Moore v. New York Life Ins. Co., 606

• Decision Date: 04 February 1966
• Docket Number: No. 606,606
• Citation: 266 N.C. 440,146 S.E.2d 492
• Parties: Flora C. MOORE, Executrix of the Estate of William Edward Moore, Deceased, v. NEW YORK LIFE INSURANCE COMPANY.
• Court: North Carolina Supreme Court

Page 492

146 S.E.2d 492

266 N.C. 440

Flora C. MOORE, Executrix of the Estate of William Edward Moore, Deceased, v. NEW YORK LIFE INSURANCE COMPANY.

No. 606.

Supreme Court of North Carolina.

Feb. 4, 1966.

Smith, Leach, Anderson & Dorsett, by Henry A. Mitchell, Jr., Raleigh, for defendant appellant.

Wilson, Bain & Bowen, by Edgar R. Bain, Lillington, for plaintiff appellee.

LAKE, Justice.

The defendant assigns as errors, among other things, the denial of its motion for judgment as of nonsuit, the refusal to submit to the jury an issue as to whether Moore had sufficient mental capacity to change the beneficiary, and the refusal to instruct the jury that if Moore did not have sufficient mental capacity to surrender the policy he did not have sufficient mental capacity to change the beneficiary. All of these assignments rest upon the same contention, which is that Moore signed the request for change of beneficiary and the form for the surrender of the policy at the same time so that, if, as the jury has found, he did not have sufficient mental capacity to surrender the policy, neither did he have sufficient mental capacity to change the beneficiary and thus the plaintiff, executrix, as the new beneficiary, cannot maintain this action.

In its answer the defendant admitted that 'by the express terms of said insurance contract said change of beneficiary became effective on April 23, 1963.' After the trial was in progress and the plaintiff had virtually completed the introduction of her evidence, the defendant moved to amend its answer to assert, as an additional defense, that if Moore was mentally incompetent to surrender the policy he was also mentally incompetent to change the beneficiary. This motion was denied. Its denial was in the discretion of the court. Handley Motor Co. v. Wood, 238 N.C. 468, 78 S.E.2d 391. It may not be reviewed on appeal in the absence of a clear showing of abuse of discretion, which does not appear. Furthermore, while the defendant excepted to the denial of its motion to amend and assigned this ruling as error, the exception is not mentioned in its brief and no argument is made or authority cited with reference to it so it is deemed abandoned. Rule 28.

Issues arise upon the pleadings of the parties and need not be submitted to the jury with reference to matters as to which there is no controversy raised by the pleadings. General Tire & Rubber Co. v. Distributors, Inc., 253 N.C. 459, 117 S.E.2d 479; Wheeler v. Wheeler, 239 N.C. 646, 80 S.E.2d 755. There was, therefore, no error in the refusal of the court to submit an issue to the jury with reference to the validity of the change of beneficiary. There being no such issue before the jury, the denial of the requested instruction with reference thereto was not error.

The defendant argues in its brief that its motion for judgment as of nonsuit should have been allowed because the plaintiff's own evidence shows Moore was mentally incompetent at the time he signed the request for the change of beneficiary. It is the defendant's evidence, not the plaintiff's which shows that the request for change of beneficiary and the form for surrender of the policy were signed contemporaneously. The plaintiff's evidence, consisting of the policy with the change of beneficiary form attached thereto, indicates that the request for change of beneficiary was signed on 23 April 1963, the day before the form for the surrender of the policy was signed. Nevertheless, the plaintiff's evidence as to the mental condition of Moore can lead to no conclusion other than that his condition was the same on the one day as on the other.

It does not follow that the motion for judgment of nonsuit should have been granted. Even if these two documents were executed contemporaneously, as the evidence of the defendant tends to show, they related to two separate and distinct rights of the insured under the policy. When completed, the two transactions were separate and distinct, each capable of standing alone without support from the other. The evidence offered by the defendant indicates that the company, for reasons not disclosed, customarily requests an insured, desiring to surrender his policy, first to change the beneficiary so as to make the policy payable to his estate, The policy, however, does not require this to be done. Under the policy Moore had the right to change the beneficiary without surrendering the policy, and vice versa.

As Denny, J. (now C. J.) said, in Walker v. McLaurin, 227 N.C. 53, 40 S.E.2d 455, 'An agreement entered into by a person who is mentally incompetent, but who has not been formally so adjudicated, is voidable and not void.' The same is true of the surrender or cancellation of a contract by such person. If he dies without regaining his mental competency, his right to disaffirm his contract passes to his heirs or to his executor, depending upon the subject matter of the contract. Walker v. McLaurin, supra; Cameron v. Cameron, 212 N.C. 674, 194 S.E. 102; Orr v. Equitable Mortgage Co., 107 Ga. 499, 33 S.E. 708; Bullard v. Moor, 158 Mass. 418, 33 N.E. 928; Verstandig v. Schlaffer, 296 N.Y. 62, 70 N.E.2d 15; Williston on Contracts, 3rd ed., § 253.

The exercise by an insured of his right under the policy to change the beneficiary thereof, effects an amendment of the former contract and is, itself, the making of a contract which is voidable at his option if he then lacks the mental capacity to make it. Similarly, the surrender by such a person of a life insurance policy for its cash value is voidable at his option. Upon his death, without regaining his mental capacity, his right to disaffirm each of these transactions passes to his executor. The executor, like the insured, may disaffirm and set aside both of the transactions, or neither, or he may disaffirm and avoid the cancellation of the policy while leaving the change of beneficiary in effect.

It is not necessary for us now to determine, and we do not determine, what, if any, rights the original beneficiary under the policy may have when the insured, lacking mental capacity, changes the beneficiary. In the present case, the original beneficiary was Mrs. Flora C. Moore, wife of the insured, who now sues, as the executrix of his estate, to enforce the policy pursuant to the change of beneficiary effected by him. It is true that she has sued in her official capacity as executrix. However, she has testified in support of this action...