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One of these agreements is that on substantial proof of his death the association will pay to his wife, Fannie E. Filley, or her legal representatives, the net proceeds of one full assessment, less the 10 cents cost of collection, at schedule rates, upon all members of good standing at the date of his death until such assessment shall exceed $1,500. Then the assessment shall be for an amount in pr ortion to the policy held by each, not exceeding schedule rates, and to an amount not to exceed $3,000. Further, that, should the insured live to the age of sixty-four years and then choose to surrender the policy, the association would pay to him the amount he had paid into the treasury on account of death and expectation assessments, less the 10 cents cost of collection, with 4 per cent interest, "provided that no assessments for the purpose of paying this expectation indemnity shall exceed the regular death assessment, and provided further, that in no case shall the payment upon this policy exceed $3,000, and it is further agreed by the association that all moneys collected by assessment aforesaid (less the cost of collection) shall be applied to the adjustment of those claims only."

Among the special conditions named in the policy is the following: "The association may classify its membership for the purpose of assessments when it shall appear expedient, in which case members shall only be assessed to pay benefits in their own class."

The schedule rates already referred to, on which assessments were to be based, are expressly named and classified according to

age.

The provision permitting the assured, after reaching the age of sixty-four years, to surrender and settle for cash, we regard as a condition subsequent. The policy assured the payment to the beneficiary, conditioned of course on the payment by the insured of all the assessments and demands. Should the insured live to be sixty-four and then choose to surrender the policy and take the cash proceeds instead of allowing the insurance to continue, he could do so; the double contingency, his age and his choice, having been reached, and thus the subsequent condition having been met. 2 Words & Phrases, 1401.

Section 76 of the act of 1871 (Gen. Stat. 1889, § 3400; Gen. Stat. 1909, § 4144) provides that in case any life insurance company organized under the laws of this state issues any policy of insurance upon the life of any person or persons for another's benefit, and such beneficiary dies during the lifetime of the person or persons whose life or lives are assured, it shall be lawful

for such company to receive from the assured an affidavit setting forth the facts in the case; and, if it shall appear from such affidavit that the affiants have paid the annual premium, and intended thereby to insure for the benefit of the person named in the policy as beneficiary, that such policy has not been assigned or transferred, and nominates or appoints some other beneficiary, "it shall then be the duty of said insurance company to take up and cancel said policies, at the request of said assured, and issue in like terms another policy or policies upon the life or lives of said insured for the benefit of the beneficiary in said affidavit nominated." Gen. Stat. 1909, § 4144. Of course, this does not in terms cover the present situation, for here the insured instead of the beneficiary died first. But the principle involved is analogous to the one under consideration touching the right to change beneficiaries. This section was thoroughly considered in Olmstead v. Masonic Mut. Ben. Soc. 37 Kan. 93, 14 Pac. 449. In that case a Kansas co-operative society, organized to give financial aid and benefit to the widows, orphans, and dependents of deceased members, issued a certificate to David D. Olmstead in 1874, by which his beneficiaries were to be entitled at his death to a sum not exceeding $2,000, if certain rules and agreements were complied with; the express agreement being that the benefit should be paid to Jennett Olmstead, his wife, or her legal representatives. In August, 1884, the insured died. Shortly before he had made a will by which he attempted to bequeath the benefit in question to his children, and to the executor for the payment of certain debts and items of expense. During his life Mr. Olmstead retained possession of the certificate and kept the fees and assessments paid. No affidavit was filed and no other certificate was issued to take the place of the original. The executor sued, and the company brought the money into court and asked that the legal representatives and heirs of Jennett Olmstead be made parties. It was held that the plaintiff could not recover. It was said (p. 96) that, however well founded the distinction may be between old line and benefit companies and policies, the beneficiary can only be changed and the benefit transferred to another in the manner prescribed by the rules and the regulations of the society, and in accordance with the terms of the contract.

"The contract in this case specifically provided that the benefit should be paid to the wife of the member, or to her legal representatives. The addition of the words legal representatives' clearly imports that, in case of her death, the benefit should be

paid to her heirs or next of kin who fall adjustment included the beneficial interest within the classes mentioned in the charter to whom aid may be given. Thus, the contract fixed and limited the persons who might receive the benefit. No provision was made in the certificate of membership for a change in the beneficiary, and the record does not show what rules, if any, the society had made respecting such change." 37 Kan. 96.

