Barron v. Liberty Nat. Bank of South Carolina at Columbia

• Decision Date: 10 June 1925
• Docket Number: 11782.
• Citation: 128 S.E. 414,131 S.C. 443
• Parties: BARRON v. LIBERTY NAT. BANK OF SOUTH CAROLINA AT COLUMBIA.
• Court: South Carolina Supreme Court

128 S.E. 414

131 S.C. 443

BARRON v. LIBERTY NAT. BANK OF SOUTH CAROLINA AT COLUMBIA.

No. 11782.

Supreme Court of South Carolina

June 10, 1925

Appeal from Common Pleas Circuit Court of Richland County; W. H Townsend, Judge.

Suit by Daisy S. Barron against the Life Insurance Company of Virginia and the Liberty National Bank of South Carolina at Columbia, wherein first-named defendant paid amount of controversy into court, and contest proceeded between plaintiff and remaining defendant. From a judgment for plaintiff, such defendant appeals. Affirmed.

The following is the decree of the trial court:

This case was heard before me at chambers without a jury, by consent of counsel representing all parties to the action.

This case arises out of the issuance by the Life Insurance Company of Virginia of a $10,000 policy of insurance, dated December 12, 1922, on the life of Charles H. Barron, of Columbia, S. C., payable to Daisy S. Barron, the plaintiff if living at the death of the insured, otherwise to his executors or administrators, which policy was thereafter by the insured, Charles H. Barron, pledged as collateral security for his obligation with the defendant, the Liberty National Bank of South Carolina at Columbia. The plaintiff Daisy S. Barron, claiming the proceeds of the insurance upon the death of her husband, the insured, Charles H. Barron, in November, 1922, brought this action against the insurance company, which thereafter by interpleader proceedings paid into court the commuted value of the policy, and had the defendant, the Liberty National Bank of South Carolina at Columbia, which claimed the proceeds of the policy by virtue of its pledge, substituted as defendant.

The only question involved in this case, therefore, is which of the claimants to the fund, the beneficiary named in the policy, Daisy S. Barron, or the defendant, the Liberty National Bank, is entitled to the proceeds of the policy which have been paid into court.

The facts in the case are practically undisputed, and will be, so far as necessary, stated in this opinion.

In the application for insurance, the insured reserves "the right, without the consent of the beneficiary or beneficiaries, to receive any benefits, exercise every right and enjoy every privilege conferred upon the insured by the policy." And also reserves "the right to change the beneficiary from time to time, if the policy or any interest therein be not assigned."

The policy names as the beneficiary, Daisy S. Barron, wife of the insured, if living at the death of the insured, otherwise to be payable to the insured executors, administrators, or assigns, subject to the right of the insured, reserved in said application, to change the beneficiary or beneficiaries as provided on the second page of the policy.

On the second page of the policy it is provided: "When," as in this case, "the right of revocation has been reserved, the insured may at any time, while the policy is in force, by written notice to the company change the beneficiary or beneficiaries under this policy, subject to any previous assignment; such change to take effect only upon indorsement of same on this policy by the company, whereupon all rights of the former beneficiary or beneficiaries shall cease."

There has never been any notice given the company, of any intention or attempt to change the beneficiary designated in the policy, and no such change has been made. But the Liberty National Bank claims that the insured, acting under reserved rights in said application and policy, acting both for himself and his wife, the beneficiary named in the policy, pledged and assigned the policy in question to it as collateral security for the payment of his note for $9,550, or any other liability or debt then due, or thereafter to become due to it, and that no part of said $9,550 has been paid.

The attempted pledge or assignment was signed, or made, by the insured only, and his wife neither joined in it, nor knew of it during his lifetime, and it was not made in the form prescribed in the policy.

The question before me is, Does such pledge or assignment entitle the bank to the insurance, as against the wife? The authorities applicable to this question clearly show that Daisy S. Barron, the wife, is entitled to the proceeds of the insurance.

