The plaintiff as the legal heir of Lewis C. Stearns brought this action in the District Court of Ward County against the men who are the executors of his last will and testament for the avails of a life insurance policy payable to the estate of Lewis C. Stearns. The defendant executors admit receiving $24,496.28 on such policy. They deny plaintiff's right thereto and allege that the only law under which the plaintiff could recover in this action is Sec. 26-1018, NDRC, 1943, which statute they claim is unconstitutional. They ask for a dismissal of the action.
The matter was submitted to the District Court on the following stipulated facts: Lewis C. Stearns, a resident of Minot, Ward County, North Dakota, died on Jan. 29, 1951, testate, leaving no wife surviving him. Mona Stearns Lapland, the plaintiff, was his legally adopted daughter and his only child or issue and no issue or children of Lewis C. Stearns preceded him in death. He left a will with codicil which was duly admitted to probate. The defendants are the duly appointed executors thereof. No creditors are involved in this controversy. At the time of the death of Lewis C. Stearns he was possessed of $24,496.28 worth of life insurance on his own life. The beneficiary named in the policy was the Lewis C. Stearns estate. No mention was made in the Stearns will or codicil of life insurance or avails of life insurance. Lewis C. Stearns made no special contract inter vivos in regard to the avails of his said life insurance. The defendant executors have collected the avails of said life insurance and still hold the same in the amount of $24,496.28. They have failed to pay said avails to anyone. Demand for payment of said avails was served on the defendant by the plaintiff prior to the commencement of this action. All of the defendants are interested solely as executors except James W. Stearns who is also a legatee or beneficiary under a testamentary trust created by the will of Lewis C. Stearns. The District Court found for the plaintiff. The defendants appeal.
The sole issue raised on the appeal is the constitutionality of Sec. 26-1018, NDRC 1943. That section reads as follows:
This section, 26-1018, supra, was originally Chapter 149 of the 1929 Session Laws. The defendants claim that section was an original enactment and that for that reason they have a right to consider the title thereof in connection with their claim of its unconstitutionality. The first ground for such claim is that the title covers more
The subject matter of Sec. 26-1018, supra, is the distribution of the avails of such life insurance. If all the provisions of an act are germane to the subject expressed in the title then the act is valid as against any claim of violation of Sec. 61 of the constitution.
Referring to that principle this court in State ex rel. Weeks v. Olson, 65 N.D. 407, 259 N.W. 83, 85, has said:
"This principle of law is well settled in North Dakota and in many other states having constitutional provisions similar to ours. Stated differently, this rule means that legislation may include any matter naturally and reasonably connected with the subject of the act as expressed in the title. State ex rel. Gammons v. Shafer, 63 N.D. 128, 246 N.W. 874; Thompson Yards v. Kingsley, 54 N.D. 49, 208 N.W. 949. It is also the law of this state that the title to an act will be construed liberally and not in a strict and technical manner. State ex rel. Poole v. Peake, 18 N.D. 101, 120 N.W. 47." See also Great Northern Railway Co. v. Duncan, 42 N.D. 346, 176 N.W. 992; State v. Colohan, 69 N.D. 316, 286 N.W. 888; 50 Am.Jur. Statutes, Sec. 196, 197, p. 177-180.
The defendants claim that the method of determining succession and an exemption statute are included in the act extraneous to the matter of the distribution of the avails. The policy makes the heirs or estate of the decedent the beneficiaries. The law of heirship determines the succession. The act makes no determination thereof. The provision that the avails shall not be subject to the debts of the decedent relates merely to the safeguarding of the avails. Construing the act liberally it contains only matters relative to the distribution of the avails of such insurance which is the subject matter thereof.
Furthermore, if there should be any doubt about this, Chapter 149, S.L.1929 was reenacted in the 1943 revision of the code as Sec. 26-1018, NDRC 1943 without the inclusion of the title and the original statute, including the title, was repealed, Sec. 1-0219, NDRC 1943. It has been held that a statute which fails to comply with a constitutional provision requiring every act to embrace one subject to be mentioned in its title becomes valid upon its incorporation in a proper code or revision duly adopted as such. See 59 C.J.Statutes, Sec. 376, p. 799; J. P. Schaller Co. v. Canistota Grain Co., 32 S.D. 15, 141 N.W. 993.
