Neary v. Metro. Life Ins. Co.

• Decision Date: 30 April 1918
• Citation: 92 Conn. 488,103 A. 661
• Court: Connecticut Supreme Court
• Parties: NEARY v. METROPOLITAN LIFE INS. CO. et al.

103 A. 661

92 Conn. 488

NEARY

v. METROPOLITAN LIFE INS. CO. et al.

Supreme Court of Errors of Connecticut.

April 30, 1918.

Wheeler, J., dissenting.

Appeal from Superior Court, New Haven County; Gardiner Greene, Judge.

Action by Jane Neary against the Metropolitan Life Insurance Company and Catherine Neary. Judgment for defendant Catherine Neary, and plaintiff appeals. No error.

The action is by one of two alleged beneficiaries to recover on a policy of life insurance. An order of interpleader was entered, and upon an agreed statement of facts judgment was rendered in favor of Catherine Neary.

In 1913 John Neary and Catherine, his wife, joined in an application to the Metropolitan Life Insurance Company for insurance upon the life of John. The policy in question was issued on that application naming Catherine as the beneficiary. All premiums on the policy were duly paid by Catherine, the last payment on August 2, 1915, and the policy itself has at all times been in the possession of Catherine. The policy provided for a change of beneficiary, and that the insured might designate a new beneficiary by a notice in writing filed at the home office of the company and accompanied by the policy itself, the change to take effect upon the indorsement of the same by the company on the policy.

On July 28, 1915, John Neary signed and delivered to the agent at New Haven for transmission to the home office of the company an application for a change of beneficiary from his wife, Catherine, to his mother, Jane Naary. The application was forwarded to and received by the home office at some date not otherwise shown than by the following indorsement thereon: "Recorded in policy register. J. F. B. 9/8/15. J. E. B." It was not accompanied by the policy, and no indorsement of any change of beneficiary was ever made on the policy. On September 2, 1915, John and Jane joined in an application for a loan upon the policy, which was made by the company's check to the joint order of John and Jane Neary. John died September 12, 1916, and the amount of the policy less the loan is admittedly due and payable to the rightful beneficiary.

George E. Beers and Charles F. Roberts, both of New Haven, for appellant. George E. Hall, of New Haven, for appellee Catherine Neary.

BEACH, J. (after stating the facts as above). It is not claimed that the attempted change of beneficiary was completed in the manner provided for in the policy and indorsement of the change thereon by the company. On the contrary, the finding is that the policy remained continuously in the possession of the original beneficiary, Catherine, who paid all the premiums thereon and was never asked to give it up. She had no knowledge of any desire or attempt to change the beneficiary until she went to the company's office to prepare the proofs of death. The plaintiff's claim is that the formalities prescribed in the policy for carrying out the reserved right of changing the beneficiary were solely for the benefit of the insurance company, and that it might and did waive their performance by treating Jane as the substituted beneficiary in making the loan of September 2, 1915.

This claim is based on the supposition that Catherine had no legal interest in the fruits of the policy, but merely an expectancy of which she could be deprived without notice. It is true that a beneficiary named in a death benefit certificate issued by a fraternal benefit association, and providing for a change of beneficiary, takes nothing more than a mere expectancy. Supreme Colony v. Towne, 87 Conn. 644, 648, 89 Atl. 264, Ann. Cas. 1916B, 181; Order of Scottish Clans v. Reich, 90 Conn. 511, 514, 97 Atl. 863.

But that is not necessarily true of beneficiaries named in an ordinary life insurance policy although the right to change the beneficiary in a prescribed manner is reserved. "In case of an ordinary policy [of insurance], the right of the person for whose benefit a policy is issued cannot be defeated by the separate or joint acts of the assured and the company, without the assent of the beneficiary." Masonic Mutual Benefit Ass'n v. Tolles, 70 Conn. 537, 544, 40 Atl. 448, 450. It seems logically to follow that the insertion in such a policy of a provision for changing the beneficiary in a prescribed manner ought not to extinguish the interest of the beneficiary, but to qualify it. The later decisions so hold. Ind. Life Ins. Co. v. McGinnis, 180 Ind. 9, 101 N. E. 289, 45 L. R. A. (N. S.) 192; Filley v. Ill. Life Ins. Co., 93 Kan. 193, 144 Pac. 257, L. R. A. 1915D, 134; Christman v. Christman, 163 Wis. 433, 157 N. W. 1099. Moreover, companies authorized to carry on a general life insurance business may contract directly with a beneficiary who has an insurable interest in the life of the assured; and there seems to be no reason why the interest of such a beneficiary may not be absolute or qualified according to the terms of the policy.