It was further held that, the statute having provided one way to change the beneficiary, no other was intended, and that the insured had no interest in the benefit arising from his membership; that it could in no event become a part of his estate; hence he could not bequeath it. This decision has been referred to with approval in Kemper v. Modern Woodmen, 70 Kan. 119, 78 Pac. 452; Pilcher v. Puckett (Modern Woodmen v. Puckett), 77 Kan. 284, 17 L.R.A. (N.S.) 1083, 94 Pac. 132; Boise v. Shepard, 78 Kan. 308, 96 Pac. 485; Modern Woodmen v. Comeaux, 79 Kan. 493, 25 L.R.A. (N.S.) 814, 101 Pac. 1, 17 Ann. Cas. 865; and cited in Hunt v. Remsberg, 83 Kan. 665, 32 L.R.A. (N.S.) 246, 112 Pac. 590, 21 Ann. Cas. 1267. The same reasoning must apply here. There is nothing in the statute or policy, and nothing shown in any charter or by-laws, authorizing the insured to change the beneficiary or to transfer the benefit, in which he had no interest and which could not become a part of his estate save upon condition subsequent, as already shown. Although he was a member of the association, which at the time issued policies to none but members, still the policy evidenced the contract between the association and him, made for the benefit of another on sufficient consideration, and no authority appears by which the member could change the terms or impair the obligation of such contract.

But it is contended that the subsequent divorce destroyed the status of wife, and that the remarriage of the insured brought about a relationship and condition demanding a change of beneficiary from the first to the second wife, and that it was the woman who should be his wife at death that he really intended as the beneficiary. It is remarkable that Mr. Filley continued to pay all sums required by the terms of the policy after the divorce, after the remarriage up to his death, with no attempt to change the policy or the beneficiary. It would seem a natural inference that he made no such attempt because he had no desire to, or else because he knew he could not succeed. It would appear from certain statements in the briefs that he adjusted certain financial matters with his first wife, and yet we hear no suggestion that such

under this policy. Not only do we think reason and the weight of authority favor the theory that when he took out the policy he contemplated no divorce or remarriage, but that at all events he entered into a contract which left him without power to change the beneficiary. Indeed, there is no evidence that he ever dreamed of the benefit going other than as provided in the policy. It must be presumed that the divorce was obtained legally, and a legal proceeding cannot be deemed to abrogate an existing contract in nowise involved in such proceeding. The rights of the company, the insured, and the beneficiary became fixed upon the issuance of the policy, and they cannot be held to have become impaired by orderly litigation occurring afterwards over other matters.

The language of the policy, "his wife, Fannie E. Filley," is plain enough without resort to technical rules of grammar. We do not think the average man could err in understanding its meaning, and we are content with the clearness thus apparent on the face of the instrument.

The indorsement on the outside of the policy, "Clarence E. Filley in favor of his wife," is not sufficiently significant of the real contract inside to control or modify the terms thereof.

But it is insisted that, when the original beneficiary ceased to be the wife, the condition subsequent contained in the policy by which the insured could, at sixty-four, surrender and receive his payments with interest, rendered it to her interest to hasten his departure, and therefore placed matters in an unlawful condition; it appearing that Fannie E. Filley makes no claim here on account of the decree of divorce. Counsel correctly argue that a divorce ends the relation of husband and wife, and this is followed by the suggestion that it would be against public policy to allow one to be a beneficiary in a policy of insurance upon the life of the other. The case of Hatch v. Hatch, 35 Tex. Civ. App. 373, 80 S. W. 411, is in some respects similar to the one at bar, and the decision to quite a degree supports counsel's contention. Riley v. Riley, 75 Wis. 464, 44 N. W. 112, was decided chiefly on the effects of the by-laws. Order of R. Conductors v. Koster, 55 Mo. App. 186, holds that a benefit certificate speaks with reference to the conditions existing at the death of the member, and that when the by-laws require the beneficiary to have an insurable interest, and the certificate designates the beneficiary mainly by the relationship of wife, her rights lapse. This also supports the theory contended for. In Tyler v. Odd Fellows' Mut. Relief Asso.

145 Mass. 134, 13 N. E. 360, the by-laws re- of the policy were not payable to Mr. Filley, quired the beneficiaries to be heirs or mem- but to his wife, Fannie E. Filley, and the bers of the decedent's family, and it was fact that she had been his wife many years quite naturally held that a divorced wife and had borne him children made the cirwas neither. In Goldsmith v. Union Mut.cumstances quite different from those in L. Ins. Co. 18 Abb. N. C. 325, 41 Hun, 641, the Sturges Case, and we cannot regard the 2 N. Y. S. R. 610, the insured sued to re- decision as either applicable or controlling. form a policy upon his life "for the sole and separate use and benefit of his wife, Lina Goldsmith; but in case of her previous death, to revert to the insured" (p. 328), and it was held that the agent who acted as scrivener or amanuensis for the insured did not word the policy so as to express the intention of the latter that his wife should have the insurance if his wife at his death. The court also thought this the real effect of the words used, and the matter was held in abeyance until the findings could be produced and examined to see if they would support a judgment in favor of the plaintiff.

