McKinney v. Fidelity Mutual Insurance Co.

• Decision Date: 12 March 1917
• Citation: 193 S.W. 564,270 Mo. 305
• Parties: BYRD N. McKINNEY et al., Appellants, v. FIDELITY MUTUAL INSURANCE COMPANY
• Court: Missouri Supreme Court

193 S.W. 564

270 Mo. 305

BYRD N. McKINNEY et al., Appellants, v. FIDELITY MUTUAL INSURANCE COMPANY

Supreme Court of Missouri, First Division

March 12, 1917

Appeal from St. Louis City Circuit Court. -- Hon. George C Hitchcock, Judge.

Affirmed.

Clarence F. Westcoat and F. H. Bacon for appellants.

The only question involved in this appeal is whether or not under the terms of the original policy issued to Charles S McKinney, and payable to plaintiffs, reserving to said McKinney the power, subject to the approval of the company to change the beneficiary named therein, he could cancel and surrender said policy without the consent of the beneficiaries. (1) Up to a comparatively recent time policies of regular life insurance contained no reservation of the right to change the beneficiary and without that reservation it is a universally admitted rule of law that such policies confer upon the beneficiary a vested interest and property which cannot be divested without their consent. Blum v. Ins. Co., 197 Mo. 513; U. S. Casualty Co. v. Kacer, 169 Mo. 301; Bank v. Hume, 128 U.S. 795; Holmes v. Gilman, 138 N.Y. 382. (2) The contracts of the fraternal beneficiary societies give the member the right to change the beneficiary, and this fact undoubtedly led the regular, or old line, life insurance companies to insert in their policies the provision permitting the change of beneficiary. From the similarity of the contracts in this respect some courts have been led to the conclusion that the insured, where the right to change the beneficiary was reserved, had an absolute control over the policy, forgetful of the fact that the contracts are very dissimilar. State ex rel. v. Vandiver, 213 Mo. 187; Westerman v. Supreme Lodge K. P., 196 Mo. 670; Commonwealth v. Equitable Beneficial Assn., 137 Pa. St. 412; Mut. Ben. Soc. v. Burkhart, 110 Ind. 189; Grigsby v. Russell, 222 U.S. 149. (3) Although the member of a fraternal society has the right to change the beneficiary, so that it is said that the beneficiary has simply an expectancy, a conditional vested interest, such beneficiary can invoke the conditions required for change of beneficiary and insist that they be observed. Their rights can only be terminated in the manner specified in the contract. It is true this is modified by the holding that the society may waive the requirement of the laws of the order as to change of beneficiary and if the certificate is surrendered and a new one is issued, the beneficiary is bound thereby; otherwise, the principle is correctly stated. Finnell v. Franklin, 55 Colo. 156; A. O. U. W. v. McFadden, 213 Mo. 269, affirming 114 Mo.App. 191; Abeles v. Ackley, 133 Mo.App. 594; Johnson v. Ins. Co., 56 Colo. 178. (4) The policy sued on constituted an executed, voluntary settlement on the wife and daughter of McKinney, subject only to one reservation, namely, the power to revoke the designation of them as beneficiaries and appoint new beneficiaries. This right conferred upon McKinney no property in the benefit but was a power only, pure and simple, subject to all the well settled rules of law governing powers. Mut. Ben. Soc. v. Clendinen, 44 Md. 433; Arthur v. Odd Fellow's Ben. Assn., 29 Ohio St. 553; Hellenberg v. Dist. No. 1, I. O. B. B., 94 N.Y. 580; Abeles v. Ackley, 133 Mo.App. 594. (5) McKinney had no property in this insurance under the contract, but simply the power to change the beneficiary, and such right creates no property in the subject of the power, that is, in the insurance or in the policy. Abeles v. Ackley, 133 Mo.App. 594; Slaughter v. Grand Lodge, 68 So. 367; Smith v. Hatke, 78 S. E. (Va.) 584; Modern Woodmen v. Headle, 90 A. 893; Sabin v. Phinney, 134 N.Y. 428; Grant v. Faires, 97 A. 1060; 31 Cyc. 1038; Ex. p. Gilchrist, 17 Q. B. D. 521; Garland v. Smith, 164 Mo. 15; Price v. Courtney, 87 Mo. 387. (6) While the interest of plaintiffs in the policy sued on might in a loose way be called an expectancy, still they had a vested conditional interest and this interest could only be divested in the manner pointed out in the contract and in no other way. The insured could not surrender the policy, that is dispose of the property, without the consent of the beneficiaries. Vance on Insurance, p. 399, citing Hopkins v. Heist, 92 Ky. 327; Richards on Insurance, sec. 58, citing Conway v. Supreme Council, 131 Cal. 437; Ins. Co. v. Clinton, 76 N.J.Eq. 4; Sullivan v. Maroney, 76 N.J.Eq. 104; Ins. Co. v. McGinnis, 180 Ind. 9; McCutchen v. Townsend, 127 Ky. 230; Holder v. Ins. Co., 77 S.C. 299; Roberts v. Ins. Co., 85 S. E. (Ga.) 1043; Deal v. Deal, 87 S.C. 395; Blum v. Ins. Co., 197 Mo. 513; Christman v. Christman, 157 N.W. 1099. (7) This policy was issued in Missouri and the statutes of the State form part of it. It is a serious question whether under our statute the provision in a policy, payable to the wife of the insured, that he can change the beneficiary (except in case of the death, or divorcement, of the wife), is not void. In re Orear, 111 C. C. A. 150, 189 F. 888.

