Johnson v. New York Life Ins. Co.

• Decision Date: 03 November 1913
• Citation: 138 P. 414,56 Colo. 178
• Parties: JOHNSON v. NEW YORK LIFE INS. CO. (SWANSON, Interpleader).
• Court: Colorado Supreme Court

138 P. 414

56 Colo. 178

JOHNSON v. NEW YORK LIFE INS. CO. (SWANSON, Interpleader).

Supreme Court of Colorado, En Banc.

November 3, 1913

Rehearing Denied Feb. 2, 1914.

Error to District Court, City and County of Denver; Greeley W Whitford, Judge.

Action by Sophia Peterson Johnson against the New York Life Insurance Company, in which Lisa Swanson interpleaded. There was a judgment for the interpleader, and plaintiff brings error. Affirmed.

Stark & Martin, of Denver, for plaintiff in error.

H. R Sahlgaard, M. B. Carpenter, and A. Newton Patton, all of Denver, for interpleader.

Hindry & Friedman, Guy K. Brewster, George Allan Smith, and B. E Woodward, all of Denver, amici curiae.

HILL J.

This action involves the disposition to $2,000 paid into court by the defendant in error, the New York Life Insurance Company. In her complaint the plaintiff in error alleges that in March, 1904, in consideration of certain payments made and to be made to the insurance company by Swan G. Peterson, it made its policy of insurance in writing wherein and whereby it agreed to pay to Lisa Swanson, mother of the insured, or to such beneficiary as may have been duly designated, the sum of $2,000 upon proof of the death of Swan G. Peterson. A copy of the policy is incorporated in the complaint. The clause bearing upon the subject of beneficiaries reads: 'The insured, having reserved the right, may change the beneficiary, or beneficiaries, at any time during the continuance of this policy, by written notice to the company at the home office, provided this policy is not then assigned. The insured may at any time, by written notice to the company at the home office, declare any beneficiary then named to be an absolute beneficiary under this policy. No designation, or change of beneficiary, or declaration of an absolute beneficiary, shall take effect until indorsed on this policy by the company at the home office. During the lifetime of an absolute beneficiary the right to revoke or change the interest of that beneficiary will not exist in the insured. If any beneficiary, or absolute beneficiary, dies before the insured, the interest of such beneficiary will become payable to the executors, administrators, or assigns of the insured.' The policy provides for its participation in the profits of the company at the end of 20 years, if the insured is then living, also for paid-up insurance, as well as for automatic term insurance, also for a cash surrender value, and possibly for loans. Another clause states: 'An assignment of this policy may be made in duplicate, and both sent to the home office, one to be retained by the company, and the other to be returned. The company has no responsibility for the validity of any assignment.' The complaint further alleges that in July, 1905, the plaintiff and the said Swan G. Peterson intermarried, and that such relation continued until his death, which occurred in November, 1907; that in September, 1906, as the issue of said marriage, there was born one child, Katherine, who is now dependent upon the plaintiff for support. It is then alleged that, while the policy was in full force, and not assigned, and in pursuance of the reservation permitting him to change the beneficiary, the said Swan G. Peterson did designate and appoint the plaintiff as the beneficiary of and under the policy; that in pursuance of such designation the insured delivered her the policy, and that the same remained and continued in her possession until his death; that after the transfer and delivery of the policy to her she paid and assisted in paving the premiums due thereon so as to keep it in full force and effect.

It appears from the complaint that notice of this assignment and change of the beneficiary was not given the company, nor was an indorsement on the policy of a change made by the company. To excuse the failure of the insured to comply with the requirements of the policy in these respects, it is alleged that he resided about 50 miles from Denver, and made a trip for the purpose of making application at the office of the company in Denver to have plaintiff designated as the beneficiary; that he was ignorant of the manner and procedure required to be taken for the purpose of effecting such change; that he endeavored to find the agent through whom the policy was effected; that he was unable to do so; that he then attempted to transact the matter himself, but found the offices of the company closed; that he was a laboring man, a miner, a poor person, and a foreigner, and unable to either read or write the English language, except meagerly; that, by reason of the long distance from his place of residence to an office of the company, the expense incident in going to one, and his unfamiliarity with the English language, he neglected to have the policy changed in the proper manner.

It is alleged that Lisa Swanson, the mother of deceased, claims the money payable under the policy, but denies that she has any interest, and prays, in order that there may be a final adjudication in the premises, that she be made a party to the action, and be required to present her claim, if any she has.

In its answer the insurance company admits the issuance of the policy, the death of the insured, the designation of Lisa Swanson, the mother, as beneficiary, and alleges that she claims the money; that it cannot determine without hazard to itself to which the money is rightfully due. It prays for an order requiring plaintiff and Lisa Swanson to appear and interplead concerning their respective claims under the policy; that an order issue authorizing it to pay the money into court, and be discharged. The order of interpleader, etc., was made. Lisa Swanson intervened; in her petition she alleged that she was made the beneficiary as the mother of the insured, denied that the insured at any time designated or appointed the plaintiff as the beneficiary under the policy, and alleged that she is the beneficiary named in the policy, and claims the money due thereunder.

