Sea v. Conrad

• Decision Date: 01 October 1913
• Citation: 155 Ky. 51,159 S.W. 622
• Parties: SEA v. CONRAD.
• Court: Kentucky Court of Appeals

159 S.W. 622

155 Ky. 51

SEA v. CONRAD.

Court of Appeals of Kentucky.

October 1, 1913

Appeal from Circuit Court, Jefferson County, Common Pleas Branch First Division.

Suit by Eva Conrad against the Mutual Benefit Life Insurance Company to which Andrew M. Sea, Jr., as administrator of Henry Conrad, deceased, and the children of Henry Conrad, were made parties. Decree for the plaintiff, and Andrew M. Sea, Jr. appeals. Reversed and remanded.

Wilson D. Crabb, of Louisville, for appellant.

Paul Blackwood, of Louisville, for appellee.

SETTLE J.

This suit was brought by appellee, Eva Conrad, against the Mutual Benefit Life Insurance Company, of Newark, N. J., to recover $5,000, with interest, claimed on policy No. 117,140, issued by it February 4, 1884, upon the life of her former husband Henry Conrad, who died April 11, 1911. The policy is what is known as a ten-year term policy; that is, in consideration of the payment, February 4, 1884, of a premium of $310.55, and the payment of a like sum on the 4th day of February in each following year, until ten full premiums were paid, the insurance company, by the terms of the policy, agreed to pay the sum of $5,000 to the appellee, Eva Conrad, the beneficiary named therein, within 60 days after due notice and satisfactory proof of the death of the insured, Henry Conrad. It is alleged in the petition that the insured, Henry Conrad, paid each of the annual premiums for ten years as it became due. The answer of the Mutual Life Insurance Company admitted the contract of insurance, as contained in the policy, but denied that the appellee, Eva Conrad, was entitled to the proceeds thereof, and alleged that such proceeds should be paid to the children of Henry Conrad, who were, by its cross-petition, made parties to the action and called upon to assert their claim thereto. It was permitted to pay into court the amount due upon the policy. Thereafter the appellant, Andrew M. Sea, Jr., administrator of the estate of Henry Conrad, deceased, filed a petition asking that he be made a party defendant and that same be taken as his answer and counterclaim to appellee's petition and cross-petition against the insurance company and children of Henry Conrad. The answer contains several paragraphs, in one of which the administrator denies that the appellee or children of Henry Conrad are entitled to the proceeds of the policy. In another, he sets up and pleads that, in an action for divorce between appellee and Henry Conrad, deceased, instituted, in 1895, in the chancery branch of the Jefferson circuit court, judgment was entered divorcing the parties, granting appellee $7,000 alimony, and restoring to each all property and property rights acquired from the other by or in consideration of the marriage; and that, though by virtue of her being at the time of the issuance of the policy the wife of Henry Conrad, she was named therein as the beneficiary, by the judgment referred to and by reason of section 425, Civil Code, and section 2121, Kentucky Statutes, appellee was divested of the beneficial interest she took under the policy, and same was vested in Henry Conrad; and that thereafter, on April 30, 1897, Henry Conrad, in pursuance of this right, made demand upon the insurance company for the dividend then due upon it as a paid-up policy, and thereafter repeated such demands, at the accrual of the subsequent dividends thereon, until his death, which dividends were, as demanded, paid to him by the insurance company. In still another paragraph of the administrator's petition, answer, counterclaim, and cross-petition, it was alleged that the insurance policy in question became by the rendition of the judgment of divorce, and continued until his death, the property of Henry Conrad, for which reason it was claimed by the administrator as assets of his estate, which he, the administrator, was entitled to receive and apply, if necessary, to the payment of the decedent's debts, or distribute as required by the laws of the state. Appellee, Eva Conrad, filed a demurrer to the petition, answer, counterclaim, and cross-petition of the administrator, which the circuit court sustained, dismissed the administrator's claim, and directed the receiver of the court to pay appellee, Eva Conrad, the amount of the policy theretofore paid by the insurance company into court. From the judgment manifesting these several rulings, the administrator has appealed.

In our opinion, the policy in question is property. It became a "paid-up" policy on the 4th of February, 1895, the date of the maturity and payment of the tenth and last premium, and, though the judgment of divorce was rendered November 30, 1895, it is admitted that every dividend, beginning with the first one of February 4, 1896, declared on the policy after it became a "paid-up" policy, was received by Henry Conrad down to the time of his death. It is apparent, therefore, that the policy, and Henry Conrad's beneficial interest therein at the time of the granting of the divorce, was not only property, but that it was an investment from which he derived an annual profit, from the time it became a "paid-up" policy until his death.

If correct in this conclusion, the question then arises: What legal effect had the judgment of divorce upon the rights of the parties with respect to this policy or its proceeds? Did the beneficial interest given the wife by the policy continue after the divorce, or was it divested by the divorce and vested in the husband? This question, as raised by a state of facts such as are here presented, has never been passed on by this court; and as we have not been favored by appellee's counsel with a brief containing their view of the case, and the record does not contain the written opinion it indicates was delivered by the judge of the circuit court at the time of deciding the case, we are not advised as to the grounds upon which he adjudged appellee entitled to the proceeds of the policy in controversy. We assume, however, that, in so holding, that court followed the doctrine announced in Ph nix Mutual Life Ins. Co. v. Dunham, 46 Conn. 79, 33 Am Rep. 14; McKee v. Ph nix Ins. Co., 28 Mo. 383, 75 Am. Dec. 129; Overhiser v. Overhiser, 63 Ohio St. 77, 57 N.E. 965, 50 L. R. A. 552, 81 Am. St. Rep. 612; Conn. Mutual Life Ins. Co. v. Schaefer, 94 U.S. 457, 24 L.Ed. 251, which, in substance, hold: That, where the policy of insurance is an "old line" policy, in the absence of a provision in the contract to the contrary, the designation of a beneficiary, valid in its exception, remains so, although the insurable interest or relationship of the beneficiary has ceased; therefore, that the wife's interest in such a policy, payable to her, is not affected by a divorce. We have never given our approval to this doctrine, nor have we expressly disapproved it, except with respect to mutual benefit associations. It was held inapplicable in Green v. Green, 147 Ky. 608, 144 S.W. 1073, 39 L. R. A. (N. S.) 370, wherein it is said: "Without approving of the rule applied by some courts in the case of ordinary life insurance companies, we are of the opinion that there is every reason why a different rule should prevail in the case of mutual benefit societies. The latter are organized for the benefit of the members, their families, and those dependent upon them. To permit the benefits to be paid to those who at one time sustained such relation, but did not sustain that relation at the time of the member's death, would be to frustrate the purpose of the society. In other words, to entitle one to receive the proceeds of a certificate in a fraternal society, he must, unless the contract...