Whatever the character of the Illinois Life Insurance Company, its contract attached to the policy simply subrogates it to the rights, liabilities, and obligations of the Kansas Mutual Company, and it agrees to assume and carry out the provisions of the policy as provided in a certain proposition "to assume and reinsure the policies" of that company. Having paid the money into the court for the benefit of the claimant found to be entitled thereto, it is not necessary to consider further the nature of the Illinois Life Insurance Company's charter or contract.

For the reasons hereinbefore set forth, the result of the two former decisions (91 Kan. 220, ante, 137 Pac, 793; 93 Kan. 193, ante, 144 Pac. 257) must stand. Whatever may be found in either of them inconsistent herewith may be regarded as expunged.

The motion for a second rehearing is denied.

All the Justices concur.

But the authorities opposing counsel's view are numerous and convincing and impress us as much more in accord with the right and reason of the matter. Among these may be mentioned Wallace v. Mutual Ben. L. Ins. Co. 3 L.R.A. (N.S.) 478, and note (97 Minn. 27, 106 N. W. 84); note in 49 L.R.A. 749; Overhiser V. Overhiser (Overhiser v. Mutual L. Ins. Co.) 63 Ohio St. 77, 50 L.R.A. 553, 81 Am. St. Rep. 612, 57 N. E. 965; White v. Brotherhood of American Yeomen, 124 Iowa, 293, 66 L.R.A. 164, 104 Am. St. Rep. 323, 99 N. W. 1071, 2 Ann. Cas. 350, and note 351; McGrew v. Mutual L. Ins. Co. 132 Cal. 85, 84 Am. St. Rep. 20, 64 Pac. 103; Connecticut Mut. L. Ins. Co. v. Schaefer, 94 U. S. 457, 24 L. ed. 251; Bacon, Ben. Soc. § 253; 25 Cyc. 889. It must be remembered that we have a CITY case in which there appears no provision for a change of beneficiary, and no desire to make a change, but a continuance of payments after the divorce the same as before. The decision in Missouri Valley L. Ins. Co. v. Sturges, 18 Kan. 93, 26 Am. Rep. 761, is cited. It was held there that one, to take by purchase or assignment an insurance on another's life, must have an interest in such life. Haynes took out a policy on his own life for $2,000 and afterwards assigned it to Sturges, who had no interest in his life. The company assented, and Sturges continued the payment of the premiums. The court said the contract amounted to a bet for each year that the insured would not live the year out, but, "where such contracts are associated with beneficent and modifying circumstances (as many insurance contracts are supposed to be) making them beneficial to society, they are generally upheld, notwithstanding their wagering characteristics." 18 Kan. 95. But here the proceeds

KANSAS SUPREME COURT.
CHARLES D. SCOTT, Appt.,

V.

W. H. MCINTYRE COMPANY,

NATIONAL BANK OF AUBURN,
INDIANA, Interpleader.

(93 Kan. 508, 144 Pac. 1002.)

Bills and notes —

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right to proceeds. Where a draft, with a bill of lading attached, is delivered to the bank in whose favor it is drawn, which forwards it to a correspondent for collection, and gives immediate credit to the depositor, the proceeds, while in the hands of the correspondent bank, are to be regarded as belonging to the payee named in the draft, as against a creditor of the depositor who attempts to reach them by garnishment, after the account, as increased by the deposit, has been overdrawn, and this notwithstanding the Headnote by MASON, J.

Note.

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See notes to Fayette Nat. Bank v. Summers, 7 L.R.A. (N.S.) 694, and Plumas County Bank v. Bank of Rideout, S. & Co. 47 L.R.A. (N.S.) 552, as to title to paper credited to depositor.

practice of the first-named bank to charge | v. Oklahoma State Bank, 83 Kan. 504, 33 its depositor with the interest on such L.R.A. (N.S.) 954, 112 Pac. 114; Ladd & T. items from the time of giving credit until Bank v. Commercial State Bank, 64 Or. 486, the proceeds were actually received, and to 40 L.R.A. (N.S.) 657, 130 Pac. 975; Alexcharge back their amount in the event of ander Smith & Co. v. First Nat. Bank, 140 nonpayment, and notwithstanding that a serial number was placed on said draft by Ga. 266, 78 S. E. 1071; National Bank v. the original bank in sending it out for col- Everett, 136 Ga. 372, 71 S. E. 660. lection, and that a witness testified to a general practice of bankers to place such numbers upon items received for collection, but not upon those accepted as cash.

