Farmers' State Bank v. Kelley
| Decision Date | 07 June 1923 |
| Docket Number | 3511. |
| Parties | FARMERS' STATE BANK v. KELLEY. |
| Court | Georgia Supreme Court |
Syllabus by the Court.
A petition, alleging that the plaintiff was the beneficiary by revocable designation in a policy of insurance on the life of her husband, that she and her husband, during his last illness and a few days before his death, and while the husband was mentally incapable of transacting any business jointly assigned the policy to a creditor of the husband to secure a debt of the husband, that the assignment was void because of such mental incapacity of the husband, and praying the cancellation of the assignment, set out a good cause of action, and the court did not err in overruling a demurrer thereto.
The wife was not estopped from attacking the validity of the husband's assignment of the policy, on the ground of his want of sufficient mental capacity to make the same, because she joined him in such assignment, for the reason that she could not lawfully assign even her expectancy under the policy during his life to secure his debt, and because she had no such vested interest in the policy with respect to which she could contract.
Where in an ordinary life insurance policy no power is reserved to the insured to change the beneficiary or to assign the same the beneficiary, upon the issuance of the policy acquires a vested interest therein, and the insured cannot assign the policy to another; but where the policy expressly provides that the insured, without the consent of the beneficiary may, at any time, by special agreement with the insurer, or in accordance with the terms of the policy, assign the same the insured can lawfully assign the policy to his creditor to secure his debt, although the designated beneficiary may be his wife.
Where the insurer consents to such assignment, during the life of the insured, the assignment is not rendered invalid because the company does not attach to the policy its formal, written memorandum of consent until after the death of the insured.
Neither the assignor nor the beneficiary can take advantage of the failure of the insurer to consent to such assignment, and of its neglect to attach such memorandum of its consent to the policy during the life of the insured.
The insured having the right to assign the policy to his creditor to secure his debt, and the attack on the assignment for lack of mental capacity of the insured to execute it being without any proof to support it, the court erred in directing a verdict for the plaintiff.
Error from Superior Court, Lincoln County; E. T. Shurley, Judge.
Suit by F. E. Kelley against the Farmers' State Bank. Judgment for plaintiff, and defendant brings error. Reversed.
C. J. Perryman, of Lincolnton, for plaintiff in error.
Homer Legg, of Lincolnton, and Colley & Colley, of Washington, Ga., for defendant in error.
A husband took out a policy of insurance on his life in the Inter-Southern Life Insurance Co., payable to his wife, as "beneficiary by revocable designation," upon receipt of due proof of the death of the insured. The policy contained the provision that when the right of revocation had been reserved, or in case of death of any beneficiary under either a revocable or irrevocable designation, the insured, if there were no existing assignment of the policy made as therein provided, might, while the policy was in force and subject to the company's rules governing the designation of beneficiaries, designate a new beneficiary, with or without the right of revocation, and that every change of beneficiary must be made by written notice to the company, and would take effect only upon indorsement upon the policy by the company. The policy further provided that:
"Without the consent of the beneficiary the insured may at any time, by special agreement with the company, or in accordance with the terms of the policy, surrender this policy for cancellation or have insurance thereunder terminated, or assign the policy or accept loans thereon, and, at his option, receive every benefit, exercise every right, and enjoy every privilege conferred by its terms upon the insured."
On January 4, 1922, the company wrote the Farmers' State Bank a letter in which the former stated that it had been unavoidably delayed in replying to the letter of the bank of December 16, 1921; that it noted the insured's desire to assign to the bank this policy as collateral security for a loan; that it was inclosing its regular assignment forms, which should be filled in, signed by the insured and his wife, and both signatures acknowledged before a notary public, and in which letter the company requested the return of both blanks thus executed to its home office at Louisville, Ky. when the assignment would be noted on its records, and one copy attached to the policy which would be promptly returned to the bank. On January 9, 1922, the insured and his wife assigned and transferred this policy to the bank, except the loan and surrender values, the right to which should be exercised by the assignors and the bank jointly. The policy and this assignment were received by the company at its home office on January 12, 1922. The policy and the assignment in duplicate were mailed to the company by the bank on January 10, 1922. On January 19, 1922, the company attached its written consent to said assignment. The insured died on January 15, 1922. The wife filed her petition for a cancellation of this assignment, and alleged that on January 9, 1922, her husband was indebted to the Farmers' State Bank in the sum of about $585; that the bank procured said assignment to secure said debt; that there was no other consideration for said assignment; and that at the time of said assignment her husband was in his last illness, by reason of which his mind had become impaired and deranged, and he was mentally incapable of transacting business and of understanding the nature and consequences of his act in making such assignment. She prayed for cancellation of said assignment. The defendant demurred to this petition, on the ground that it set forth no cause of action, either legal or equitable. The court overruled the demurrer, and error is assigned on this judgment. The case proceeded to trial, and the facts hereinbefore stated were proved. There was no evidence introduced on the trial showing that the husband was mentally incapable of executing the assignment of this policy to the bank. At the conclusion of the evidence the court directed a verdict for the plaintiff, on the ground that the bank could not hold this policy under this assignment. Error is assigned by the bank upon the direction of this verdict.
1. The court did not err in overruling the demurrer to the petition. The plaintiff, who was the wife of the insured, was designated in the policy as "beneficiary by revocable designation." As the insured had not named another as beneficiary in her place, if he had failed to make a valid assignment of the policy to the bank, the wife, on his death would be entitled to the proceeds of the policy. If the assignment made by the...
To continue reading
Request your trial