by the defendant in error’s refusal to surrender the policy; such, change becomes effective on the proposition that that is regarded ‘as having done that which ought to have been done.’ “(3) Whether or not when the plaintiff in error Mrs. Jennie Smith sued in the alternative as an heir the defendant in error Sehoellkopf could legally be permitted to testify to the existence of a debt owing by the insured to him and to the fact that said debt -had not been paid. “(4) Whether or not the claim of the defendant in error, Sehoellkopf, against Karl M. Smith was barred by the two years statute of limitation before he took any action to enforce same, such statute of .limitation having been specially pleade…
Citator
UpLaw has not yet analyzed Smith v. Schoellkopf. The absence of a flag is not a finding that it is good law.
- Cited by
- 7 opinions
SMITH v. SCHOELLKOPF,68 S.W.2d 346(Tex.Civ.App.-El Paso 1934)
SMITH v. SCHOELLKOPF.
No. 2950.
Court of Civil Appeals of Texas, El Paso.
February 1, 1934.
Rehearing Denied February 21, 1934.
Suit by the Pan-American Life Insurance Company, by filing a bill of interpleader against Mrs. Jennie Smith and Hugo W. Schoellkopf. To review a judgment for Hugo W. Schoellkopf, Mrs. Jennie Smith brings error.
Affirmed.
See, also,63 S.W.2d 234.Page 347
On June 28, 1924, the Pan-American Life Insurance Company issued an insurance policy in the sum of $5,000 upon the life of Karl M. Smith, in which the defendant in error, Schoellkopf, was named as beneficiary. Smith died intestate May 9, 1931, leaving as his heirs at law his wife, Jennie Smith, plaintiff in error, and one or more children by a former marriage.
This suit was commenced August 8, 1932, by said company filing a bill of interpleader against Mrs. Smith and Schoellkopf, rival claimants of the sum payable upon the policy, which sum the plaintiff deposited in the registry of the court.
The defendants answered and, upon the issues joined between them, the fund in controversy was awarded to Schoellkopf. The case was tried without a jury.
The policy was issued upon the written application of the assured in which he directed the policy be made payable to Schoellkopf and stated that the relation of Schoellkopf to assured was as a partner in Karl M. Smith Cordage Company. The policy was made payable to Hugo W. Schoellkopf, beneficiary, or to such other beneficiary as might be designated by the insured as thereinafter provided, if living, otherwise to the insured's executors, administrators, and assigns. The said policy provided, with reference to a change of beneficiary, as follows:
"Beneficiary: — This policy is issued with the express understanding that the insured may from time to time, without the consent of the Beneficiary, change the Beneficiary or Beneficiaries by filing with the Company, at its Home Office, a written request, such change to take effect only when endorsed upon this policy, or on any copy thereof, at the Home Office of the Company, whereupon all rights of the former Beneficiary shall cease, provided this policy has not been assigned, or, if assigned, that the assignee shall have duly consented in writing filed at the Home Office to such change of Beneficiary. The consent of the Beneficiary shall not be requisite for the Insured to obtain the surrender or loan values of this policy, nor for any changes or alterations of this policy."
For statement of other material facts we quote the court's findings:
"5: On or about June 2, 1924, Karl M. Smith and the defendant, Hugo W. Schoellkopf, formed a partnership to engage in the business of purchasing and selling paper, paper bags, rope and twine, to be conducted under the name of Karl M. Smith Cordage Company, with headquarters at Dallas.
"6: The said Karl M. Smith had had previous experience in such business, and became the active manager of the business, but was a man of no means or financial responsibility. The said Smith furnished no capital to the business; the defendant Schoellkopf furnished only a nominal sum, but it was contemplated that the partnership would, and it did, operate on funds borrowed from Dallas banks, and the loans were made and credit was extended to the firm on the financial responsibility and personal liability of the said defendant, Schoellkopf.
"7: During the negotiations for, and as a part of, the formation of the partnership, the partners, Smith and Schoellkopf mutually agreed that the policy involved in this suit should be, and it was, procured for the full and complete protection of the defendant Schoellkopf in all matters relating to the partnership, including a protection pro tanto for the defendant Schoellkopf against loss in consequence of the undertaking, and against any liability to him on the part of Karl M. Smith growing out of the partnership.
