Equitable Life Assurance Society v. McClelland

• Decision Date: 18 August 1949
• Docket Number: Civ. A. No. 1266.
• Citation: 85 F. Supp. 688
• Parties: EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES v. McCLELLAND et al.
• Court: U.S. District Court — Western District of Michigan

85 F. Supp. 688

EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES v. McCLELLAND et al.

Civ. A. No. 1266.

United States District Court W. D. Michigan, S. D.

August 18, 1949.

Butterfield, Amberg, Law & Buchen and R. Dale Law, of Grand Rapids, Mich., for plaintiff.

Gerald M. Henry, of Grand Rapids, Mich., for Elizabeth McClelland, as guardian of Margaret Ann McClelland and Robert McClelland, minors, and Margaret McClelland, defendants.

Uhl, Bryant, Slawson & Wheeler and Harold W. Bryant, of Grand Rapids, Mich., for Charles Mitchell, Jr., Douglas Mitchell and Jack Mitchell, defendants.

STARR, District Judge.

On January 28, 1949, plaintiff insurance company began the present civil action of interpleader in pursuance of Title 28 U.S. C.A. § 1335. The case was submitted on an agreed stipulation of facts, the material facts being as follows:

On June 8, 1905, plaintiff issued its policy No. 1456337 known as a "twenty-year endowment bond" to James C. Quinlan, thereby insuring his life in the sum of $1,000. Frances M. Quinlan, the wife of the insured, was named as beneficiary. The policy having matured through the payment of all premiums and the expiration of the endowment and dividend-accumulation period, and the insured having elected to convert it into a paid-up life-assurance policy, it was agreed by plaintiff and the insured on June 29, 1925, by an endorsement on the policy, that it would be continued in force as a fully paid-up life policy in the amount of $2,700, payable in a single sum at the death of the insured to his wife, if living, but if not living, then to his executors, administrators or assigns. This endorsement further provided that the insured reserved the right to change the beneficiary in "the manner stipulated in the policy." The policy provided:

"VI. Change of Beneficiary

"This Bond is issued with the express understanding that the Subscriber may, from time to time during its continuance, change the beneficiary or beneficiaries, by filing with the Society a written request, duly acknowledged, accompanied by this Bond, such change to take effect upon the endorsement of the same on the Bond by the Society, provided this Bond has not been assigned and notice of such assignment recorded on the books of the Society, or if assigned that all assignments shall have been duly cancelled or released on the books of the Society. No assignment of this Bond or any interest therein shall be effectual against the Society unless the same be in writing and filed with the Society."

On December 23, 1942, as shown by endorsement or rider attached to the policy, the insured, exercising his right to change the beneficiary therein, revoked the aforesaid designation of his wife, who had died, and named as beneficiaries his grandchildren, Margaret Ann McClelland and Robert Clement McClelland. About five years later, on December 31, 1947, the insured wrote plaintiff company regarding a further change of beneficiaries as follows:

"Enclosed find my policy #1456337. I am returning this policy so that the beneficiary can be changed from that was made on Dec. 23, 1942.

"You will kindly change to read as follows:

"Robert McClelland — Margaret McClelland

"James Peter Quinlan; Francis K. Quinlan

"Charles Mitchell Jr.

"Douglas Mitchell; Jack Mitchell

"David Quinlan; Karon Quinlan

"Francis Dood; Thomas Dood, Betsy Dood

"The returns are to be divided equally.

"I would like to have the total amounts remain in your company and made payable to the different children as they may reach the age of 21 years.

"This would then be in the form of a Trust Fund and should be subject to interest bearing.

"Kindly advise if this plan can be carried out."

This letter and the policy were received by plaintiff's Grand Rapids office and forwarded to its Detroit office. The Detroit office retained the policy but forwarded the letter to its home office in New York, where it was received on January 8, 1948. Two days later, on January 10th, the insured died at Grand Rapids, Michigan. On January 21st, apparently unaware of the insured's death, plaintiff replied to his letter of December 31st as follows:

"Dear Mr. Quinlan:

"Re: Policy 1456337

"We are enclosing a beneficiary provision which has been prepared by our Home Office in connection with the above policy.

"It is not possible to offer a mode of settlement request since the amount involved is $2700 and twelve beneficiaries are being designated to share equally. There must be a minimum of $1000 available for each beneficiary before we can provide for a mode settlement, therefore, we have prepared a single sum request. The relationship of the beneficiaries should be inserted on the request, and the insertions should be initialed by you. Please note that your signature on this form should be acknowledged by a notary public as required by the terms of the policy."

