Wannamaker v. Stroman

• Decision Date: 22 November 1932
• Docket Number: 13520.
• Citation: 166 S.E. 621,167 S.C. 484
• Parties: WANNAMAKER et al. v. STROMAN et al.
• Court: South Carolina Supreme Court

166 S.E. 621

167 S.C. 484

WANNAMAKER et al. v. STROMAN et al.

No. 13520.

Supreme Court of South Carolina

November 22, 1932

Appeal from Common Pleas Circuit Court of Orangeburg County; T. S Sease, Judge.

Action by H. C. Wannamaker, as receiver, and others, against Maggie A. Stroman and others. From the judgment, plaintiffs appeal.

Reversed and remanded.

Lide & Felder and John S. Bowman, all of Orangeburg, for appellants.

M. E Zeigler, of Orangeburg, for respondents.

COTHRAN J.

The controversy in this case arises out of the claim of judgment creditors of Mrs. Maggie A. Stroman to have the proceeds of certain life insurance policies issued upon the life of her husband, Z. E. Stroman, applied to the payment of their judgments.

The undisputed facts are these: Z. E. Stroman, husband of Mrs Stroman, at the time of his death in August, 1930, held three policies of life insurance, which for convenience shall be designated as A, B, and C.

Policy A was for $1,500; the beneficiary was Mrs. Stroman; it contained a provision reserving to the insured the right to change the beneficiary, in these words: "The insured will be entitled at any time while this policy is in force and not assigned, upon return of the policy to Newark with the insured's written request for the appropriate indorsement of the policy by the company; 1. To have the beneficiary changed."

Policy B was for $1,000; the beneficiary was the same, and the provision for a change of the beneficiary was also the same (both were in the same company).

Policy C was for $1,500; the beneficiary was the same; but the policy contained no provision for a change of the beneficiary.

The insured, as stated, died in August, 1930, without having complied with the provisions for a change of the beneficiary under policies A and B.

The contention of the parties opposed to the claim of the judgment creditors, however, is that the insured by his will dated April 13, 1929, accomplished a change in the beneficiary named in policies A and B (it appears to be conceded that the beneficial interest of Mrs. Stroman in policy C for $1,500 has not been affected by the will).

In item 2 of the will, the testator bequeathed to Mrs. Stroman "Fifteen hundred ($1,500) dollars of my insurance money." It seems clear that in the proceeds of policy C, $1,500, in which Mrs. Stroman was named beneficiary, and which contained no provision for a change of the beneficiary, she had a vested interest, which became due and payable to her immediately upon the death of the insured, regardless of this provision in the will.

In item 6 of the will the testator bequeathed "Two Thousand ($2,000) dollars of my insurance" to his three daughters and his grandson, to be divided equally between them. It seems clear that, as the testator had no right to interfere with the proceeds of policy C, which as has been shown was vested in Mrs. Stroman and payable to her, the bequest of $2,000 "of my insurance" was available only out of the proceeds of policies A and B, and that, if he had no right to interfere with the expectant interest of Mrs. Stroman, except in the mode provided in the policy regulating a change of the beneficiary, which he did not comply with, there is no part of the insurance which was the subject of testamentary disposition by the testator. The pivotal question therefore is whether the attempted disposition constituted a change in the beneficiary named in those policies.

The circuit judge, in his decree, held that "the evident intention of the testator was to dispose of all his insurance money which he knew to be $4,000.00, by giving $1,500.00 to his wife, $500.00 each, to his three daughters and grandson, and the residue to his three daughters." That may have been, and doubtless was, his intention; but this is not a question of testamentary intention, but of testamentary power. Did he have the power of control over the proceeds of Policies A and B?

