Wannamaker v. Stroman , 167 S.C. 484 ( 1932 )

The exact point is not involved in any case that has been heretofore passed upon by this Court; but the principles applicable, and which, it seems to me should be regarded as controlling, are settled by the decisions inHunter v. Hunter, 100 S.C. 517, 84 S.E., 180, and Antley v. New York Life Insurance Co., 139 S.C. 23,137 S.E., 199, 60 A.L.R., 184.

In Hunter v. Hunter, supra, the statute (Section 4151, Civ. Code of 1922), relating to the payment of death benefits by fraternal benefit associations, contained provisions giving each insured member "the right to designate his beneficiary, and from time to time have the same changed in accordance with the laws, rules or regulations of the association, and no beneficiary shall have or obtain any vested interest in the said benefit until the same has become due and payable upon the death of said member." Since there was no provision in either the statute or the policy or the regulations of the association for the change of the beneficiary by the will of the insured member, the question was whether the widow of the insured, as being the first named of a designated class of beneficiaries, would be entitled to the proceeds of the insurance against the claim of the mother of the insured, also a member of the designated class, where the mother's claim to take the proceeds was based on a will in which the insured, in his last moments, had undertaken to name her as sole beneficiary under the policy.

The decision, sustaining the mother's claim that she was made the sole beneficiary by the will, was justified, because, under the provisions governing the payment of the benefit, a vested right in the policy could not exist, since such provisions permitted the insured to change the beneficiary by designating any person within the class of beneficiaries permitted by the statute. In the Hunter case, just as in the case at bar, the provisions governing the insurance, while reserving the right of the insurer to make the change of beneficiary, were altogether silent as to the right to make the change by will. In the Hunter case, just as in the case at bar, the control of the insured over the policy was exercised by an appointment, or designation of beneficiary, made in writing, which was intended to be effective as a will, but which was not communicated to the insurance company until after the death of the insured.

The reason of decision in the Hunter case is wholly consistent with the statement of law made in Antley v. LifeInsurance Co., 139 S.C. at page 27, 137 S.E., 199, 200, 60 A.L.R., 184, cited and approved in Harper v. InsuranceCo., 153 S.C. 478, 486, 151 S.E., 60, that, where the right to change the beneficiary is not reserved to the insured, "the beneficiary, upon the issuance of the policy, acquires a vested interest in the proceeds of the insurance when available according to the terms of the policy, which cannot be divested by any act of the insured." The next fundamental proposition determined by the Antley opinion, and the one especially important to the present consideration, was that, under provisions reserving to the insured the right to change the beneficiary at will, the beneficiary named upon the issuance of the policy does not acquire a vested right in the proceeds of the insurance, but only an expectancy. In this holding the opinion followed Bost v. Insurance Co., 114 S.C. 405,103 S.E., 771, 772, where it was declared that "under the provisions of the policy the insured had the right to act with the policy as he saw fit * * * to change the beneficiary without her consent and to enjoy every benefit given him under the policy." The citation fromMutual Ben. Life Insurance Co. v. Swett (C.C.A.) 222 F., 200, 205, Ann. Cas. 1917-B, 298 — one of the many leading cases to similar effect analyzed in the opinion — expresses the same thought by saying that the control of the insured over the policy "was, subject to its items, as complete as if he himself had been the beneficiary."

It was upon this sound ground of reasoning and supporting authorities that the Court, speaking through Mr. Justice Cothran in deciding the Antley case, made the declaration "that the Holder (77 S.C. 299, 57 S.E., 853), Deal (87 S.C. 395,69 S.E., 886, Ann Cas. 1912-B, 1142), Taff (114 S.C. 306, 103 S.E., 551), Brown (114 S.C. 202,103 S.E., 555), and Barron (131 S.C. 441,128 S.E., 414) cases, so far as they are not consistent with the conclusions herein announced, can no longer be considered authority." The only possible ground of differentiation from the Antley case is that suggested in the comment made in the Antley opinion that the result in Barron v. Bank, 131 S.C. 443,128 S.E., 414, may perhaps be sustainable "upon the ground that the assignment was not effected in that case, in the mode prescribed in the policy, though weare not to be understood as so deciding, as many respectable authorities hold that the form of the assignment is designed solely for the protection of the company."

A case almost identical with the case at bar is found inArrington v. Grand Lodge of Brotherhood of RailroadTrainmen (C.C.A. 5th Circuit), 21 F.2d 914, 916, where it was held that a provision in the constitution of the benefit association requiring change of the beneficiary to be effected as prescribed therein was for the benefit of the insurer alone. The constitution of the brotherhood contained the following provision: "Any member desiring to transfer his beneficiary certificate shall fill out the printed transfer on the certificate and sign his name thereto, and send the same to the general secretary and treasurer, through the secretary of a lodge of the brotherhood. All transfers of beneficiary certificates shall be made upon the books of the Grand Lodge under the direction of the general secretary and treasurer, and any and all transfers made in any other manner shall be null and void."

