Splawn v. Chew

• Decision Date: 14 December 1883
• Docket Number: Case No. 1539.
• Parties: A. H. SPLAWN ET AL. v. W. R. CHEW ET AL.
• Court: Texas Supreme Court

60 Tex. 532

A. H. SPLAWN ET AL.

v.W. R. CHEW ET AL.

Case No. 1539.

Supreme Court of Texas.

Dec. 14, 1883.

APPEAL from Red River. Tried below before the Hon. R. R. Gaines.

On the 20th day of December, 1880, E. J. Chew took out a benefit certificate in the order known as the American Legion of Honor, for $5,000, payable to “W. R. and Helen M. Chew, father and mother.” He was a member of the local lodge of that order at Clarksville, Texas, by reason of which membership he obtained the certificate, and he continued as a member and retained possession of the benefit certificate and paid the assessments and premiums upon it until his death, which occurred on the 19th of December, 1882, in Red River county, Texas. On the 15th of February, 1882, he made his will, bequeathing this benefit certificate and the proceeds of it to his two minor children, Joseph F. and Helen R. Chew, and the interest on it to the support of his wife, Hattie M. Chew, during her widowhood, and appointing appellants A. H. Splawn and T. A. Fuller executors of the will and guardians of his said minor children. The will was duly probated and the said Splawn and Fuller qualified as executors of the will and guardians of the children. The appellees, the beneficiaries named in the certificate, and the appellants, executors and guardians, both claimed the money secured by said certificate, and it was mutually agreed that the money should be collected by the Red River County Bank and held subject to the judgment of the court in the premises. The money ($5,000) was collected by the bank, and on the 15th of May, 1883, appellees filed their petition alleging that appellants had collected the money and asking judgment for it. On the 15th day of May, appellants filed their answer, setting up the facts as herein stated, and that there was no consideration from plaintiffs to deceased Chew for said policy, and asked judgment for the proceeds of the certificate. On the 21st of June, 1883, the case was tried, and the court rendered judgment for plaintiffs for the $5,000, adjudging that they were entitled to the same, and that a receipt to the bank by plaintiffs should be an acquittance of the bank, and that plaintiffs should pay the costs, to which judgment defendants excepted and gave notice of appeal.

Taylor & Chambers, for appellants, as to the disposition of the benefit certificate money, cited: Kerman v. Howard, Adm'r, 23 Wis., 108;Charter Oak Ins. Co. v. Brant, 47 Mo., 419;Ballou v. Gile, 50 Wis., 614; Clark v. Durand, 12 Wis., 248; Lemon v. Phœnix Ins. Co., 38 Conn., 300.

Sims & McDonald, for appellees, as to the disposition of the proceeds of the benefit certificate, cited: Ricker v. Charter Oak Ins. Co., 27 Minn., 193 (38 Am. Rep., 289); Bliss on Life Insurance (2d ed.), secs. 307, 337; May on Insurance (2d ed.), sec. 392.

On benevolent associations being governed by the rules as to insurance companies in this character of contract, they cited: May on Ins. (2d ed.), 550; Comm. v. Witherbee, 105 Mass., 149;Kent Masonic Ins. Co. v. Miller, 13 Bush (Ky.), 489; Shunk v. Ford, 44 Wis., 370; Dietrich v. Mad. Rel. Ass., 45 Wis., 79;Mason's Ben. Soc. v. Winthrop, 85 Ill., 537.

On the binding character of the laws of chartered associations, they cited: 2 Wait's Act. & Def., 326; Anacosta Tribe v. Murback, 13 Md., 91;Cummings v. Webster, 43 Me., 192;Flint v. Pierce, 99 Mass., 68.

On the binding character of insurance contracts, they cited: 4 Wait's Act. & Def., 112; Mitchell v. Lycoming Ins. Co., 51 Penn. St., 402; Cole v. Iowa St. Ins. Co., 18 Iowa, 426; May on Ins. (2d. ed.), sec. 67; Frazer v. La. Eq. Life Ins. Co., 9 Ins. L. J., 817; Chase v. Ins. Co., 67 Me., 85.

WILLIE, CHIEF JUSTICE.

It seems pretty well settled by authority that in cases of an ordinary life insurance policy the beneficiaries named in such policy become the owners of it the moment it is issued, and the person procuring the insurance cannot by any subsequent act of his transfer to others the interest of those beneficiaries. Bliss on Life Ins., §§ 317, 337; Ricker v. Charter Oak Life Ins. Co., 27 Minn., 193.

The principle upon which this doctrine rests is that “the rights under the policy become vested immediately upon its being issued, so that no person other than those designated in it can assign or surrender it.” See above authorities; also May on Ins., § 392.

The person procuring the insurance is held to divest himself of all interest in the policy, and to vest it exclusively in the beneficiaries, and to make an irrevocable settlement upon them of the amount for which the policy is issued. Ricker v. Charter Oak Life Ins. Co., supra.

But this is merely a matter of legal construction obtaining where a different understanding is not had between the original parties to the contract. The law does not prohibit the person procuring the policy from entering into such arrangements with the insurer as may be agreed on, either as to the persons who are to receive the benefit of the policy, or as to what control over it the ““insured” is to exercise. In these respects an insurance policy does not differ from any other contract authorized by law, and should be subject to the same interpretation. The person procuring the policy for the benefit of another may reserve the right to change this designation in whole or in part, and the law will respect any change he may make in the beneficiaries of the policy in pursuance of such right. Bliss on Life Insurance, § 318; Hutchings v. Miner, 46 N. Y., 456. In such case there is no indefeasible interest in the insurance money vested in the beneficiaries named in the policy, nor settlement made upon them, which cannot be revoked. Such reservation being allowable, may be made expressly in the policy, or may become part of it by being included in any instrument or paper which enters into the insurance contract.

The institution in which the insurance in the present case was effected is known as the “American Legion of Honor of Texas.” Among other beneficent objects of the order is the following, contained in art. II, sec. 5, of its constitution, viz.: “To establish a benefit fund, from which on the satisfactory evidence of the death of a beneficial member of the order, who has complied with all its lawful requirements, a sum not exceeding $5,000 shall be paid to the family, orphans or dependents, as the member may direct.”

This “benefit fund,” according to the by-laws, is raised by means of payments made by parties joining the order before being received into membership, and assessments levied upon them upon death of a member, should this fund at the time be insufficient to pay the death benefit. Art. I, secs. 1-6.

Thus, the life of each member becomes insured immediately upon his entering the order, and he also becomes one of the insurers of the lives of his fellow members, i. e., to the amount required to be paid by him under the above provisions of the by-laws. The order is in effect, and so far as those provisions are concerned, a mutual life insurance company, in which the life of every member is insured by reason of his membership and compliance with the requirements of its constitution and by-laws.

Every one insured by reason of membership in such a company is charged with a knowledge of its constitution and by-laws, bound by their requirements and entitled to the rights and privileges conferred by them. May on Ins., § 552; Cales v. Ins. Co., 18 Iowa, 425. The present order did not issue policies as do ordinary insurance companies, but delivered to the insured a benefit certificate, which, together with the positive regulations of the order, evidenced...