Lloyd v. Royal Union Mut. Life Ins. Co.

• Citation: 245 F. 162
• Decision Date: 03 October 1917
• Docket Number: 90.
• Parties: LLOYD v. ROYAL UNION MUT. LIFE INS. CO.
• Court: U.S. District Court — Northern District of Iowa

245 F. 162

LLOYD v. ROYAL UNION MUT. LIFE INS. CO.

No. 90.

United States District Court, N.D. Iowa, Cedar Rapids Division.

October 3, 1917

[Copyrighted Material Omitted]

Leslie H. Whipp, of Chicago, Ill., and Crosby & Fordyce, of Cedar Rapids, Iowa, for plaintiff.

Dawley Jordan & Dawley, of Cedar Rapids, Iowa, for defendant.

REED District Judge (after stating the facts as above).

But two questions are presented for determination:

First. Did the insured, shortly after the policy was issued, deliver the same to the plaintiff upon an oral agreement with her that she was to pay from her own funds the annual premiums thereon as they matured, and receive the amount of the insurance upon his death? And

Second. Did the insured prior to his death change the beneficiary named originally in the policy from his wife, the plaintiff to his mother, Mrs. Kirk, in accordance with the terms prescribed in the policy?

As to the first of these questions, it is the contention of the defendant (1) that the alleged oral assignment of the policy is not proven; or (2) if proven, that the policy under its terms can only be assigned in writing. The first of these contentions is that plaintiff, under section 4607, Code of Iowa (1897), is not a competent witness. That section provides:

'Neither husband nor wife can be examined in any case as to any communication made by the one to the other while married, nor shall they, after the marriage relation ceases, be permitted to reveal in testimony any such communication made while the marriage subsisted.'

This section does not forbid either the husband or wife from testifying to the transfer of a claim by one to the other. Hanks v. Van Garder, 59 Iowa, 179, 13 N.W. 103; Sexton, v. Sexton, 129 Iowa, 487, 491, 492, 105 N.W. 314, 2 L.R.A. (N.S.) 708; Wigmore on Evidence, Sec. 2226, and note.

(2) But the policy does not forbid its assignment. It only provides that no assignment thereof shall be binding upon the company unless a duplicate thereof shall have been filed at the home office. Section 3046 of the Iowa Code (1897) provides:

'When by the terms of an instrument its assignment is prohibited, an assignment thereof shall nevertheless be valid, but the maker may avail himself of any defense or counterclaim against the assignee which he may have against any assignor thereof before notice of such assignment is given to him in writing.'

Under this section an assignment of a policy of insurance, by the terms of which an assignment is expressly prohibited, is permitted, and the assignee may sue thereon in his own name. Mershon v. National Ins. Co., 34 Iowa, 87; Farmers' & Traders' Bank v. Johnson, 118 Iowa, 282, 286, 91 N.W. 1074.

As to the sufficiency of the testimony to establish the oral transfer of the policy, I find as a fact from the evidence that the policy, shortly after it was made, was delivered by the insured to the plaintiff, as claimed by her, under an oral agreement that she was to pay from her own funds the annual premiums upon the policy, and at the death of the insured she was to receive the amount of the insurance, either as owner of the policy or as the beneficiary named therein, and that she fully performed her part of this agreement. The fact that plaintiff was afterwards divorced from the insured does not defeat her right to the insurance. White v. Brotherhood of Yeoman, 124 Iowa, 293, 295, 99 N.W. 1071, 66 L.R.A. 164, 104 Am.St.Rep. 323; Connecticut Mutual Life Ins. Co. v. Schaefer, 94 U.S. 457-462, 24 L.Ed. 251.

The defendant is a life insurance company organized under the laws of Iowa, and is therein conducting such an insurance business, and is not a fraternal or mutual benefit association. This distinction between these two classes of insurance is fundamental, and should be observed in the determination of these questions. In Carpenter v. Knapp, 101 Iowa, 712, at page 724, 70 N.W. 764, at page 766, 38 L.R.A. 128, this distinction and the rule in Iowa are clearly stated as follows:

'It is the general rule that a beneficiary under an ordinary life policy takes a vested interest therein at the moment the policy is executed and delivered, which cannot be impaired or defeated by any act of the assured, or of the assured and the company, to which said beneficiary does not assent' (citing many authorities).

To the same effect are Bliss on Life Insurance (2d Ed.) Sec. 517; Wilmaser, Ex'r, v. Continental Life Ins. Co., 66 Iowa, 417, 23 N.W. 903, 55 Am.Rep. 277; Ricker v. Charter Oak Life Ins. Co., 27 Minn. 193, 6 N.W. 771, 38 Am.Rep. 289; Central Bank v. Hume, 128 U.S. 195, 206, 9 Sup.Ct. 41, 32 L.Ed. 370; Indiana National Life Ins. Co. v. McGinnis, 180 Ind. 9, 101 N.E. 289, 293, 45 L.R.A. (N.S.) 192; 3 A. & E. Enc. Law (2d Ed.) 980; Washington Life Ins. Co. v. Berwald, 97 Tex. 111, 76 S.W. 443, 1 Ann.Cas. 682, and note; 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; Strong v. Supreme Lodge, 189 N.Y. 346, 82 N.E. 433, 12 L.R.A. (N.S.) 1206, 121 Am.St.Rep. 902, 12 Ann.Cas. 941; Perry v. Tweedy, 128 Ga. 402, 57 S.E. 50, 119 Am.St.Rep. 393, 11 Ann.Cas. 46; Savage v. Modern Woodmen of America, 84 Kan. 63, 113 P. 802, 33 L.R.A. (N.S.) 773; 25 Cyc. 889-894.

