Teague v. Pilot Life Insurance

CONNOR, J. Charity McDaniel, wife of the insured, and beneficiary in each of the policies of insurance issued by the Pilot Life Insurance Company on the life of T. M. McDaniel, her husband, at the date of their issuance, died before the death of the insured. By the terms of said policies, her interest therein at her death vested in the insured, who survived her, subject, however, to his right thereafter to change the beneficiary in accordance with the provisions of said policies. If no change of beneficiary was thereafter made by the insured, at his death the amounts due on the policies were payable, according to the terms of the policies, to the executor or administrator of the insured, to be administered by such executor or administrator as assets of the estate of the insured. In that case, the said amounts would be applied first to the payment of claims of creditors of T. M. McDaniel, deceased. The contention of the defendants on their appeal to this Court, that if upon the facts alleged in the complaint and admitted by their demurrer, a change of beneficiary in both of the policies of insurance sued on in this action was made by the insured, by which the plaintiff became the beneficiary in both policies, such change was void as to the creditors of the insured, cannot be sustained. It is provided by statute in this State that “when a policy of insurance is effected by any person on his own life, or on the life of another in favor of some person other than himself, having an insurable interest therein, the lawful beneficiary thereof, other than himself or his legal representatives, is entitled to the proceeds against the creditors and representatives of the person effecting the insurance.” C. S., 6464. By reason of the provisions of this statute, it was held in Pearsall v. Bloodworth, 194 N. C., 628, 140 S. E., 303, that where the insured in a policy of life insurance, payable at his death to his estate, procured a change of beneficiary in said policy in accordance with its provisions, by which his wife became the beneficiary, such change was not void as against creditors although at the date of the change made at his request, the insured was insolvent. The insurable interest covered by a policy of insurance on the life of the insured, who applied for and paid the premiums on the insurance, is the interest which the insured has in his own life; the amount due by the terms of the policy is indemnity for the loss which the insured sustains by his death, and is payable to the beneficiary not as an indemnity for his *455 loss by the death of the insured, but as a' bounty in accordance with the direction of the insured. Howell v. Ins. Co., 189 N. C., 212, 126 S. E., 603. In the instant case, if the plaintiff is the lawful beneficiary in the policies of insurance issued by the Pilot Insurance Company on the life of the insured, he is entitled to the proceeds of said policies as trustee and not as executor of T. M. McDaniel, deceased. In that case, the creditors of the insured have no interest in the proceeds of the policies. Defendants contend, however, that on the facts alleged in the complaint, plaintiff is not the beneficiary in said policies, and is therefore not entitled to recover in this action, for the reason that the requests, in writing, of the insured that the beneficiary in said policies be changed from Charity McDaniel, his wife, to the plaintiff, was not received by the Pilot Life Insurance Company, at its home office, until after the death of the insured, and that the change of beneficiary requested by the insured was not endorsed on either policy by said company. Each policy provides, in effect, that no change of beneficiary by the insured, as authorized by its provisions, shall become effective until notice in writing of such change, accompanied by the policy, has been received by the company, at its home office, and such change has been endorsed on the policy by the company. This provision is manifestly for the protection of the company; in the event of the death of the insured, while the policy is in full force and effect, the company is thus advised as to who is lawfully entitled to the amount due on account of the policy, and may pay such amount to such person, and thereby he discharged of liability under the policy. It has been held by this Court that where there has been a substantial compliance by both the insured and the company with a provision in a policy of life insurance, authorizing a change of beneficiary therein by the insured, the change is effected, and a payment by the company of the amount due under the policy to the new beneficiary, will discharge the company of liability to the original beneficiary. Wooten v. Order of Odd Fellows, 176 N. C., 52, 96 S. E., 654. In his opinion in that case, Walker, J., with his usual fullness and accuracy, declares the law to be as follows: “It is now considered that an insurance company may make reasonable rules and regulations by which the insured may change the beneficiary named in the policy of insurance, or his certificate in case of benefit societies, and that such rules and regulations become a part of the contract. Where the policy or rule of the company, or society, provides that such change may be made in a particular way, the method prescribed should be followed, hut if the insured has done substantially what is required of him, or what he is able to do, to effect a change of *456 beneficiary, and all tbat remains to be done are ministerial acts of the association, the change will take effect, though the formal details are not completed before the death of the insured. It must be understood, however, that some affirmative act on the part of the insured to change the beneficiary is required, as his mere unexecuted intention will not suffice to work such a change. When the right to substitute another beneficiary exists by express reservation, or otherwise, the insured or member of a benefit society, may, without the consent of the original beneficiary, and subject only to the rules of the association, change his beneficiary at will. Pollock v. Household of Ruth, 150 N. C., 211, 63 S. E., 940. This is true, because the beneficiary whose right, under the policy or certificate, may thus be taken away, has only a contingent interest therein, which will not vest until the death of the insured. The revocation of his appointment as beneficiary does not require his consent, as the power to displace him is vested solely in the insured, provided he proceeds in substantial compliance with the rules of the association, which may be waived by the company or society, where they are made for its benefit or protection.” The law in other jurisdictions, applicable to the decision of the question presented by this appeal, is stated in 37 C. J., at p. 584, in section 350(b). The text in this section is supported by abundant citations of authoritative judicial decisions. It is there said: “On the principle that equity regards as done that which ought to be done, the courts will give effect to the intention of insured by holding that the change of beneficiary has been accomplished where he has done all that he could to comply with the provisions of the policy, as where he sent a proper written notice or request to the home office of the company, but was unable to send the policy by reason of circumstances beyond his control, as where it has been lost, or was in the possession of another person who refused to surrender it or was otherwise inaccessible, or where he sent both the policy and a proper written notice or request and all that remained to be done were certain formal and ministerial acts on the part of the company, such as the endorsement of the change on the policy, and these acts were either not done at all or were done after the death of insured.” On the facts alleged in the complaint in the instant case, the judgment overruling the demurrer is sustained, on the authority of Wooten v. Odd Fellows, supra, and in accordance with principles of law generally recognized as just and equitable. See State Mutual Life Asso. v. Bessett et al., 41 R. I., 54, 102 Atl., 727, L. R. A., 1918c, 961. The judgment is Affirmed.