Lynn v. Magness

• Decision Date: 10 December 1948
• Docket Number: 40.
• Citation: Lynn v. Magness, 62 A.2d 604, 191 Md. 674 (Md. 1948)
• Parties: LYNN v. MAGNESS.
• Court: Maryland Court of Appeals

62 A.2d 604

191 Md. 674

LYNN v. MAGNESS.

No. 40.

Court of Appeals of Maryland

December 10, 1948

Rehearing Denied Jan. 11, 1949.

Appeal from Circuit Court of Baltimore City; W. Conwell Smith, Chief Judge.

Proceeding by the Aetna Life Insurance Company to determine rights of contesting claimants under three life policies, wherein Edward J. Lynn and Stella F. Magness were interpleaded as plaintiff and defendant, respectively.From the decree interpleaded plaintiff appeals.

Decree reversed and remanded with directions.

MARKELL J., dissenting.

Joseph T. Brennan, of Baltimore (Calvert K. Hartle, of Hagerstown and Charles Ruzicka, of Baltimore, on the brief), for appellant.

James C. Burch and L. Wethered Barroll, Jr., both of Baltimore (Preston P. Heck, of Chestertown, and L. Wethered Barroll, Sr., of Baltimore, on the brief), for appellee.

Before MARBURY, C.J., and DELAPLAINE, HENDERSON, and MARKELL, JJ.

DELAPLAINE Judge.

This is a contest for the life insurance payable by Aetna Life Insurance Company under three policies insuring Dr. Samuel Lee Magness, now deceased.The contesting claimants are the insured's widow, Stella E. Magness, of Rock Hall, and his son-in-law, Edward J. Lynn, of Hagerstown.

For many years Dr. Magness engaged in the general practice of medicine in Baltimore.His home and office were located at 1206 East Preston Street.Dr. and Mrs. Magness had one son, Stephen Lee, and one daughter, Eleanora.In January, 1926, Eleanora married Lynn, a tobacco salesman, and the couple thereafter occupied an apartment on the third floor of the doctor's building.In 1928 the doctor's health began to fail.He had been overexerting himself to attend to a large practice, and had been relying heavily on alcoholic stimulants.Dr. Daniel Miller, who assisted him in his practice from 1930 to 1933, found that, in addition to high blood pressure and hardening of the arteries, he had developed Bright's disease.

After Dr. Magness became addicted to alcoholic stimulants, his medical practice decreased, and in June, 1932, he became financially embarrassed.However, he had in his possession five Aetna insurance policies, and so he planned to cancel one of them for its cash surrender value.Mrs. Magness, however, was hopeful that he would be able to keep his insurance policies so that she would not lose the disability benefits in case of his illness.The doctor decided to turn over to Lynn a $3,000 policy, which had been issued to him in 1924.Lynn agreed to give the doctor the cash surrender value of the policy and pay the annual premiums as long as the doctor lived, if the doctor would make him beneficiary.The main office of Aetna Life Insurance Company is in Hartford, Connecticut, but Dr. W. Edward Magruder, Aetna agent in Baltimore, arranged to make the change of beneficiary.The change was made on June 15, 1932, and the agent brought the policy to the doctor's office on June 18.The new beneficiary clause thereon provided: 'The net sum payable by the Company under this policy by reason of the death of the insured is hereby made payable to Edward J. Lynn, son-in-law of the insured, if he survives the insured; otherwise to the executors, administrators or assigns of the insured.'The agent presented the policy to Lynn, and Lynn thereupon gave the doctor a cashier's check for $519.14, the cash surrender value, and paid the agent $50.23, the annual premium.

Within two months the doctor was again in need of money, and he offered to turn over to Lynn two more Aetna policies, one for $2,000, the other for $3,000, both issued in 1920.Lynn testified that he showed the first policy to his wife, and they were not entirely satisfied with the beneficiary clause.He explained on the witness stand that he drove his wife and son frequently to Rock Hall, and he meditated on the eventualities in case they should be unfortunate enough to have an automobile accident.He discussed the matter with Dr. Magruder, the insurance agent, and he promised to fix the beneficiary clauses so that if he and his wife and boy were killed in an accident, the insurance would come to his estate.He quoted the agent as saying: 'After all, it is your money, and Dr. Magness has the benefit of the double disability clause.'On August 29, 1932, Dr. Magness, then 55 years old, signed a request to change the beneficiary clause in the two 1920 policies and also in the 1924 policy.The agent arranged to make the beneficiary clause the same in all three policies, and when he brought them to the doctor's office on September 3, each clause provided as follows: 'The net sum payable by the Company under this policy by reason of the death of the insured shall be payable to Edward J. Lynn, son-in-law of the insured, if he survives the insured; otherwise to Eleanora V. Lynn, daughter of the insured, if she survives the insured; otherwise to Carns E. J. Lynn, grandson of the insured, if he survives the insured; otherwise to the executors, administrators or assigns of said Edward J. Lynn.'The agent presented all three policies to Lynn, and Lynn gave the doctor a check for $1,252.60, the cash surrender value of the two additional policies.

