Taylor v. Southern Bank & Trust Co.

• Decision Date: 05 October 1933
• Docket Number: 6 Div. 211.
• Citation: 151 So. 357,227 Ala. 565
• Court: Alabama Supreme Court
• Parties: TAYLOR v. SOUTHERN BANK & TRUST CO.

151 So. 357

227 Ala. 565

TAYLOR v. SOUTHERN BANK & TRUST CO.

6 Div. 211.

Supreme Court of Alabama

October 5, 1933

Rehearing Denied Dec. 1, 1933.

Appeal from Circuit Court, Jefferson County; J. Russell McElroy Judge.

Action of assumpsit by Minnie Taylor against the Southern Bank &amp Trust Company. From a judgment for defendant, plaintiff appeals.

Affirmed.

J. K Taylor and Chas. W. Greer, both of Birmingham, for appellant.

H. H. Grooms and Coleman, Spain, Stewart & Davies, all of Birmingham, for appellee.

GARDNER Justice.

Plaintiff, the widow of James A. Taylor, was named the beneficiary in two policies of insurance on his life, bearing date March 5, 1928, aggregating $15,000. Insured paid the premiums on these policies except as to the quarterly premiums falling due December 5, 1929, and subsequent thereto. As to said premium due December 5, 1929, insured executed a note to defendant bank for a loan of $265.20, and out of the proceeds said quarterly premiums were paid. Subsequent premiums were paid by defendant. The insured died on June 26, 1930.

Contemporaneously with the execution of the note above referred to, the insured, joined by plaintiff, his wife and beneficiary, executed an assignment to the defendant of each of said policies in full compliance with the policy provisions regarding such assignments. Each assignment contained the provision that "the interest of the assignee in the policy hereby assigned is limited to said assignee's valid, pecuniary claim against the assignor existing at the time of any settlement of the policy, the remaining proceeds of said policy, if any, being unaffected by this assignment." The policy provisions disclose there was no cash surrender value to either policy at the time of the assignment or at the date of the death of the insured. The policies being thus assigned were delivered to the defendant and both original and duplicate of these assignments were filed in the general office of the insurer in accordance with the terms of the policy. At the time of the execution of these assignments, the insured was indebted to the bank in the sum of $66,825.75, which was subsequently increased to $68,362.63 at the time of his death.

Following the specific language above quoted from these assignments, the interest of the bank, as assignee, was measured by the "pecuniary claim against the assignor existing at the time of any settlement of the policy," and suffices to refute the insistence of the plaintiff that the assignment was merely to secure the note of $265.20. The pecuniary claim existing against the assignor (the insured) at the time of his death was in excess of $68,000, and, if the above noted language is to be taken at its face value, the assignments likewise secured this latter sum. It will be here so considered.

Proof of loss was made by defendant, upon the death of the insured, and the full amount due on the policies was paid to it, and plaintiff seeks to recover this sum of defendant. The debt was that of the husband, the insured, and we attach no importance to the fact that the wife joined in the assignment. Fourth National Bank v. Woolfolk, 220 Ala. 344, 125 So. 217.

Plaintiff rests her claim in the main upon the proposition that to affect her rights a change of beneficiary was essential; and that these assignments cannot be so construed. Authorities are cited tending to sustain this contention, among them Muller v. Penn Mut. Life Ins. Co., 62 Colo. 245, 161 P. 148; Sullivan v. Maroney, 76 N. J. Eq. 104, 73 A. 842; Anderson v. Broad Street Nat.

Bank, 90 N. J. Eq. 78, 105 A. 599; Barner v. Lyter, 31 Pa. Super. Ct. 435; Douglass v. Equitable Life Assur. Soc., 150 La. 519, 90 So. 834; Johnson v. New York Life Ins. Co., 56 Colo. 178, 138 P. 414, L. R. A. 1916A, 868. These authorities we have carefully considered, but think they are out of harmony with the logic of our own decisions and therefore unsafe as guides to be followed here.

As we view the question, the matter of change of beneficiary and assignment of the policies are two separate and distinct things. As said in Mut. Benefit Life Ins. Co. v. Swett (C. C. A.) 222 F. 200, 205, Ann. Cas. 1917B, 298, "An assignment is the transfer by one of his right or interest in property to another. * * * The power to change the beneficiary is the power to appoint."