"8: Pursuant to the said agreement, the policy was procured, and immediately delivered by the said Karl M. Smith to the defendant Schoellkopf, in whose continuous possession the policy has been ever since and by whom it was produced at the trial.
"9: All premiums falling due on the policy prior to June, 1928, were paid out of the partnership funds. The quarterly premium of $28.39 due June 28, 1929, was not paid in cash, but for and on account of the said premium the said Smith gave the plaintiff a premium lien on the policy for $28.39. No subsequent premium was paid, the policy lapsing for the non-payment of the quarterly premium due September 28, 1929. The plaintiff used the cash value of the policy, first, to pay the premium lien and then to purchase extended insurance which lasted beyond the date of the death of the said Smith.
"10: By December 17, 1927, the partnership had become insolvent, and on that date the partners executed a written agreement for dissolution of the partnership, in the execution of which the defendant Jennie Smith joined. Such agreement was in words and figures substantially as follows:
"`Whereas, on or about June 2, 1924, Hugo W. Schoellkopf and Karl M. Smith formedPage 348a partnership to engage in the purchase and sale of paper, paper bags, rope and twine, in Texas and Oklahoma, to have headquarters at Dallas, and to be conducted under the name of Karl M. Smith Cordage Company; and
"`Whereas, such partnership has continued until this date; and
"`Whereas such partnership is insolvent, — that is to say, it is indebted in a sum in excess of its assets, and
"`Whereas, Hugo W. Schoellkopf is financially solvent and desires to terminate the partnership and to take possession of and liquidate all of the assets of the partnership and apply them, so far as possible, to the discharge of the liability of the partnership.
"`Now, therefore, this instrument witnesseth the agreement of Karl M. Smith and Hugo W. Schoellkopf, as follows:
"`1: The partnership heretofore existing between Karl M. Smith and Hugo W. Schoellkopf, is hereby terminated.
"`2: All assets and records of the partnership are hereby assigned, transferred and delivered to Hugo W. Schoellkopf, for administration, conversion into money and application to the debts of the partnership, as aforesaid. Each partner, however, shall continue liable to creditors, as at present, and to each other, for his share of all indebtedness.
"`3: All authority of Karl M. Smith and of his wife, Mrs. J. G. Smith, and of all employees or other representatives of the business, to act in anywise or to any extent for Hugo W. Schoellkopf or for the partnership, or with reference to any asset or liability of the partnership, is hereby terminated.
"`4: Complete and sole authority shall be possessed by the said Hugo W. Schoellkopf to administer, collect, liquidate, sell, dispose of, exchange or otherwise convert into cash, all of the assets of the partnership.
"`Witness the signatures of the parties, this December 17, 1927.
"`[Signed] Karl M. Smith,
"`[Signed] Hugo W. Schoellkopf
"`[Signed] J. G. Smith.'
"11: Pursuant to the said agreement for dissolution, the defendant Schoellkopf completely liquidated the partnership business. He reduced all of the partnership assets to cash, and applied such cash, as far as it would go, toward the satisfaction of the partnership obligations, but such obligations exceeded the proceeds of said assets by the sum of $53,400. In carrying on such liquidation, the defendant Schoellkopf had to use, and did use, to pay off obligations of the partnership to a local bank and other creditors of the firm, $57,000. of his own personal funds, and he received repayment of the same from the proceeds of the partnership assets only to the extent of $3,600. The said sum of $53,400. represented and was the amount of the net loss of the partnership undertaking, which loss was borne wholly by the defendant Schoellkopf. Neither the partnership nor the defendant Schoellkopf owed the said Smith anything.
