Chapman v. Scott, 17538

Decision Date01 June 1959
Docket NumberNo. 17538,17538
Citation234 S.C. 469,109 S.E.2d 1
PartiesMrs. Lavinia B. CHAPMAN, Appellant, v. Andrew SCOTT, Executor of the Last Will and Testament of James W. Scott, deceased, Sallie Scott, James W. Scott, Jr., Ruby Ann Scott, Walter Lee Scott and Roy Louis Scott, Respondents.
CourtSouth Carolina Supreme Court

Leatherwood, Walker, Todd & Mann, W. E. Bowen, Greenville, for appellant.

Love, Thornton & Arnold, Greenville, for respondents.

LEGGE, Justice.

James W. Scott died on January 30, 1957, owning a tract of some 17 acres in Greenville County. On February 19, 1957, appellant brought this action to foreclose Scott's mortgage of said premises dated April 26, 1948, securing his note to her of that date in the principal sum of $4,250. After Scott's death appellant, who had been named as beneficiary in three policies of insurance on his life, and who had possession of them, collected their proceeds, amounting to $2,293.29. The only issue before us concerns the executor's claim (disallowed by the Master, but allowed by the Circuit Judge) that Scott's estate is entitled to credit for this amount against his indebtedness to appellant.

In the absence of statutory prohibition, one may in good faith insure his own life for the benefit of anyone, regardless of whether the latter has an insurable interest in his life. 29 Am.Jur., Insurance, Paragraph 355; 44 C.J.S. Insurance § 202. This principle is equally applicable to an assignment or change of beneficiary effected by the insured. 29 Am.Jur., Insurance, Paragraph 357; 44 C.J.S. Insurance § 202. Though not necessary to their decision, it has been affirmed by this court in numerous cases. Crosswell v. Connecticut Indemnity Ass'n, 51 S.C. 103, 28 S.E. 200; Robers v. Atlantic Life Insurance Co., 135 S.C. 89, 133 S.E. 215, 45 A.L.R. 1172; Roberts v. National Benefit Life Insurance Co., 150 S.C. 326, 148 S.E. 179; Henderson v. Life Insurance Co. of Virginia, 176 S.C. 100, 179 S.E. 680; Warren v. Pilgrim Health & Life Insurance Co., 217 S.C. 453, 60 S.E.2d 891.

Where a creditor has been named as beneficiary of a policy of insurance on his debtor's life, his rights in its proceeds depend largely upon the intention of the parties to the insurance contract, and particularly upon that of the insured. Ordinarily he is entitled only to reimbursement for the debt due him, together with such sums as he may have paid to keep the policy in force. 29 Am.Jur., Insurance, Paragraph 1289; 46 C.J.S. Insurance § 1162. But the fact that he is a creditor is not in itself conclusive of that issue, because, as before stated, the insured may, if so minded, make his creditor the absolute beneficiary though the amount of the policy far exceed the amount of the debt.

Because the intention of the parties, which is the key to the problem, must often be gleaned from the circumstances of the particular transaction, the numerous decisions involving conflicting claims of creditor-beneficiary and insured's executor in the proceeds of such policies are of little help in the solution of the issue now before us. Most of them concern the proceeds in excess of the debt; here the beneficiary, holding an obligation of the deceased insured much larger than the proceeds of the policies, claims the right to collect that obligation in full and to retain also the full proceeds of the policies.

Mrs. Chapman and her husband, lately deceased, operated a dairy farm, and also raised and exhibited show horses. They had no children of their own, but adopted and raised four, in addition to three nephews. James W. Scott, a colored boy, entered the Chapmans' employ about 1924, when he was some fifteen years old. He lived on their place, took care of their horses, and did other domestic and farm work. He was a faithful servant. In 1944 he bought, for $3,200, the tract of land in question, with a small house on it, near the Chapmans' farm. In 1948 he borrowed from Mrs. Chapman $4,250, on the security of the mortgage before mentioned; and about the same time he moved with his family to the tract that he had purchased, constructed on it a horse barn, and went into the business of boarding and training show horses and ponies. He continued to do occasional work for the Chapmans, and kept their horses for them. His venture into the business of a boarding and training stable met with success for a time, and he soon increased the capacity of his barn from four to seventeen stalls. His weakness, however, was draink; and as he became more and more addicted to it his clientele left him. By the summer of 1956 he was out of the horse business and back doing occasional work for the Chapmans. On January 30, 1957, at the age of forty-eight, he fell into an abandoned well and was killed.

