Howell v. John Hancock Mut. Life Ins. Co. of Boston

• Decision Date: 29 July 1941
• Citation: 286 N.Y. 179,36 N.E.2d 102
• Parties: HOWELL v. JOHN HANCOCK MUT. LIFE INS. CO. OF BOSTON, MASS.
• Court: New York Court of Appeals Court of Appeals

286 N.Y. 179

36 N.E.2d 102

HOWELL

v.JOHN HANCOCK MUT. LIFE INS. CO. OF BOSTON, MASS.

Court of Appeals of New York.

July 29, 1941.

Appeal from Supreme Court, Appellate Division, Second Department.

Action by Ernest Howell, as administrator of the goods, chattels and credits of Annie E. Howell, deceased, against the John Hancock Mutual Life Insurance Company of Boston, Massachusetts, on two industrial life insurance policies. From a judgment on an order of the Appellate Division, 260 App.Div. 1042, 24 N.Y.S.2d 348, reversing on the law a county court's judgment and affirming a city court's judgment for plaintiff, defendant appeals by leave of the Appellate Division, 261 App.Div. 836, 25 N.Y.S.2d 1002.

Affirmed. William B. Moore, of New York City, for appellant.

Myron J. Shon, of Yonkers, for respondent.

RIPPEY, Judge.

Annie Howell died June 13, 1935, and her husband, Ernest Howell, was named administrator of her estate. As such administrator, he brought this action to recover from defendant the face value of two insurance policies on her life.

Upon the trial on September 22, 1937, the plaintiff introduced the two policies and the letters of administration in evidence and rested. Defendant then moved to dismiss the complaint upon the ground, specifically set up as an affirmative defense and also appearing, it was asserted, on the face of the policies, that plaintiff was not entitled to maintain the action in his representative capacity, it being urged that the insured had specifically designated the husband individually as beneficiary, and upon the further ground that, in any event, plaintiff had failed to prove compliance with the terms of the policies with respect to furnishing defendant with proofs of death of the insured. Decision on the motion was reserved, whereupon the defendant rested without offering any evidence and renewed its motion to dismiss. Decision was again reserved. On June 1, 1938, judgment was entered for the plaintiff for the full face value of the policies, with costs. By the pleadings and during the discussion that followed defendant's motion to dismiss the case after plaintiff rested, substantial admissions of receipt and retention of proofs of death by defendant were made. The issues were narrowed down to the two questions, (1) whether the action may be maintained by plaintiff in his representative capacity and (2) whether proofs of claim by Howell as the individual beneficiary meet the requirements of the policies when suit is brought by him in his representative capacity as administrator. Those were the only questions thus presented to the trial court for decision and are the only questions open to review here.

The policies are commonly known as ‘industrial policies'; each was specified on its face by the company to be a ‘Whole Life Policy: Payable at Death.’ One policy was dated October 25, 1933, No. 24963332, for $200 with weekly premium of twenty-five cents and stated that the insured, Annie E. Howell, was forty-nine years of age at her next birthday. They years of age at her next birthday. The July 4, 1934, fixed $114 as the full amount of the policy, called for a weekly premium of fifteen cents and stated that the age of the insured at her next birthday was fifty years. Otherwise all terms and provisions of the policies were identical.

Each contract of insurance, on the first page, provided that, in consideration of the payment of the premium stipulated, the defendant granted the insurance ‘with the privileges and benefits and subject to the conditions and provisions on this and the three following pages which are hereby made a part of this contract and constitute the entire contract between the parties hereto.’ Then follows the number, the date of the policy, the name of the insured, the full amount of the policy, age of insured at next birthday, weekly premium, and number of the soliciting agent as above stated in a box which also included the following items in this form:

+------------------------------------------+
                ¦Name of Insured¦Name of      ¦Relationship¦
                +---------------+-------------+------------¦
                ¦Annie E. Howell¦Beneficiary  ¦to Insured  ¦
                +---------------+-------------+------------¦
                ¦               ¦Ernest Howell¦Husband     ¦
                +------------------------------------------+
                

Next appears the following specific clause: ‘On satisfactory proof of the death of the Insured made in the manner and to the extent required herein and upon surrender of the Policy and Premium Receipt Books, the Company will pay the amount due hereunder. The Company may make any payment or grant any non-forfeiture benefit provided herein either to the beneficiary above named, if living, or to such other living beneficiary as may be duly and finally designated, and recognized by endorsement hereon, or to the Executor or Administrator of said Insured or to any relative by blood or connection by marriage, or to any person appearing to the Company to be equitably entitled thereto by reason of having incurred expense in any way on behalf of the Insured for burial or for any other purpose; and the receipt of any such payee shall be conclusive evidence that payment has been made to the person or persons entitled thereto and that all claims under this policy have been fully satisfied.’

We need not refer in detail to numerous other provisions of the policies except to say that each provides for change of beneficiary, for automatic extended term insurance after three years, for alternative options of paid-up policy or cash surrender value after five years and for accidental and death benefits indicating some control over the policy and proceeds by the insured and the possibility of definite vested interest in its proceeds by the insured under certain conditions.

In accord with the wording of the policies, when proofs of the death of the insured were presented, the defendant might pay the insurance to someone who should, in its opinion, meet the description contained in the ‘facility of payment’ clause whom, at its sole and exclusive option, it might select to receive the proceeds of the policies. The wording of the policies completely refutes any contention that the defendant expressly promised to make payment to any specific person or class of persons to the exclusion of others named under the ‘facility of payment’ clause. It did not expressly promise to pay the face value of the policies to the named beneficiary or to the administrator of the insured. In this jurisdiction and by the weight of authority elsewhere, where a beneficiary is definitely named to whom an express promise is made to make the required payment, ‘the only effect of the clause is to provide the company with a defense in case it has paid thereunder. It neither gives nor takes away a cause of action from any person.’ Wokal v. Belsky, 53 App.Div. 167, 171, 65 N.Y.S. 815, 817;Golden v. Metropolitan L. Ins. Co., 35 App.Div. 569, 55 N.Y.S. 143; and annotations in 28 A.L.R. 1350; 49 A.L.R. 939; 75 A.L.R. 1435. If the company fails to exercise its option under that clause, payment may be compelled by the named beneficiary. McCarthy v. Prudential Ins. Co., 252 N.Y. 459, 169 N.E. 645. The effect of the clause cannot be different where no beneficiary is named to whom an express promise to pay is made. The insurance company will not be permitted to defeat the purpose of the insurance by failing to exercise its option under the ‘facility of payment’ clause whether a beneficiary is named or not. Where no express promise is made to pay any designated person, the administrator is the party to sue and may compel payment. Matter of Howley's Estate, 133 Misc. 34, 231 N.Y.S. 95;Williams v. Metropolitan Ins. Co., Mo.App., 233 S.W. 248;Heubner v. Metropolitan Ins. Co., 146 IllApp. 282;Lewis v. Metropolitan L. Ins. Co., 178 Mass. 52, 59 N.E. 439,86 Am.St.Rep. 463.

If ambiguity exists, the contracts must be...