When the benefit certificate was issued, the insured had his sister named as the beneficiary. Subsequently, he married. Receiving fatal injuries in a railroad wreck, he signed an informally prepared paper, intended as a will and subsequently probated as such, stating that he wanted his wife to have the insurance made to his sister. The widow claimed the insurance. The brotherhood filed its bill of interpleader in Court, and paid the money into Court. The sister of the insured claimed as the beneficiary in the certificate, and averred that her interest thereunder had never been legally divested. The decree of the district Court sustained the claim of the widow. The Circuit Court of Appeals, affirming the decree, said:

"Under provisions of the brotherhood's constitution, as between the insured and his sister, the former had the right to terminate the latter's interest without her consent or notice to her, as the sister, being a mere volunteer beneficiary, had no vested right in the proceeds of the certificate prior to the insured's death, and the only limitation on the insured's right to change the beneficiary was contained in the quoted provision as to the manner of effecting such change. RoyalArcanum v. Riley, 143 Ga. 75, 84 S.E., 428. The just mentioned provision was a matter entirely between the insurer and the insured, and was for the benefit of the insurer alone. If the insurer chose to waive or not insist on an objection to the sufficiency of the act of the insured manifesting his intention to change the beneficiary, based on a non-compliance with a requirement prescribed for its sole benefit, an objection on that ground was not available in favor of the original beneficiary. No one other than the insurer had the right to question the sufficiency of the above set out instrument to effect a change of beneficiary, on the ground of noncompliance with the provision as to the method of effecting such change. Subject only to the right of the insurer to insist on compliance with the provision of its constitution as to the manner of effecting such change, such change could be effected by parol or by a written instrument manifesting the insured's intention to change the beneficiary.Nally v. Nally, 74 Ga. 669, 675, 58 Am. Rep., 458.

"The above set out instrument plainly shows that the insured intended thereby to substitute his wife in place of his sister as the beneficiary of the certificate referred to. The absence of any intention of the insurer to question the sufficiency of that instrument to effect a change of beneficiary was manifested by its paying the money into Court and expressing a willingness that it be paid to either of the claimants. Dell v. Varnedoe, 148 Ga. 91, 95 S.E., 977. We conclude that, in the absence of any objection by the insurer as to the manner of effecting a change of beneficiary, the above set out instrument was effective to accomplish that result."

The same principle is even more clearly applicable under the policy provision involved in the present case, under which the right was retained by the insured to have the designated beneficiary changed "at any time while this policy is in force and not assigned, upon the return of the policy with the insured's written request for appropriate endorsement of the policy by the company." This provision clearly evidenced the intent of both the insurer and the insured that (as expressed by Mr. Justice Watts in Bost v. InsuranceCompany, 114 S.C. page 409, 103 S.E., 771, 772), "under the provisions of the policy the insured had theright to act with the policy as he saw fit * * * to changethe beneficiary without her consent and to enjoy everybenefit given him under the policy." (Italics mine.) The contract made by the policy of insurance should, therefore, it seems to me, be regarded as one existing solely between the insurer and the insured to the end that the desires of the insured — if expressed in such manner as to afford adequate protection for making a payment — should be carried out by the insurer.

The extensive note in 43 A.L.R., 573, citing many supporting authorities from a large number of jurisdictions, states that, "as a general rule, the proceeds of an ordinary life insurance policy, payable to insured's `estate,' or, what is equivalent, to himself, or to his executors, administrators, or assigns, are subject to testamentary disposition by him, the same as other property." An expectant beneficiary designated under the policy whose rights may be cut off by the act of the insured occupies essentially the same position as the expectant legal representative of the insured whose rights, if not cut off by the acts of the insured, are established by statutory provision. In either case there seems no sound reason for withholding from the insured the right to make testamentary disposition of the proceeds of such of his life insurance policies as are subject to his control.

It is unquestioned that the two policies for $1,500.00 and $1,000.00, respectively, designated in the majority opinion as policies A and B, were in force and not assigned when Stroman made his will. The provisions of the will may quite properly be regarded, to my mind, as constituting the insured's written request, solemnly expressive of his wishes in regard to insurance policies A and B over which he had retained the right of control. The insurance company, by paying the proceeds of the insurance into Court and manifesting its willingness that such proceeds be paid to either of the claimants, has relieved the case from any question of possible objection on its part as to the manner of effecting the change of beneficiary. The only question remaining is as to the proper construction of the will; and its provisions should be given effect as far as possible, keeping in mind, however, the fact that one of the policies — the one designated in the majority opinion as policy C — did not contain any provision reserving to the insured the right to change the beneficiary, and was not therefore subject to his testamentary disposition.

The views hereinabove expressed were originally written as the leading opinion, but did not meet with the approval of the majority of the Court, and hence become the writer's dissenting opinion.

MR. JUSTICE CARTER concurs.