The plaintiff filed a replication to this answer. The interpleader then moved for judgment in her favor on the pleadings, which was sustained. The plaintiff brings the case here for review.

If the facts alleged, when admitted to be true, are such that no other judgment could have been rendered thereunder, the motion was properly sustained. Where the policy contains no provisions for a change of the beneficiary, the general rule is that the policy and the money to become due under it vests immediately in the person named as the beneficiary, and that this interest, being vested, cannot be transferred by the insured to any other person without the consent of the named beneficiary. Hill v. Groesbeck, 29 Colo. 161, 67 P. 167; Pittinger v. Pittinger, 28 Colo. 308, 64 P. 195, 89 Am.St.Rep. 193; Love v. Clune, 24 Colo. 237, 50 P. 34; Mutual Life Insurance Co. v. Hagerman, 19 Colo.App. 33, 72 P. 889; Central Bank v. Hume, 128 U.S. 195, 9 S.Ct. 41, 32 L.Ed. 370; Hopkins v. Hopkins' Adm'r, 92 Ky. 324, 17 S.W. 864; Mutual Life Ins. Co. v. Twyman, 122 Ky. 513, 92 S.W. 335, 97 S.W. 391, 121 Am.St.Rep. 471; Pilcher v. New York Life Ins. Co., 33 La. Ann. 322.

This does not hold true, however, where the contract of insurance provides (as this one does) that the insured may change the beneficiary. In policies like this the general rule is that the beneficiary has an interest in the policy which, while subject to be defeated by a change of beneficiary, can be defeated only in the manner prescribed in the policy, the charter or by-laws of the company, or by statute. Finnell v. Franklin, 134 P. 122; Rollins v. McHatton, 16 Colo. 203, 27 P. 254, 25 Am.St.Rep. 260; Indiana Nat. Life Ins. Co. v. McGinnis (Ind.) 101 N.E. 289, 45 L.R.A. (N. S.) 192; Union Central Life Ins. Co. v. Woods, 11 Ind.App. 355; ^[1] Farra v. Braman, 171 Ind. 529, 86 N.E. 843; Holland, Guardian, v. Taylor, 111 Ind. 121, 12 N.E. 116; Smith v. Nat. Benefit Soc., 123 N.Y. 85, 25 N.E. 197, 9 L.R.A. 616; Arnold v. Empire Life Ins. Co., 3 Ga.App. 685, 60 S.E. 470; 2 May on Insurance, § 399e; Bliss on Life Insurance (2d Ed.) §§ 318, 337; Isgrigg, Ex'r, v. Schooley, 125 Ind. 94, 25 N.E. 151; Holder v. Prudential Ins. Co., 77 S.C. 299, 57 S.E. 853; Washington Life Ins. Co. v. Berwald, 97 Tex. 111, 76 S.W. 442, 1 Ann.Cas. 682; Freund v. Freund, 218 Ill. 189, 75 N.E. 925, 109 Am.St.Rep. 283; Thomas v. Thomas, 131 N.Y. 205, 30 N.E. 61, 27 Am.St.Rep. 582; De Silva v. Supreme Council, 109 Cal. 373, 42 P. 32; Charch v. Charch, 57 Ohio St. 561, 49 N.E. 408; Kentucky Masonic Mutual Life Ins. Co. v. Miller's Adm'r, 76 Ky. (13 Bush) 489; Eastman v. Association, 62 N.H. 555; National Mut. Aid Soc. v. Lupold, 101 Pa. 111; McLaughlin v. McLaughlin, 104 Cal. 171, 37 P. 865, 43 Am.St.Rep. 83; Wendt, Adm'r, v. Iowa Legion of Honor, 72 Iowa 682, 34 N.W. 470; Supreme Conclave v. Capella (C. C.) 41 F. 1; Mut. Ass'n v. Montgomery, 70 Mich. 587, 38 N.W. 588, 14 Am.St.Rep. 519; Wirgman v. Miller, 98 Ky. 620, 33 S.W. 937.

In this jurisdiction there is no difference in this respect between policies held in fraternal or mutual companies and ordinary life insurance companies. Finnell v. Franklin, 134 P. 122; Hill v. Groesbeck, 29 Colo. 161, 67 P. 167; Pittinger v. Pittinger, 28 Colo. 308, 64 P. 195, 89 Am.St.Rep. 193; Love v. Clune, 24 Colo. 237, 50 P. 34.

It has repeatedly been held, where a change of beneficiaries is to be made in a certain manner which includes notice to the insurer, that a disposition of the proceeds by will not brought to the attention of the insurer during the insured's lifetime is ineffectual as against the beneficiary named in the policy. De Silva v. Supreme Council, 109 Cal. 373, 42 P. 32; Hellenberg v. District No 1, 94 N.Y. 580; Stephenson v....