Carter v. Carter

• Decision Date: 08 September 1961
• Docket Number: No. 5277,5277
• Citation: 121 S.E.2d 482,202 Va. 892
• Parties: JOHN SCOTT CARTER, ET AL., ETC. v. WILLIS SCOTT CARTER, INDIVIDUALLY AND AS ADMINISTRATRIX, ETC. Record
• Court: Virginia Supreme Court

Page 482

121 S.E.2d 482

202 Va. 892

JOHN SCOTT CARTER, ET AL., ETC. v. WILLIS SCOTT CARTER, INDIVIDUALLY AND AS ADMINISTRATRIX, ETC.

Record No. 5277.

Supreme Court of Appeals of Virginia

September 8, 1961.

Robert L. Marshall, for the appellants.

Samuel H. Williams (Williams, Robertson & Sackett, on brief), for the appellee.

JUDGE: SPRATLEY

SPRATLEY, J., delivered the opinion of the court.

Indemnity Insurance Company of North America, hereinafter referred to as the insurer, initiated this proceeding by filing a bill of interpleader praying the lower court to determine to whom and in what proportion the proceeds of an accident insurance policy issued by it covering John S. Carter, in the event of his accidental death, should be paid. It alleged that Carter died in the crash of an airplane on October 30, 1959; that he left surviving him Willis Scott Carter, his widow, who qualified as administratrix of his estate, Aurelia I. Carter, his mother, and John Scott Carter and Francis C. Carter, respectively 17 and 7 years of age, his only children. Each of the above named survivors was made a party defendant to the bill, the widow in her own right and as administratrix of the estate of her late husband. A guardian ad litem was appointed for the infants, answers were filed on behalf of each of the defendants, and the cause duly matured.

The facts, set out in the pleadings, in the depositions of witnesses, and by the exhibits, are not in dispute.

John S. Carter was the manager of the plant of American Cyanamid Company at Piney River, Virginia, where he had been employed by that company since 1938. At the time of his death, he was returning in an airplane to his home in Virginia from New York City, where he had gone on business for his company.

In 1949, American Cyanamid Company, sometimes hereinafter referred to as the employer, inaugurated a system of employee insurance, and purchased from the Prudential Insurance Company of America a policy of Group Insurance providing death, hospital and other benefits. On February 1, 1949, there was issued to John S. Carter a certificate of coverage under this policy, with death benefits amounting to $14,000.00, payable to his wife as beneficiary. On January 1, 1950, November 1, 1951, and September 1, 1953, certificates were issued to Carter showing an increase of benefits upon each of the said dates. On January 1, 1957, he was furnished a certificate showing that the amount payable as death benefits had increased to $26,000.00.

Under the terms of that policy, decedent had the right, without the consent of the beneficiary, to change the beneficiary by giving a written notice to his employer on a form provided by the insurer. Accordingly, on January 12, 1951, at the request of decedent, a rider was issued by the insurer containing the provision that, upon the death of the insured, the sum of $2,000.00 should be paid to his mother, Aurelia I. Carter, and the remaining portion to his son, John Scott Carter.

On June 4, 1954, after the birth of his second son, decedent made a further change in his beneficiaries by making the following designation:

'(a) $2,000, or the proceeds if less, to Aurelia I. Carter, Beneficiary, mother of the Insured, if living, otherwise to such of John S. Carter and Francis C. Carter, sons of the Insured, as may be living, Beneficiaries, in equal shares or to the survivor of them, if any, otherwise to the executors or administrators of the Insured; and

'(b) The remaining portion, if any, of the proceeds to such of said sons as may be living, in equal shares or to the survivor of them, if any, otherwise to the executors or administrators of the Insured.'

In 1950, American Cyanamid Company purchased additional insurance for the benefit of its employees by taking out a policy with the Indemnity Insurance Company of North America, known as a Blanket Accident Policy. This policy provided coverage for its employees, including the decedent, in the event of death, as a result of an accident while engaged in travel on the business of the company. The employer company issued a memorandum dated April 11, 1955, found in the files of the decedent after his death, addressed to 'Division of Department Executives, Plant and Office Managers, All Holders of Air Travel Cards -- Subject: Travel Insurance for Employees,' superseding a memorandum of June 5, 1951. In the memorandum, it was stated that the additional coverage was 'intended as a complement to its other group insurance for employees. ' It set out a schedule showing death benefits based on the rate of employee's regular fixed compensation in the form of salary or wages. It stated that 'Indemnity for loss of life of the insured employee is payable to the beneficiary designated by the insured employee under the Company's Employees Group Insurance Plan, or in the event no beneficiary has been designated thereunder, payment shall be made to the estate of the insured employee.'

A clause of the Blanket Accident Policy, in force at decedent's death, contained an almost identical provision setting out that in the event of accidental death, indemnity is 'payable to the Beneficiary, or Beneficiaries in the proportions designated by such Insured Employee under the Group Life Policy carried by the Employer, if any, otherwise, as on file with the employer, if no beneficiary designated, then to the estate of such Insured Employee.'

In 1950, when the Blanket Accident Policy was issued, coverage of the decedent amounted to $28,000.00. Carter had a coverage of $40,000.00 at his salary scale according to the memorandum of April 11, 1955. The coverage increased to $52,000.00 in 1956; to $118,000.00 in 1958; and in 1959 amounted to $126,000.00.

Decedent's salary at the date of his death was $15,000.00 per year. The evidence does not show that Carter received any formal notice of the precise amount of the increased benefits arising from increases in his salary, except by the memorandum of April 11, 1955, which disclosed that his coverage was $40,000.00 at the time of its issue.

Both the 1955 memorandum and the superseded memorandum of June 5, 1951, likewise addressed to the executives of the several divisions of the company, plant and office managers, set out the benefits of the Blanket Accident Policy and suggested that all employees be made acquainted with their contents. In June, 1951, decedent was the personnel manager of the plant of the American Cyanamid Company.

The trial court held that since it appeared from the evidence decedent knew that his coverage under the Blanket Accident Policy amounted to $40,000.00, when he designated his mother and his sons as beneficiaries under the Group Policy, and was thereafter unaware of any increased coverage, and made no designation as to the payment thereof, he effectively designated the distribution of $40,000.00 only, that is, $2,000.00 to his mother and $19,000.00 to each of his sons, and died intestate as to the balance of the amount payable under the policy, that is, $86,000.00.

The court thereupon decreed that the Indemnity Insurance Company of North America, after the payment of a fee of $100.00 to the guardian ad litem of the infant defendants, and a fee of $200.00 to their counsel for services rendered in this proceeding, pay to Aurelia I. Carter the sum of $2,000.00; to the First National Trust and Savings Bank of Lynchburg, Virginia, guardian of John Scott Carter the sum of $19,000.00, and as guardian of Francis C. Carter a like sum of $19,000.00, the beneficiaries designated under the Group...