Jones, Hocker, Sullivan & Angert and James C. Jones, Jr. for respondent.

(1) Where a policy of insurance reserves to the insured the right to change the beneficiary, the interest of such beneficiary during the lifetime of the insured is a contingent and not a vested interest; such a policy when issued becomes the property of the insured; the insured is the legal holder thereof and the ownership and control of the policy is in him. United States Cas. Co. v. Kacer, 169 Mo. 313; Masonic Assn. v. Bunch, 109 Mo. 580; Hoffman v. Ins. Co., 56 Mo.App. 306; Robinson v. Ins. Co., 168 Mo.App. 259; Clarkston v. Ins. Co., 190 Mo.App. 631; Lewine v. K. of P., 122 Mo.App. 547; Wells v. Ins. Co., 126 Mo. 638; Callies v. Ins. Co., 98 Mo.App. 526; Diehm v. Ins. Co., 129 Mo.App. 256; Eves v. Modern Woodmen, 153 Mo.App. 247; Splawn v. Chew, 60 Tex. 532; Mutual Life Ins. Co. v. Twyman, 122 Ky. 513; Hopkins v. Hopkins, 92 Ky. 324; Crice v. Ins. Co., 122 Ky. 572; Hopkins v. Ins. Co., 99 F. 199; Lamb v. Ins. Co., 106 F. 637; Ins. Co. v. Swett, 222 F. 200; In re Orear, 178 F. 632; In re Herr, 182 F. 717; In re Bonvillain, 232 F. 370; Hicks v. Ins. Co., 147 N.W. 883; Bilbro v. Jones, 102 Ga. 161; Littleton v. Sain, 126 Tenn. 461; Ins. Co. v. Healy, 25 A.D. 53; St. John v. Ins. Co., 13 N.Y. 31; Bacon on Benefit Societies and Life Insurance (3 Ed), sec. 291, (a), (b); Alba v. Ins. Co., 118 La. 1021; Hutson v. Merrifield, 51 Ind. 24, 29; Eagle v. Ins. Co., 48 Ind. 284; Ins. Co. v. McGinnis, 99 N.E. 751; Beggert v. Straub, 193 Mass. 77, 79; In re Estate Heilbron, 14 Wash. 536; Ins. Co. v. Palmer, 42 Conn. 64. (2) Where a policy contains a provision for paid-up insurance upon the nonpayment of any premium when due, conditioned upon a demand therefor and a surrender of the policy, and the policy gives the insured the right to change the beneficiary, the right to demand and surrender the policy for paid-up insurance is in the insured alone and he may demand and surrender the policy for paid-up insurance without the consent of the beneficiary. Bilbro v. Jones, 102 Ga. 161; Hopkins v. Ins. Co., 99 F. 199; Ins. Co. v. Swett, 222 F. 200; Hicks v. Ins. Co., 147 N.W. 883; Crice v. Ins. Co., 122 Ky. 572. (3) Secs. 6946-6949, R. S. 1909, enter into and become a part of the policy or contract of insurance. Under these statutes the insured was the legal holder of the policy in suit, and was authorized to surrender the same either in exchange for paid-up or extended insurance or for any other consideration deemed adequate in his judgment. Head v. Ins. Co., 241 Mo. 413; Cravens v. Ins. Co., 148 Mo. 608; Smith v. Ins. Co., 173 Mo. 352; Horton v. Ins. Co, 151 Mo. 604; Capp. v. Ins. Co., 117 Mo.App. 532, 536; Fahle v. Ins. Co., 155 Mo.App. 15.

OPINION

BOND, P. J.

I. Action on a policy of life insurance to recover amounts totalling thirty thousand dollars, or the commuted value thereof of $ 21,522. The answer was a general denial and the cause was tried without a jury on an agreed statement of facts, resulting in a judgment for plaintiffs for $ 2760, less costs. The plaintiffs appealed.

The agreed statement of facts, in substance, is as follows:

That this case shall be submitted to the court upon an agreed statement of facts and such other testimony as either party may deem material, all objections by either party to the sufficiency of the pleadings being hereby waived.

The defendant is a corporation organized under the laws of the State of Pennsylvania and licensed to do the business of life insurance in the State of Missouri; that on the 29th day of December, 1903, defendant issued and delivered to Charles S. McKinney its policy of life insurance, dated December 29, 1903, in the sum of $ 30,000, a copy of which is hereto attached, marked "Exhibit A," to this agreed statement; that on December 29, 1903, Charles S. McKinney resided in the city of St. Louis, State of Missouri; that said policy (Exhibit A) remained in the possession of the said Charles S. McKinney until November 25, 1912, when it was surrendered by the said Charles S. McKinney to the defendant as hereinafter stated.

The plaintiffs, beneficiaries named in said policy, had no knowledge of the surrender of the same by said Charles S McKinney until after his death; that all the premiums provided for in said policy were duly paid by the said Charles S. McKinney to the defendant up to November 1, 1912; that the premium due November 1, 1912, was not paid on that day, or within the thirty-day-grace period provided and allowed for such payment in the clause headed, "General Precedent Conditions," on the second page of Exhibit A; that said policy, on December 1, 1912, had a paid-up value of $ 2760, and, if not legally surrendered on or before that date, was entitled to be...