American Life Ins. Co. v. Hauer, 38885

• Decision Date: 02 November 1953
• Docket Number: No. 38885,38885
• Citation: 218 Miss. 560,67 So.2d 523
• Parties: AMERICAN LIFE INS. CO. v. HAUER.
• Court: Mississippi Supreme Court

Page 523

67 So.2d 523

218 Miss. 560

AMERICAN LIFE INS. CO. v. HAUER.

No. 38885.

Supreme Court of Mississippi.

Nov. 2, 1953.

Wells, Thomas & Wells, Roland D. Marble, Jackson, for appellant.

Holcomb & Curtis, Clarksdale, for appellee.

LEE, Justice.

This was a suit in the chancery court by Mrs. Corinne W. Hauer against American Life Insurance Company to recover the proceeds of an insurance policy on the life of Jesse H. Whitworth. Issue was joined and, on final hearing, there was a decree for the complainant. The Insurance Company appealed.

The policy was taken out by Whitworth in 1944. It became lost, and on August 20, 1946, the Company issued a duplicate in which Mrs. Hauer, sister of the policyholder was named the beneficiary. August 28th was the date for the payment of annual premiums. All premiums had been paid up to August 28, 1950, but he failed to remit the premium due on that date. The policy provided for its forfeiture in case of nonpayment of premiums, but allowed a grace period of thirty-one days. On September 19, 1950, during the grace period, Whitworth shot himself in Memphis, Tennessee and was placed in a hospital and remained unconscious thereafter until his death on September 29, 1950. On September 21, 1950, Mrs. Hauer wrote the Insurance Company the following letter:

'718 Leflore Ave.

'Clarksdale, Miss.

'Sept. 21, 1950

'American Life Ins. Co.

'Birmingham, Ala.

'Dear Sirs:

'Could you advise the status of policy No. 34785 as to premiums and if they are up to date.

'Thanking you for this information.

'Respectfully

'Mrs. Corinne Hauer

'Sister of the Insured'

From its Birmingham, Alabama, office on September 26, 1950, the Insurance Company, in reply, wrote the following letter:

September 26, 1950

'Mrs. Corinne Hauer

'718 Leflore Ave.

'Clarksdale, Miss.

'Re: 34785

'Dear Mrs. Hauer:

'In answer to your letter of September 21, regarding Policy No. 34785, we regret that we cannot give you the information. We may give the information only to the insured.

'Very truly yours,

'/s/ E. B. Montgomery

'Vice-President' Mrs. Hauer testified that she did not have the policy in her possession, but made the inquiry so that she could pay the premium, if due, and that she was ready, willing and able to do so. She did not obtain the policy until after her brother's death, at which time the grace period had alreadly expired.

It is the contention of the appellant that a beneficiary, where the right to change is reserved, is not a party to an insurance contract and has no vested interest until the death of the insured; that it was under no duty to give to the appellee the information which she requested; that the premium was not paid within the grace period; and that the benefits under the policy became forefeited.

The appellee contends that, as the beneficiary, she had the right to pay the premium; that appellant's refusal to advise her as to the status of the premiums made it impossible for her to pay the same, although she was ready, willing and able to do so, and thereby defeated her right to do so; and that appellant is estopped to declare a forfeiture under such circumstances.

It seems to be settled beyond peradventure that the beneficiary in an insurance policy, where the right to change is reserved, has no vested interest therein until the death of the insured. Lamar Life Insurance Company v. Moody, 122 Miss. 99, 84 So. 135; Bank of Belzoni v. Hodges, 132 Miss. 238, 96 So. 97; Faulkner v. Faulkner, 192 Miss. 358, 5 So.2d 421. These cases recognized the right of the insured to pledge his policy without the consent of the beneficiary and that his will governed. See also Fleming v. Grimes, 142 Miss. 522, 107 So. 420, 45 A.L.R. 618, which conformed to the rule announced above. These cases did not deal with the question as to whether a beneficiary may pay premiums on the policy.

The validity of a provision that nonpayment of premiums will effect a forfeiture of benefits is so widely recognized as to need no citation of authority. This Court, in New York Life Insurance Company v. Alexander, 122 Miss. 813, 85 So. 93, 15 A.L.R. 314, so held; and also, that sickness and insanity will not avoid such result. See also New York Life Insurance Company v. Morris, 137 Miss. 101, 102 So. 71. In these cases, the insurance company was in nowise to blame.

Much significance, in the decision of this case, hinges on whether or not the beneficiary had the right to pay the premiums. None of our cases withhold such right. On the contrary, 29 Am.Jur., Insurance, Sec. 424, p. 356, says: 'Although there is some authority to the contrary, it is generally held that where an insured takes out a policy on his life for the benefit of another, the beneficiary, although he has no insurable interest in the life of the insured, has a right to keep the contract alive and pay the premiums thereon after the discontinuance of payment of premiums by the insured.' See also 44 C.J.S., Insurance, Sec. 347, page 1320, where the ordinary rule is said to be that premiums may be paid by any one, including the beneficiary. In Whitehead v. New York Life Insurance Company, 102 N.Y. 143, 6 N.E. 267, it was held that where the wife and children were the beneficiaries in policies on the life of their husband and father, they had the right, if the insured failed to pay the premiums, to pay themselves, and so continue the policies in force.

When, in Faulkner v. Faulkner, supra [192 Miss. 358, 5 So.2d 422], it was said that 'the original beneficiary had no vested rights but only an inchoate imperfect and ambulatory right prior to insured's death', the Court was dealing with the question as to whether or not the insured could and did change the beneficiary.

So, while the beneficiary cannot prevent a change in beneficiary or the encumbrance of...