Folts v. Jones

• Citation: 132 S.W.2d 205,175 Tenn. 77
• Parties: FOLTS et al. v. JONES et al.
• Decision Date: 21 October 1939
• Court: Supreme Court of Tennessee

132 S.W.2d 205

175 Tenn. 77

FOLTS et al. v. JONES et al.

Supreme Court of Tennessee.

October 21, 1939

Appeal from Chancery Court, Hamilton County; J. Lon Foust Chancellor.

Suit by Aubrey F. Folts, guardian of Nannie J. Paul, a person of unsound mind, against Kathleen Jones, the Mutual Life Insurance Company of New York, and another, for a decree advising and directing complainant with reference to a policy of insurance on the life of Nannie J. Paul. From the decree all of the parties, except the Mutual Life Insurance Company of New York, appeal.

Decree affirmed, and cause remanded for further proceedings.

Thomas Folts & Brown, of Chattanooga, for complainant.

Francis Esslinger, of Huntsville, Ala., for defendant Kathleen Jones.

Miller. Miller & Martin, of Chattanooga, for defendant Mutual Life Ins. Co. of New York.

Clarence Kolwyck, of Chattanooga, guardian ad litem for defendant Nannie J. Paul.

DeHAVEN Justice.

Complainant, Aubrey F. Folts, as guardian of Nannie J. Paul, alleged in his bill herein that his ward is a person of unsound mind, having been so adjudged on February 5, 1938, and committed to Central State Hospital, at Nashville, Tennessee; that among the assets of his ward coming into his hands as guardian is a life insurance policy for the face amount of $5,000, issued to Nannie J. Paul by the Mutual Life Insurance Company of New York on March 6, 1922, which policy is on the twenty-year payment life plan; that the annual premium on said policy is $257.20, which have been kept paid in order to keep the policy in force pending a final determination of the guardian's rights and duties in respect to said policy.

It is further averred that defendant, Kathleen Jones, is named beneficiary in said policy; but that the right is reserved to the insured, under the terms of the policy, of revocation and change of beneficiary. That the guardian believes that since the right of revocation and change of beneficiary is reserved in the policy, no rights whatever vested in the beneficiary any present interest and that the cash surrender of said policy is that of the insured in her own right; that even if the court should declare he has no right to surrender the policy for cash as a part of his ward's estate, yet he has the right to discontinue payment of premiums and allow the policy to remain in a paid-up status according to the non-forfeiture clause of the policy.

It is further alleged that in all of these insistences the beneficiary, Kathleen Jones, has an adverse interest and is made a party defendant in order that she may have the opportunity to present what claim, if any, she may have in connection with said policy.

The prayer of the bill is, in substance, that the court advise and direct the guardian with reference to the matters set out in the bill.

Defendant, Kathleen Jones, made answer and alleged that to maintain the insurance in force would be more beneficial to the estate of Nannie J. Paul than would be the cash for which the policy could be surrendered; that complainant did not allege facts showing that a conversion of the policy into cash would be of any benefit to her estate; and that Nannie J. Paul having created a succession during her sanity by which Kathleen Jones was to succeed to the value of the insurance policy upon her death, the court should protect and carry out the intentions and desires of the incompetent as shown by her acts prior to her incompetency; that should the court find it was to the best interest of the estate of the incompetent to convert the policy into cash such conversion shall be under the direction of the court, so that the fund so created would, upon the death of the incompetent, prior to the death of Kathleen Jones, be payable to said defendant as would be the proceeds of the insurance policy if left in force; and that if the court should find it to the best interests of the incompetent's estate to direct the surrender of the policy for either a term insurance policy or a paid-up policy that it should be payable under the same terms as the existing policy. It is further alleged that there was available dividend additions having a cash value of $575 which could be cashed without surrendering the policy, in the event the income from the estate of the incompetent should be insufficient to keep her in comfort and pay the annual premiums upon the policy, it would be more advantageous to her estate and would maintain the succession to the benefits; that she (Kathleen Jones) has an expectant interest in said policy which should be protected and preserved by the court.

The cause was tried upon a written stipulation of facts.

The decree of the chancellor, in its material parts, was as follows:

"1. That the amount of premiums which the Guardian has paid since Insured's commitment in order to keep the policy in force, together with all costs of this cause, including the fee, hereinafter allowed, of the guardian ad litem, shall be paid by the guardian out of the cash surrender value of the dividend additions upon said policy.

"2. That the policy involved in this cause shall not be surrendered for cash at this time, but it shall be retained and kept in force in the manner hereinafter decreed.

"3. That after the guardian has repaid to himself, for the benefit of the estate of Nannie J. Paul, the amount of the premium payments which he has paid from her estate since his appointment, and after the costs of

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