Feely v. Lacey

• Decision Date: 31 March 1958
• Docket Number: No. 9576,9576
• Citation: 322 P.2d 1104,133 Mont. 283
• Parties: Chelsea FEELY and Allie Feely, Plaintiffs and Respondents, v. Etta LACEY, Defendant and Appellant.
• Court: Montana Supreme Court

Page 1104

322 P.2d 1104

133 Mont. 283

Chelsea FEELY and Allie Feely, Plaintiffs and Respondents, v. Etta LACEY, Defendant and Appellant.

No. 9576.

Supreme Court of Montana.

Submitted Nov. 14, 1957.

Decided Feb. 18, 1958.

Rehearing Denied March 31, 1958.

Joseph J. McCaffery, Jr., Thomas F. Kiely, Thomas F. Joyce, Butte, for appellant. Thomas F. Joyce argued orally.

P. E. Geagan, William N. Geagan, Butte, for respondent. William N. Geagan argued orally.

CASTLES, Justice.

This is an appeal by defendant from a judgment on a verdict for plaintiffs after defendant was nonsuited on her amended cross-complaint. Her motion for new trial was denied. The action is founded in claim and delivery. The dispute is between rival claimants, designated 'friends' of the insured and successively named beneficiaries in a group life insurance contract. Except for this designation, neither plaintiffs nor defendant would have an insurable interest. The context is solely for possession of the group certificate. Defendant claims her interest is vested.

The suit was instituted in Silver Bow County to determine the right to possess a $2,250 group life certificate, in usual form, issued originally in 1941 by the Prudential Insurance Company of America on the life of one Luis Kruzich, a miner employed by The Anaconda Company in Butte, Montana; $500 of the coverage is industrial insurance, $1,750 is term life insurance. We make no ruling as to whether the contract is severable. The plaintiffs are the beneficiaries last named. The defendant is the beneficiary they superseded. Neither the employer nor the insurer are parties to this action.

The verdict and judgment awarded possession to plaintiffs but denied damages to plaintiffs for wrongful detention by defendant. In effect, the jury decided that as between the rival beneficiaries, the plaintiffs had established a superior right to the death benefits.

In a cross-complaint, defendant alleged she was given the certificate by the insured, but alleged that through a conspiracy the plaintiffs and others unnamed had persuaded the insured to change the beneficiary to plaintiffs about a month before the insured died. Demurrer was sustained to her cross-complaint.

An amended cross-complaint continued the allegations of conspiracy but abandoned the allegation of gift and asserted instead an agreement between defendant and the insured that, if defendant paid the premiums falling due after the time of the agreement, she could have the certificate. The testimony indicated that the alleged agreement was made soon after the insured had been injured and when he believed he would never again be able to work. Defendant's amended cross-complaint therefore still alleges a gift, except made causa mortis and called an agreement. But having adopted the theory of an agreement, defendant may not depart from it. State ex rel. Altop v. City of Billings, 79 Mont. 25, 32, 255 P. 11, 54 A.L.R. 1091; Gay v. Lavina State Bank, 61 Mont. 449, 456, 202 P. 753, 18 A.L.R. 1204, and citations.

We therefore need not examine the difference between completed gifts inter vivos, which are irrevocable, and gifts causa mortis, which generally, but depending on the circumstances, may be revoked. See 24 Am.Jur., Gifts, Sec. 4, p. 432; 38 C.J.S. Gifts Sec. 4, p. 782; Nelson v. Wilson, 81 Mont. 560, 569-570, 264 P. 679.

In this connection, the case of Stepson v. Brand, 213 Miss. 826, 58 So.2d 18, 22, 33 A.L.R.2d 267, involving a group certificate written on the life of an employee of the Masonite Company, given by the insured to his wife but later claimed by a beneficiary with whom the insured had entered into what the Mississippi court called a 'ceremonial marriage', supports the theory of vested interest urged by defendant here. The decision is annotated in 33 A.L.R.2d, beginning at page 273. It is noted, however, that the effect of the decision is to sustain the position of the wife and widow as against an interloper. In closing its opinion, the Mississippi court remarks that it is 'mindful of the fact that proof of the gift in cases of this character should be clear and convincing so as not to open the way to fraud arising out of the mere possession of a pretended gift at the time of the death of the alleged donor.'

A comparable situation involving industrial group insurance was examined by the Alabama Supreme Court in Jennings v. Provident Life & Accident Ins. Co., 246 Ala. 689, 22 So.2d 319, and reconsidered on appeal in Jennings v. Jennings, 250 Ala. 130, 33 So.2d 251, with opposite result. But in the Alabama case a later donee wife, from whom the insured had been separated for a time, was awarded the death benefit over a beneficiary named by the insured in the interim. The effect of both decisions, however, is to support the claimant with the greater moral right. With that principle we fully agree.

