Prudential Ins. Co. of Am. v. Swanson

• Decision Date: 17 October 1932
• Docket Number: No. 122.,122.
• Citation: 162 A. 597
• Parties: PRUDENTIAL INS. CO. OF AMERICA v. SWANSON et al.
• Court: New Jersey Supreme Court

162 A. 597

PRUDENTIAL INS. CO. OF AMERICA

v. SWANSON et al.

No. 122.

Court of Errors and Appeals of New Jersey.

Oct. 17, 1932.

DONGES, Justice, and VAN BUSKIRK and KERNEY, Judges, dissenting.

Appeal from Court of Chancery.

Bill of interpleader by the Prudential insurance Company of America against Hardy Swanson and Mildred Swanson, to determine which of them was entitled to receive the proceeds of an insurance policy issued by the complainant upon the life of one Oscar E. Swanson. Judgment for Hardy Swanson, and Mildred Swanson appeals.

Reversed.

Lindabury, Depue & Faulks, of Newark, for complainant.

Paula Laddey, of Newark, for appellant.

Grosso, Brundage & Anderson, of Orange, for respondent.

WELLS, J.

The complainant, a life insurance company, filed a bill of interpleader against the defendants to determine which of them was entitled to receive the proceeds of an insurance policy issued by the complainant upon the life of one Oscar E. Swanson.

The proceeds are in court. The facts are for the most part either stipulated or not in controversy.

On June 4, 1928, the Prudential Insurance

Company, at the Instance of Oscar E. Swanson, issued to him a policy in which it promised to pay to the insured, if living twenty years after the date thereof, or in case of the prior death of the insured, to Mildred Swanson, beneficiary, wife of the insured, the sum of $1,000.

The policy by its terms reserved to the insured the right to change the beneficiary, and the method whereby the beneficiary under said policy might be changed was stated in the policy as follows: "Change of Beneficiary—if the right to change the Beneficiary has been reserved the Insured may at any time while this Policy is in force, by written notice to the Company at its Home Office, change the Beneficiary or Beneficiaries under this Policy, such change to be subject to the rights of any previous assignee and to become effective only when a provision to that effect is endorsed on or attached to the Policy by the Company whereupon all rights of the former Beneficiary or Beneficiaries shall cease."

The policy also contained the following provision relative to its assignment: "Assignments—Any assignment of this Policy must be in writing, and the Company shall not be deemed to have knowledge of such assignment unless the original or a duplicate thereof is filed at the Home Office of the Company. The Company will not assume any responsibility for the validity of an assignment."

For about a year prior to his death, Oscar E. Swanson and his wife had not lived together. About one month before he died he went to the City Hospital, and while there he signed the following paper:

"For And in Consideration of the sum of One Dollar and other valuable consideration, to me in hand paid, the receipt whereof is hereby acknowledged, I do hereby assign, transfer and set over unto Hardy Swanson, all of my right, title and interest in and to a certain life insurance policy on my life, made by the Prudential Insurance Company of America, in the amount of $1,000.00 and I do hereby authorize and constitute the said Prudential Insurance Company of America to change the name of the beneficiary of the said policy from Mildred Swanson to Hardy Swanson.

"in Witness Whereof, I have hereunto set my hand and seal this 14th day of July, 1930.

"Oscar E. Swanson [L.S.]

"Signed, Sealed and Delivered in the presence of:

"Ruth E. Jackson."

At the same time he also signed a letter which was dated July 15, 1930, addressed to the complainant, as follows:

"Gentlemen: Some time ago, I took out, thru your Roseville Branch, a policy on my life in the amount of $1,000.00, naming my wife, Mildred Swanson, beneficiary. I have not been living with my wife for almost a year and do not wish to have her continue as the beneficiary of the policy.

"I am enclosing herewith an Assignment assigning my right, title and interest in the policy and naming my brother, Hardy Swanson, as beneficiary thereof in the event of my death. I am handling the matter in this way for the reason that my wife will not give up the policy.

"Will you kindly change your records accordingly and advise me that it has been done. Thanking you, I am, "Yours respectfully,

"Oscar E. Swanson."

Both the assignment and the letter were prepared by Ruth E. Jackson, a friend, and signed at the hospital by Oscar E. Swanson, in the presence of Miss Jackson's brother-in-law and the Reverend F. Wahlborg, the minister of Oscar E. Swanson's church. On July 15, 1930, at Swanson's request, Pastor Wahlborg took the letter and the assignment, without, however, the insurance policy, to the home office of complainant in Newark, expressing the purpose of his call to an employee at the home office, who directed him to take the papers to the Roseville branch office of complainant in Newark, which he did, and left the same on July 15, 1930, at that office.

Oscar E. Swanson died on July 17, 1930. The policy at the time the papers were executed, and for about a year before insured's death, was in the possession or under the control of appellant, Mildred Swanson.

No provision as to the proposed change of beneficiary was indorsed on, or attached to, the policy by the complainant.

The only question for solution herein is whether a change of beneficiary was effected.

The respondent, Hardy Swanson, claims that Oscar E. Swanson complied with all the requirements of the policy for effecting a change of beneficiary, so far as lay within his power, and hence the doctrine that equity regards that done which ought to be done is applicable, and that the respondent, Hardy Swanson, is therefore entitled to the proceeds of the policy.

The Vice Chancellor decided that the brother, Hardy Swanson, was entitled to the insurance money, and found that Oscar E. Swanson did everything, under the circumstances, that he could have done to comply with the requirements of the policy respecting the change of beneficiary, that the notice was sufficient, and that while it was true that the policy was not delivered to the insurance company for endorsement of change of beneficiary, it was in the hands of an adverse claimant, the wife of the insured, and that the insured was therefore unable to get it for the purpose of delivery. He applied the legal principle that where it is impossible to deliver the policy to the insurance company for indorsement of change of beneficiary because it is held by an adverse claimant, such delivery is not necessary.

With this legal principle we have no quarrel

"It is uniformly held that where insured's failure to complete a change of beneficiary in his policy, before his death, by a return of the policy to the insurer, was caused by a refusal of the beneficiary named therein to surrender the policy to him, his efforts, if otherwise in substantial compliance with the requirements imposed by statute or contract, will—at least, as between the persons claiming as beneficiaries—be given effect, and the equitable right of the person designated by him as the new beneficiary will prevail over the strict legal title appearing on the face of the policy." 36 A. L. R. page 771.

Counsel for Hardy Swanson, respondent, cites, in support of his claim, paragraph 350 of 37 Corpus Juris, as follows: "On the principle that equity regards as done that which ought to be done, the Court will give effect to the intention of the insured by holding that the change of beneficiary has been accomplished where he has done all that he could to comply with the...