"It is the general rule that an ordinary life policy, containing no right in the insured to change the beneficiary, cannot be assigned without the consent of the beneficiary. The delivery of the policy vests an interest in the beneficiary, which no act of the company or insured can divest. * * *

"If, however, the right to change the beneficiary or to assign the policy is reserved, the insured may assign the policy at will." 2 Cooley's Briefs on Ins. (2d Ed.) pp. 1801 and 1805; 6 Couch on Ins., p. 5232.

A life insurance policy is, of course, assignable as any other chose of action (Missouri State Life Ins. Co. v. Robertson Banking Co., 223 Ala. 13, 134 So. 25; 37 Corpus Juris 422), and may be pledged by delivery to secure a debt (37 Corpus Juris 428), or may be assigned as collateral security (Keeble v. Jones, 187 Ala. 207, 65 So. 384).

In the instant case, the policies were assigned in strict compliance with the provisions therein contained, and the policies expressly further provided that the insured may change the beneficiary. The stipulations therein relating to the assignment, as well as change of the beneficiary, are as follows:

"If there be no written assignment of this policy on file with the company, the insured may, while this policy is in force, designate a new beneficiary, by filing written notice thereof at the general office of the company, accompanied by this policy for suitable endorsement. Such change shall take effect upon endorsement of the same on the policy by the company. If any beneficiary shall die before the insured, the interest of such beneficiary shall vest in the insured unless otherwise provided herein.

"The insured may, without the consent of the beneficiary, receive every benefit, exercise every right and enjoy every privilege conferred on the insured by the policy.

"No assignment of this policy shall be binding upon the company unless filed in duplicate at the general office on a form provided by the company, one copy to be retained by the company and the other to be returned. The company assumes no responsibility for the validity of any assignment."

Each assignment contained the provision that:

"The interest of the assignee in the policy hereby assigned is limited to said assignee's valid, pecuniary claim against the assignor existing at the time of any settlement of the policy, the remaining proceeds of said policy, if any, being unaffected by this assignment."

It is clear, we think, that the policies themselves disclose that the right to make a change as to the beneficiary and the right to assign are separate and distinct, and, indeed, the language indicates so far as the insurer is concerned a right to fail to recognize the change of beneficiary if there is on file a written assignment of the policy.

So far as the right to change the beneficiary is concerned, the policy not only reserves this right but expresses in broad language the control of the insured in that regard. "The insured may, without the consent of the beneficiary, receive every benefit, exercise every right and enjoy every privilege conferred on the insured by the policy." The policy further discloses that the assignment is as security for the valid pecuniary claim against the assignor existing at the time of the settlement of the policy and is expressly limited thereto as shown by the concluding words, "The remaining proceeds of said policy, if any, being unaffected by this assignment."

No change of beneficiary was contemplated, nor was there necessity therefor. If the amount of the policy exceeded the indebtedness for which it was pledged, this provision was intended to preserve the surplus for the beneficiary named. Under the uniform decisions of this court, the right to change the beneficiary being reserved, the beneficiary had no vested right, but only an expectancy. West End Savings Bank v. Goodwin, 223 Ala. 185, 135 So. 161, 162; McDonald v. McDonald, 212 Ala. 317, 102 So. 38, 36 A. L. R. 761; Id., 215 Ala. 179, 110 So. 291; Summers v. Summers, 218 Ala. 420, 118 So. 912; Barnett v. Boyd, 224 Ala. 309, 140 So. 375.

And we have held (illustrative of the expectant character of such an interest) that fraud or undue influence inducing the insured to change the beneficiary, the right to change being reserved, does not give the first beneficiary any right to claim the proceeds of the policy. Metropolitan Life Ins. Co. v. Bramlett, 224 Ala. 473, 140 So. 752; Barnett v. Boyd, supra; Summers v. Summers, supra.

The language of the opinion in Fourth National Bank v. Woolfolk, supra, laying stress on the lack of such a reservation in the policy there considered, clearly indicates a different conclusion, had such reservation been found in the policy.

Some of the authorities relied upon by plaintiff lay stress upon the necessity of strict compliance with the policy provisions as to a change of beneficiary as being absolutely essential, and, if these stipulations are not met, no change effected, notwithstanding the intention of the insured to the contrary, and his effort to that end.

Our decisions take a broader view, and are to the effect that such policy provisions are for the benefit of the insurer and may be waived, and are waived by an interpleader ( Missouri State Life Ins. Co. v. Robertson Banking Co., 223 Ala. 13, 134 So. 25), or by a failure to take advantage thereof (Whitman v. Whitman, 225 Ala. 113, 142 So. 413).

But,...