Schade v. Western Union Life Ins. Co.

• Decision Date: 22 May 1923
• Docket Number: 17615.
• Citation: 125 Wash. 200,215 P. 521
• Parties: SCHADE v. WESTERN UNION LIFE INS. CO. et al.
• Court: Washington Supreme Court

215 P. 521

125 Wash. 200

SCHADE v. WESTERN UNION LIFE INS. CO. et al.

No. 17615.

Supreme Court of Washington

May 22, 1923

Department 1.

Appeal from Superior Court, Spokane County; Bruce Blake, Judge.

Action by Sophia Schade against the Western Union Life Insurance Company and another. Judgment for defendants, and plaintiff appeals. Affirmed.

O. C Moore and Turner, Nuzum & Nuzum, all of Spokane, for appellant.

Graves Kizer & Graves, of Spokane, for respondents.

MITCHELL J.

The complaint states two causes of action, each on a policy of life insurance, one policy dated December 6, 1906, for $5,000 and the other one dated August 3, 1909, for $10,000, both written by the Western Union Life Insurance Company on the life of Bernhard Schade, and in each of which his wife, the plaintiff herein, was nominated as beneficiary. The suit is against the insurance company and also against the Spokane & Eastern Trust Company, to which the insurance money was paid upon the death of the insured. Upon the complaint, the answers of the defendants, and plaintiff's replies thereto, the case was tried without a jury and decided against the plaintiff as to both causes of action from which judgment she had appealed.

The facts in the case as presented to the trial court and in this seem not to be in dispute. They are disclosed by allegations and admissions in the pleadings, together with a written stipulation of facts, which latter appears to be treated by the parties as covering all the controverted allegations in the pleadings of the respective parties.

At the date of the policies, the insured and the appellant were husband and wife and continued to be such until his death February 16, 1921. Each of the policies contained the following provision:

' Change of Beneficiary.--The insured may, at any time, without the consent of the beneficiary, provided this bond is not assigned, change the beneficiary by filing a written request, duly acknowledged, accompanied by this bond, such change to take effect upon the indorsement thereof upon this bond by the company, whereupon it will be returned to the insured.'

' Assignment.--This bond may be assigned, but any such assignment must be made in duplicate, and both copies must be sent to the head office of the company, one being filed and one to be returned to the insured. Claim of assignee shall be subject to proof of interest, and the company will assume no responsibility for the validity of any assignment.'

Upon the issuance and delivery of each policy to the insured, he delivered it to his wife and declared it to be a gift, and she accepted it as a gift. She immediately permitted her husband to take each policy for the purpose of placing it in his safe for safe-keeping without any agreement between them, or intention on her part, that she was thereby parting with the policy as her property. On a number of occasions thereafter, the number of times or dates not given, she paid the premiums due on the policies upon her husband failing to do so. In November, 1913, the insured was indebted to the Spokane & Eastern Trust Company in an amount in excess of $14,000, which it was insisting should be paid, and, in consideration of an extension of time for making payment granted by the Spokane & Eastern Trust Company, he, without the knowledge or consent of his wife, assigned and delivered to it as collateral for the payment of his indebtedness the two policies of insurance. At the time of the delivery of the policies to the trust company he had procured the written indorsement of the insurance company on each of them as follows:

'At the request of the insured, Bernhard Schade, the beneficiary hereunder is changed to the insured's executors, administrators, or assigns, and not to Sophia Schade, wife, as originally written.

'Dated at Spokane, Washington, this 24th day of November, 1913.

'Western Union Life Insurance Company,

'By J. N. Wright, Secretary.

'Attest: Emma Daughs.'

The indorsement on each of the policies had been procured upon the duly acknowledged written request of the insured, according to the provision of the policy therefor, the request being accompanied with the policy which the insured alleged he was the holder of. And at the same time, in delivering the policies as collateral, the insured executed and delivered with each of them his duly acknowledged written assignment thereof in duplicate, reciting that for a valuable consideration he assigned and transferred to the Spokane & Eastern Trust Company the policy and all benefit and advantage to be had or derived therefrom, subject to the conditions of the policy and to the rules and regulations of the company. The assignment in duplicate, in the case of each policy, was filed with the insurance company, which indorsed thereon its acceptance of the assignment, retaining one copy thereof and returning the other to the Spokane & Eastern Trust Company. During the years 1919 and 1920 the Spokane & Eastern Trust Company was compelled to pay premiums on the policies in the sum of $1,095.61, and from the date of the assignments his indebtedness, though fluctuating in amount, was at all times large and at the date of his death amounted to $9,136.70.

After the death of the insured the Spokane & Eastern Trust Company made proof thereof to the insurance company, demanded and received payment of the insurance money provided for in both of the policies, in the total sum of $15,621.16, and gave its acquittance and discharge therefor. Neither of the respondents had any knowledge or notice whatever that the insured had made or attempted to make a gift of the policies or either of them to his wife, or that he had delivered them or either of them to her at any time, or that she was in any way connected with them other than that she was the wife of the insured and the original beneficiary named in the policies, as appeared upon the faces of them. The Spokane & Eastern Trust Company took the assignments and accepted the policies as collateral in the course of a regular, ordinary banking transaction, after the beneficiary had been changed in the manner provided for by the terms of the policies. Mrs. Schade, the appellant, was at no time aware that the policies had been changed as to the beneficiary, that they had been pledged and assigned, that the assignee had paid any premiums, or that the insurance money had been collected by the Spokane & Eastern Trust Company until after all of those things had been done. She then brought this action.

The excess between the amount collected by the Spokane & Eastern Trust Company on the two policies and the amount of Schade's indebtedness to the trust company is in no way involved in this proceeding at this time, such excess having been satisfactorily arranged as admitted by the appellant in her brief in this court.

It is contended on behalf of the appellant that, upon the gift of the policies to her by her husband, any contingency in her rights as beneficiary was overcome, and that she thereupon became vested with full and complete title to the policies, and that the subsequent attempt of her husband to change the beneficiary and assign the policies were futile acts, which neither divested her of her title nor conferred upon the assignee, the Spokane & Eastern Trust Company, any right superior to hers, either in law or equity.

Rather elaborate arguments have been made upon the point, by counsel on both sides, as to whether the facts show that there was a valid and completed gift and if so the result thereof in the law relative to the rights of the insured, under the particular terms of the policies, to change the beneficiary. However, we are constrained to hold, so far as this point is concerned, that appellant's conduct, more fully discussed hereinafter, has deprived her of any right to prevail over the respondents or either of them.

Another argument presented on behalf of the appellant, generally speaking, is that the policy provisions purporting to authorize a change of beneficiary at the option of the insured are violative of the common law and of the statutes and public policy of this state, whereby an indefeasible title vests immediately in the wife as beneficiary. Until the last two or three decades, life insurance policies did not contain any express reservation of power in the insured with reference to a change of the beneficiary, and in all of the earlier cases, if the courts in construing policies...