Arnold v. Newcomb
| Decision Date | 25 April 1922 |
| Docket Number | 17112 |
| Citation | 104 Ohio St. 578,136 N.E. 206 |
| Parties | Arnold Et Al. v. Newcomb Et Al. |
| Court | Ohio Supreme Court |
Life insurance - Right to proceeds determined, how - Statutes regulations and by-laws construed with contract, when - Change of beneficiary effected, how - Section 9467, General Code - Status of insured changed by marriage - Transfer of beneficiary executed -Failure by wife to secure new certificate - Or approval of home office during insured's lifetime.
1. The rights of contending parties to the proceeds of an insurance policy or certificate in a mutual benefit association in this state, each claiming to be the lawful beneficiary thereof are determined by a construction and interpretation of the contract itself.
2. Pertinent, valid legislative acts in force at the time of the making of the contract, unless the effect thereof is subsequently changed by mutual act or agreement of the insurer and insured, together with the valid rules regulations and by-laws of the association to which the certificate or policy makes reference, must be taken into account in such construction, as a part of the contract.
3. In order to effect a change of the beneficiary named in the insurance policy or certificate the insured must follow and substantially comply with the method prescribed in the rules regulations and by-laws of the association.
4. Where, within certain restrictions, the statute (section 9467, General Code) permits the insured to change his beneficiary in accordance with the rules, laws and regulations of the society, and where the rules, laws and regulations of the society, in harmony with the statute, provide for a change of beneficiary and the method by which the same may be accomplished, the right of the insured who follows the prescribed method in effecting the change may not be questioned.
Where an Insured in a benefit association, having acquired a different status by entering into a marriage contract during the continuance of his insurance contract, and with the manifest intention of making his wife the beneficiary, executes the transfer of beneficiary on the back of the policy in the manner and form provided therefor, delivering the same to his wife and continuing the policy in force by the payment of dues until the time of his death, with- out making further attempt to change the beneficiary for recover possession of the policy, and where the wife keep the policy and through inadvertence or ignorance fails to forward it to the general secretary and treasurer until after the death of the insured, and the home office of the association receives and cancels the policy and acknowledges liability thereon, but declines to issue a new certificate with new designation of beneficiary, such transfer, when challenged in an action between the wife and former beneficiaries, will be held to operate as a change of beneficiary in favor of the wife, in the absence of a rule or by-law that the approval of the home office must occur during the life time of the insured.
William B. Arnold became a member of The Brotherhood of Locomotive Firemen & Enginemen, a fraternal beneficiary association, in 1907. The brotherhood issued to him a certificate or policy for $3,000, in which he named as beneficiary his three sisters, who are the defendants in error herein.
Ten years later, to-wit, on the 3d day of December, 1917, he married Alice M. Arnold, the plaintiff herein, and they lived together as man and wife until the time of his death, which occurred accidentally, in the course of his employment, on the first day of March, 1919.
The certificate or policy remained in full force, through the payment of dues or premiums, until the time of his death.
On the first day of May, 1918, some ten months prior to his death, Arnold went before a notary public in Hamilton county, and on the form printed on the policy for change of beneficiary, revoked the des- ignation of his sisters, the defendants in error herein, as his beneficiaries, and named the plaintiff in error, his wife, as the beneficiary under the policy. The filling out of the form on the back of the certificate and the acknowledgment of the same before a notary public were in full accord with the provisions of the policy contract for effecting the change of beneficiary.
At the same time, Arnold delivered the policy to his wife, continued to pay dues and premiums thereon, and, so far as the record shows, never had either possession or right of possession of the same there-after.
The certificate with the name of Alice M. Arnold filed in as beneficiary was not returned to the Brotherhood at its office in Cleveland, Ohio, until the 19th day of April, 1919, when Alice M. Arnold sent the policy in together with the proof of death.
Her claim is that the failure to forward it to the home office for change of beneficiary was through ignorance or inadvertence.
The home office of the beneficial association, upon receipt of the certificate, canceled the same and refused to pay the amount due thereon, for the reason that the beneficiary named through the act of the insured in transferring and making his wife the beneficiary, as was shown by the certificate, did not correspond to the beneficiaries appearing on the records of the company.
Under the constitution and rules of the fraternal order it was provided that in the event there should be no legally designated beneficiary, the funds due on the policy should be paid as follows, in the order named, to-wit: first, to the widow; second, to the child or children; third, to the mother; fourth to the father; and fifth, to the sisters and brothers equally.
The widow filed her petition in the court of common pleas, seeking recovery either as legally designated beneficiary, or as widow, and made the fraternal order and the original beneficiaries all parties defendant.
The sisters filed an answer and cross-petition, in which they claim to be entitled to the fund, as the legally designated beneficiaries.
The fraternal order filed an answer and inter-pleader, acknowledged liability, and answered interrogatories, which fully set out the essential and pertinent rules and by-laws of the association, and upon its motion and the payment into court of the amount of the fund the court dismissed it as a party to the action.
The plaintiff filed her reply to the answer and cross-petition, and to the answer and interpleader, and later filed her amended petition. Thereupon the defendants below, defendants in error here, filed their motion for judgment on the pleadings.
This the court sustained, and judgment was duly entered in favor of the defendants and against the plaintiff. On error to the court of appeals the judgment was affirmed, and it is that judgment that this court is called upon to review.
Mr. Chas. S. Betl and Mr. Thos. L. Michie, for plaintiff in error.
Mr. L. W. H. Peyton and Mr. Ben B. Nelson, for defendants in error.
The question for determination is whether it was reversible error for the nisi prius court to sustain the motion for judgment on the pleadings.
In the consideration of this question, and as a basis thereto, we will be dealing with some firmly established general principles. The relationship of the insured and insurer is founded on contract, and the respective rights of the parties thereto are confined and limited to the valid terms of the contract. As a part of the contract, consideration must be given to the valid rules and by-laws of the fraternal association, as well as the statutes which are applicable thereto. It has been repeatedly held that both the statutes and the rules and by-laws become a part of the contract, and it is just as well settled that in changing the beneficiary to an insurance contract the rules and by-laws, as well as the pertinent provisions of the law, must be substantially complied with, in order to give effect to the change.
The statutes bearing upon this subject are Sections 9467 and 9469, General Code, the former providing in part as follows:...
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