Silva v. Cohn

FORD, J. The question presented on this appeal is whether a surviving partner was entitled to retain as his own the proceeds of insurance on the life of his deceased partner or whether he was required to account for such proceeds as part [652]of the assets of the partnership. The trial court’s determination was in favor of the surviving partner.

The plaintiff is the administratrix with the will annexed of the deceased partner, Barney Silva. In the life insurance policy Barney Silva was named as the insured; the defendant, Jerome H. Cohn, then Silva’s partner, was designated as the applicant and the right to change the beneficiary was reserved to him.1 Cohn was named as the beneficiary of the policy and his relationship to the insured was stated to be that of a partner. The policy was issued as of August 7, 1958. Silva died on March 17, 1959.

At the trial, the defendant was called as a witness by the plaintiff under the provisions of section 2055 of the Code of Civil Procedure. He testified that he and Silva had been engaged as partners in the operation of three restaurants. In the summer of 1958, the partners decided to purchase some life insurance and contacted Nat Teller, an insurance agent. Two policies were issued. Each partner was the beneficiary named in the policy in which the other was the insured. The amount of the insurance under each policy was $10,000, except that there was a provision for the payment of the additional sum of $10,000 in the event of accidental death, The witness testified as follows as to the discussions of the partners with respect to the use of the proceeds if one partner should die: “If either one of us died, the survivor would have some money with which he would be in position to pay the debts as they became due. ... Yes, the debts of the partnership. . . . Either debts that would arise out of the operation of the partnership or debts we already had. ’ ’ There were substantial debts both at the time the policies were obtained and at the time of Mr. Silva’s death. At the latter time, there was [653]an overdraft on the bank account of $6,558.73 and. there were current accounts payable of $3,365.60. In addition, there were loans and notes payable in the total amount of $24,503.63, $4,400 thereof being owed to the defendant. At about the time that the application for the policy was made, Mr. Silva told the defendant that he had applied for an additional policy in which someone else was named as beneficiary. The premiums for that policy were not paid through the business.