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The facts are stated in the opinion. Mr. Eugene S. Quinton, for appellant: The draft deposited for collection and credited to the depositor's account was not the property of the bank.

Morse, Banks & Bkg. p. 427; Downey v. National Exch. Bank, 52 Ind. App. 672, 96 N. E. 403; Armour Packing Co. v. Davis, 118 N. C. 548, 24 S. E. 365; Beal v. Somerville, 17 L.R.A. 291, 1 C. C. A. 598, 5 U. S. App. 14, 50 Fed. 647; Scott v. Ocean Bank, 23 N. Y. 289; Levi v. National Bank, 5 Dill. 104, Fed. Cas. No. 8,289; Alpine Cotton Mills v. Weil, 129 N. C. 452, 40 S. E. 218; Armour Packing Co. v. Davis, 118 N. C. 548, 24 S. E. 365; Boykin v. Bank of Fayetteville, 118 N. C. 566, 24 S. E. 357; Fayette Nat. Bank v. Summers, 105 Va. 689, 7 L.R.A. (N.S.) 694, 54 S. E. 862; National Gold Bank & T. Co. v. McDonald, 51 Cal. 64, 21 Am. Rep. 697; National Commercial Bank v. Miller, 77 Ala. 168, 54 Am. Rep. 50.

Messrs. Robert W. Blair, Charles A. Magaw, and Thomas M. Lillard, for appellee:

Whether the money in the hands of the Merchants National Bank at the time the garnishment summons was served on it belonged to McIntyre Company or to the City National Bank of Auburn is a question of law for the court.

Kemp v. Chicago, R. I. & P. R. Co. 91 Kan. 477, 138 Pac. 621.

Possession of the draft and bill of lading was prima facie evidence of ownership.

Mann v. Second Nat. Bank, 34 Kan. 746, 10 Pac. 150; O'Keeffe v. First Nat. Bank, 49 Kan. 347, 33 Am. St. Rep. 370, 30 Pac. 473; Halsey v. Warden, 25 Kan. 128; Means v. Bank of Randall, 146 U. S. 620627, 36 L. ed. 1107-1110, 13 Sup. Ct. Rep. 186; Dows v. National Exch. Bank, 91 U. S. 618, 23 L. ed. 214; Central Mercantile Co.

Mr. B. F. Scandrett also for appellee.

Mason, J., delivered the opinion of the

court:

On November 17, 1911, the W. H. McIntyre Company drew a draft for $3.412.50 upon Charles D. Scott, of Topeka, payable to the City National Bank of Auburn, Indiana, and delivered it to the bank, with a bill of lading attached. The bank sent the draft to a Topeka bank for collection. Scott paid the draft November 27th, and on the same day brought an action against the McIntyre Company for $1,955, garnishing the Topeka bank, which filed an answer setting out the facts, and stating that it held the proceeds of the draft subject to the order of the court. Service by publication was made upon the defendant, which made no appearance, and judgment was taken against it. The Auburn bank interpleaded, claiming to be the owner of the money in the hands of the Topeka bank, which was paid into court to await the result of the litigation. The plaintiff filed a denial of the allegations of the interplea, and a jury was impaneled to try the issue. Evidence was taken, and the court directed a verdict for the interpleader, upon which judgment was rendered. The plaintiff appeals.

The evidence as to the transactions between the McIntyre Company and the Auburn bank was in the form of depositions. It was uncontradicted, and must be deemed to have established these facts: The draft was delivered to the bank by the company in the usual course of business, and, in accordance with custom, credit was at once given to the company on the books of the bank and in the pass book of the company, whose account was at the time overdrawn in the sum of $2,070.44. Five days later it was again overdrawn. The practice was for the bank to accept such drafts, send them out for collection, credit the company at once with their face, and, when the returns were received, charge the company with interest to that time; the understanding being that, if payment should be refused in any instance the amount of the item should be charged back to the depositor.

Various assignments of error are made, but the case turns upon the question whether the title to the draft and its proceeds at the time of the garnishment was in the Auburn bank, or in the McIntyre Company;

whether the bank took the draft as a purchaser, or for collection. There is much apparent and considerable real conflict in the decisions bearing on the matter. They are collected in notes in 7 L.R.A. (N.S.) 694, and 86 Am. St. Rep. 782. The general rule has been thus stated: "Prima facie, according to the weight of authority, the passing to the credit of the depositor, of a check bearing an indorsement not indicating that it was deposited for collection merely, passes the title to the bank. Still, according to the weight of authority, the rule above stated is not an absolute rule, and is prima facie merely, and yields to the intention of the parties, expressed or implied from the circumstances." 3 R. C. L.

