This is an action, begun in the United States District Court for the Northern District of Texas, by the personal representatives substituted for the heirs at law of Colonel Robert D. Gordon, who died a citizen and resident of Texas, against the Prudential Insurance Company of America to collect an insurance policy on the life of the decedent. The Company filed a bill of interpleader, 49 Stat. 1096, 28 U.S.C.A. § 41(26), making the respondent John D. McCoach, Trustee, and other alleged claimants parties and tendering the net amount due under the policy. The interpleader was allowed, the Company discharged from the litigation and the interests of all parties to the suit other than petitioner and respondent disposed of by the decree in a manner to which no one objects here. The controversy still to be decided is as to whether the estate or the Trustee is entitled to certain portions of the insurance. The circumstances giving rise to the issue follow.
Colonel Gordon, the insured, interested seven persons in Texas oil developments, including McCoach, the Trustee, in his individual capacity. They operated as a New York common law association called the Middleton Tex Oil Syndicate. The record here shows that 'Prior to the issuing of the policy and thereafter, the members advanced considerable money to Gordon, and the premiums on the policy were paid by the members of the syndicate at Gordon's request, upon his agreement to repay the syndicate. Premiums were paid on the policy by the syndicate, in accordance with this agreement and were never repaid by Gordon.' A term insurance policy was taken out by Gordon with the Syndicate named as beneficiary. When the policy was issued, and at all times subsequent until his death, Gordon was a citizen of Texas. The Syndicate originally had physical possession of the policy. Two years after its issuance the Syndicate ceased operations. In 1924 due to financial reverses it ceased to do business and the members formed a new association called the Protection Syndicate. McCoach became and continues as Trustee of the Syndicate. It was organized 'for the sole purpose' of paying the premiums on the policy and receiving and distributing the proceeds among the members. This it did until the insured's death. The beneficiary in the policy was changed to make the members of the Protection Syndicate the beneficiaries. By arrangement between the decedent and the members of the Protection Syndicate in 1934 a further change of beneficiaries was made by which, in consideration of the insured's release of the right to change beneficiaries on presentation of the policy for endorsement, hitherto retained, one-eighth of the disability proceeds of the policy were to be paid the insured and one-eighth of the death proceeds to his wife and the remaining seven-eighths to the Trustee for the members of the Protection Syndicate.
'The application for the policy was signed by Gordon in the State of New York, and forwarded to the home office of th Prudential Insurance Company in the State of New Jersey, and there acted upon, and the policy was delivered in the State of New York.' The later arrangement by which Gordon and his wife became beneficiaries of one-eighth of the proceeds was consummated by certain forms furnished by the Prudential and 'transmitted * * * from Middletown, N.Y., to Tyler, Texas, for Colonel Gordon's signature. They were there executed by Colonel Gordon before a notary public in Tyler, Texas, and returned to Middletown, N.Y., where they were executed by the parties residing there, from whence they were sent by Schweiger (an agent of the Prudential and a member of the Syndicate), with the policy, to the home office at Newark, N.J., and subsequently the forms were indorsed on the policy and it was returned directly from New Jersey to the beneficiaries in New York.'
Thereafter three of the members of the Protection Syndicate separately assigned their interest in the policy to three individuals not previously interested in the transaction. These assignees paid their proportion of the premiums after the respective assignments.