"12: The said Smith's share of the said loss was one-fourth thereof, or the sum of $13,350. which sum, in the settlement of accounts between the partners, the said Smith owed the defendant Schoellkopf. The said Smith never paid, and no one for him has ever paid, to the partnership, the said Schoellkopf, or anyone else, any share of the partnership indebtedness, or any share of the said loss, or any share of the said Smith's indebtedness, in the settlement of accounts as between the partners, in the sum of $13,350, save that since the death of the said Smith the defendant Schoellkopf has collected on another policy on the life of the said Smith, payable to the said Schoellkopf, a sum less than $4,600.
"13. In August, 1928, the said Karl M. Smith made known to the plaintiff that he desired to change the beneficiary of said policy to his wife, the defendant Jennie Smith, sometimes known as Janet Goulding Smith, and procured from the plaintiff its regular printed form for use in designating a new beneficiary, known as Change of Beneficiary form. On August 15, 1928, the said Smith executed such form, and forwarded it to the plaintiff. The policy however, was not sent therewith to the plaintiff, but the said Smith requested the plaintiff to issue a copy or duplicate policy and to endorse thereon the change of beneficiary as designated by him. The change of beneficiary form so executed was in words and figures as follows:
"`Note: Policy must be sent with this to the home office of the company. Change of beneficiary is not effective until endorsed on the policy by the company.
"Change of Beneficiary"
"Pan American Life Insurance Company,
"New Orleans La. U S A.
"August 15, 1928.
"Gentlemen: I desire, in accordance with the terms of the accompanying Policy No.Page 349108134, to designate as a new beneficiary thereunder (with the right of revocation reserved)
(Name) Janet Goulding Smith
(Insert Relationship to Insured) Wife
(Address) 1839 W. Magnolia Ave San Antonic Texas
"I therefore request that the proper endorsement, changing the beneficiary as above, be made upon this policy, such change to take effect only when endorsed on said policy by the Company at the Home Office, and I hereby represent for the purpose of inducing the said Company to make this change, that there is no existing assignment of the said policy.
"Signed in the presence of
"[Signed] Mrs. E. R. Goulding
Witness
"(Sign here in ink) Karl M. Smith
Insured.
"Instructions
"The form must be properly dated, and the full name of the beneficiary given, and the relationship, if any stated. If beneficiary is a married woman, give her name thus, `Mary Smith' not `Mrs. John C. Smith.'
"Neither the beneficiary nor any person interested in the policy may sign as a witness.
"When more than one beneficiary is named, please state in proportional amounts the percentage each beneficiary is to receive.
"If insured cannot write, and signs with a mark `X' the signature must be witnessed by two witnesses and acknowledged before an officer duly authorized to administer oaths under his official seal. This request cannot be accepted if any corrections or erasures are made therein."
"14. The plaintiff never endorsed the change of beneficiary upon the policy or on any copy thereof. It refused to issue a copy or duplicate policy without being furnished affidavits by the said Karl M. Smith, and the beneficiary named in the policy, to-wit, the defendant Schoellkopf, that the policy had been lost. Such affidavits were not made or furnished to the plaintiff, though required by the plaintiff, and the plaintiff returned to the said Smith the executed Change of Beneficiary form and advised him that no change of beneficiary could be effected, because such change could not be endorsed as required by the terms of the policy."
Locke, Locke, Stroud Randolph, of Dallas, for defendant in error.
"(1) Whether the insurable interest of a partner under the conditions alleged in the pleadings can extend beyond the termination of the partnership so as to entitle him to receive the proceeds of a policy as a creditor when the plain provisions of the policy and contract of insurance, which have been complied with, provide that the insured shall at all times have the right to change the beneficiary without the consent of the beneficiary named in the policy.
"(2) Whether or not when the insured has used all the means within his power and control to avail himself of his contractual right to change the beneficiary in the policy and such change is defeated only by the defendant in error's refusal to surrender the policy; such change becomes effective on the proposition that that is regarded `as having done that which ought to have been done.'
"(3) Whether or not when the plaintiff in error Mrs. Jennie Smith sued in the alternative as an heir the defendant in error Schoellkopf could legally be permitted to testify to the existence of a debt owing by the insured to him and to the fact that said debt had not been paid.
