Carruth v. Aetna Life Ins. Co.

• Decision Date: 16 February 1924
• Docket Number: 3555.
• Citation: 122 S.E. 226,157 Ga. 608
• Parties: CARRUTH v. ÆTNA LIFE INS. CO. ET AL.
• Court: Georgia Supreme Court

122 S.E. 226

157 Ga. 608

CARRUTH v. ÆTNA LIFE INS. CO. ET AL.

No. 3555.

Supreme Court of Georgia

February 16, 1924

Syllabus by the Court.

Where a "promise is made for the purpose of conferring a benefit on a person, though he be not a party to the contract, or furnish the consideration for the promise, he can bring suit upon it." Sheppard v. Bridges, 137 Ga. 615 621, 74 S.E. 245, 248. Where an insurance company issues a group policy of insurance on the lives of the employees of a manufactory, naming the manufacturing corporation as beneficiary, but contemporaneously therewith the latter corporation issues to the employees who are referred to in the policy of insurance a certificate promising that the sums payable respectively as set forth in the policy will be collected and paid by the employer corporation, except upon the breach of certain conditions named in the policy and also in the certificate, the insurance named in the policy and in the certificate may be recovered upon the death of the person named in the certificate by the personal representative of the insured.

(a) A contract for the benefit of a third person, which evidences an intent to benefit such third person and an obligation on the part of the promisee to the third person, creates an equitable right or interest in the beneficiary, growing out of the trust relationship, which may be enforced by the real beneficiary or her personal representative. The case would not be altered if the transaction be considered as a gift if it be accepted by the donee.

(b) "If the contract, although in form it is with A., is intended to secure a benefit to B., so that B. is entitled to say that he has a beneficial right as cestui que trust under the contract, then B. would, in a court of equity, be allowed to insist upon and enforce the contract." Gandy v Gandy, 30 L. R. Ch. Div. 57. A person not a party to the contract and not a privy to the consideration may, if the contract was entered into for his benefit, maintain an action on it if he has either a legal or equitable interest in the performance of the contract.

Performance of stipulations in a contract of insurance, such as that the employer be given written notice of sickness or of absence from the employment, but which are inserted for the benefit of the employer, may be waived by the actual knowledge of the employer, supplying the same information as would have been conveyed had the required notice been given.

(a) One is not charged with the performance of any duty which is prevented by providential circumstances which are beyond human control. Where a request for permission for absence on account of sickness was prevented by the nature of the attack and the continuance of the illness until death supervened and prevented such request for permission to be absent, there was presented such a reasonable excuse for noncompliance with the stipulation as was the equivalent of compliance therewith.

Questions as to the sufficiency of the excuse offered, and the diligence of the beneficiary, are generally questions of fact to be determined by the jury according to the nature and circumstances of the particular case.

Where it appears from the allegations of an equitable petition that the defendants named therein have a common interest in the subject-matter of the suit, or where, as in the present case the nature of the contract is such that the promisee becomes a mere trustee for the disbursement of the funds which the promisor obligates himself to pay, there is such privity as authorizes the real beneficiary of the contract to enforce it, and as to require the promisor to pay the promisee in order that the latter in turn may be required to pay the fund to the real beneficiary or her representative. A petition cannot be said to be multifarious for misjoinder of parties where the presence of all the parties named as defendants is essential to the grant of the relief sought by the petition.

Error from Superior Court, Troup County; C. E. Roop, Judge.

Action by Lillian Carruth, administratrix of the estate of Ethel Harmon, deceased, against the Ætna Life Insurance Company and another. Judgment for defendants, and plaintiff brings error. Reversed.