The defendants urge, as the main ground for their claim that Sec. 26-1018, NDRC 1943 is unconstitutional, that it is really an exemption statute and does not comply with Sec. 208 of the constitution which provides that:
They claim that the language of Sec. 26-1018, supra, and of its 1929 title indicates that the intent of the legislature was to place the avails of that insurance in the estate of the deceased and to provide for the exemption thereof without fixing any reasonable amount contrary to Sec. 208. They admit that, what they call "a slightly similar law," was construed by this court in the case of Farmers' State Bank v. Smith, 36 N.D. 225, 226, 162 N.W. 302 against their contention but claim that that construction cannot be applied to the present act because it is a new law and because of additional language not included in the old law.
It is immaterial whether Sec. 26-1018, supra, is a new law or not. In the enactment of a statute earlier acts on the same subject are generally presumed to have been within the knowledge and view of the legislature which is regarded as having adopted the new statute in the light thereof and with reference thereto. 50 Am.Jur. Sec. 354, p. 354.
It is also generally held that the construction by the courts of former statutes is presumed to have been considered by the legislature and may be considered by the courts in the construction of the latter statute on the same subject.
A legislature is presumed, in enacting a statute, to have in mind court decisions pertaining to the subject legislated on and to have acted with reference thereto. Merchants' Transfer & Warehouse Co. v. Gates, 180 Ark. 96, 21 S.W.2d 406; Texarkana Special School Dist. v. Consolidated Special School District No. 2, 185 Ark. 213, 46 S.W.2d 631.
In Batt's Estate, 220 Ind. 193, 41 N.E.2d 365, 139 A.L.R. 1391, it is said:
It is necessary, therefore, to examine the prior statutes on the subject and this court's construction thereof to determine whether the legislative policy as formerly enacted and interpreted has been changed by the 1929 enactment as claimed by the defendants.
The first appearance of the subject matter contained in Sec. 26-1018, NDRC 1943
This applied to all life insurance policies. This was amended in the Probate Code, Chapter 111, S.L.1897, p. 192 to limit it to life insurance policies or contracts "made payable to the personal representatives of a deceased, his heirs or estate". In that amendment the phrase, "and disposed of like other property" was changed to read: "and distributed to the heirs or the heirs at law of such decedent." That change indicates that the intention of the legislators then was to make avails of life insurance policies, payable to the heirs or estate, distributed directly rather than going through probate "like other property." That change has remained in the law ever since.
In this last form the section was carried forward as Sec. 6385 in R.C.1899, as Sec. 8083, R.C.1905 and as Sec. 8719, C.L.1913. The next amendment of that section was by Chapter 225, S.L.1927.
In the meantime many decisions have been rendered by this court construing this law. In Anderson v. Northern & Dakota Trust Co., 67 N.D. 458, 468, 274 N.W. 127, 132, Judge Christianson summarizes the holdings of such decisions as follows:
In the case of Farmers' State Bank v. Smith, 36 N.D. 225, 162 N.W. 302, 303, the very question raised in the instant case was passed upon by this court. The argument was made that Sec. 8719, S.L.1913 violated Sec. 208 of the constitution. It was claimed that Sec. 8719 was an exemption statute and as it failed to fix any limit on the amount of insurance exempt from creditors' claims it violated Sec. 208 of the constitution which provides that the exemption extends merely to "a reasonable amount of personal property". In deciding that case this court said:
* * *
This court then held that Sec. 8719 "is not in conflict with section 208 of the Constitution of North Dakota".
That opinion was filed March 22, 1917, ten years and five sessions of the legislature before any amendment to Sec. 8719 was made. It will be presumed that the legislature had knowledge thereof and had that holding in mind when it enacted Chapter 225, S.L.1927. The legislature still retained the provision that the avails "shall not be subject to the debts of the decedent" and "shall be distributed" to the heirs upon which is based the holding in the Smith case that the avails did not become a part of the estate of the decedent but passed to the heirs by contract so that Sec. 8719 did not become an exemption statute.
