Assignment of the Policy by the Assignee A Policy of Life Insurance Is Not a Negotiable Instrument

Although an assignee cannot, in the absence of an agreement to the contrary, sell or surrender the policy without giving the insured a reasonable opportunity to redeem it, he may, under proper circumstances, reassign the policy to another. Thus, in Corcoran v. Mutual Life Insurance Company it was held that where a policy was given as collateral security for the payment of a note, the holder'has the right, to assign the same to the indorsee of the note, who will then be entitled to hold the policy as security for the note.

But a life-insurance policy is not to be regarded as a negotiable instrument, as is exemplified by the case of Brown v. Equitable Life Assurance Society. Here the insured assigned a policy as security for a debt, and the assignee subsequently assigned the same to a bank as security for another loan. The court held that despite the absoluteness of the form of assignment, "the bank took the policy subject to the equities existing in favor of the insured, unless the conduct of the latter was such as to create an estoppel". According to the facts of the case the insured had neglected to pay premiums for eleven years, and during that period had made no effort to recover the policy. These circumstances, together with the fact that the bank kept the policy 'from lapsing by paying the premiums itself, caused the court to hold that the insured was prevented from claiming any rights under the policy as against either the first assignee or the bank.