(1) The overwhelming weight of authorities support the position that the beneficiary named in the insurance policy has an interest in the policy which can only be divested by a strict compliance by the insured with the provisions of the policy regulating a change of beneficiary. 14 R. C. L. 1390, 1391; Johnson v. N.Y. L. Ins. Co., 56 Colo. 178, 138 P. 414, L. R. A. 1916A, 868; 2 Joyce on Ins. § 1678; Holder v. Ins. Co., 77 S.C. 299, 57 S.E. 853; Deal v. Deal, 87 S.C. 400, 401, 69 S.E. 886, Ann. Cas. 1912B, 1142; Neary v. Ins. Co., 92 Conn. 488, 103 A. 661, L. R. A. 1918F, 306, and note; Sangunitto v. Goldey , 88 A.D. 78, 84 N.Y.S. 989; Metro. L. Ins. Co. v. Zgliczenski (N. J. Ch.) 119 A. 29; Reid v. Durboraw (C. C. A.) 272 F. 101 (opinion by Judge Woods).

There having been no attempt to comply with the provisions of the policy as to change of beneficiary, the interest of the beneficiary named therefor has clearly not been affected.

(2) Under the South Carolina statutes (section 4099, Code 1922, vol. 3), where a life insurance policy is payable to the wife, or wife and children, of the insured, the named beneficiary, i. e., the wife and children, are entitled to the proceeds of the insurance in preference to any person claiming through the husband insured. Code 1922, vol. 3, § 4099; 2 Joyce on Ins.§§ 2345, 4007 (note) p. 1651. This policy, having been made in South Carolina, is governed by the South Carolina laws. Owens v. Ins. Co., 84 S.C. 253, 66 S.E. 290, 137 Am. St. Rep. 845. And under this statute this policy could not be assigned so as to affect the rights of the wife without the consent of the wife. Eadie v. Slimmon, 26 N.Y. 9, 15, 82 Am. Dec. 395; Union Cen. Life Ins. Co. v. Woods, 11 Ind.App. 333, 37 N.E. 180, 39 N.E. 205.

(3) The pledge of the insurance policy by the insured, Charles H. Barron, even though it might be regarded as a sufficient assignment of the proceeds of the policy to bar the insured or his representatives, can at most affect the contingent interest of the insured, and cannot be regarded as a request to change the beneficiary so as to affect or impair the rights of the beneficiary named in the policy. (4) Joyce on Ins. § 2322 (a), p. 3970. Johnson v. N.Y. Life Ins. Co., 56 Colo. 178, 138 P. 414, L. R. A. 1916A, 868; Deal v. Deal, 87 S.C. 400, 401, 69 S.E. 886, Ann. Cas. 1912B, 1142; Schoenholz v. N.Y. Ins. Co., 234 N.Y. 24, 136 N.E. 227; L. R. A. 1916A, note 878, and cases cited.

Under the facts of this case and of the authorities cited, I am clearly of the opinion that the plaintiff, Daisy S. Barron, is entitled to the proceeds of the policy already paid into court.

It is therefore ordered and adjudged that the plaintiff, Daisy S. Barron, have judgment for the sum of $6,838.34, now in the hands of C. E. Hinnant, clerk of court for Richland county, and that the said C. E. Hinnant is hereby authorized and directed forthwith to pay over the said sum, together with the accrued interest thereon, to the plaintiff, Daisy S. Barron, or her attorneys.

Marion J., dissenting.

Sloan & Sloan, of Columbia, for appellant.

Melton & Belser, of Columbia, for respondent.

W. C. COTHRAN, A. A. J.

Suit was begun in the court of common pleas for Richland county, in January, 1923, by the respondent against the named insurance company, to recover the sum of $6,838.34, the commuted value of an insurance policy issued on the life of Charles H. Barron. By order of court, the insurance company was permitted to pay into court the amount in controversy, and thereupon the bank was substituted as the real defendant. During the life of Barron he had deposited the policy with the bank as collateral security to a note. Upon his death, the proceeds of the policy were claimed by Mrs. Barron as beneficiary and by the bank under its collateral note.

The foregoing facts being undisputed, the cause was submitted to his honor, Judge Townsend, for decision. Under this decree, the plaintiff, Mrs. Barron, was awarded the money so deposited with the clerk, and hence this appeal by the bank.

By five exceptions, error is imputed to the presiding judge, all of which, however,...