524.

dorsement, but, however evidenced, it should not militate against the theory of a passing of the title. The fact that the depositor has guaranteed the payment of a draft with a bill of lading attached should not prevent the bank from holding the goods or their proceeds, and looking first to them, as against the depositor or any claimant under him, such as an attaching creditor. See Shaffer Bros. v. Rhynders, 116 Iowa, 472, 89 N. W. 1099; German Nat. Bank v. Grinstead, 21 Ky. L. Rep. 674, 52 S. W. 951.

Some of the conflict in the decisions bearing upon the general aspects of the question can be accounted for by differences in the facts, and the manner in which the issue of ownership has been raised, but in some instances the divergence is due to the atti

See also Noble v. Doughten, 72 Kan. 336, tude taken as to the effect of giving imme3 L.R.A. (N.S.) 1167, 83 Pac. 1048.

In Beal v. Somerville, 17 L.R.A. 291, 1 C. C. A. 598, 5 U. S. App. 14, 50 Fed. 647, which in one of the notes referred to (7 L.R.A. (N.S.) 694, 700) and which is classed with the minority decisions, it was held that the right of the bank to charge back the item to the depositor in the event of its nonpayment is inconsistent with the hypothesis that title thereto had passed to the bank. This view has been adopted in a number of cases, of which Armour Packing Co. v. Davis, 118 N. C. 548, 24 S. E. 365, is typical. It has been denied in others, examples of which are: Auto & A. Mfg. Co. v. Merchants' Nat. Bank, 116 Md. 179, 81 Atl. 294; American Trust & Sav. Bank v. Gueder & P. Mfg. Co. 150 Ill. 336, 37 N. E. 227; and Fourth Nat. Bank v. Mayer, 89 Ga. 108, 14 S. E. 891.

Of the Beal-Somerville Case one of the text-writers says: "This last is the only able examination of the matter that has been made. It expressly disapproves 2 Morse, Banking, 896." Zane, Banks & Bkg. § 133, p. 211, note 14.

Another says of it: "The court lays much weight on the fact that the indorsement was 'for deposit,' which was held, erroneously, it is submitted (ante, note 64), to import a bailment, with the result that it rested on the bank to support affirmatively a claim that on the deposit it became an owner of the check." Tiffany, Banks & Bkg. § 11, p. 38, note 82.

diate credit to the depositor. An extended review of the authorities is not thought necessary. Here we regard the result as controlled by the circumstances that the depositor not only received credit for the amount of the draft, but actually drew upon it, and used the full amount. When the item was deposited, the account of the McIntyre Company was overdrawn. The credit operated at once to offset the depositor's debt to the bank. Before the garnishment summons issued, the account was again overdrawn, and the credit thereby exhausted. In this situation the McIntyre Company could not successfully have asserted a claim to the draft or its proceeds against the Auburn bank, and the attaching creditor could gain no higher rights than were possessed by the defendant. Ladd & T. Bank v. Commercial State Bank, 64 Or. 486, 49 L.R.A. (N.S.) 657, 130 Pac. 975. In Perth Amboy Gaslight Co. v. Middlesex County Bank, 60 N. J. Eq. 84, 45 Atl. 704, which leans to the view favoring the theory of a bailment, rather than a purchase, where a draft is deposited for credit, the court says: "If a depositor deposits a check or draft on a third party with the understanding, either expressed or implied, that he is to draw against it at once as if it were cash, and the bank agrees to accept it and treat it as cash, and the depositor draws against it before the amount is realized by the bank, then it is properly treated as a deposit of cash. Or, if the depositor is already indebted to the bank, and the deposit is received in whole or partial payment, the same result follows." p. 91.

We cannot regard the right of a bank receiving a draft for deposit to charge the amount back to the depositor if payment is refused, as having a determining influence. Such a right on the part of the bank would In National Bank v. Everett, 136 Ga. seem to be an ordinary incident even of a 372, 71 S. E. 660-an attachment casedeposit which is accepted as cash. The this language was used: "The evidence distransaction is based upon the supposition closes that at the time of the deposit the that the draft is going to be paid. A guar-drawer had overdrawn its account, and the anty of payment often results from the in- deposit was entered as cash to its credit;

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