Summers v. Summers

• Citation: 118 So. 912,218 Ala. 420
• Decision Date: 30 June 1928
• Docket Number: 6 Div. 961
• Parties: SUMMERS v. SUMMERS.
• Court: Alabama Supreme Court

118 So. 912

218 Ala. 420

SUMMERS v. SUMMERS.

6 Div. 961

Supreme Court of Alabama

June 30, 1928

Rehearing Granted Nov. 30, 1928

Appeal from Circuit Court, Jefferson County; William M. Walker Judge.

Bill in equity by Dora Summers against Hanna B. Summers and another. From a decree sustaining a demurrer of the named respondent and dismissing the bill, complainant appeals. Reversed and remanded.

Bill by original beneficiary, seeking priority against substituted beneficiary, held sufficient for purpose of impressing trust on proceeds of policy for premiums paid by beneficiary.

Statement by SOMERVILLE, J.:

The bill of complaint is filed by Dora Summers against the Grand Lodge of Brotherhood of Railroad Trainmen, as insurer of the life of her son, Robert F. Summers, deceased, and against Hanna B. Summers, his widow, as the illegally substituted beneficiary in his policy of insurance, for the purpose of enforcing complainant's asserted priority as the equitable owner of the proceeds of the policy.

The respondent brotherhood has paid the money due on the policy into court for the benefit of the party entitled to receive it, and has been duly released from further liability and discharged as a party respondent.

Complainant shows that the policy was issued in November, 1913, and that she was named as the beneficiary therein; that from the date of issuance until the death of insured, in November, 1926 she paid all dues and assessments on the policy; that the insured married respondent, Hanna B. Summers, about the year 1916, and in 1918 he had a new policy issued in which his said wife was named as beneficiary, of which complainant had no knowledge until after the death of the insured, and that the fact of complainant's said payments was known to the insured and to his wife, Hanna, who knew also that complainant had in her possession the original policy.

By amended paragraph 13 it is alleged:

"That your oratrix has a vested interest in the first policy aforesaid set out; that the said Robert F. Summers at the time of the issuance of the first policy as aforesaid agreed with your oratrix that she should be and remain the sole beneficiary therein, during his lifetime provided that she paid all dues and assessments thereon; that the said Robert F. Summers delivered possession of said policy to your oratrix in pursuance of said agreement and said possession has remained in the oratrix, of which defendant, Hanna B. Summers, has notice; that by reason thereof and by reason of the fulfillment of said contract and agreement on the part of your oratrix the said Robert F. Summers was estopped from making any change in the beneficiary in said policy."

The bill also charges that--

The substituted policy "was issued upon false averments and allegations and in fraud of the vested interest of your oratrix under said first-mentioned policy, which said false averments *** were material in procuring and obtaining said illegally substituted policy, as aforesaid."

There is no allegation as to the character of the membership of the Brotherhood of Railroad Trainmen, nor of the rules of the brotherhood prescribing or limiting its membership or their vocations.

Respondent's demurrer to the amended bill was sustained, and complainant appeals on the record.

G.M. Edmonds, of Birmingham, for appellant.

London, Yancey & Brower and J.K. Jackson, all of Birmingham, for appellee.

SOMERVILLE J.

Independent of the influence of any statute affecting the subject, the authorities are overwhelmingly to the effect (1) that the mere custody of a life insurance policy by the beneficiary named therein, though that beneficiary also voluntarily pay the dues or assessments thereon, will not deprive the insured of his expressly given power to change the beneficiary in accordance with the rules of the association; and (2) that, where the original beneficiary is named pursuant to an agreement, express or implied, that he shall be so named, upon some valid consideration moving from him, he acquires an equitable interest in the policy which cannot be defeated by a substituted beneficiary having no superior equity, notwithstanding the general rule that the beneficiary of such a certificate does not acquire a vested right. Columbian Circle v. Mundra, 298 Ill. 599, 132 N.E. 213, 18 A.L.R. 378, and note, 383-393; McDonald v. McDonald, 212 Ala. 137, 102 So. 38, 36 A.L.R. 761; Id., 215 Ala. 179, 110 So. 291; 37 C.J. 579, 580, § 345.

Those principles of law are not disputed, and the decisive question here presented is whether or not the second proposition upon which the equity of complainant's bill depends has been changed, with respect to fraternal benefit policies like this, by section 8445 of the Code, which is a part of the act of April 24, 1911.