In this case the wife, having an insurable interest in the life of her husband, joined in the application for a policy which, on its face, provided for the presentation of the policy to the company for indorsement before any change of beneficiary should become effective. She took the policy into her own possession, apparently relying on that provision for her protection, and paid all the premiums. Under these circumstances she had an interest in the policy of which she could not be deprived except in the manner prescribed therein.

Assuming, without deciding, that she was bound to deliver up the policy to the assured on demand, the finding is that no such demand was made. Whether she had a lien upon the policy for premiums advanced, at least to the extent of its cash surrender value, need not be determined. She had a legal interest, as distinguished from a mere expectancy, of which she could not be deprived except in the manner prescribed in the policy, and therefore the provisions as to the mode of changing the beneficiary were not solely for the benefit of the insurance company. Even if they were so intended by the company, they hold out on their face an inducement for the payment of premiums by a beneficiary to whom the policy is delivered. In the long run the payment of premiums inures to the benefit of the company, and if a beneficiary pays premiums on the faith of an apparent protection afforded by the terms of the policy he ought equitably to be protected as far as the terms of the contract will protect him.

It does not appear from the finding whether the company knew that the premiums were being paid by the beneficiary. It did know that she joined in the application: that she had an insurable interest in the life of the assured; and the policy contained provisions on the faith of which she might suppose herself to be protected in paying premiums. Under such circumstances it is not asking too much of insurance companies to see that the terms of the policy are complied with before assenting to a change of beneficiary. This conclusion makes it unnecessary to pass on the somewhat doubtful question whether the company did in this case assent to an informal change of beneficiary.

There is no error. In this opinion PRENTICE, C. J., and RORABACK and SHUMWAY, JJ., concurred.

WHEELER, J. (dissenting). The Metropolitan Life Insurance Company issued its policy of ordinary life insurance upon the life of one John H. Neary upon an application signed January 17, 1913, by him and his wife, Catherine E. Neary. The application expressly provided that: "The right to change the beneficiary hereby designated without the consent of said beneficiary is reserved." The policy provided that the insured reserved "the right of revocation of the beneficiary named, and the right to designate a new beneficiary." The assured could exercise this right by filing written notice of such change in the home office of the company, together with the policy itself. The change became effective upon the company indorsing such change of beneficiary upon the policy.

On July 28, 1915, the assured signed and delivered to the agent of the insurance company in New Haven an application for a change of beneficiary from his wife to his mother, Jane Neary. Tpon the policy register of the company at its main office is indorsed: "Recorded in policy register. J. F. B. 9/8/15. J. F. B."

On September 2, 1915, John H. Neary made written application signed by the plaintiff, Jane Neary, for a loan of $82 upon this policy, and this loan was duly made and a check given for the same payable to John H. and Jane Neary. It was the practice of the company to make loans to the insured and not to the beneficiary, in the application for which in some cases the beneficiary joined. The court reached the conclusion that the loan was insufficient to prove a waiver by the company because it was not proved that the company knew of the attempted change of beneficiary when it was made.

The application fee for said insurance and all premiums thereon were paid by the defendant Catherine E. Neary, and she always had possession of the policy and had no knowledge of an attempt to change the beneficiary or of the making of said loan until after the death of her husband.

The member of a mutual benefit society may change, at will, the beneficiary named in his certificate of insurance. In the ordinary life insurance policy the assured may not change the beneficiary without his consent. The reason for this distinction is found in the fact that in the ordinary life policy the beneficiary has a vested right in the benefits of the policy, while in the benefit certificate the beneficiary has no vested right in the proceeds, merely the expectancy of an interest in case the assured die without having changed the beneficiary. Masonic Mutual Benefit Association v. Tolles, 70 Conn. 537, 544, 40 Atl. 448; Shepard & Co. v. New York Life Ins. Co., 87 Conn. 500, 504, 89 Atl. 186. But the ordinary life policy may contain a provision reserving the...