Lamar Life Ins. Co. v. Moody

• Decision Date: 12 April 1920
• Docket Number: 20982
• Court: Mississippi Supreme Court
• Parties: LAMAR LIFE INS. Co. v. MOODY

84 So. 135

122 Miss. 99

LAMAR LIFE INS. Co. v. MOODY

No. 20982

Supreme Court of Mississippi

April 12, 1920

March 1920

INSURANCE. Insured may pledge policy to company for loan without beneficiary's consent.

The insured may pledge policy to the company for Ioan without the consent of the beneficiary, where it appears that insured reserved the right to change the beneficiary. Beneficiary has no vested right in the proceeds of such policies.

HON. W L. CRANFORD, Special Judge.

APPEAL from Circuit Court, Pearl River County, HON. W. L. CRANFORD Special Judge.

Action by Mrs. Catherine A. Moody against the Lamar Life Insurance Company. Judgment for Plaintiff, and defendant appeals. Reversed and dismissed.

Reversed and dismissed.

Wells Roberson & Jones, for appellant.

It is our contention that whenever, in any contract of life insurance, the applicant and insured reserves in the application, which becomes a part of the contract of insurance, the right to change the beneficiary, then, and in that event, the interest of the beneficiary first named, is not vested but contingent, and the insured has the absolute authority without the consent of the beneficiary to take the entire cash surrender value or borrow the entire loan value of the policy, and thus himself, get the full benefit of the policy, or he may designate another than the first beneficiary as the object of his bounty.

This identical question has never been decided by this court. We say this, having fully in mind the decisions of this court as laid down in: Bishop v. Curphy, 60 Miss. 179; Cozine v. Grimes, 76 Miss. 398; Grego v. Grego, 78 Miss. 443; Johnson v. Bacon, 92 Miss. 156; and Mutual Benefit Life Insurance Co. v. Willoughby, 54 So. 834, 99 Miss. 98.

The precise question which we now present, was in none of those cases suggested to the court; on the contrary, in the most exhaustive cases considering this subject, to-wit: in the case of Bank v. Williams, Insurance Co. v. Willoughby, and Johnson v. Bacon, supra, it affirmatively appears from the original records that the right was not reserved by the insured to change the beneficiary in the contract of insurance and however broad the language of the court may be in those cases such holding must be limited to the facts in those cases. As a matter of fact, in the briefs of counsel on the winning side in the above cases, they recognize the principle contended for by us herein. For instance, in the case of Mutual, etc., v. Willoughby, 54 So. 834, 99 Miss. 98, in the record in this court No. 14993, in the brief of Willing & Davis, and George B. Power we find this statement of the law: "It is a well established principle of insurance law that in ordinary life insurance policies, where no power of disposition is reserved in the insured, the beneficiary in the policy, upon the issuance of the policy, acquires a vested right therein, which cannot be impaired or defeated, without his consent." And counsel quoted the cases above referred to in support of such statement of the law.

Likewise, in the case of Johnson v. Bacon, 92 Miss. 160, in the brief of Pollard & Hammer, we find the following contention as to the law: "The wife and children had a vested right upon the issuance of the policies. In ordinary life insurance where no power of divestiture is reserved, the general doctrine prevails that the issuance of the policy conferred immediately a vested right upon and raises an irrevocable trust in favor of the party named as beneficiary, a right which no act of the insured can impair without the beneficiary's consent," and said counsel quoted the Mississippi cases above referred to by us.

