dissenting:
It is with regret that I find myself unable to agree with my associates in the determination of this cause.
*664Very briefly, I shall set forth the principles which I think should be determinative.
In June, 1924, Leo Katz negotiated with the Huntington National Bank for a loan of $50,000.00. As security of repayment of said loan when due he gave the following-securities:
A first mortgage on a 99 year lease of a High Street business property.
Two insurance policies on the life of Leo Katz in the Midland Mutual Life Insurance Company in the sum of $25,000.00 each.
The personal endorsement of Stella M. Katz, plaintiff in this case.
The mortgage was signed by husband and wife and the 99 year lease had a value of many times the amount of the loan.
The insurance policies were probably taken out at the instance of the Huntington National Bank as an additional security. Mrs. Stella M. Katz, wife of Leo Katz, was made beneficiary in each of the policies. The policies contained the provision that the beneficiary might be changed at any time without the consent of the beneficiary then named. Assignments of the policies were made to the Huntington National Bank on the -regular blanks furnished by the Insurance Company and headed in large type “ASSIGNMENT AS COLLATERAL SECURITY.”
The beneficiary was not changed during the lifetime of Leo Katz.
There was an issue between the parties as to whether or not Stella M. Katz was principal or surety on the notes. The court below accepted the finding of the jury that she was a surety. This court is in accord in arriving at the same conclusion. Leo Katz died in November, 1927. Previous to his death he had reduced his loan by practically $15,000.00. Thereafter the Huntington National Bank duly executed a discharge of the assignment of the insurance policies and delivered same to Mrs. Katz, the plaintiff herein. At the same time the insurance company issued its check to Mrs. Stella M. Katz, the beneficiary under the two policies in the sum of $50,000.00. Mrs. Katz then paid off the balance due on her husband’s notes upon which she was security and took from the bank an assignment of all the other securities that it held. At that time or later Mrs. Katz presented her claim to the executor of her deceased husband’s estate and the same was allowed. Subsequent thereto the executor had the opportunity and desired to sell the 99 year lease whereupon the executor gave to Mrs. Katz an executed writing in a further effort to establish her claim against the estate of her deceased husband in consideration of her releasing the mortgage assigned to her by the bank. Thereafter the executor rejected the claim of Mrs. Katz and then followed the action.
Under the above stated facts, it is my conclusion that Mrs. Katz was subrogated to the rights of the Huntington National Bank and therefore she should succeed in this action. There will be and can be no merited dispute on the facts of this case. My associates have arrived at the conclusion that the right of subrogation would not inure to Mrs. Katz because in their opinion it was not her money that paid off the notes at the Huntington National Bank. If I understand correctly this is based on the theory that the insurance policies contained the provision that the beneficiary might be changed at any time and that no vested interest inured to Mrs. Katz; that an assignment having been made to the bank' there could be no vesting in Mrs. Katz even after the death of Mr. Katz, only as to the surplus over and above the amount necessary to pay the notes. I have no difficulty in agreeing with my associates on many of the propositions, however, we do differ on the final conclusion. It is unquestionably true as a matter of law that Mr. Katz during his lifetime had the right to change the beneficiary without the consent of Mrs. Katz. However, the fact remains that he did not change his beneficiary.
Likewise there can be no question that the Huntington National Bank had a superior right to this fund over Mrs. Katz. However they did not assert it, but on the other hand consented that the payment might be made to her. I am in thorough accord with counsel for defendant in errólas is stated on page 10 of their brief that where a creditor holds two or more securities for his debts hei may proceed against either or both at his election and cannot be compelled to subject one before resorting to the other; such creditor has right to enforce either one or two securities as may be most to his advantage. 31 Cyc., page 363; 21 R.O.L., 685.
Applying this principle the Huntington National Bank had a right to do with their securities as they saw fit. There never was a time that they might not have given up the collateral security furnished by these insurance policies and relied on their other securities. They could even have gone further and cancelled all their securities, if they cared to, and relied upon Mr. Katz’s *665name alone. The fact that Mr. Katz died did not take away from the Huntington National Bank the privilege of discharging the assignment to them of the insurance policies. In other words, it was a situation in which the Huntington National Bank alone had the right to determine whether it would hold or discharge any of its collateral. Surely the executor of the estate has no right to complain. The result accomplished is exactly what Mr. Katz desired and all the interested parties including the executor sought to bring about. Mr. Katz had the right to make the insurance policies payable to his estate but he did not do so. He had a right to change his beneficiary but he did not do so. Even if the statements are accepted that the policies were taken out because of the demand of the Huntington National Bank, nevertheless Mr. Katz when he did take them out made his wife the beneficiary and never changed that provision. After his death without change of beneficiary the interest would vest in Mrs. Katz subject to the prior lien of the Huntington National Bank. When the Huntington National Bank yielded its lien the entire interest was vested in Mrs. Katz. In the majority opinion my associates hold that the case of Oettinger v Sparks, 109 Oh St, 94, is controlling. In my judgment the two cases are readily distinguishable. In the instant case the right of subrogation inures to Mrs. Katz by reason of the! fact that she was surety on a note and paid the same as such surety. In the Oettinger-Sparks case, supra, there were no notes or surety involved. The only similarity -in the two cases was that. Richard P. Sparks was named as beneficiary and there was' a provision in the policy, the right to change the beneficiary without his consent. In the Supreme Court case the insured, Agnes Anderson, a niece of the beneficiary, Richard P. Sparks negotiated a loan and put up the insurance policy as collateral security. At the time the insured procured the loan she designated the Superintendent of the Relief Department as her beneficiary to the extent of the sum which might remain unpaid at the time of her death upon the loan. At the same time the loan was negotiated she entered into a contract with her uncle, Sparks, the prior beneficiary, that he should be subrogated to all the rights of the loan company in the event of her death and that the insurance fund should be used to pay off the indebtedness. Under this situation, of course, there would be no subrogation. Subrogation only arises by virtue of contract and the only contract upon which Sparks could seek reliance was a contract made when the insurance policy was taken out and the loan procured. Of course, at that time, he would have no vested interest and so such a contract would be without any consideration. Jn the instant case the contractural relation between Mr. and Mrs. Katz was that of principal and surety and thereby there was a consideration to support the right of subrogation.
In the brief of counsel for defendant in error, the case of Walker v Pennick, 122 Virginia, page 664 is cited. There is no difficulty whatever in distinguishing this case from the instant case. In the Virginia case the positive terms of the policy made provision as to payment of premiums, etc. In that case the beneficiary was paid an amount less deductions for notes given for past premiums, the same being secured by the policy. The beneficiary sought to recover from the estate the amount of these deductions. The mere statement of this proposition should be sufficient to disclose why he did not prevail.
The case of Schuremann, Executor v Twachtman, 24 C. C. (N.S.), 459, while not parallel in all its facts contains statements with many principles applicable to the present case.
It is my conclusion that the merits of the controversy are with Mrs. Katz. The judgment of the court below should be reversed.