New York Life Insurance Co. v. Nashville Trust Co.

Neil, Chief Justice

(concurring).

This case has given me the greatest concern due to its importance, and the fact that the issue, whether the fraud involved is intrinsic or extrinsic. My tentative view at the beginning was (1) that it was intrinsic and fell within the category of judgments that had been obtained by false testimony; and (2) that since the complainant had it within its own power to contract against the fraud of the insured the Chancery Court could not grant the relief prayed for. In other words, the complainant was not privileged to invoke the jurisdiction of the court to protect it from its own folly in not guarding against the wrong complained of.

Upon a thorough examination of the authorities, and especially the excellent briefs of counsel, I feel constrained to disagree with the able Chancellor and to concur with Justices Burnett and Tomlinson that the fraud practiced upon the New York Life Insurance Company was both intrinsic and extrinsic. If it were a case of intrinsic fraud, the court would clearly have no jurisdiction of the case. But if it were otherwise, i. e. intrinsic and extrinsic, and the money out of which the complainant was defrauded is within the reach of the Chancery Court, then the court should require restitution of the fund under the equitable doctrine of a constructive trust which arises for the benefit of the one who is defrauded.

*533 The beneficiaries of the insurance contracts, and who have been enriched by the fraud of Buntin, the insured, have no legal or equitable claim upon this fund even though no wrong is imputed to them. It is said by Mr. Gibson, Gibson’s Suits in Chancery, 3rd Ed., Section 33, “any wrong done to a legal or equitable right will be redressed in Equity, unless some other Court has exclusive jurisdiction. ’ ’

In the instant case the counsel for the complainant rightfully contends that “this money belongs to'the New York Life Insurance Company” because of the gross fraud of the insured. In Pomeroy’s Equity Jurisprudence, 5th Ed., at Section 155, it is said:

“If one party obtains the legal title to property, not only by fraud or by violation of confidence or of fiduciary relations, but in any other unconscientious manner, so that he cannot equitably retain the property which really belongs to another, equity carries out its theory of a double ownership, equitable and legal, by impressing a constructive trust upon the property in favor of the one who is in good conscience entitled to it, and who is considered in equity as the beneficial owner. ’ ’

It is my well-considered opinion that the court should decree that the money now in trust should be held for the benefit of the New York Life Insurance Company. The beneficiaries will suffer no injury as a result of a decree sustaining the complainant’s bill, because the money is not theirs to retain as a matter of legal or equitable right.

The complainant has appealed from an unyielding rule of the common law to the great forum of conscience. The High Court of Chancery was erected, and has continued *534 to exist, for the purpose of doing justice where there is no adequate remedy at law. It is- said by Pomeroy, and recognized by universal authority, “Constructive trusts are raised by equity for the purpose of working out right and justice.” Section 155. Moreover we are ever reminded by pronouncements of a great truth “that Equity delights in doing justice. ’ ’ And what is justice ? It was defined by Ulpian, the great Boman, centuries ago; “Justice is the constant and perpetual will to allot to every man his due.” Dean Wigmore in his “Panorama of the World’s Legal Systems” speaks of Ulpian as “the author of that lofty definition.” It is upon this principle that I rest my decision in this case.

I concur with Mr. Justice Barnett that the complainant should not be repelled from court on the ground that it is deprived of the court’s jurisdiction to frustrate a fraud because in issuing the policy it failed to make provision against the fraud that was practiced upon it. It would result in refusing relief in all cases of fraud wherein the complaining party had failed to take notice of it in the contract and make express provision against it. It is fundamental to every contract that “Neither party has done, nor will do, anything to hinder, delay or defeat a faithful compliance with the contract on his part.” Gibson’s Suits in Chancery, 3rd Ed., Section 932.

For the foregoing reasons I feel constrained to hold that the complainant’s bill should be sustained.