Zolintakis v. Orfanos

• Decision Date: 31 March 1941
• Docket Number: No. 2206.,2206.
• Citation: 119 F.2d 571
• Parties: ZOLINTAKIS v. ORFANOS.
• Court: U.S. Court of Appeals — Tenth Circuit

119 F.2d 571 (1941)

ZOLINTAKIS v. ORFANOS.

No. 2206.

Circuit Court of Appeals, Tenth Circuit.

March 31, 1941.

H. L. Mulliner and Parnell Black, both of Salt Lake City, Utah (Calvin W. Rawlings and H. E. Wallace, both of Salt Lake City, Utah, on the brief), for appellant.

P. T. Farnsworth, Jr., of Salt Lake City, Utah (Edgar C. Jensen, of Salt Lake City, Utah, on the brief), for appellee.

Before PHILLIPS, MURRAH, and WILLIAMS, Circuit Judges.

MURRAH, Circuit Judge.

On January 29, 1934, the Equitable Life Assurance Society of the United States issued and delivered to James Orfanos¹ a policy of insurance on his life in the sum of $7,500, and providing for double indemnity in the event death was caused by accident. He made his brother, Christ Orfanos,² beneficiary, but reserved the right to change the beneficiary. On July 23, 1934, at the request of the insured, Peter Zolintakis, whose executor is the appellant here,³ was made beneficiary under the policy. On July 14, 1935, the insured died by accident.⁴ Peter Zolintakis, as beneficiary, filed suit for the face amount of the policy; the trial court directed a verdict in favor of the insurance company and this court reversed the judgment. See 10 Cir., 97 F.2d 583.

After the case was remanded Christ Orfanos, as administrator of the estate of James Orfanos, the insured, intervened, asserting his rights to the proceeds of said policy, contending that appellant's interest in the insurance was limited to the amount of a loan which the appellant had made to the insured, and that the designation of appellant as beneficiary and the delivery of the policy was solely as security for the loan.

The administrator asked the court to declare the appellant trustee for the use and benefit of the estate of said insured of any amount recovered by the appellant from the insurance company in excess of the debt of insured to beneficiary appellant. The administrator further asked that the estate be declared the real beneficiary in the policy of insurance and for judgment against the company in the sum of $15,000.00, less the sum owing to the appellant on the loan.

The appellant beneficiary moved to dismiss the petition of intervention. The motion was denied and the appellant answered the complaint in intervention by asserting that since the 23rd day of July, 1935, the appellant, Peter Zolintakis, had been the legal and lawful beneficiary of the policy of insurance and entitled to the proceeds thereof, and asked that the intervening administrator take nothing.

The case was tried and the insurance company again prevailed. The appellant and intervening administrator appealed. This Court reversed solely on the question of the liability of the insurance company. See 10 Cir., 108 F.2d 902. Thereafter, the insurance company paid the face amount of the policy, plus interest, into court and this case is between the appellant, as designated beneficiary in the policy, and the intervening administrator, as appellee.

The appellee contends that the subject matter of this suit was adjudicated on the second appeal (10 Cir., 108 F.2d 902), and in effect says that the issues raised between the parties here were determined by the trial court by its former judgment; that this is in effect a retrial of the facts in this case.

With this contention we cannot agree. An examination of the trial court's judgment, and the decision of this court on appeal, conclusively shows that although the controversy between the administrator and the beneficiary was drawn in issue, the trial court "reserved" the question and did not decide the issue which now constitutes the subject matter of this suit. This is evidenced by the judgment of the court denying recovery to either the beneficiary or the administrator and a judgment for the defendant insurance company. Lack of adjudication is further shown by the retrial of the case pursuant to remand (10 Cir., 108 F.2d 902), and the judgment of the trial court, which is the basis of this appeal.

We conclude that the issues between the administrator and beneficiary have not been adjudicated and are presented here for our decision.

The pertinent facts show that the insured was an itinerant unmarried person of Greek nationality. At the time the policy of insurance was issued to him he was not steadily employed, had no substantial income and at the time of his death was living in poverty. The policy was sold to him by a Greek insurance salesman, who was the son-in-law of the appellant beneficiary. The beneficiary was a Greek and insured had lived at his home from time to time as a friend. Their social contact appears to have been somewhat close.

