Fidelity Bankers Life Ins. Co. v. Dortch, 8518SC736

• Decision Date: 04 February 1986
• Docket Number: No. 8518SC736,8518SC736
• Citation: 79 N.C.App. 148,339 S.E.2d 38
• Court: North Carolina Court of Appeals
• Parties: FIDELITY BANKERS LIFE INSURANCE COMPANY v. Patricia DORTCH, Ann C. Dortch, Ann Hunter Dortch, Elizabeth D. Beswick and Central Bank of the South, Trustee for John J. Dortch Retirement Plan and Trust.

Page 38

339 S.E.2d 38

79 N.C.App. 148

FIDELITY BANKERS LIFE INSURANCE COMPANY v. Patricia DORTCH, Ann C. Dortch, Ann Hunter Dortch, Elizabeth D. Beswick and Central Bank of the South, Trustee for John J. Dortch Retirement Plan and Trust.

No. 8518SC736.

Court of Appeals of North Carolina.

Feb. 4, 1986.

Nichols, Caffrey, Hill, Evans & Murrelle by Thomas C. Duncan and Douglas E. Wright, Greensboro, for defendants-appellants.

Adams, Kleemeier, Hagan, Hannah & Fouts by Charles T. Hagan III, Greensboro, for defendant-appellee.

ARNOLD, Judge.

The issue presented for review is whether the court erred in allowing Patricia Dortch's motion for summary judgment and in denying the motion for summary judgment by Ann C. Dortch, Ann Hunter Dortch, Elizabeth D. Beswick and Central Bank of the South. Believing the trial court improperly awarded summary judgment in favor of Patricia Dortch, we reverse.

Provisions of an insurance policy which relate to the procedures that must be followed in order to change the beneficiaries under the policy are conditions which are inserted for the protection of the insurer, not to protect the original beneficiaries. See, Sudan Temple v. Umphlett, 246 N.C. 555, 99 S.E.2d 791 (1957). The beneficiary designated under policies in which the owner reserves the right to make changes in the beneficiary had no vested rights under those policies. See, Gray v. Insurance Co., 254 N.C. 286, 118 S.E.2d 909 (1961). An insurer may waive any provisions inserted in the insurance contract solely for its benefit. Bray v. Benefit Association, 258 N.C. 419, 128 S.E.2d 766 (1963); Burgess v. Insurance Co., 44 N.C.App. 441, 261 S.E.2d 234 (1980).

Some states have adopted a rule that restrictions or conditions regarding the formalities which must be followed to effect a change of beneficiary under the policy are waived when the insurer pays the proceeds of the insurance policy into court and interpleads the claimants to the proceeds. Couch on Insurance 2d (Rev. ed.) § 28:93. Under this rule the rights of the claimant are determined on equitable consideration rather than under the technical terms and conditions of the contract. Id. The provisions regarding change of beneficiaries are inserted to protect the insurer from becoming liable for double payments under the policy. When the insurer pays the proceeds into the court this negates the possibility that the insurer will be subjected to double liability, thus, there is no reason to enforce these restrictions. See, New York Life Insurance Company v. Lawson, 134 F.Supp. 63 (D.C.Del.1955). The North Carolina courts have not spoken to the issue of whether this rule applies in this state. However, in Sudan Temple v. Umphlett, 246 N.C. 555, 99 S.E.2d 791 (1957), our Supreme Court quoted this rule with approval before determining that they need not determine the effect of the interpleader action under the facts in that case.

North Carolina courts have consistently attempted to effectuate the intent of the insured in determining who is to receive the benefits under the policy. See, Teague v. Insurance Co., 200 N.C. 450, 157 S.E. 421 (1931). In English v. English, 34 N.C.App. 193, 237 S.E.2d 555, disc. rev. denied, 293 N.C. 740, 241 S.E.2d 513 (1977), this Court enunciated the doctrine of "substantial compliance" as a...