And it follows that such policies are assignable, unless that be forbidden by statute, the company's charter, or the terms of the policy itself. Carpenter v. Knapp, above. The only exceptions to this rule are some early cases in Wisconsin, Clark v. Durand, 12 Wis. 223, which seems to have been modified in Ellison v. Straw, 116 Wis. 207, 92 N.W. 1094, and some later cases. 25 Cyc. 890. But as to mutual benefit associations the rule is different, and it is generally held in such cases, wherever the question has arisen, that the member may change the beneficiary named in the certificate or policy, unless the contract itself, its charter, or the statute provides to the contrary. Carpenter v. Knapp, above, and the authorities there cited. But this must be done in strict compliance with the contract, where that prescribes how the change shall be made. Wendt v. Iowa Legion of Honor, 72 Iowa, 682, 34 N.W. 470; Stephenson v. Stephenson, 64 Iowa, 534, 21 N.W. 19; Shuman v. A.O.U.W., 110 Iowa, 642, 82 N.W. 331; Modern Woodmen v. Little, 114 Iowa, 109, 86 N.W. 216; and see Wandell v. Mystic Toilers, 130 Iowa, 639, 105 N.W. 448; also Bauer v. Samson Lodge, 102 Ind. 262, 1 N.E. 571; Assurance Fund v. Allen, 106 Ind. 593, 7 N.E. 317; Freund v. Freund, 218 Ill. 189, 75 N.E. 925; American Legion of Honor v. Smith, 45 N.J.Eq. 466, 17 A. 770; Grand Lodge v. Connolly, 58 N.J.Eq. 180, 43 A. 286.

Many other authorities may be cited to the same effect, and it may be admitted that authorities to the contrary might be cited. But the authorities to the contrary are mostly based upon, or assumed to be, certificates issued by mutual benefit or fraternal associations. Thus in Wandell v. Mystic Toilers, 130 Iowa, 639, 105 N.W. 448, above, the contract in suit was upon a benefit certificate issued by the Mystic Toilers, a purely fraternal association, to a Mrs. Wandell, payable to the plaintiff who was her husband as beneficiary. The association made no defense, but the father of Mrs. Wandell intervened, and claimed the right to the insurance upon the ground that his daughter, the insured, prior to her death had changed the beneficiary from her husband to her father. The only question for determination was whether or not the change was effected in the manner prescribed in the certificate. Some members of the court were of opinion that the change had been so effected, and that the intervener was entitled to recover upon that ground. Others of the court were of opinion that the recovery should be upon the principles of equity. The previous cases in Iowa are reviewed, and Wendt v. Legion of Honor, 72 Iowa, 682, 34 N.W. 470, Stephenson v. Stephenson, 64 Iowa, 534, 21 N.W. 19, Modern Woodmen v. Little, 114 Iowa, 109, 86 N.W. 216, and Carpenter v. Knapp, 101 Iowa, 712, 70 N.W. 764, 38 L.R.A. 128, are approved.

In Central Bank v. Hume, 128 U.S. 195, at page 206, 9 Sup.Ct. 41, at page 44, 32 L.Ed. 370 (1915), there is a full review of the authorities, and it is said by Mr. Chief Justice Fuller:

'It is indeed the general rule that a policy of insurance (ordinary life) and the money to become due under it belong, the moment it is issued, to the person or persons named in it as the beneficiary or beneficiaries, and there is no power in the person procuring the insurance, by any act of his, by deed or by will, to transfer to any other person the interest of the person named without his or their consent' (citing authorities, including Ricker v. Charter Oak Ins. Co., 27 Minn. 193, 6 N.W. 771 (38 Am.Rep. 289), and other cases before cited).

In Modern Woodmen v. Little, 114 Iowa, 109, 86 N.W. 216, where it was contended that a change of beneficiary (in a fraternal association) by the insured in a manner other than as provided in the policy effected such change, the Supreme Court said:

'We cannot agree with the reasoning or the conclusions in these cases. Surely it is not correct to say that the provisions of the contract as to the mode in which beneficiaries may be changed are solely for the benefit of the insurer. They are for the benefit of all concerned, to the end that it may at all times be certain who is the beneficiary. * * * We think it entirely clear, upon reason and authority, that where the parties have agreed upon a mode by which a change of beneficiaries may be effected the change can only be made in that mode, unless by subsequent agreement * * * a different mode is agreed upon.' To the same effect are Stephenson v. Stephenson, 64 Iowa, 534, 21 N.W. 19; Wendt

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