Cronbach v. Aetna Life Ins. Co.

• Decision Date: 22 May 1926
• Citation: 284 S.W. 72,153 Tenn. 362
• Parties: CRONBACH v. ÆTNA LIFE INS. CO. ET AL.
• Court: Tennessee Supreme Court

284 S.W. 72

153 Tenn. 362

CRONBACH v. ÆTNA LIFE INS. CO. ET AL.

Supreme Court of Tennessee.

May 22, 1926

Appeal from Chancery Court, Davidson County; John R. Aust Chancellor.

Bill by Minnie P. Cronbach against the Ætna Life Insurance Company and others. Decree dismissing the bill was affirmed by the Court of Appeals, and complainant appeals. Writ denied.

Roberts & Roberts, of Nashville, for appellant.

R. B C. Howell, B. A. Butler, and W. C. Davidson, all of Nashville, for appellees.

McKINNEY J.

Mrs Cronbach, by her bill, sought a decree against the defendant company on eight policies of $5,000 each issued upon the life of her husband, Joseph Cronbach, upon the theory that, prior to his death, he had taken such action as to make her the sole beneficiary under said policies.

The chancellor dismissed her bill, and, upon appeal, his decree was affirmed by the Court of Appeals.

About a month before the death of the insured he had procured the company to change the beneficiary clauses in said policies so as to provide that the company should pay monthly interest on the principal, at the rate of 3.6 per cent. per annum, to his wife and daughter for a period of 20 years, at which time other and different settlements were to be made.

On the night of February the 18th, 1924, the insured suddenly became violently ill, was carried to his home and a physician summoned. After consultation it was decided that an immediate surgical operation was necessary, and while the physician was arranging for an ambulance and hospital accommodations the insured talked over his business affairs with his wife and a friend, and decided that, on account of recent financial reverses, and in order to secure an adequate support for his wife in case of his death, he would change said policies so as to make her sole beneficiary thereunder. He had his wife to procure his lock box from a closet, gave her the key to same, and she had taken the policies from said box and was looking for the beneficiary clauses when the insured was seized with such paroxysms of pain that he was unable to do more in effecting a change of beneficiary, was taken immediately to the hospital, operated upon, and died nine days later without ever having recovered sufficiently to transact any business.

It clearly appears that the defendant intended and desired to change the beneficiary clauses, as indicated, and would have done so in the regular way but for the fact that he was prevented by the circumstances detailed above.

The complainant contends that when the insured has done all that was reasonably in his power to do in order to comply with the rules of the company, but failed to do so, and dies before the change is formally made, a court of equity will treat the substitution as complete, on the principle that in equity that will be decreed done which ought to have been done.

The provision in the policies, with reference to a change of beneficiary, is as follows "The beneficiary may be changed as often as desired, and such change shall take effect on receipt at the home office of the company, before the sum insured or any installment thereof becomes due, of a written request, accompanied by the policy for indorsement."

For the company it is insisted that it had neither knowledge nor notice of any desire on the part of the insured to change the beneficiary, that it has not omitted to do anything that it should have done, that the insured did not comply with the provisions of the policies, and that the maxim invoked has no application in this cause. In other words, that the omission to effect a change of beneficiary is chargeable to the negligence and delay of the insured, and not to the company or other person.

Ordinarily, the terms of a written contract can only be changed by consent of the parties, or in accordance with some provision thereof authorizing a change upon specified terms and conditions. Here there was no such consent, and the provision as to change of beneficiary was only to become effective upon receipt, at the home office of the company, of a written request, accompanied by the policy for indorsement. It follows that a change of beneficiary in the policies here involved was not effected, unless some exception to the general rule can be applied.

The rules of law applicable to such cases and approved generally by the courts of this country are succinctly and accurately set forth in 37 Corpus Juris, § 350, p. 584, as follows:

"Policies authorizing a change of beneficiary usually specify the mode of effecting the change, as by filing a written notice or request, accompanied by the policy, at the home office of the company, and the indorsement of the change on the policy by the company. In order to effect a change of beneficiary the mode prescribed in the policy must be followed, it being held in some cases that a substantial compliance is necessary and in others that a strict compliance is required. A mere unexecuted intention to change the beneficiary is not sufficient. The company has a right to insist upon compliance with the provisions of the policy, and while it may waive or be estopped to assert provisions intended for its benefit and protection, a waiver by it after the death of insured is ineffectual as against the original beneficiary. On the principle that equity regards as done that which ought to be done, the courts will give effect to the intention of insured by holding that the change of beneficiary has been accomplished where he has done all that he could to comply with the provisions of the policy, as where he sent a proper written notice or request to the home office of the company but was unable to send the policy by reason of circumstances beyond his control, as where it has been lost, or was in the possession of another person who refused to surrender it or was otherwise inaccessible, or where he sent both the policy and a proper written notice or request and all that remained to be done were certain formal and ministerial acts on the part of the company, such as the indorsement of the change of the policy, and these acts were either not done at all or were done after the death of insured. Of course the rule is not applicable where insured has not done all that he reasonably could to meet the conditions of the policy."

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