The policy of insurance was large ($7,500 and $15,000 for accidental death), when considered in the light of the financial ability of insured to pay the premiums thereon. Before the first semi-annual premium was due in July, 1934, the insured sought to borrow money from his brother who was at that time beneficiary, and living in the State of New Mexico. His brother refused to advance the money. He then unsuccessfully sought to borrow the money from the agent to pay the premium. He approached the appellant, who did advance the money to pay the premium in July, 1934, in the sum of $137.10.

Soon after this advance, at the request of the insured, the appellant was designated as beneficiary in the policy, and the policy of insurance was delivered to appellant beneficiary. In January, 1935, again at the request of the insured, the appellant advanced a like sum to pay the semi-annual premium then due.

The exact understanding and agreement between insured and appellant before, and at the time, the money was advanced to pay the first premium and pursuant to which the appellant was designated beneficiary, and the manner and purpose of the designation of the appellant as beneficiary, are debatable.

It is fairly conclusive that the insured contemplated lapsing the policy. The appellant sought and obtained advice from his son-in-law, who had sold the policy, concerning how he could be protected in the event of insured's death, if he advanced the money to pay the premiums. He learned that if he were made beneficiary in the policy he would be entitled to the proceeds of the policy in event of insured's death. After this understanding was verified by the insured he advanced the money and the premiums were paid.

Appellant testified on three different occasions concerning this transaction. He could not speak English and his testimony was adduced through an interpreter. He testified first that the money advanced was a "loan", but the interpreter testified that in translating the questions and answers he made no fine distinction in the use of the word "loan". At other times he testified, through the interpreter, that "I gave him the money to help him out." Obviously, it was the purpose of counsel for the administrator to use the word "loan" in its technical sense.

Appellant further testified: "He told me he needed the money to pay the insurance and that is why I give him the money, and make me the beneficiary." Whether the money advanced was considered a "loan" or "money to help him out", it is certain it was advanced for the purpose of paying the premiums on the policy, with the understanding that the appellant should be made the beneficiary in the policy. If there was an agreement to repay the money advanced there was no time fixed for its repayment, but in the event of repayment the policy would be redelivered to insured. The conduct of the parties conclusively shows these facts. When the matter was mentioned in conversation between appellant and insured concerning the money advanced, the insured stated in substance: "Why should you worry, if I die you get the money."

In the course of his opinion the trial court significantly stated: "* * * Now, if the policy were returned, of course it is possible that Orfanos (insured) would have continued him as the beneficiary entitled to the insurance stated in the policy in case of death, but the question is: was he made beneficiary as such permanently or was it in respect to the loan that was then made?"

The trial court held that the money advanced was a loan; that the appellant was designated beneficiary, and the policy delivered to secure the payment of the loan, and "under that state of facts the law would raise the question of trusteeship." The court further held that the appellant was trustee for the proceeds of the policy in excess of the amount of the loan in the sum of $407.61.

In our view, the result does not turn on the question of whether or not there was a loan by the appellant beneficiary to the insured, in consideration for which the appellant was made beneficiary, but rather does the existence of the debtor-creditor relationship, created by the loan, limit the otherwise unqualified and vested right of the beneficiary to the proceeds of the policy upon maturity of the contract.

The answer to this question hinges upon the purposes and intent of the insured in designating the appellant as beneficiary and delivering the policy to him.

It is pertinent to note that from the underlying facts the insured was not prompted to take out this policy of insurance for the purpose of discharging his obligations to dependents — he had none. The primary incentive was his personal welfare. So in considering the question of the beneficiary's right to take under the policy we are not the guardians of widows and orphans. There are no equities to balance the scales of justice.

The administrator admits the indubitable right of the insured to change the beneficiary in the policy at will; that the intention of the insured as to who will be the beneficiary, when ascertained, must be given effect. Neither the former beneficiary, nor this beneficiary, had any vested right in the policy, but only an expectancy. Upon maturity of the contract the beneficiary therein became vested with a right to the...