Metro. Life Ins. Co. v. Woolf

• Decision Date: 20 May 1946
• Docket Number: No. 205.,205.
• Citation: 47 A.2d 340
• Parties: METROPOLITAN LIFE INS. CO. et al. v. WOOLF et al.
• Court: New Jersey Supreme Court

47 A.2d 340

METROPOLITAN LIFE INS. CO. et al.

v.WOOLF et al.

No. 205.

Court of Errors and Appeals of New Jersey.

May 20, 1946.

Appeal from Court of Chancery.

Suit by Metropolitan Life Insurance Company against Helen Welstead Woolf and others to determine the right to proceeds of an insurance policy paid into court by complainant. From a decree for defendants George Woolf, Carroll L. Woolf, Jr., and Cornelius Roy Woolf, 136 N.J.Eq. 588, 42 A.2d 866, defendant Helen Welstead Woolf appeals.

Affirmed.

McGEEHAN, Judge, dissenting.

John E. Toolan, of Perth Amboy, for appellant.

Saul Nemser and Abner W. Feinberg, both of Jersey City, for respondents.

HEHER, Justice.

The subject matter of this litigation is the proceeds of a certificate of life insurance issued by the complainant insurer to Carroll L. Woolf on April 1, 1943, under a master policy theretofore supplied by complainant to the General Motors Corporation, covering certain of its employees as a group. The certificate was payable to the named insured's wife, Mary E. Woolf, as beneficiary; and it was provided that should the beneficiary predecease the insured employee, ‘the interest of such beneficiary shall vest in such employee, subject to the provisions of the group policy.’ The right to change the beneficiary was reserved to the insured.

The designated beneficiary died on April 8, 1943. There were three children of the marriage, viz.: George, Carroll and Cornelius Roy. The learned Vice Chancellor found that shortly after the mother's death, the insured made an oral assignment of the insurance certificate to his three sons, accompanied by a manual delivery of the instrument to Roy, for all three, who immediately returned it to his father for safe-keeping (Carroll was then in military service in Germany, and Roy was home from service on a furlough); and the factual basis for this finding of an effectual gift inter vivos is not now challenged.

On October 17, 1943, the insured married appellant, Helen Welstead Woolf. He died on July 27, 1944; and the widow now asserts title to the insurance moneys under the provision of section 9 of the group policy that, if there be ‘no designated beneficiary at the time when any benefits' thereunder shall be payable to the ‘beneficiary, then such benefits shall be payable as follows: To the wife or husband, if living, of such employee; if not living, to the children of such employee who survive such employee, equally; if none survive, to the father and the mother of such employee equally, or to the survivor;if none of the above survive such employee, to the estate of such employee.’ Neither the insured nor the employer endorsed a change of beneficiary upon the certificate of insurance; and the insured did not give notice either to the insurer or to the employer of a change of beneficiary, or of his resolve so to do. Section 9 of the master policy also provides that the insured may effect a change of beneficiary ‘by filing written notice thereof with the employer accompanied by’ the employee's certificate, and that ‘such change shall take effect upon endorsement thereof by the employer on such certificate, and unless the certificate is so endorsed, the change shall not take effect.’ The policy also declares that the insurance certificate ‘and the benefits provided’ thereunder ‘are nonassignable.’ The certificate itself has an endorsement that the ‘insurance’ is ‘nonassignable.’ And there are provisions that the insurance coverage shall cease upon the termination of the insured's employment with the holder of the group policy, but shall be convertible, at the insured's option, and without evidence of insurability, into any form of policy customarily issued by the insurer, except term insurance.

The argument of appellant is that the insured did not have ‘an indefeasible property interest’ in the policy ‘at the time the oral assignment was made,’ and that his right therein was limited (a) ‘to the power to appoint a beneficiary, in strict compliance’ with the contractual provision for a change of beneficiary, and (b) the ‘contingent interest which his estate would take in the event he outlived his wife, his children, and his mother and father.’ It is said that an assignment of such a policy ‘cannot effectuate a change of the beneficiary named’ therein; that an assignment of a policy so restricted ‘is a nullity and does not even transfer the contingent interest’ of the insured (citing Order of Heptasophs v. Dailey, 61 N.J.Eq. 145, 47 A. 277), and, at all events, transfers only the insured's contingent interest (citing Sullivan v. Maroney, 76 N.J.Eq. 104, 73 A. 842, affirmed 77 N.J.Eq. 565, 78 A. 150; Anderson v. Broad Street National Bank, 90 N.J.Eq. 78, 105 A. 599, affirmed 91 N.J.Eq. 331, 109 A. 205); and that the nonassignment clause here is for the employer's benefit and cannot be waived by the insurer.

An ordinary life insurance policy is but a chose in action; and the insured may make an absolute assignment of all such right, title and interest as he may have therein, subject to the limitations imposed by the contract. It is a chose in action arising on contract within the purview of the Assignment Act. R.S. 2:41-1, N.J.S.A. And the assignment may be by parol, accompanied by delivery of the policy. Such is cognizable and enforceable in equity, however it may be viewed at law. DeRonge v. Elliott, 23 N.J.Eq. 486; Travelers' Insurance Co. of Hartford v. Grant, 54 N.J.Eq. 208, 33 A. 1060; Sullivan v. Maroney, 76 N.J.Eq. 104, 73 A. 842, affirmed 77 N.J.Eq. 565, 78 A. 150; Prudential Insurance Co. v. Deyerberg, 101 N.J.Eq. 90, 137 A. 785; Metropolitan Life Insurance Co. v. Poliakoff, 123 N.J.Eq. 524, 198 A. 852; Tompkins v. Tompkins, 132 N.J.L. 217, 38 A.2d 890.

What was the insured's interest in the policy at the time of the oral assignment to his three sons? Invoking the doctrine expounded in Sullivan v. Maroney, supra, appellant maintains that the insured and his estate had but a contingent interest in the policy; that his subsequent death survived by a wife, the ‘first-named substituted beneficiary’ under the policy provision adverted to, served to ‘defeat’ his contingent interest ‘before it ripened into a vested property right,’ and therefore the transfer was ineffectual as to the widow. We take a different view.

While the general rule elsewhere is that the beneficiary of an ordinary life insurance policy acquires a vested and absolute interest therein, not subject to divestment without his consent, only where there is no reservation of the right to effect a change of beneficiary, and that where such right is reserved, the designated beneficiary has a mere expectancy, and no interest therein which can be assigned until it becomes absolute by the death of the insured (29 Am.Jr. 403, 404; 45 C.J.S. Insurance, §§ 412, 428, pp. 37, 54), in this state it seems to be the accepted rule that, notwithstanding the reservation of the right to change the beneficiary, the interest of the designated beneficiary in such a policy is a vested property right, payable if he survives the insured, which can be divested only by a change of beneficiary in the mode and manner prescribed by the contract. Sullivan v. Maroney, supra; Prudential Insurance Co. of America v. Swanson, 111 N.J.Eq. 477, 162 A. 597; Prudential Insurance Co. v. Deyerberg, supra. And chancery has applied this doctrine to group life insurance policies. Koczot v. Travelers Insurance Co., 130 N.J.Eq. 106, 21 A.2d 300; Woehr v. Travelers Insurance Co., 134 N.J.Eq. 38, 34 A.2d 136. But here, as we have seen, the certificate provides that if the designated beneficiary should predecease the insured, the ‘interest’ of such beneficiary ‘shall vest’ in the insured, subject to the terms and conditions of the master policy. Thus, when the parol assignment of the certificate was made, the ‘...