Carnes v. Franklin Life Ins. Co.

• Decision Date: 04 February 1936
• Docket Number: No. 7892.,7892.
• Citation: 81 F.2d 800
• Parties: CARNES v. FRANKLIN LIFE INS. CO. et al.
• Court: U.S. Court of Appeals — Fifth Circuit

81 F.2d 800 (1936)

CARNES v. FRANKLIN LIFE INS. CO. et al.

No. 7892.

Circuit Court of Appeals, Fifth Circuit.

February 4, 1936.

Ed C. Brewer and Fred H. Montgomery, both of Clarksdale, Miss., for appellant.

J. L. Roberson, Sam C. Cook, Greek P. Rice, and J. M. Talbot, all of Clarksdale, Miss., for appellee.

Before FOSTER, SIBLEY, and WALKER, Circuit Judges.

WALKER, Circuit Judge.

The Franklin Life Insurance Company, an appellee (herein referred to as the insurer), filed its bill of interpleader (28 U.S.C.A. § 41 (26) making defendants thereto Lillian L. Carnes, the appellant, and P. F. Williams, herein referred to as the appellee. The bill made an exhibit thereto a policy of insurance, No. 118060, in the sum of $5,000 on the life of Henry Cooper Carnes, issued by the insurer in January, 1918, and, after alleging the death of the insured while that policy was in force, that there was due on the policy, when proof of death was received on November 9, 1933, $3,225.11, being the amount of the policy less the amounts of a loan thereon and a premium note, and that appellant and appellee each claimed the amount due on the policy, offered to pay that amount into court, and prayed that appellant and appellee be decreed to interplead, and that the insurer be discharged from all further liability under said policy. By answer to the bill, appellant claimed the proceeds of the policy as the beneficiary named therein, and appellee by answer claimed those proceeds by virtue of a written instrument, dated February 24, 1933, executed by the insured, and set out below.

The facts are not in dispute. When the policy was issued, the insurance was made payable to insured's executors, administrators, or assigns. It contained the following provisions:

"The Insured may change any designated Beneficiary at any time during the continuance of this Policy, subject to the written consent of the Assignee, if any, by filing with the Company a written request accompanied by this Policy, such change to take effect upon the indorsement of the same on the Policy by the Company, whereupon all interest of the former Beneficiary shall cease. If no Beneficiary shall survive the Insured the Policy shall be payable to the Insured's Executors, Administrators or Assigns. * * *

"No assignment of this policy shall be binding upon the company unless filed in duplicate at the Home Office, one to be retained by the company and the other to be returned. The company assumes no responsibility for the validity of any assignment."

Pursuant to the above first set out provision, the insured changed the beneficiary three times; the last of such changes being made in September, 1927, when the policy was made payable to appellant, the wife of the insured. In January, 1933, the insured had two other policies, each for $5,000, on his life, issued by the insurer. Loans had been made by the insurer on each of the three policies; the amount of the loan on the policy now in question being about $1,700. All the policies would lapse unless premiums and interest were paid by the 15th or 16th of February, 1933. In January, 1933, the insured applied to the Delta Grocery & Cotton Company, of Clarksdale, Miss., through appellee, its manager, for the loan of an amount sufficient to make the payments due on the policies in February, 1933. On account of financial conditions then existing, that application was denied. Then the insured made a personal appeal to appellee, who was a friend of the insured, for a loan of the amount required to keep in force the two policies other than the one now in question; the insured then stating to appellee that in any event he was going to drop the policy now in question, and, if appellee wanted that policy, insured would give it to appellee, and appellee could pay the premiums or drop it, whatever he wanted to do, if appellee would make arrangements to keep alive the other two policies. After considering this proposition several days, appellee told the insured that he would undertake to keep the two other policies alive for the benefit of the insured, and accept the policy now in question if he could arrange with the insurer to pay premiums in monthly installments. After the appellee had been informed by the insurer that it would be satisfactory to pay the premiums in monthly installments, the appellee agreed to keep the other two policies alive and to accept the policy now in question. Thereupon the insured delivered that policy to the appellee, and executed and delivered to the appellee the following instrument:

"To Be Executed in Duplicate and Both Sent to the Home Office of the Company.

"For Value Received, I hereby sell, transfer and assign to P. F. Williams of Clarksdale, State of Mississippi, executors, administrators, successors, and assigns, policy No. 118060 issued by The Franklin Life Insurance Company of Springfield, Illinois, upon the life of Henry Cooper Carnes, the Insured, and all right, title and interest therein including the right to the Assignee herein to exercise any and all options, rights, and privileges in said policy given to the Insured and/or beneficiaries, and to execute a valid surrender of said policy and collect and receipt for the proceeds thereof at any time for the sole use and benefit of said assignee; subject to the conditions of said policy and to the rules and regulations of the Company, and to any lien, charge, or indebtedness now or hereafter existing against or on account of said policy in favor of said The Franklin Life Insurance Company. The undersigned warrant the validity and sufficiency of the foregoing assignment, and that no proceedings in bankruptcy have been taken by or against, nor has any assignment for the benefit of creditors been made by the undersigned or either of them.

"In Witness Whereof, I have hereunto set my Hand and Seal this 24th day of February, 1933.

"H. C. Carnes, Insured. Seal "Henry Cooper Carnes, Seal."

The form of that instrument was furnished by the insurer, and it was executed and delivered to the insurer in accordance with its regulations. On the two other policies appellee made payments aggregating $205.82. On the policy now in dispute appellee made payments aggregating $73.20, with the result that that policy, as well as the other two, was in force when the insured died. With reference to those payments the appellee testified:

"The only amounts that Mr. Carnes owed the witness at any time were for money the witness advanced to the insurance company to keep alive the two policies not involved in this litigation. The witness produced his ledger which showed that he made the payments above referred to, and that the payments for the two policies not involved were charged to Mr. Carnes. This ledger likewise showed payments that the witness made to the insurance company on the policy involved in this litigation, being policy 118060. None of these payments with reference to the last mentioned policy were charged to Mr. Carnes, but all of them, on the policy involved in this litigation, were made by the witness for his own account; that said policy had been assigned to him by Mr. Carnes, with the understanding that same was to be the sole property of the witness; that the way the matter of the payment of the premiums on the two policies not involved in this litigation was handled was that Mr. Carnes, during February, 1933, signed and delivered to the Clarksdale agency of the Franklin Life Insurance Company, a series of notes; the first note was filled out for the total amount due, and was payable in thirty days; the balance of the notes were blank as to amount and date of payment; when the first note became due, the witness made a payment thereon for Mr. Carnes; the insurance company then filled out one of the blank notes for the balance due; then, when that note became due, the witness would make another payment sufficient in amount to keep the two policies alive for a month; that note would be taken up and another note filled out for the balance due, and as the notes fell due from time to time, payments would be made by the witness to keep same alive and another note would be filled out for the balance in each instance; that all of these notes were signed by Mr. Carnes; that Mr. Carnes did not give notes, however, for the premiums due or to become due on the policy involved in this litigation which had been assigned to the witness; that the premiums falling due in 1933 on the policy given to him were handled by the witness giving his personal notes therefor and making payments thereon from month to month until the date of Mr. Carnes' death;...