The legislature added to the provisions regarding the avails being inventoried the phrase "as part of the estate of the deceased" which this court in Anderson v. Northern & Dakota Trust Co., 67 N.D. 458, 472, 274 N.W. 127, 134, construed to mean "that the avails should be inventoried in like manner as though they were a part of the estate of the decedent." That makes the inventory only a special record of the avails. Then the legislature added to the provision for the distribution of the avails that it shall be done "without deduction." That again indicates an intent that the avails should not become liable for the debts of the estate. Then Chapter 225 adds a new provision that the insured may transfer the avails by will or contract life insurance policies or contracts "heretofore made." This court had held in Jorgensen v. DeViney, 57 N.D. 63, 222 N.W. 464, that the insured had a right to transfer such a policy of insurance upon his life by will or assignment so that the legislature was merely enacting the principle found by this court to be included in the act.
Chapter 149, S.L.1929 also provided it shall apply to policies made payable to the deceased as well as to his heirs or estate. These provisions only apply to who shall be made beneficiaries under the policies or contracts. The 1929 act was also made to apply to policies and contracts whether made "heretofore or hereafter". None of these amendments make any material change in the purpose of the act.
Chapter 149, S.L.1929 also adds the following: "This statute is intended to apply only to life insurance policies and beneficiary certificates that by their terms are made payable to the insured, to the personal representatives of the insured, or to his heirs or estate." That provision the codification of Sec. 26-1018 omitted "as surplusage."
Sec. 26-1018, NDRC 1943 as codified also omits the phrase, "in due course of administration". That is further clear indication that the avails were not to be included in the probating of the estate.
These are the main changes from the original language of Sec. 8719 C.L.1913 brought about by Chapter 225, S.L.1927 and Chapter 149, S.L.1929. Some of the changes were brought about by the holdings of those decisions, indicating the awareness of the legislature of those decisions. See Anderson v. Northern & Dakota Trust Co., 65 N.D. 721, 261 N.W. 759. In the second Anderson case, Anderson v. Northern & Dakota Trust Co., 67 N.D. 458, 474, 274 N.W. 127, 135, Judge Christianson, after a complete summary writes:
After a careful comparison of Chapter 225, S.L.1927 and Chapter 149, S.L.1929 as codified in Sec. 26-1018, NDRC 1943, with Sec. 8719, S.L.1913, we have come to the same conclusion. There is nothing in those amendments or the 1929 reenactment to warrant this court in finding that the legislature intended to change the meaning of Sec. 8719 as construed by this court in its various decisions on that section.
The defendants, however, argue that these decisions of the court are in error and that the intention of the legislature from the beginning and especially since the enactment of the 1929 act was to make the avails of such insurance a part of the estate without making them subject to the debts of the decedent. They again contend that the result is an exemption of the avails and there being no limitation in the amount such exemption is contrary to Sec. 208 of the constitution.
The defendants argue that such construction is indicated by the use of the word "exempting" in the title of the 1929 acts and the use of the phrases "shall not be subject to the debts of the decedent" and "inventoried as part of the estate of the deceased" and "shall be distributed without deduction" in the body of the different acts. All of these phrases except the word "exempting" have been considered by this court in making its prior decisions. One meaning of "exempting" is "not subject to", New Century Dictionary, which is the phrase used in the body of both the 1927 and 1929 acts in connection with the debts so adds nothing new. When these phrases are considered in connection with the whole act, its
When the insured uses the names of his legal heirs as beneficiaries in the policy there can be no question about the avails passing directly to them. When, however, he uses the terms "personal representatives, heirs or estate" it is necessary to provide a special method by which the identification of the individual beneficiaries can be accomplished. The logical person through whom that can be done is the executor or administrator of the estate of the decedent who has accessible, in the files of the estate, the names of the legal heirs as established by the county court. If, however, the avails become part of the estate they might become subjected to the liabilities thereof. The phrases used indicate the intention of the legislators to avoid that situation. They were providing for the transfer of the avails through the executor or administrator as a mere conduit and without any actual connection with the probate. They provided that the avails should "pass to the heirs" without becoming subject to the debts of the estate. They provided for an inventory thereof in the same manner as the property of the estate, Anderson v. Northern & Dakota Trust Co., 67 N.D. 458, 474, 274 N.W. 127, 134, to keep a record of the transactions always available and easy to find.
