O'Donnell v. Metropolitan Life Insurance Company

• Court: Court of Chancery of Delaware
• Writing for the Court: THE CHANCELLOR
• Citation: O'Donnell v. Metropolitan Life Insurance Company, 11 Del. Ch. 4, 95 A. 289 (Del. Ch. 1915)
• Decision Date: 06 July 1915
• Parties: ELIZABETH A. O'DONNELL, v. METROPOLITAN LIFE INSURANCE COMPANY, GEORGE H. MCGOVERN, Administrator of Mary C. MCGovern, deceased, and GEORGE H. McGOVERN, Administrator of Isaac J. Gilkey, deceased

95 A. 289

11 Del.Ch. 4

ELIZABETH A. O'DONNELL, v. METROPOLITAN LIFE INSURANCE COMPANY, GEORGE H. MCGOVERN, Administrator of Mary C. MCGovern, deceased, and GEORGE H. McGOVERN, Administrator of Isaac J. Gilkey, deceased

Court of Chancery of Delaware, New Castle

July 6, 1915

BILL TO ENFORCE AN EQUITABLE ASSIGNMENT to the complainant of two insurance policies on the life of Isaac J. Gilkey, deceased. The facts are stated in the opinion of the Chancellor.

Defendant McGovern, required to pay all the costs.

Henry R. Isaacs, for the complainant.

John R Nicholson, for the defendants George H. McGovern Administrator of Mary C. Gilkey, deceased, and George H McGovern, Administrator of Isaac J. Gilkey, deceased.

Andrew C. Gray, for the defendant Metropolitan Life Insurance Company.

OPINION

THE CHANCELLOR

The object of the bill is to enforce an equitable assignment of two policies of insurance on the life of Isaac J. Gilkey deceased, one issued by the Metropolitan Life Insurance Company for $ 96 and the other by the Economic Insurance Company of America for $ 225. After the issuance of the latter policy, the Metropolitan Life Insurance Company assumed the obligations arising thereunder. There was no question as to the liability to pay the losses on the death of the insured, and the only question was as to the person entitled to receive payment thereof. Mary C. Gilkey, the daughter of the insured, was named as beneficiary in both policies when they were issued. She afterward married George H. McGovern and died December 21, 1911, in the life of the insured, who died March 20, 1912. George H. McGovern became administrator of the insured, Isaac J. Gilkey, and also of the beneficiary, Mary C. Gilkey McGovern. Prior to about January 1, 1912, the insured had lived in the family of McGovern, and about that date left there and lived with the complainant, Elizabeth A. O'Donnell, his niece, until about February 7, 1912, when he went to a hospital in Philadelphia for treatment, and died there March 20, 1912.

On February 6, 1912, Gilkey, the insured, made written application on forms supplied by the company to change the beneficiary of both policies so that they be payable to the complainant, and not then having in his possession the policies, also made application on the proper printed forms to have new policies issued, declaring that the policies were lost, and paid the agent the cost fixed by the company for such duplicates. These applications were received at the local office of the company to be forwarded to the home office of the company; but this was not done, because very shortly after they were delivered at the local office, the originals were presented to the local office by McGovern, and as the original policies were not lost, no duplicates were issued. No change in the beneficiary was actually effected in accordance with the terms of the policies and the rules of the company.

The Economic policy gave no privilege, or right, to change the beneficiary. By the policy of the Metropolitan Company the insured could, with the approval of the company, change the beneficiary by notice to the home office accompanied by the policy, "the change to take effect on the indorsement of the same on the policy by the company." Demand on the company for payment was made both by the complainant and by McGovern as administrator of his wife, the beneficiary. The bill alleged that the company while not denying liability to pay was uncertain as to who was entitled to receive payment and refused to pay either claimant, and alleged that the policies were in the possession of McGovern, while the premium receipt book was in the possession of the complainant.

The prayers were that the company be adjudged to hold the moneys due on the policies as trustee for the complainant; that McGovern be directed to deliver the policies to the complainant; and that the company be directed to pay to the complainant the moneys due on the policies on presentation of the policies and premium receipt book. The defendants were the Metropolitan Life Insurance Company, and George H. McGovern as administrator of the beneficiary and as administrator of the insured.

