Strohsahl v. Equitable Life Assur. Soc. of U.S.
| Decision Date | 02 January 1962 |
| Docket Number | No. 7394,C--601,7394 |
| Citation | 71 N.J.Super. 300,176 A.2d 814 |
| Parties | Reverend Father Vincent H. STROHSAHL and Edward C. Gunther, as Executors and Trustees under the Last Will of Julian Thurber Kelly, deceased, Plaintiffs, v. EQUITABLE LIFE ASSURANCE SOCIETY OF the UNITED STATES, a mutual company, Defendant. (). |
| Court | New Jersey Superior Court |
Edward C. Gunther, Union City, for plaintiffs.
George Warren, Trenton, guardian ad litem, pro se.
O'Mara, Schumann, Davis & Lynch, Jersey City (J. Alan Drummond, Newark, appearing), for Captain Robert B. Kelly and Hazel Kelly, his wife.
Lamb, Langan & Blake, Jersey City (H. Curtis Meanor, Jersey City, appearing), for defendant.
This matter is before the court on a stipulation of facts agreed to by all of the interested parties and concerns the novel question of whether an insured may effectively, by will, alter the mode of insurance proceeds distribution to his named beneficiaries without substantially complying with the 'change of beneficiary' provisions in his policies of life insurance.
The facts are substantially as follows: Julian T. Kelly died on August 8, 1959 as the result of pulmonary tuberculosis. At the time of the decedent's death his life was insured under five individual life insurance policies and one group insurance plan issued by defendant the Equitable Life Assurance Society of the United States (hereinafter Equitable). The beneficiaries under each of the policies in question were the decedent's children, Lucy Merritt Kelly and William Thurber Kelly, age eight and six years respectively.
The five individual life insurance policies provided, with respect to a change of beneficiaries, that:
'The owner may change the beneficiary from time to time Prior to the death of the insured, by written notice to the Society, but any such change shall be effective only if it is endorsed on this policy by the Society * * *.' (Emphasis added.)
The group insurance policy also contained language dealing with a change of beneficiaries by the insured, viz.:
'Upon receipt of due proof of the death of any employee occurring while insured under this policy and while this policy is in force, the Society agrees to pay, at its Home Office in the City of New York, to the person or persons entitled thereto under the provisions of this policy, the amount for which such employee's life is insured.
'The beneficiary shall be the person or persons designated on the insurance records described in the provision hereof entitled 'Records and Reports,' in accordance with the employee's election. Any employee may from time to time while insured hereunder change the beneficiary by a written request signed by the employee, but such change shall take effect only upon its entry on such records.
The Society or, upon written agreement between the employer and the Society, the employer shall maintain records setting forth the names of all employees insured and their respective beneficiaries.'
On September 15, 1959 plaintiff Edward C. Gunther, as one of the trustees and executors under the will of the decedent, filed proofs of death with Equitable in connection with the decedent's group insurance coverage. Since the group insurance records reflected that the insured's children were the designated beneficiaries at the time of the decedent's death, Equitable advised Gunther that a claim should be made by the children rather than by the executors of the insured's estate.
On September 22, 1959 Equitable, in response to Gunther's inquiry concerning the five individual life insurance policies, informed him that said policies were payable to the insured's two children, and not to the insured's estate.
Gunther's claim, as executor of Kelly's estate, to the proceeds in question is predicated upon the following paragraph in the decedent's last will and testament:
'All the rest, residue and remainder of my estate, including the principal and/or income due and growing out of all life insurance policies covering my life and made payable to my estate or to my aforesaid beloved children or to either of them, I give, devise, and bequeath unto Reverend Father Vincent H. Strohsahl * * * and Edward C. Gunther * * * or the survivor or survivors of them, as trustees, in trust nevertheless, for the use and benefit of my aforesaid beloved daughter, Lucy Merritt Kelly, and my aforesaid son, William Thurber Kelly * * *.'
Decedent's will also provided for the appointment of Reverend Father Vincent H. Strohsahl, Reverend Father Joseph Slagg, Francis C. Kelly and Edward Gunther, or the survivor or survivors of them, as the executors.
Equitable takes the position that a construction of the will of the deceased insured entitling the plaintiffs, as executors of the insured's estate, to the proceeds under the policies in question, would be in violation of the applicable provisions contained in said policies concerning a change of beneficiaries by the insured. Equitable maintains that it has a contractual obligation to make payment of the proceeds to the proper person or persons legally entitled thereto, in accordance with the provisions of the policies, I.e., to the designated beneficiaries who are the decedent's children. I am in substantial agreement with the position advanced by Equitable.
The right of a beneficiary to insurance proceeds is dependent upon the contractual agreement between the insurer and the insured. Generally, an insured may not change the beneficiaries under a policy of life insurance except by substantial compliance with the method prescribed in the insurance contract. See E.g., Prudential Ins. Co. of America v. Swanson, 111 N.J.Eq. 477, 482, 162 A. 597 (E. & A. 1932); Anderson v. Broad Street National Bank, 90 N.J.Eq. 78, 105 A. 599 (Ch. 1918), affirmed per curiam, 91 N.J.Eq....
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