Dr. Magness continued to practice medicine nearly two years longer, although his health was growing gradually worse.In August, 1934, he suffered a paralytic stroke, and his sife promptly filed a petition in the Circuit Court of Baltimore City alleging that he was receiving monthly disability payments under five insurance policies, and was unable to manage his own affairs.Acting upon that petition the Court on September 4 appointed Mrs. Magness committee to manage her husband's personal estate.She acted in that capacity for more than a year; but on January 31, 1936, she filed another petition alleging that her husband had 'returned to a normal condition' and was able to care for himself and manage his own financial affairs, whereupon the Court dismissed her as committee.In 1940 Dr. and Mrs. Magness moved to Rock Hall.On December 24, 1942, the Circuit Court for Kent County appointed Mrs. Magness trustee for her husband's property.On November 22, 1945, Dr. Magness died.

On November 1, 1946, Aetna Life Insurance Company instituted this proceeding in the Circuit Court alleging that the aggregate sum of $8,000 was payable by the company under three policies issued on the life of Dr. Magness, but that conflicting claims thereto had been made by Lynn and Mrs. Magness.The company prayed the Court to order the two contesting claimants to interplead, and to authorize the company to pay the fund into court.On January 27, 1947, the Court passed a decree directing (1) that the parties interplead in the proceeding, with Stella F. Magness as plaintiff and Edward J. Lynn as defendant; (2) that the company retain $100 out of the fund of $8,000 as a fee for its solicitors for their services; and (3) that the company pay the balance of $7,900 to the clerk, whereupon its liability would be discharged.Mrs. Magness advanced two contentions: (1) that Dr. Magness was not mentally capable of making the changes of beneficiary, and (2) that Lynn agreed to pay the cash surrender values and the annual premiums in order to keep the policies in force solely for the benefit of Dr. Magness and herself, and not for his own personal benefit.

The chancellor was not thoroughly convinced that Dr. Magness was incompetent at the time of the changes of beneficiary, but he decided that the change in each policy was in the nature of a mortgage.Accordingly, the final decree passed on March 24, 1948, from which Lynn appealed, awarded him only $4,492.79, the total of the amounts which were paid to Dr. Magness and the company, with interest.The decree also directed the costs to be paid out of the fund, and the balance to be paid to Mrs. Magness.

There is no question, of course, that a change of beneficiary, to be given effect, must appear to have been made understandingly, and if it is shown that there was either lack of mental capacity or fraud or undue influence, the attempted change will be held inoperative.It is also accepted that the degree of mental capacity necessary to change the beneficiary in a life insurance policy is the same as that necessary to execute a will or a valid deed or contract.Wojtczuk v. Oleksik,168 Md. 522, 531, 178 A. 261.This Court has adopted the rule that the law presumes every man to be sane and to possess the requisite mental capacity to make a valid will or contract.Brown v. Ward,53 Md. 376, 387, 36 Am.Rep. 422;Davis v. Denny,94 Md. 390, 50 A. 1037;Bell v. Wolfkill,152 Md. 407, 416, 137 A. 35.Testimony, in order to be legally sufficient to overthrow the presumption in favor of a person's sanity and capacity, must be directed to the date of the execution of his will or contract, and must tend to show that he was incompetent at that particular time.Gesell v. Baugher,100 Md. 677, 682, 60 A. 481.

In the Court below Mrs. Lynn and also her brother, who is now a physician at Catonsville, testified about their father's peculiar conduct as far back as 1927.However, mere eccentricities, such as are found in people of ordinary sound mind, do not show lack of mental capacity.If the law were otherwise, as Chief Judge Bond observed in Mecutchen v Gigous,150 Md. 79, 87, 132 A. 425, 429, 'then few wills could be sustained, for few testators can hope to pass their lives without odd actions and remarks, at times.'Dr. Miller gave his opinion that there was 'a screw loose somewhere,' and that the condition was caused by alcohol and hardening of the arteries.But Mrs. Magness failed to adduce and evidence as to the mental condition of Dr. Magness on August 29, 1932.And it is significant that the doctor practiced medicine...