The "beneficiary provision" or "single sum request" enclosed with plaintiff's letter read as follows:

"To The Equitable Life Assurance Society of the United States, 393 Seventh Avenue, New York 1, N. Y.

"Re: Policy No. 1,456,337

"This is to certify that there is no existing assignment of the above numbered policy. It is hereby requested that the following change of beneficiary be made effective by endorsement on the said policy.

"Beneficiary Provision:

"The net sum due under this policy by reason of the death of the Subscriber shall be paid in a single sum in equal shares to Robert McClelland, Margaret McClelland, James Peter Quinlan, Francis K. Quinlan, Charles Mitchell, Jr., Douglas Mitchell, Jack Mitchell, David Quinlan, Karon Quinlan, Frances Dood, Thomas Dood, and Betsy Dood, if living at the death of the Subscriber or to such of them as shall then be living, should none then be living to the executors or administrators of the Subscriber.

"Relationship of Robert McClelland and Margaret McClelland ______________

"Relationship of James Peter Quinlan and Francis K. Quinlan ___________

"Relationship of Charles Mitchell, Jr., Douglas Mitchell and Jack Mitchell __________

"Relationship of David Quinlan and Karon Quinlan ______________

"Relationship of Frances Dood, Thomas Dood and Betsy Dood ____________

"Dated at _____________ 1948.

"Signature of subscriber ____________

"Address _________________________ * * *

"State of ___________ | &gt "County of ____________ |

"On this _____ day of _________________ in the year of our Lord 1948 before me personally came ____________ to me known and known to me to be the individual described in and who executed the foregoing and acknowledged that he executed the same.

_________________________ Notary Public."

Apparently not having been advised of the insured's death, the plaintiff on February 18th again wrote him as follows: "On January 21, we sent you a beneficiary provision which had been prepared by our Home Office in connection with the above policy. Since the change of beneficiary is not effective until actually endorsed on the policy by the Society we suggest that you give this matter your earliest attention."

On March 17th plaintiff again wrote the insured as follows: "Since we have not had any reply to our letters of January 21, and February 18, regarding the proposed change of beneficiary under the above policy we assume that you have decided not to complete the beneficiary change at this time. We are, therefore, returning your policy but if we can be of further service to you in connection with the contemplated change please inform us."

On June 29th, in response to a letter from the executor of the insured's estate inquiring relative to payment on the policy, plaintiff replied as follows:

"Re: Policy No. 1456337, James C. Quinlan, Deceased.

"Your letter of June 16 to Mr. C. W. Pratt, the Society's Cashier at Grand Rapids, has been referred to this office for attention and reply.

"We should like to point out that while it is true we were not prepared to include the mode of settlement suggested by Mr. Quinlan in the change of beneficiary proposed by him in his letter of December 31, 1947, we were quite ready to proceed with the change of beneficiary in favor of the 12 persons mentioned in his said request, payment to be made to them in a single sum. Incidentally, these 12 persons were not children of the insured; it appears that some of them, at least, are grandchildren of Mr. Quinlan.

"Inasmuch as we have on file a signed request by Mr. Quinlan to have the beneficiary under this policy changed to the 12 persons mentioned in his letter, we do not feel that we can safely disregard this request. It is our understanding that Margaret Ann McClelland and Robert Clement McClelland, the grandchildren of the insured in whose favor the beneficiary under this policy was changed on December 23, 1942, are minors. In the circumstances, therefore, we would be willing to make payment to the 12 proposed beneficiaries on the basis of a request so to do made by the legal guardians of the estates of the two said grandchildren presently named in the policy, subject to approval of the court. An alternative would be for such of the 12 proposed beneficiaries who are of legal age and the guardians of the estates of such of them who may be minors, with court approval, to agree among themselves as to the distribution of the proceeds of this policy. If neither of these suggestions is satisfactory, payment of the death claim could be deferred until Margaret Ann McClelland and Robert Clement McClelland attain legal age, at which time they could consider authorizing the Society to make settlement in the manner proposed by Mr. Quinlan in his letter of December 31, 1947.

"Unless settlement can be effected by following one of the suggestions made above, it would appear that no payment can be made until such time the courts decide who is entitled to the funds."

In its complaint plaintiff admits liability under the policy to the persons legally entitled thereto, of the sum of...