By its answer the company avers that there had been no actual transfer of the policies to the complainant, which was not claimed. But it says that notwithstanding the conflicting demands the entire amount due on the policies had been paid to George H. McGovern "about the time of the institution of this cause," and refers to the two following provisions of the policies. In the Metropolitan policy was the following:

"The company may pay the amount due under this policy to the beneficiary named below or to the executor or administrator, husband or wife or near relative by blood of the insured, or to any other person appearing to said company to be equitably entitled to the same by reason of having incurred expense on behalf of the insured, or for his or her burial; and the production of a receipt signed by either of them shall be conclusive evidence that all claims under this policy have been satisfied."

The Economic policy contained this:

"2. The production by the company of this policy and of a receipt for the amount of benefit, signed by any person furnishing proof satisfactory to the company that he or she is the beneficiary or an executor or administrator, husband or wife or relative by blood or connection by marriage of the insured, shall be conclusive evidence that such sum has been paid to and received by the person or persons lawfully entitled to the same, and that all claims and demands upon said company under this policy have been fully satisfied."

It also relied on a provision in the policy of the Economic Company limiting suits on the policy to six months after the accrual of the cause of action.

In his answer as administrator of the insured, and also of the beneficiary, McGovern claimed that the premiums were paid by the beneficiary in her lifetime, and after her death by the complainant, but by the latter from moneys of the insured. Also that from about January 1, 1912, McGovern as administrator of the beneficiary tendered payment of the premiums to the company, and it refused to accept it; that the policies were not lost and Gilkey, the insured, knew they were not lost and knew that they were rightfully in the possession of the administrator of the beneficiary; that he, as such administrator, received payment of the sums due on the two policies.

From the evidence adduced it was made reasonably clear that the premiums were paid by the insured from his own money until he went to the hospital about six weeks before his death, and thereafter by the complainant from her own moneys. There is much testimony on the subject, but there is no satisfactory evidence to controvert the statement to the above effect by the agent of the company who collected the premiums on the policies. It is also clear that the amounts due on the policies were paid to the administrator of the beneficiary. In its answer the company says the money was paid to McGovern, but in his answer, and by his testimony, McGovern says he received it as administrator of the beneficiary. He also testified that he received it on March 28, 1913, which was nine days after the bill had been filed, and two days after the insurance company had been served with the subpoena in the suit. The company did not produce the receipt for the sums so paid, and in the absence of it the evidence as to the payee and the time of payment is established as above. Therefore, the important point is established, that after being served with process in the suit of one of the claimants to recover the amounts due on the policies, the company paid the other claimant.

It is seriously urged by counsel for McGovern that this payment made after service of process in the suit brought against the insurance company deprives this court of power to adjudicate the rights of the parties, unless there be a supplemental bill. In other words, a defendant, after having been served with process in a suit to recover money from him, may pay the money to a third person, and then ask that the bill be dismissed, leaving the complainant the right to bring a supplemental bill against the third person, who in turn could pass the money on to a fourth person, and so keep the complainant on the chase. There is no such principle of law or equity. In this case the insurance company, after full notice of all the claims made for the moneys due on the policies, paid it to one of the claimants after being sued by another of those here claiming the money, and does not even take the trouble to say in its answer to whom it paid it, or when, or produce the proper evidence of the payment. Payment is, therefore, not established as a defense here by either of the defendants. Neither is there any need of a supplemental bill, as was suggested by the solicitor for the administrator of the beneficiary.

There was no allegation of fraud, or undue influence practiced on the insured, or lack of mental capacity on his part. The evidence of the agent of the company showed a clear intention on the part of the insured to make the complainant the beneficiary in the place of the one named in the policy. That Gilkey was mentally competent to do so, both the agent of the company and the physician who attended him testify, and there is little evidence to the contrary. Neither is there satisfactory evidence of a change of mind on the part of Gilkey that the complainant should be beneficiary.

The basis of the claim of the complainant is an equitable assignment, not a legal one, or one made in accordance with the terms of the policy, or the rules of the...