However, when we turn to the standard text-books on insurance we find the law clearly laid down as asserted by us above. In 1 Bacon's Life & Accident Insurance (2 Ed.), sec. 379, page 792, we find: "It has been held, however, that where the right to change the beneficiary is reserved, the policy can be assigned by the insured to a creditor as security of a debt." Citing the following authorities: McNeil v. Chinn, 45 Tex. Civ. App. 551, 101 S.W. 465; Alba v. Provident Savings L. Assn. Society, 116 La. 1021, 43 So. 663; Fuos v. Dietreich, (Tex Civ. App), 101 S.W. 291; Cornell v. Mut. Life Ins. Co., 179 Mo.App. 420, 165 S.W. 858; and again in section 380 of the same work, page 793, we find the following: "The insured may borrow money on the policy although payable to the wife and children, if the right to change the policy is reserved. Citing Mut. L. Ins. Co. v. Twyman, 122 Ky. 513, 92 S.W. 335; Grice v. Ill. Life Ins. Co., 122 Ky. 575, 92 S.W. 560.

Likewise, there is found in Briefs on the Law of Insurance, Cooley, Suppl. Vol. VI, page 424, Secs, 1091 of, the following: "If, however, the right to change the beneficiary is reserved, the insured may assign the policy at will." Citing Alba v. Provident Sav. L. Assurance Soc. of N. Y. 43 So. 663, 118 La. 1021; Cornell v. Mut. L. Ins. Co. of N. Y., 170, Mo.App. 420, 165 S.W. 858; Fuos v. Dietrich (Tex. Civ. App.), 101 S.W. 291; McNeill v. Chinn, 45 Tex. Civ. App. 551, 101 S.W. 465.

