Missouri State Life Ins. Co. v. California State Bank
| Decision Date | 01 December 1919 |
| Citation | 216 S.W. 785,202 Mo.App. 347 |
| Parties | MISSOURI STATE LIFE INSURANCE COMPANY, A CORPORATION, Plaintiff, Respondent, v. CALIFORNIA STATE BANK, A CORPORATION, Interpleader, Appellant and GRACE KELSAY, Interpleader, Respondent |
| Court | Kansas Court of Appeals |
Appeal from Moniteau County Circuit Court.--Hon. John G. Slate Judge.
REVERSED AND REMANDED (with directions.)
Judgment reversed and cause remanded.
Embry & Embry for interpleader, appellant.
S. C Gill and J. B. Gallagher for interpleader, respondent.
On February 5, 1914, plaintiff issued a policy of life insurance in the sum of $ 3,000 on the life of one Benjamin F. Kelsay, in favor of his wife, Grace Kelsay, the beneficiary. The application for said policy was taken by plaintiff's local agent, Henry Herfurth, who was at the time cashier of the interpleader, California State Bank. Herfurth paid the first premium and took Kelsay's note therefor, and Kelsay pledged the policy to Herfurth as security for the note. Herfurth placed this policy in a safe in said bank with some other policies left by persons with Herfurth for safe keeping, but not in a place where the bank securities were stored. In August, 1915, Herfurth moved to Helena, Mont., and became president of a bank there. Upon his removal one F. C. Harry became cashier of the interpleader bank. Benj. F. Kelsay died May 6, 1918, and at the time of his death there had been paid upon the policy not more than two annual premiums. The policy lapsed on February 5, 1916, for non-payment of the premiums then due but by reason of the failure of the insured to take advantage of one of three options of settlement provided for in the policy in case premiums were not paid, the insurance became automatically extended for two years and four months. The extended insurance expired on June 5, 1918. The policy contained a provision that the insured might change the beneficiary "provided the policy is not then assigned."
At the time of insured's death the bank held notes which together with accrued interest amounted to more than the face of the policy. These notes purported to signed by B. F. Kelsay and Mrs. B. F. Kelsay but Mrs. Kelsay denied having signed them. There is no question as to the genuineness of the signatures of B. F. Kelsay. This indebtedness seems to have been made several years previous to Kelsay's death but was slightly less at that time than when Herfurth left and Harry became cashier of the bank. The notes held by the bank at Kelsay's death were renewal notes. Sometime prior to Kelsay's death he pledged the policy to the bank as collateral for his indebtedness to it. There is no evidence that Grace Kelsay, the beneficiary, ever joined in or consented to the pledging of the policy to the bank. Upon the insured's death both the bank and Grace Kelsay claimed the proceeds of the policy, resulting in the insurance company filing a bill of interpleader in the circuit court of Moniteau county, Missouri, setting forth the facts and praying that defendants be required to interplead for the fund in its hand. The bank pleaded that the policy had been pledged or assigned to it to secure the insured's indebtedness to it and claimed the proceeds of the policy. Grace Kelsay claimed the proceeds by reason of having been named as beneficiary in the policy and denied that the policy had ever been assigned or pledged to the bank. The court found the issued for the interpleader, Grace Kelsay.
Where there is no provision in the policy that the insured may change his beneficiary, the rule is "that the issue of the policy confers 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." [Blum v. N. Y. Ins. Co., 197 Mo. 513, 523; Bank v. Hume, 128 U.S. 195, 206; Cornell v. Ins. Co., 179 Mo.App. 420, 429.] However, if the right to change the beneficiary is reserved in the policy, the insured may make the change without the consent of the beneficiary. [Robinson v. Ins. Co., 168 Mo.App. 259; 25 Cyc. 892; Cornell v. Ins. Co., supra.] This is because the beneficiary, in such a case, would have no vested right in the policy. A policy of life insurance may be assigned or pledged by concurrent act of the insured and beneficiary as security for debt (Ins. Co. v. Rosenheim, 56 Mo.App. 27; Charter Oak Life Ins. Co. v. Brant, 47 Mo. 419; 25 Cyc, 764); the insured without the beneficiary joining him can assign or pledge the interest he has in the policy. [Cornell v. Ins. Co., supra; 25 Cyc. 765.]
If the provision in the policy that the insured might assign it is not in itself authority for him to transfer all beneficial rights and interest of whatever character in it, regardless of the permission to change the beneficiary, then these provisions of the policy, that is, that the insured could change the beneficiary and assign the policy, conferred that right. The insured had the right to assign the policy and change the beneficiary, and the interpleader, Grace Kelsay having no vested right in the policy at the time of its assignment, it is apparent that the insured assigned all beneficial interests that could accrue under the policy to secure his debt (Cornell Ins. Co....
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