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there upon the policy, the pendency of the suit by the general administrator being no bar; for the pledgee, having the equitable interest and immediate possession of the policy, is entitled to its control and collection in preference to the principal administrator of the estate.1
It is not necessary that the pledgee or assignee should have an interest in the life insured, either as between him and the insurance company, or as between him and his assignors.*
If the assignment of a life policy be made by an instrument which is in form and substance a mortgage, the transaction will be a mortgage and not a pledge of the policy.'
A creditor who takes a policy of insurance upon his debtor's life as collateral security, and charges the premium for a term of years as a part of the principal of the loan, is bound to keep the policies alive; and if he fails to do so, he is either regarded as making himself the insurer, or he is made liable for negligence in not keeping the insurance in force.*
The pledgor of a life insurance policy, in the absence of an agreement to the contrary, impliedly undertakes to keep the certificate alive so long as it remains as security, and if he fails to pay the assessments as they become due the pledgee may do so and recover the amounts so paid from the pledgor
1 Merrill v. N. E. Mut. Life Ins. Co., They are not ordinary articles of sale 103 Mass. 245, 4 Am. Rep. 548. in market overt or at the stock boards.
2 Dixon v. National L. Ins. Co., 168 The power of sale incident to a pledge Mass. 48, 46 N. E. Rep. 430.
8 3 Dungan v. Mut. Benefit L. Ins. Co., 38 Md. 242, 253. In this case, Miller, J., delivering the opinion of the court, thought there was reason to regard the transfer as a mortgage rather than a pledge, not only by reason of the form of the transfer, but also from consideration of the subject matter of the transfer. "Continuing life policies, if they have any, have not the same easily ascertained market value as personal chattels or shares of stock in banks or other corporations.
could not be readily exercised, if at all, in case of default, and hence no one would be inclined to accept them as securities for loans and advances with no more interest or title in, or control over them, than that which the law of bailments confers."
In England life insurance policies are mortgaged as security more frequently than pledged. Salt v. Northampton , A. C. 1; Deering v. Bank, 12 App. Cas. 20.
4 Soule v. Union Bank, 45 Barb. (N. Y.) 111, 30 How. Pr. 105.
in assumpsit, even though the payments were made by the pledgee after a repudiation of responsibility by the pledgor.1
A pledgee of a life insurance policy has no right without the consent of the pledgor to surrender the policy to the insurance company and receive its cash value. The rule of damages in such a case would, it seems, be the cost of replacing the policy on the same terms in a perfectly sound company at the time of the surrender; but where it appears that at that time the insured was suffering from a fatal disease, from which he subsequently died, and that he had ceased to be an insurable risk, and the company, having cancelled the obligation, refused to reinstate it, the damages are the face value of the policy, less what it would cost to carry it by payment of another premium, which fell due before the death of the insured, with interest from the date of the conversion."
§ 146. A policy of life insurance payable to a married woman may be pledged by a delivery of it with an indorsement of it by her in blank which her husband has filled up by an assignment. By indorsing the policy and delivering it to her husband, she clothes him with all necessary evidence of a power to pledge the instrument, and she can not afterwards claim that her husband had no authority to assign it. "Such assignments are of daily occurrence in the way of collateral security; and where a policy is made payable to the wife, and she indorses it in blank, and the husband pledges it, we are wholly at a loss to conceive on what ground it can be claimed that such an assignment is not valid in a court of equity. The husband and the wife are the only parties interested, and they have both participated in the assignment. The law provides no particular mode by which the wife is to manifest her consent, as in the case of a conveyance of lands; and if such an
1 Emmeluth v. Cook, 10 Hawaii 125. "Manton v. Robinson, 19 R. I. 405, 34 Atl. Rep. 148. 'Toplitz v. Bauer, 161 N. Y. 325, 55 701. N. E. Rep. 1059.
'Wirgman v. Miller, 98 Ky. 620, 33 S. W. Rep. 937; First Nat. Bank v. Goodman, 55 Neb. 409, 419, 58 Neb.
assignment as was made in the present case is not valid, then a policy payable to a married woman is not assignable at all. *** She gave to the public the evidence of her consent by indorsing the policy in blank,-an act which could be interpreted as done for no other purpose than an assignment; and the same consequences must be attached to this act against her as would follow from such an act performed by any other perWhen innocent parties have advanced money to her husband on the faith of such blank assignment, she can not be permitted to repudiate the transaction. She can not be permitted to enable her husband to perpetrate a fraud.""
Where a life insurance policy is pledged to secure a debt also secured by a mortgage on a homestead, an agreement by the assured that premiums advanced by the pledgee shall be a first lien in the policy is valid without the wife's consent, and does not increase the burden on the homestead."