James Scott was survived by his widow, Sallie, and four children. Several years before his death he and Sallie had separated, she moving into the city of Greenville where she was employed; but they continued to visit each other occasionally. After Sallie moved into the city, two of the children continued for a time to live with James, but one got a job and the other went into the army; none was living with him at the time of his death.

Scott's will was dated August 28, 1945. In it he named his brother, Andrew Scott, executor and trustee; bequeathed $500 to Sallie in lieu of dower; and left to his children the beneficial interest in all of the rest of his property.

There was no evidence that any part of the mortgage debt to Mrs. Chapman, principal or interest, had ever been paid; and the Master found that the amount due thereon, including interest at six per cent. compounded annually, and attorney's fee, totalled $8,129.20. The tract in question was further encumbered by a second mortgage (held by Mrs. Lydia P. Martin, and as to which there is no contest) securing an obligation in the amount of $1,213.72. Evidence was to the effect that the value of the mortgaged premises was between $12,000 and $15,000.

One of the policies here involved, in the amount of $310.00, was issued by Independent Life & Accident Insurance Company in September, 1956. It contained provision for sick benefits. James' mother was named as beneficiary. On November 5, 1956, upon his application, Mrs. Chapman was designated as beneficiary of this policy.

The other two policies with which we are concerned were issued by Metropolitan Life Insurance Company, one in 1952, the other in 1955. Each was in the face amount of $500, with provision for double indemnity in case of accidental death. James' mother was named as beneficiary in each of these policies. It appears from the evidence that one or both of them contained provisions for sick benefits. On December 27, 1956, upon James' application, Mrs. Chapman was designated as beneficiary of each of these policies.

The agent of Independent Life & Accident Insurance Company testified that he had handled, at James' request, the change of beneficiary under that...

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6 cases
  • Froiland v. Tritle, 17659
    • United States
    • South Dakota Supreme Court
    • February 11, 1991
    ...137 (1924); Amick v. Butler, 111 Ind. 578, 12 N.E. 518 (1887); Rittler v. Smith, 70 Md. 261, 16 A. 890 (App.1889); Chapman v. Scott, 234 S.C. 469, 109 S.E.2d 1 (1959). Other courts have noted that this rule applies only where there is not such a disproportion between the debt and the amount......
  • Dibble v. Dibble
    • United States
    • South Carolina Supreme Court
    • July 14, 1966
    ...of the evidence. Twitty v. Harrison, 230 S.C. 174, 94 S.E.2d 879; Simonds v. Simonds, 232 S.C. 185, 101 S.E.2d 494; Chapman v. Scott, 234 S.C. 469, 109 S.E.2d 1; Watson v. Wall, 239 S.C. 109, 121 S.E.2d As pointed out in the circuit court decree family settlements are favored by the courts ......
  • Davis v. Southern Life Ins. Co.
    • United States
    • South Carolina Supreme Court
    • March 8, 1967
    ...interest in his life and this principle is equally applicable to a change of beneficiary effected by the insured. Chapman v. Scott, 234 S.C. 469, 109 S.E.2d 1. It is the contention of the appellant that the change of the beneficiary in the insurance policy here involved was invalid, null an......
  • Rettenmaier v. Rettenmaier
    • United States
    • Iowa Supreme Court
    • November 12, 1963
    ...mecessarily incurred by the creditor in keeping the insurance in force.' In addition to the authorities there cited see Chapman v. Scott, 234 S.C. 469, 109 S.E.2d 1; and Craft v. Miller, 72 S.W.2d 806 From the foregoing authorities we think the question should be determined from the circums......
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