This statute, after limiting the beneficiaries that may be named to certain specified relatives or dependents, declares:

"Within the above restrictions each member shall have the right to designate his beneficiary, and, from time to time, have the same changed in accordance with the laws, rules or regulations of the society, and no beneficiary shall have or obtain any vested interest in the said benefit until the same has become due and payable upon the death of the said member."

This declaration is positive and sweeping in its terms. If it were stated merely that such a beneficiary took no vested interest it might be fairly contended that this did not change the general principle which recognizes a vested equity in beneficiaries under the conditions predicated above; but, when it declares that no beneficiary shall have or obtain any vested interest before the death of the insured, we cannot avoid the very plain meaning of the words, nor deny to them the effect so plainly intended by the Legislature--an effect in line with all modern legislation on this subject, and specifically with the Uniform Fraternal Beneficiary Act, adopted in many of the states, as pointed out by Mr. Bacon in his Benefit Societies (4th Ed.) vol. 1, pp. 863, 864. See, also, Supreme Tent, etc., v. Altmann, 134 Mo.App. 363, 114 S.W. 1107; Supreme Council, etc., v. Behrend, 247 U.S. 394, 38 S.Ct. 522, 62 L.Ed. 1182, 1 A.L.R. 966; Malancy v. Malancy, 165 Wis. 642, 163 N.W. 186; Grand Lodge, etc., v. Denzer, 129 Ky. 202, 110 S.W. 882, where the influence of statutes or by-laws was fully recognized.

Under the influence of this statute, the complainant did not acquire, and could not "obtain," any vested equity in this policy unless she were the actual and nominal beneficiary therein at the time of the death of the insured, unless it appears that this Brotherhood of Railroad Trainmen is an association which is excepted by some other statute from the provision in question.

Counsel for complainant point, for this effect, to section 8503 of the Code, in the same article, declaring that--

"Nothing contained in this article shall be construed to affect or apply to *** or societies which limit their membership to any one hazardous occupation. ***"

The burden is, of course, upon the complainant to show that this insurer--brotherhood--is an excepted class in order to escape the effect of section 8445. As to this the bill of complaint avers nothing, but counsel insists that this court may and must take judicial notice of the fact that this brotherhood has a membership limited by its own laws to "one hazardous occupation." We are clear, however, in the conviction that our judicial knowledge does not extend so far. At most, we might infer that its membership is made up of trainmen; but, even so, we do not know that all members are restricted to a single, and also a hazardous, occupation. Those are not matters of common knowledge, and they must be alleged and proved.

The case of Sovereign Camp v. Allen, 206 Ala. 41, 45, 89 So. 58, does not support appellant's theory of judicial notice, and holds merely that courts judicially know that the position of a railroad flagman is one of "hazardous employment," equally with that of conductor, brakeman, fireman, or switchman, a very different matter.

It is suggested for appellant that in any case she is entitled to reimbursement out of the policy fund to the extent of the dues and assessments paid by her. Such a claim, however, falls as clearly within the inhibition of the statute (section 8445) as a claim to the entire fund, and cannot be allowed without violating the law. Royal Arcanum v. Hartzman, 140 Mo.App. 105, 120 S.W. 629.

The dismissal of the bill as unamendable, though assigned for error, is not argued in the brief for appellant, and hence we treat it as waived.

As to the contention that complainant was defrauded by a false affidavit by means of which the insured effected the substitution of another beneficiary and secured the issuance of a new policy, as observed by Mr. Justice Sayre in McDonald v. McDonald, 212 Ala. 137, 141, 102 So. 38, 36 A.L.R. 761, if complainant had no vested interest in the policy, she could not have been defrauded, and, if she had such an interest, the alleged fraud could not have affected it; hence the imposition, if any, was upon the association alone, and, if the association waives it, no one else can complain. It was so declared in Slaughter v Grand Lodge, etc., 192 Ala. 301, 305, 68 So. 367 See, also, to the same effect, Hoeft v. Supreme Lodge, etc., 113 Cal. 91, 45 P. 185, 33 L.R.A. 174; 4 Cooley's Briefs on Insurance, 372. The allegation of fraud in this behalf does not aid the bill.

It results that the demurrer to the bill is...