§ 146a. Where a policy of insurance on the husband's life, payable to his wife, was assigned by both to a creditor of the husband "as collateral security for the amount of his demands subsisting against the husband at his decease as creditor or as surety," and the husband subsequently received a discharge in bankruptcy, his creditor proving a part of his claim and assenting to the debtor's discharge, it was held that upon the death of the husband without having satisfied the balance of his debt the creditor was entitled to enforce his security under the assignment of the policy, he having a subsisting demand within the meaning of the assignment. The word "creditor" in such case does not necessarily mean a person having a claim capable of legal enforcement. To give it that meaning would be to hold that the parties contemplated that the security should continue if the debtor remained solvent, but not if he became bankrupt and got a discharge.
'Norwood v. Guerdon, 60 Ill. 253,
257, per Lawrence, C. J.
2 Blake v. McCosh, 91 Iowa 544, 60 N. W. Rep. 127.
Champion v. Buckingham, 165 Mass. 76, 42 N. E. Rep. 498.
§ 146b. A certificate of membership in a beneficiary association can not be pledged, in case the rules of association provide that upon the death of a member the amount due on his certificate shall be payable to his widow, children and other relatives in a designated order. A member can not direct the payment of the amount due upon his certificate to any person other than the beneficiaries so named and in the order named.'
Such a certificate in a beneficiary association organized for the purpose of assisting widows and other dependents of deceased members, is protected by a statute declaring that the beneficiary fund shall not be liable to attachment or to the claims of creditors. "It is not contemplated by the statute that the right to the assistance secured by membership shall be assignable to creditors during the member's life. The statute intends a particular and special method of assistance to the designated classes of persons after the member's death; and the purpose of the statute would be defeated by allowing an assignment during the member's life, to his creditors, as collateral security."
§ 147. A policy of fire insurance may be effectually pledged by delivery without a formal assignment. Thus when the directors of a manufacturing corporation placed the company's fire insurance policies in the hands of two directors without any formal assignment, to secure loans made and to be made. by such directors and others to the corporation, it was held there was a sufficient delivery of the policies to sustain the pledge. Judge Treat, in delivering the judgment in this case, said: "It is a matter of daily occurrence that creditors require their debtors to insure their property and assign or pledge the same as security. They are not willing to trust the event of the debtor's solvency if his property is destroyed by fire, and hence exact such security in addition to his personal lia
1 Odd Fellows' Beneficial Asso. v. Diebert, 2 Ohio C. C. 462.
2 Briggs v. Earl, 139 Mass. 473, 476, 1 N. E. Rep. 847.
Stout v. Yaeger Milling Co., 13 Fed. Rep. 802.
bility. In the absence of such an arrangement the creditor may well be supposed to rely upon his debtor's ability to meet his liabilities, irrespective of the contingency by fire. The debtor was not bound to insure, and if he did not, the creditor had no recourse except upon his remaining assets. If he did insure, and the proceeds thereof became a part of his general estate, they became subject to the demands of his creditors, equally with other assets. But if the insurance was made, not for the general benefit, but solely or primarily for the security of a specified class of creditors, by agreement with them, why should not the transaction be upheld, and by what legal or equitable right could the unsecured creditors claim that they should share in such securities? The question, however, in this case is as to the pledge of the policies and their renewals for the purposes alleged. There was no formal assignment, and no consent of the insurance companies to such assignments. * * When the fire occurred and the amount of losses was collected, the sums so collected would necessarily have to be paid over to the pledgees, to the amount of their demands secured. The fact that the creditors were directors, and the company, pledgor, and directors were the trustees for the benefit of said creditors, can not affect the good faith of the transaction, if the agreement to pledge existed at the time of the advances, and the creditors were within the terms of the pledge. Other or general creditors who had not taken such securities have no ground of complaint. There was no preference within the admitted rule, but merely an enforcement of securities."
The deposit of a policy of insurance with a creditor of the assured, as collateral security, gives the creditor a lien on the proceeds of the policy, which is binding upon the underwriters and upon the assured, and upon all persons who take an interest from the assured with notice of such lien.' Even
1 Godin v. London Ins. Co., 1 Burr. 489, 494; Wells v. Archer, 10 S. & R. (Pa.) 412, 13 Am. Dec. 682: Dickey v. Pocomoke City Nat. Bank, 89 Md. 280,
43 Atl. Rep. 33; Soule v. Union Bank, 45 Barb. 111; Chapman v. McIlwrath, 77 Mo. 38.