Papp v. Metro. Life Ins. Co.

• Citation: 167 A. 873
• Parties: PAPP v. METROPOLITAN LIFE INS. CO.
• Decision Date: 03 August 1933
• Court: New Jersey Court of Chancery

167 A. 873

PAPP

v. METROPOLITAN LIFE INS. CO.

Court of Chancery of New Jersey.

Aug. 3, 1933.

Syllabus by the Court.

1. It is the rule in equity that, "if the insured has pursued the course provided in the policy and has done all that lies in his power to change the beneficiary, but dies before a new certificate is issued, a court of equity will treat such certificate as having been issued."

2. Equity aids the vigilant. It refuses relief if delay in prosecuting an equity occasions inequity.

3. Interpleader in personam will not lie against a nonresident not served with process in this state.

Bill by John Papp against the Metropolitan Life Insurance Company. On final hearing.

Bill dismissed.

Gustav L. Goldstein, of Newark, for complainant.

McCarter & English and Conover English, all of Newark, for defendant.

BACKES, Vice Chancellor.

The defendant, Metropolitan Life Insurance Company, issued a group life insurance policy to the John A. Roebling Sons' Company of Trenton, upon the lives of its employees, entitling the beneficiary designated by the employee to $1,000 at death, and $2,000 if death be due to violence. A certificate issued under the policy to John Kish, an employee who designated Charles Getz, uncle in Roumania, as beneficiary. Kish was injured by an automobile and died seven days later in a Trenton hospital, January 1, 1930. The day before, he designated the complainant, John Papp, as beneficiary. The request for the change and the certificate reached the insurance company after Kish died. The insurance company, with notice of the change of beneficiary, paid Getz. The complainant as equitable beneficiary sues to compel a formal change of beneficiaries and to recover the insurance.

The objection that Kish was incompetent when he made the change of beneficiary is not sustained. Three days before he died pneumonia developed, and on December 30th and 31st the disease was in full bloom, his temperature ranged around 104', and he was desperately ill and at times semi-delirious, so much so that he tore off the splints from his injured arms, tried to remove those on his legs, and it was difficult to keep him abed. The attending physician and his assistant expressed the opinion that with pneumonia and a temperature of 104° he was in-capable of understanding the transaction. On the other hand, a specialist in this disease stated that temperature in pneumonia does not mean anything, is not an indication of delirium, and that a patient an hour or two after delirium may be perfectly normal. On the 30th, when the doctors regarded him as semi-delirious and irresponsible, he made his confession, and the priest says he was rational and clear of understanding, otherwise he would not and, in conscience, according to the laws of the church, could not have given him Holy Communion. When he signed the change of beneficiary the notary, a justice of the peace called in to prepare the document, realizing that Kish was very sick, examined him to satisfy himself of his competency. He testifies that he was properly orientated and that Kish was sensible of the affair in hand and expressed his wishes with intelligence. The apparent conflict may have for its solution that Kish could not speak English and the doctors may have, to some extent, misinterpreted his mutterings as the rambling of delirium, whereas with the priest and notary, who spoke his mother tongue, and the other witnesses—fellow countrymen—he was at home, and there was mutual comprehension. The principles that obtain in the execution of wills are applicable, and a testament in the circumstances would not be denied probate for incompetence.

The objection that the change of beneficiary was ineffectual, because incomplete, is sound at law, but not in equity. The policy reads:

"Section 9: Change of Beneficiary.—Any employee insured hereunder may, from time to time, change the beneficiary by filing written notice thereof with the company accompanied by the certificate and certificate riders —if any—of such employee. Such change shall take effect upon endorsement thereof by the company on such certificate and certificate riders—if any—and unless the certificate and all certificate riders—if any—are so endorsed, the change shall not take effect. After such endorsement, the change shall relate back and take effect as of the date the employee signed said written notice of change, whether or not the employee be living at the time of such endorsement or not, but without prejudice to the company on account of any payment made by it before receipt of such written notice."