It was indicated in the dissenting opinion in Farmers' State Bank v. Smith, supra, and in Marifjeren v. Farup, supra; Anderson v. Northern & Dakota Trust Co., 65 N.D. 721, 726, 261 N.W. 759; Anderson v. Northern & Dakota Trust Co., 67 N.D. 458, 474, 274 N.W. 127, that if the avails became a part of the estate not subject to the debts of the decedent the constitutionality of Sec. 26-1018, supra, might become doubtful. Whenever a law is reasonably subject to two constructions one of which sustains it as constitutional and the other renders it of doubtful constitutionality the courts, as we have done in this case, adopt that construction which holds the law constitutional. 11 Am.Jur. Constitutional Law, Sec. 97, p. 725; State ex rel. Eckroth v. Berge, 69 N.D. 1, 283 N.W. 521; Wood v. Byrne, 60 N.D. 1, 232 N.W. 303; State ex rel. Linde v. Taylor, 33 N.D. 76, 156 N.W. 561, L.R.A.1918B, 156, Ann.Cas.1918A, 583.
The defendants finally claim that Sec. 26-1018, NDRC 1943 violates the due process clauses of the federal and state constitutions. They argue that the act is an attempt to arbitrarily and unreasonably regulate the descent of particular property. They claim that under the construction the court has given said act any taxes that may be levied against the avails of an insurance policy, the cost of determining in the proper court to whom such avails belong and the expense of transferring the avails to the legal heirs will have to be paid out of decedent's estate. That, they say, is taking property from the creditors and legatees without due process of law. That does not follow from the construction we have given the act.
When the purposes of the act are taken into consideration and the fact that these avails never were a part of decedent's estate it cannot be said that the law is unreasonable or arbitrary. The law in no way involves the descent of property. The fund is created by contract. It is not a fund to which the creditors or legatees have any legal or moral claim, unless the testator so provides.
If the heir has to sue for the avails that is his expense. The separate inventory of the avails made by the executor or administrator does not become a part of the gross inventory of the estate so does not increase the expense of administering the estate. If the executor or administrator claims title to the avails for the estate and forces suit to determine the title that is a legitimate expense of the estate just as would be the expense of determining any title claimed by the estate.
It is apparent, therefore, that no property is taken out of the estate by virtue of Sec. 26-1018, supra, nor are the heirs enriched by getting the expense of transferring the avails to them paid out of the estate.
The defendants claim that the law is not complete because there is no provision in the law for the disposition of the avails in the event there were no heirs of the decedent. Sec. 54-0102, NDRC 1943 takes care of that. It is there provided:
Plaintiff asked for interest at 4 per cent on the amount of the avails which the executors have held pending this lawsuit. They claim the money has been wrongfully withheld. The defendants claim that they were advised by their counsel that there was a serious question about the constitutionality of Sec. 26-1018, NDRC 1943 under which the money was received and that for the protection of themselves and the estate a determination of its title in court would be necessary. Under such circumstances we can not say the money was wrongfully withheld. We believe the defendants and their attorneys acted in good faith. See Hill v. Hanna, 57 N.D. 412, 222 N.W. 459. The District Court disallowed plaintiff's claim for interest. We agree with the District Court.
We have come to the conclusion that, considering Sec. 26-1018, NDRC 1943 as a whole, its terms, history and purposes and comparing it with Chapter 225, S.L.1927 and Chapter 149, S.L.1929, there has been no change made to make the former decisions of this court inapplicable. We hold it is not violation of Sec. 208 of the constitution. We further hold that Sec. 26-1018 does not violate Sec. 61 of the constitution nor the provisions of the state and federal constitutions against taking property without due process of law.
GRIMSON, CHRISTIANSON, SATHRE and BURKE, JJ., concur.
MORRIS, C. J., concurs in the result.