In addition to these quotations, from these text books with the cases cited by them in support of the text, we now cite the following from opinions in various cases from courts of last resort in various states, to wit: Grice v Illinois Life Insurance Company, 122 Ky. 472; Hopkins v. Hopkins Admr., 92 Ky. 324, 13 Law Rep. (Ky.) 707, 17 S.W. 864; Wirgman v. Miller, 98 Ky. 620, 17 Ky. Law Rep. 1174, 33 S.W. 937; Wrather v. Stacy, 82 S.W. 420, 26 Ky. Law Rep. 683, 89 S.W. 178, Ky. Law Rep. 167; Mutual Life Insurance Company of Kentucky v. Twyman, etc., 122 Ky. 513; Wirgman v. Miller, 98 Ky. 620, 17 Ky. Law Rep. 1174, 33 S.W. 937; Baldwin v. Haydon, 70 S.W. 300, 24 Ky. Law Rep. 900; Mente v. Townsend, 68 Ark. 391, 59 S.W. 41; Marsh v. Sup. Council, etc., 149 Mass. 312, 21 N.E. 1070, 4 L. R. A. 382; Sabin v. Phinney, 134 N.Y. 423, 31 N.E. 1087, 30 Am. St. Rep., 681; Swift v. Swift, 96 Ill. 309; Splawn v. Chew, 60 Texas 532; Nally v. Nally, 74 Ga. 669, 58 Am. Rep. 458; Hopkins v. M. W. Life Assur. Co., 99 F. 199, 40 C. C. A. 1; Hopkins v. Hopkins Adm'r., 92 Ky. P. 324; Cent. Natl. Bk. v. Hume, 128 U.S. 195, 9 S.Ct. 41, 32 L.Ed. 370; Atlantic Mutual Life Insurance Company v. Annie Gannon et als., 179 Mass. 291; Martin v. Stubbings, 126 Ill. 387; Splawn v. Chew, 60 Tex. 532; Bliss on Life Insurance, secs, 317, 337; Ricker v. Charter Oak Life Ins. Co., 27 Minn. 193; Ricker v. Charter Oak Ins. Co., supra; Fuos v. Dietreich, 101 S.W. 291; McNeil v. Chinn, 45 Tex. Civ. App. 553; Splawn v. Chew, 60 Tex. 534; Irwin v. Traveler's Ins. Co., 16 Tex. Civ. App. 685; Washington Life Ins. Co., v. Berwald, 97 Tex. 115; Knights v. Watson, 64 N.H. 519; Bank v. Whittle, 63 N.H. 587; Pittinger v Pittinger, 28 Colo. 314; Fidelity Mutual Life Assn. v. Winn, 96 Tenn. 224, 33 S.W. 1045; Steinhausen v. Assn. (Sup.), 13 N.Y.S. 36; Martin v Stubbings, 125 Ill. 387, 18 N.E. 657, 9 Am. St. Rep. 620; Van Frank v. Assn., 158 Ill. 560, N.E. 1005; Masonic Mut. Ben Soc. v. Burkhart, 110 Ind. 189, 10 N.E. 449; Stewart v. Sup. Council, 36 Mo.App. 319; Mutual Assn. v. Montgomery, 70 Mich. 587, 38 N.W. 588, 14 Am. St. Rep. 519; Niblack on Benefit Societies, sec. 325; Mutual Life Ins. v. Lowther, 126 P. 882; Cornell v. Mutual Life Insurance Company, 179 Mo.App. 420; 3 Ency of Law (2 Ed.), 984; Blum v. Insurance Company, 197 Mo. 513, 95 S.W. 317, and cases cited; U. S. Casualty Co. v. Kacer, 169 Mo. 301, 313, 69 S.W. 370; Lockwood v. Ins. Co. (Mich.), 66 N.W. 229; N.Y. Life Ins. Co. v. Ireland, (Tex.), 11 S.W. 617; Webb v. Ins. Co., 134 Mo.App. 576, 579, 115 S.W. 481; Leeker v. Ins. Co., 154 Mo.App. 440, 451, 134 S.W. 676; Eves v. Woodmen of the World, 153 Mo.App. 247, 256, 133 S.W. 657; Mut. Life Ins. Co. v. Twyman (Ky.), 92 S.W. 335; Eagle v. Ins. Co., (Ind.), 91 N.E. 814; Pierce v. Ins. Co., 138 Mass. 151-160; Robinson v. Ins. Co., 168 Mo.App. 259, 153 S.W. 534; Hopkins v. Ins. Co., 99 F. 199; Lamb v. Ins. Co., 106 F. 637; Denver Ins. Co. v. Crane, (Colo.), 73 P. 875; Alba v. Provident Savings Life Assur. Soc., 43 So. 663 (La.); Lake v. N.Y. Life Ins. Co., 120 La. 974, 45 So. 959; Alba v Provident Sav. Life Ins. Co., 118 La. 1021, 43 So. 663; Jagoe v. Aetna Life Ins. Co., 123 Ky. Rep. 511; Rumsey v. N.Y. Life Ins. Co., 59 Colo. 71; Hopkins v. Ins. Co., 99 F. 199, 40, C. C. A. 1; Mut. Life Ins. Co. v. Twyman, 122 Ky. 513, 92 S.W. 335, 97 S.W. 391, 121 Am. St. Rep. 471; Hopkins v. Hopkins, etc. 92 Ky. 324, 17 S.W. 864; A. Mut. L. I. Co. v. Gannon, 179 Mass. 291, 60 N.E. 933; Martin v. Stubbings, 126 Ill. 387, 18 N.E. 657, 9 Am. St. Rep. 620; Delaney, v. Delaney, 175 Ill. 187, 51 N.E. 961; Splawn v. Chew, 10 Tex. 532; Fuos v. Dietrich (Tex. Civ. App.), 101 S.W. 291; McNeil v. Chinn, 45 Tex. Civ. App. 551, 101 S.W. 465; Knight of Honor v. Watson, 64 N.H. 517, 15 A. 125; Mente v. Townsend, 68 Ark. 391.

We submit, therefore, that this case should be reversed and judgment entered here for the appellant, the Lamar Life Insurance Company.

W. A. Shipman, for appellee.

Did the insured, by reserving the right in his application to change the beneficiary, have the right to assign the policy without the consent of the beneficiary named in the policy; never having exercised the right so reserved, if indeed he ever had such right?

Counsel for appellant contends that in such case the interest of the beneficiary is not a vested, but a contingent, interest, and that the insured had the absolute and unqualified right, without the consent of the beneficiary, to make such assignment, to take the entire cash or loan surrender value, to borrow the loan value, and in fact to make any kind of disposition he might have seen fit with or without reason.

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