"(4) Whether or not the claim of the defendant in error, Schoellkopf, against Karl M. Smith was barred by the two years statute of limitation before he took any action to enforce same, such statute of limitation having been specially pleaded by the plaintiff in error."
In Cheeves v. Anders,87 Tex. 287,28 S.W. 274,275, 47 Am.St.Rep. 107, a policy was issued upon the life of L. B. Chilton payable to Cheeves Chilton, a partnership composed of the assured and Cheeves. The partnership was dissolved. Thereafter Chilton died and his administrator sued the assurer upon the policy making Cheeves a party. The assurer admitted liability. The contest was between the administrator and Cheeves over the proceeds of the policy.
There was no allegation in the answer of Cheeves that Chilton was indebted to Cheeves Chilton, or to Cheeves, or in what respect Cheeves had any interest in Chilton's life except that he was a partner when the policy was issued.Page 350
It was held that the insurable interest of Cheeves terminated upon the dissolution of the partnership and that he could not maintain his claim to the proceeds of the policy.
But in the course of the opinion Judge Brown said:
"The law permits one who is interested in the life of another to become the owner of insurance upon the life of such other person, either by contracting with the insurance company, or by contract made by the party whose life is insured, or by assignment of the policy after it is issued. If, however, the interest is of a definite character, as that of a creditor of the insured, or of one who may, from the life of the insured, reap some pecuniary advantage of a definite nature, the interest of the holder of such policy will be limited to the amount of such liability at the death of the insured, together with such amount as he has paid to preserve the policy, with interest thereon, and the remainder will be given to the estate of the party insured. Price v. Knights of Honor,68 Tex. 361,4 S.W. 633; Schonfield v. Turner,75 Tex. 324,12 S.W. 626[7 L.R.A. 189]; Insurance Co. v. Hazlewood,75 Tex. 338,12 S.W. 621[7 L.R.A. 217, 16 Am.St.Rep. 893]; Goldbaum v. Blum,79 Tex. 638,15 S.W. 564. If the interest of the policy holder should cease before the death of the insured, as if the debt should be paid and premiums advanced, then the whole of the policy will go to the estate of the insured. * * *
"We will not undertake to enumerate the different phases of facts in which the firm might be interested in such a policy, nor when it might be regarded as assets of the firm for the whole amount. It is sufficient to say that no such state of facts is alleged as gives to the firm such right, nor to the claimant, Cheeves, any right by reason of a liability for the debts of the firm. The answer shows that Chilton did not owe the firm any remaining debt, and that the property was more than sufficient to pay all firm debts, for Cheeves assumed all such debts, and, in addition, paid to Chilton several thousand dollars for his interest therein. The firm had no right to the policy, as such. The answer, however, does allege that the premiums upon the policy, to amount of $1,180, were paid by the firm out of its assets; and this would create a charge upon this policy in favor of the firm, with the right to be reimbursed, with interest, out of the proceeds of the policy, the same as if it had been paid by a creditor whose debt had been paid, or when the debt was not equal to the amount named in the policy. This right existed in the firm at dissolution, and, by the transfer of Chilton, passed to Cheeves."
The implication of these excerpts from the opinion is that if Chilton had been indebted to Cheeves at the time of the former's death, then Cheeves would have been regarded as having an insurable interest in the life of Chilton to the extent of such indebtedness.
The present record shows that Smith at the time of his death was indebted to Schoellkopf in an amount greatly in excess of the amount payable upon the policy, and it would seem that in Judge Brown's opinion this gave to Schoellkopf an insurable interest in the life of Smith, which survived the dissolution of the partnership and continued until Smith's death.
But whatever may be the correct interpretation to be placed upon the opinion referred to, it is certain that under article 5048, R.S., the insurable interest of Schoellkopf survived the dissolution of the partnership to the extent at least of the indebtedness of $13,350, owing by Smith to Schoellkopf as his share of the partnership losses. Brammer v. Wilder (Tex.Com.App.)57 S.W.2d 571.
The question now arises as to the right of Smith to change the beneficiary in accordance with the terms of the policy and as he attempted to do by naming the plaintiff in error as such beneficiary.