There is not a semblance of evidence in the case that the testator entertained a purpose to change the beneficiary named in these policies; he makes no reference to them; the only suggestion of his purpose is contained in the effect of his provision in the will, which is entirely compatible with his apprehension that the insurance money was a part of his estate; he constantly refers to it as "my insurance"; he had the insurance policies before him, and is presumed to have been familiar with the provision which accorded him the right to change the beneficiary; the truth of the matter is that he thought that the insurance was his to dispose of as he wished, regardless, and doubtless ignorant, of the provision in the policies designating his wife as the beneficiary. It seems clear that what the insured intended and attempted to do, in making his will, was not to change the beneficiary designated in the policies, but to dispose of the proceeds of all three policies available at his death, as if they had been made payable in that event to his executor, as much a part of his estate as the real estate or any other species of personal property; his action evinces no recognition of the fixed designation of the wife as beneficiary, nor a purpose to change it, nor an effort to comply with the provisions regulating a change of the beneficiary.

I do not think, therefore, that the cases which hold that under circumstances the designation may be altered by will have any application to the facts of the present case; they are generally, like the Hunter Case, cases where there is no direction as to the mode of changing the beneficiary; they all unmistakably evince a recognition of the designation and a plain purpose to change it.

The case of Hunter v. Hunter, 100 S.C. 517, 84 S.E. 180, strongly relied upon as sustaining the validity of the testamentary change of beneficiary, has more than one distinctly distinguishing feature from the case at bar. It was a case of tragic coloring; the insured was shot by the paramour of his wife as he was entering his own home to their surprise; he died the following day after having made a will bequeathing the proceeds of an insurance policy which had been payable to the unfaithful wife to his mother. In the contest between them, the court sustained the claim of the mother upon two grounds: (1) That under the terms of the policy the mother was as definitely designated as the wife; and (2) "But, even if I am wrong in this conclusion, and even if it should be held that the widow was named as beneficiary under the policy, she had no vested interest until the policy became due and payable, and the assured could, at any time, change the beneficiary by complying with the regulations of the order. No specific regulation as to the manner of designating a beneficiary in the first instance, or of changing a beneficiary already named, has been pointed out to me."

The court said: "The assured has, in a solemn manner, to wit, by his last will and testament, and by his declaration when in 'extremis,' undertaken to name his mother as sole beneficiary under the policy. In the absence of any specific regulation as to when and how one who is to receive the benefits under a policy is to be named in the first instance, or how substituted after one has been named, I hold that the plan pursued by Tom Hunter was a sufficient and valid designation of his mother as such beneficiary whether it was an original appointment, or a substitution for one previously named."

I think that it may be gathered from this decision that the assured, in order to make a change of beneficiaries effective, must comply with the prescribed mode; that, when no mode is prescribed, a designation of the substituted beneficiary will be recognized if "sufficient and valid"; that, under the circumstances of that case, the designation by will was "valid and effective." I do not apprehend that any one would contest the wisdom and justice of that decision. The insured was aware of the provision in the policy; he naturally was unwilling that the unfaithful wife should receive the insurance; he specifically provided in his will that, instead of her, his mother should receive it; he unquestionably evinced a recognition of the designation previously made and a distinct purpose to substitute another for the wife.

But, assuming that the insured in the execution of his will recognized the designation of a beneficiary in the policies, and evinced a purpose to change it, in all of the South Carolina cases that have come to my attention, where there is a method of changing the beneficiary provided in the policy contract, our courts have approved this right only where the mode prescribed in the policy was followed, or substantially followed.

In Bost v. Ins. Co., 114 S.C. 405, 103 S.E. 771, 772, opinion by the late Chief Justice Watts, it was declared: "By the terms of the policies the insured reserved the right to change the beneficiary, without the beneficiary's consent, and under this provision the beneficiary acquired, not a vested interest during the life of the insured, but only an expectancy. That expectancy could be defeated at any time during the life of the insured, by the insured complying with the provisions of the policy, in the manner provided for in the policy, whereby change of beneficiary could be made."

In Antley v. Ins. Co., 139 S.C. 23, 137 S.E. 199, 203, 60 A. L. R. 184, the court said: "The opinion of Mr. Justice Watts in the Bost Case makes the proper distinction and draws the correct conclusion." In Brown v. Ins. Co., 114 S.C. 202, 103 S.E. 555, 557, the court said: "Nor could the beneficiary be changed, except by strict compliance with the requirements of the policy in that respect."

In Taft v. Smith, 114 S.C. 306, 103 S.E. 551, an application for...