Lashley v. Lashley , 212 Ala. 255 ( 1924 )

"In accordance with the rule that an enforceable trust in personal property may be created orally, it has been uniformly held that an oral promise by a beneficiary in a life insurance contract to pay the proceeds of such policy or a portion thereof to a third person is a valid and enforceable trust. Crews v. Crews, 113 Ky. 152, 67 S.W. 276; Catland v. Hoyt,78 Me. 355, 5 A. 775; Clark v. Callahan, 105 Md. 600, 66 A. 618, 12 Ann. Cas. 162, 10 L.R.A. (N.S.) 616; Hirsh v. Auer,146 N.Y. 16, 40 N.E. 397; Bloodgood v. Massachusetts Ben. Assoc.,19 Misc. Rep. 460, 44 N.Y. S. 563. See, also, Janes v. Falk,50 N.J. Eq. 468, 26 A. 138, 35 Am. St. Rep. 783. In Hirsh v. Auer, supra, * * * the beneficiary in a life insurance policy agreed verbally to collect the money, and, after paying a certain amount for the funeral expenses of the insured, to divide the remainder equally among his children. In an action by the children against the beneficiary to recover their share, the court said: 'Trusts may be created in personal property by parol, and no particular form of words is required to accomplish the result. * * * The statutes of this state do not define the objects for which trusts in personal property may be created, and if they are not against public policy and do not contravene any existing provisions of law they will be enforced. The fact that the trust dealt with a contingent interest of the insured in the certificate of insurance is of no moment; that interest became vested at the death of the insured, and the beneficiary having collected the insurance money, the trust under the agreement creating and acknowledging it attached to the fund.' In Crews v. Crews, 113 Ky. 152,67 S.W. 276, it appeared that a husband insured his life for the benefit of a creditor. The beneficiary promised verbally that after satisfying his claim he would pay the remainder of the money received on the policy to the wife of the insured. In a contest between the wife and the husband's administrator, it was held that the trust was a valid and reasonable one, and that the wife was entitled to the money. In an action to recover from a beneficiary in a life insurance policy the amount that he orally promised to pay to a third person, evidence to show the verbal promise does not tend to vary the contract of insurance, but rather to establish a new and independent contract of trust in the proceeds of the insurance. Catland v. Hoyt, 78 Me. 355, 5 A. 775." Coyne et al. v. Supreme Conclave of Improved Order of Heptasophs et al., 106 Md. 54,66 A. 704, 14 Ann. Cas. 870.

We may add that our statutes do not forbid the creation of a trust as to personalty by parol. Reid v. Bank of Mobile,70 Ala. 199; Moore v. Campbell, 113 Ala. 587, 21 So. 353. Nor are we persuaded that the line of cases against mortgages on property which has no potential existence applies to the present case, for, while the trust fund was contingent, it became vested upon the death of the insured, and became subject to the trust ingrafted thereupon. Moreover, while it may not have been necessary, the bill charges an express recognition of the trust by the trustee subsequent to the death of the insured. We find nothing in the federal statutes or the policy which forbids this trust or the enforcement of same in the courts of this state. The creation of the trust was contingent, and did not impair the right of the insured to redesignate or change the beneficiary at any time before his death.

The demurrers are to the bill as a whole, and the learned trial court declined to rule upon same, so far as applicable to certain parts of the bill, and which was in accord with the decisions of this court. McMahon v. McMahon, 170 Ala. 338,54 So. 165. It is sufficient, however, to suggest that it was not improper to make one of the beneficiaries under the trust a party respondent when he declined to become a party complainant. Having an interest in the subject-matter, he was a proper, if not a necessary, party.

The decree of the circuit court is affirmed.

Affirmed.

SAYRE, GARDNER, and MILLER, JJ., concur.