The first excerpt quoted from Cheeves v. Anders, supra, states that one interested in the life of another may become the owner of insurance upon the life of such other person "by contract made by the party whose life is insured."
The authorities support the view that an insured person, who, for a valuable consideration, has so contracted, cannot at will rescind his contract and designate another beneficiary, even though the policy contains stipulations authorizing such change. The collateral agreement between the assured and the person with whom he has contracted is binding upon the assured upon the principle of estoppel. 37 C.J., p. 579; 2 Couch Cyclopedia of Insurance Law, pp. 829 and 852; 7 Cooley Briefs on Insurance (2d Ed.) p. 6432; Locomotive, etc., v. Waterhouse (Tex.Civ.App.)257 S.W. 304; Coleman v. Anderson,98 Tex. 570,86 S.W. 730; Kelly v. Searcy,100 Tex. 566,102 S.W. 100; Lord v. New York Life Ins. Co.,95 Tex. 216,66 S.W. 290,56 L.R.A. 596,93 Am.St.Rep. 827; Eatman v. Eatman (Tex.Civ.App.)135 S.W. 165; Gillham v. Estes,158 Ill. App. 211; SupremePage 351Council Royal Arcanum v. Tracy,169 Ill. 123,48 N.E. 401; Bush v. Kansas City Life Ins. Co. (Mo.Sup.)214 S.W. 175.
Under the facts shown above this case falls within the rule stated and supported by the authorities cited. The attempt of Smith to change the beneficiary from Schoellkopf to his wife was ineffective.
The matter of limitation presents no error. The four year and not the two-year statute of limitations applies. Article 5527, subd. 3, R.S.
Schoellkopf's right of action against Smith for contribution did not accrue until the partnership affairs had been settled and the debts paid by Schoellkopf. Roberts v. Nunn (Tex.Civ.App.)169 S.W. 1086; Easley v. Clay (Tex.Civ.App.)16 S.W.2d 888; Bluntzer v. Hirsch,32 Tex. Civ. App. 585,75 S.W. 326.
His answer and cross-action was filed within such four-year period.
But it is unimportant if Schoellkopf's right of action against Smith for contribution was barred by limitation. The action here is upon the policy which is payable to Schoellkopf and which did not mature until Smith's death. If Smith's debt was barred, such fact would not defeat the right of Schoellkopf to recover upon the policy. 7 Cooley's Briefs on Insurance (2d Ed.) p. 6498; 7 Couch Cyclopedia of Ins. Law § 1662; First National Bank of Beeville, Texas, v. Security Mutual Life Ins. Co.,283 Mo. 336,222 S.W. 832; Bush v. Kansas City Life Ins. Co. (Mo.Sup.)214 S.W. 175; Townsend v. Tyndale,165 Mass. 293,43 N.E. 107,52 Am.St.Rep. 513; Connecticut Mut. Life Ins. Co. v. Dunscomb,108 Tenn. 724,69 S.W. 345,58 L.R.A. 694,91 Am.St.Rep. 769; Rawls v. American Mut. Life Ins. Co.,27 N.Y. 282,84 Am.Dec. 280.
The question presented by the ruling admitting the testimony of Schoellkopf arises upon an alternative plea of Mrs. Smith. The theory of this alternative plea is that, if she was not entitled to the fund as beneficiary, then she was entitled thereto as the heir of the assured and in that capacity she claimed the fund.
The objection to Schoellkopf's testimony is founded upon article 3716, R.S., sometimes referred to as the "dead man" statute. Under the ruling in Spencer v. Schell,107 Tex. 44,173 S.W. 867, the competency of Schoellkopf's testimony is doubtful. Assuming that it was incompetent, the error in admitting the same is harmless because by other witnesses and documentary evidence the claim of Schoellkopf was fully and completely established and no evidence to rebut his claim was offered.
In cases tried before the court without a jury error in the admission of evidence is regarded as harmless where the judgment rendered is sufficiently supported by other competent testimony.
See cases cited in 1 Michie Digest, 794. For this reason the admission of Schoellkopf's testimony, if incompetent under the statute, was harmless.
Affirmed.