In the present case it could be said that so long as defendant kept the certificate in force some equities might arise in her favor for the reason that her premium payments would be making death benefits available (at least up to $500 under the Industrial Facility of Payment clause) against the expense of the insured's last illness and burial. But this was not mentioned in testimony, nor was it urged by counsel; and the record shows that the insured's last days were eased and the insured's funeral expenses were paid, not by defendant but by the plaintiffs, who have still to be reimbursed.

As we have pointed out, defendant adopted the theory of an agreement and is bound by it. Gay v. Lavina State Bank, supra. 3 Words and Phrases, p. 15, defines the term 'agreement' as 'a completed contract', also as 'a mutual obligation', and Restatement, Contracts, Sec. 3, p. 5, defines an agreement as 'a manifestation of mutual assent'. Ballantine's dictionary adds that 'The legal import of the word [agreement] includes not only a promise, but also the consideration for which the promise was made.'

If the agreement was conditioned upon any consideration, it is neither alleged nor proven. The only obligation the agreement imposed on the defendant was paying the premiums to collect the death benefit. Her obligation therefore ran to herself. The essential of mutuality is lacking. 1 Wilson, Contracts (Rev.ed.) Sec. 141, p. 504.

Hereafter we will review defendant's testimony in some detail. The trial court considered it insufficient to support defendant's cross-complaint alleging agreement and conspiracy to change the beneficiary and the jury's verdict rejected it as a defense against plaintiff's claim for possession.

In considering this appeal we bear in mind the rule that 'in reviewing the court's action in sustaining a motion for a nonsuit we must deem every fact true which the evidence tends to prove and interpret the evidence in the light most favorable to the plaintiff [here the cross-complainant] * * * Yet if the evidence is such that a recovery cannot be had on any reasonable view, it is proper for the court to take the case from the jury.' Burns v. Fisher, Mont., 313 P.2d 1044, 1046.

We also recognize that where 'the evidence is conflicting, but substantial evidence appears in the record to support the judgment, the judgment will not be disturbed on appeal, and this is especially true when the court, as here, has passed upon the sufficiency of the evidence on a motion * * * for a new trial and upheld its sufficiency.' Wallace v. Wallace, 85 Mont. 492, 502, 279 P. 374, 377, 66 A.L.R. 587. See also Reynolds v. Trbovich, Inc., 123 Mont. 224, 210 P.2d 634; Holden v. Varner, 128 Mont. 211, 272 P.2d 1008.

The group certificate here involved is the last of several successively issued to the insured through insured's employer, varying in amounts as insured's duties changed, but all issued at insured's own request and, until he was disabled, all paid for by the insured. The original application gives insured's date of birth as August 15, 1880, and names Mary Kruzich, wife, beneficiary. On November 28, 1943, the insured changed the beneficiary to the defendant, using the designation 'Etta Lacey, friend,' and according to her testimony immediately gave her the certificate. Defendant kept possession of it and of the certificates issued from time to time an lieu of it until she surrendered the last issued certificate to the court at the time of the trial. In each certificate her designation as beneficiary, 'Etta Lacey, friend', is carried forward. The last certificate, here in dispute, is dated effective January 12, 1948.

Except the original designation of a wife as beneficiary and except that one witness mentioned having heard the insured once refer to a daughter 'in the old country', nothing is shown as to insured's family status. No probate is mentioned. We assume the insured died without will or estate. Defendant testified she knew insured as a bachelor.

It is elementary that under R.C.M.1947, Sec. 40-1002, subd. 3, everyone has an insurable interest in his own life and may procure insurance on his own life and transfer it to another, with or without insurable interest, so long as the transaction is bona fide and the right to change the beneficiary is reserved in the contract. The foregoing is, however, subject to the rights arising through vested interest.

It is generally held that 'the mere payment or the assumption or payment of the premiums by a beneficiary without insurable interest is not of itself sufficient to establish the speculative character of the contract.' 44 C.J.S. Insurance Sec. 202, pp. 899, 902, citing many cases, including Mutual Aid Union v. White, 166 Ark. 467, 267 S.W. 137, which holds that if the policy is valid at inception it is not invalidated by the beneficiary paying the premiums after the insured has ceased to pay them. In any event, the defense of lack of insurable interest is to be raised only by the insurer, 44 C.J.S. Insurance Sec. 212, p. 915, and may be lost by waiver or estoppel;...