Fidelity Trust Company v. Travelers Insurance Co.

• Decision Date: 25 November 1935
• Docket Number: 266
• Citation: 181 A. 594,320 Pa. 161
• Parties: Fidelity Trust Company v. The Travelers Insurance Company (et al., Appellant)
• Court: Pennsylvania Supreme Court

181 A. 594

320 Pa. 161

Fidelity Trust Company v. The Travelers Insurance Company (et al., Appellant)

No. 266

Supreme Court of Pennsylvania

November 25, 1935

Argued October 14, 1935

Appeal, No. 266, March T., 1935, by defendant, under interpleader, from judgment of C.P. Allegheny Co., Oct. T. 1933, No. 1026, in case of Fidelity Trust Company v. The Travelers Insurance Company and Gertrude T. Tenser defendant, under interpleader. Judgment affirmed.

Assumpsit.

The opinion of the Supreme Court states the facts.

Trial on framed issue, before McNAUGHER, J. Verdict for defendant. Judgment entered for plaintiff n.o.v., McNAUGHER, E. W. MARSHALL and RICHARDSON, JJ., opinion by McNAUGHER, J. Defendant appealed.

Error assigned, among others, was judgment n.o.v.

The judgment is affirmed.

Charles B. Prichard, for appellant.

Earl F. Reed, of Thorp, Bostwick, Reed & Armstrong, with him Joseph A. Langfitt, Jr., for appellee.

Before FRAZER, C.J., KEPHART, SCHAFFER, MAXEY, DREW, LINN and BARNES, JJ.

OPINION

MR. JUSTICE MAXEY:

On January 21, 1933, William H. Tenser of Pittsburgh designated the Fidelity Trust Company the beneficiary of two policies of insurance upon his life. By a trust agreement of the same date the Fidelity Trust Company agreed to receive and pay the proceeds, as trustee, to certain persons named therein, the largest share going to one Clementine Bole. Tenser died June 16, 1933, and thereafter his widow, Gertrude T. Tenser, who had previously been the beneficiary of these policies, also claimed the proceeds. Suit being brought upon the policies by the trust company, the insurer admitted its liability, paid the money into court, and petitioned that the opposing claimants be required to interplead. The petition was granted and a feigned issue framed, with the Fidelity Trust Company, trustee, as plaintiff, and Gertrude T. Tenser as defendant. Pleadings were filed by the parties, whereupon plaintiff moved for judgment for want of a sufficient affidavit of defense. The court refused the motion (which action, on appeal, this court affirmed per curiam, 316 Pa. 385, 175 A. 409) and the case proceeded to trial. The jury returned a verdict for defendant, but the court in banc entered judgment for plaintiff n.o.v., and defendant appealed.

William H. Tenser and A. J. Phipps were, for a number of years, engaged as partners in the food brokerage business. In May, 1921, they orally agreed that, in lieu of attempting to value the good will in appraising the partnership assets in the event of the death of either partner, each would take out a policy of life insurance for $10,000, on his own life, and payable to his wife, the premiums to be paid out of partnership funds and charged to partnership expense. This was done. The partners were about the same age; they had an equal interest in the business; and the premiums were almost identical in amount. This agreement was embodied in paragraph eight of a written partnership agreement executed the following September. ^[*] The business continued to prosper, and, in December, 1926, they each took out, in pursuance of a further agreement, additional policies of insurance for $10,000, upon the same terms and conditions. The parties never discussed with each other whether the insured should retain the right to change the beneficiary of his policies. All the policies, however, expressly reserved to the insured that right.

In February, 1927, Tenser exercised his right to change the beneficiary of his policies, and made them payable to the Fidelity Trust Company, in trust, to pay $5,000 to his wife, and the income from the balance of the proceeds to her during her natural life, with discretion to pay additional sums out of the principal for her support and maintenance. In January, 1931, Tenser revoked this arrangement and made the policies payable to his estate. In January, 1933, he again changed the policies to be payable to the Fidelity Trust Company, in trust to pay the proceeds as follows: $12,500 to Clementine Bole, $1,500 to his mother, and the balance equally to his two sisters. Phipps did not know of the changes Tenser had made until 1931, but meanwhile, in February, 1928, he changed the beneficiary of his own policies to the Fidelity Trust Company, as trustee; he revised the trust agreement in 1931, and revoked it in 1934. Throughout these changes Phipps retained his wife as beneficiary of the trust, although she was provided for in part by income rather than by principal.

At the trial plaintiff placed in evidence the trust agreement of January, 1933, and the admitted averments of the statement of claim that it was the beneficiary named in the policies on Tenser's life at the time of his death, and rested. Not disputing these facts, defendant contends, as she did below, that the above cited provisions of the partnership agreement of 1921 were made, among other reasons, for her benefit, making her a donee beneficiary thereof, that therefore she acquired a vested interest in the insurance taken out under that agreement, which interest, being vested, her husband was powerless to destroy by attempting to change the beneficiary of his policies. She further contends that the trust agreement of 1933 is fraudulent and void in that it was executed in pursuance of a conspiracy entered into in consideration of a meretricious relationship between her husband and Clementine Bole.

Concerning defendant's first contention the learned trial judge, without submitting the question to the jury, ruled as a matter of law that under the evidence presented the defendant acquired no vested interest in the policies by virtue of the partnership agreement, and that, therefore, the decedent was at all times at liberty to change the beneficiary named in his insurance policy. In this we find no error. Defendant failed to prove her averments -- which, when the case was here before, we held sufficient to prevent judgment on the pleadings -- that the partnership agreement of 1921 was made for her benefit; she was at that time only a possible incidental beneficiary of that agreement. The principle that the donee beneficiary of a contract may sue thereon is inapplicable here, for defendant never acquired that status. It is not everyone who may possibly benefit from a contract if it is carried out as first written who acquires the substantial status of "donee beneficiary."

The language of the partnership contract of September, 1921 wherein Phipps and Tenser reduced to writing their previous oral agreement, shows clearly that the sole purpose for taking out the insurance was to avoid the difficult problem of appraising the good will of the business and determining the amount payable to the estate of that partner who should die first. That the policies were made payable to their respective wives was not the motivating...