Mrs Lillian Carruth, as administratrix of the estate of Ethel Harmon, filed a petition against the Ætna Life Insurance Company and the Lanette Cotton Mills. Both defendants are foreign corporations, but are alleged to have an agent and office in Troup county, Ga., for the purpose of transacting business. The action is based on the fact that the Ætna Life Insurance Company insured the employees of the Lanette Cotton Mills, including the decedent, under group policy No. 379 and that Ethel Harmon had departed this life on September 22, 1918, holding a "certificate" No. 937 under the provisions of the policy issued to the Lanette Cotton Mills. The policy and certificate both bear as of October 25, 1917. A copy of the certificate was attached to the original petition, and by amendment the plaintiff added a copy of the policy and the application therefor. The policy of insurance is as follows:

"The Ætna Life Insurance Company of Hartford, Connecticut (herein called the company), hereby agrees with the Lanette Cotton Mills of Lanette, county of Chambers and state of Alabama (herein called the employer), to pay the amount stated as the sum insured upon any card attached hereto bearing the stamp seal of the company, which card forms a part hereof, less any unpaid premium hereon for the current premium paying period, on due proof of the death of the person described on said card (herein called the insured) within the term of one year from five o'clock p. m. of the date hereof, ending at five o'clock p. m. on the twenty-fifth day of October, 1918; provided that the insurance on such life has not been previously terminated and such card is then returned to the company. Any sum payable by the company as a death claim shall be paid to the beneficiary indicated as such in the application for this insurance. The foregoing agreement is made in consideration of the application for this policy, which application is hereby made a part of this contract, and a copy of which is attached hereto, and in further consideration of the premium of forty-four hundred, fifty-four, and 53/100 dollars to be paid upon delivery of this policy. The policy is issued and accepted subject to all the conditions, benefits, and privileges described on the subsequent pages hereof, and which are hereby made a part of this contract.

In witness whereof the said Ætna Life Insurance Company has by two of its executive officers signed this contract in the city of Hartford and state of Connecticut, this twenty-fifth day of October, 1917."

There are various stipulations as to renewal, payment of premiums, incontestability, additions and amount of insurance, termination for discontinued employment, settlement of premiums, etc., which are immaterial in this case. In the application of the Lanette Cotton Mills (which is made a part of the policy) for group life insurance upon the annual renewable-term plan, renewable for 49 years, with premiums payable annually, upon the lives of its employees, it is stated that the said employees are engaged in the kind of work usual to cotton mill employees. The application proceeds as follows:

"The attached descriptive list of the persons whose lives are to be insured by said policy described [describes] each and all the employees of the employer, except the following, who are accepted for the reason stated below: No exceptions.

Schedule of insurance: All employees in their first year of service insured for $300.00. All employees in their second year of service insured for $350.00. All employees in their third year of service insured for $400.00. All employees in their fourth year of service insured for $450.00. All employees in their fifth year and more of service insured maximum $500.00. Beneficiary as per company's list form No. 801 attached hereto: Lanette Cotton Mills.

It is requested that any sum payable under this policy as a claim shall be paid to the Lanette Cotton Mills, employer, as beneficiary. The above schedule shall apply to all employees on pay roll at this date. Increase as per above schedule is desired to apply both for services already rendered and for services rendered in the future. New employees engaged after this date shall not be insured until after they have been in the service for thirty days. Rate classification, schedule C. Said persons proposed to be insured are now working for the employer on full time and for full pay, and are all in good health at the present time to the best of applicant's knowledge and belief.

Note.--It is not expected to have this insurance cover any person who is now temporarily absent from regular duties on account of poor health; but any such person may be hereafter insured in accordance with the conditions of the policy hereby applied for, if the company is notified that such person has recovered.

Signed at West Point, State of Georgia, This 25th day of October, 1917. Lanette Cotton Mills, Geo. H. Lanier, Vice President & Gen. Mgr."

In the fourth paragraph of the petition the plaintiff alleged that the insurance was given to the deceased Ethel Harmon in consideration of the continued and faithful services of the deceased, and shows that the Lanette Cotton Mills delivered a certificate of insurance under said group policy to Ethel Harmon and other employees of the said mill, in order to make their employment with the mill more attractive...