The day before the change was made, Kish signified his intention to Papp to substitute him as beneficiary, to secure a debt of $500, and, when Papp and his two friends called at the hospital the next morning, they came prepared with a regulation form of substitution furnished by the insurance company. Kish told them to get Jacobs, the notary, whom he knew spoke his language. With Jacobs they went to the insurance company's local office in Trenton for instructions, and, being informed that the certificate and the request must be sent to the company's home office in New York, the four went to Kish's lodgings in Roebling, a nearby town, and returned with the certificate to the hospital, where Jacobs filled in the form, Kish executed it with his mark, one of the friends signed as witness, Jacobs affixed his name and office and his notarial seal, and they took it and the certificate away with them to Jacobs' office, where he inclosed the documents in an envelope addressed to the insurance company's New York office, and instructed them to mail it. Instead of mailing in Trenton, they took the package back to Roebling. It was late, the post office was closed, as it was the next day, New Year's Day, and on the second or third day they gave the papers to the employer, and they were forwarded to the insurance company, which received them January 24th.

Had the documents reached the company before Kish died, there could be no question as to the effectiveness of the transfer in equity, though the policy provided that the change should not take effect until indorsed by the insurance company. It was so held by Vice Chancellor Learning in Pnidential Insurance Co. v. Reid, 107 N. J. Eq. 338, 152 A. 454, who, treating the indorsement as a mere ministerial act, enforced the change, in that case complete but for the indorsement, in compliance with the maxim that "equity regards that as done which ought to be done."

Here, however, we are dealing with a change of beneficiary not as far advanced in the effort as in the Reid Case, where the request was not in the hands of the insurance company and the ministerial act was not incumbent in the lifetime of the insured. The rule at law is, undoubtedly, that the change in the manner prescribed by the policy must be absolutely complete in the lifetime of the insured, and that the beneficiary has a vested right at death if the change is not accordingly perfected, but there are three well-established exceptions to the rule of strict compliance, one of them being that, "if the insured has pursued the course provided in the policy and has done all that lies in his power to change the beneficiary, but dies before a new certificate is issued, a court of equity will treat such certificate as having been issued." Supreme Conclave, Royal Adelphia, v. Cappella (C. C.) 41 F. 1. Couch, Ins. § 323. Whenever invoked in the proper forum and upon satisfactory proof that the insured has strictly met the requirements of the equity rule, it has received affirmance. None denies the rule. Our Court of Appeals recently in Prudential Ins. Co. v. Swanson, 111 N. J. Eq. 477, 162 A. 597, reiterated it. There is divergence of view as to its application. In some instances the contract itself forbids it, in others, the facts have not warranted it. It is not cognizable at law and it is not always set up in equity, and hence confusion in the cases.

These are a few of the eases, and there are many theories cited, applying the equity rule, where the substitution reached the insurance company after death. Hoskins v. Hoskins, 231 Ky. 5, 20 S.W.(2d) 1029; Johnston v. Kearns, 107 Cal. App. 557, 290 P. 640; La Borde v. Farmers' State Bank, 116 Neb. 33, 215 N. W. 559; Mutual Life Ins. Co. v. Lowther, 22 Colo. App. 622, 126 P. 882; Wentworth v. Equitable Life Assurance Soc., 65 Utah, 581, 238 P. 648; Barrett v. Barrett, 173 Ga. 375, 160 S. E. 399, 78 A. L. R. 962; Manning v. Ancient Order of United Workmen, 86 Ky. 136, 5 S. W. 385, 9 Am. St. Rep. 270; State Mutual Life Assur. Co. v. Bessett, 41 R. I. 54, 102 A. 727, L. R. A. 1918C, 961. In the last-cited case, death intervening between the deposit of the notice in the mail and its delivery at the home office, was regarded as one of the contingencies making it impossible to complete the change after all had been done that could be done by the insured.

These cases appear to expound a contrary doctrine. Fink v. Fink, 171 N. Y. 616, 64 N. E. 506. The suit was at law. The Court of Appeals held that the question was one of title, and, the power of appointment not having been strictly and fully exercised, the beneficiary's rights vested at death and the company became her debtor. The equity rule was not involved. The case was distinguished in White v. White (Sup.) 194 N. Y. S. 114, a suit in equity, where the change from mother to wife was made on the day of death, but did not reach the Metropolitan Life Insurance Company until the day after. The court pointed to the distinction between the rule at law and in equity, and, holding that there was substantial...