Carpenter v. Knapp

Kinne, C. J. 1 2 [723] Counsel have exhaustively and ably argued many interesting questions arising upon this record. In our view, however, the controlling question in the case is, as to the right of Clarence C. Knapp to assign the certificate to the intervener. If he had no such right, then it is clear, that intervener is not entitled to the fund in controversy. We proceed, therefore, to a consideration of that question. At the outset it should be said, that the object of the association, as stated in its articles of incorporation, is “benevolent and mutual assistance among its members and their families, or designated beneficiaries, by the collection of dues and assessments, and disbursement at the death of its members, or at stated periods, less cost of maintaining association.” (The italics above are ours.) The certificate of membership provides, that upon proper proof of the death of a member being made, and in case he dies within ten years from the date of the issuing of the certificate, the association will pay to' “Clarence C. Knapp, or, in case of —— death before that of said assured, then to executors, administers, or assigns of said member, * * * the proceeds of one assessment. * * *” It also provides, that upon the surrender of the certificate by the “aforesaid member or legal holder, after having been kept in force for a period of ten full years the * * * association will pay to said member or legal holder, his full share of the endowment fund of said association, not exceeding one thousand dollars.” It is also provided that “in case of assignment of the [724] within certificate, the beneficiary must consent thereto, and said assignment must be approved by the secretary of the association; otherwise the assignment shall be void.” There is no express provision in the certificate, articles of incorporation, or by-laws authorizing a change in the beneficiary, unless some of the provisions heretofore set out can be construed to give such authority. It is the general rule that a beneficiary under an ordinary life policy takes a vested interest therein at the moment the policy is executed and delivered, which cannot be impaired or defeated by any act of the assured, or of the assured and the com-, pany, to which said beneficiary does not assent. 13 Am. and Eng. Enc. Law, page 655; Bacon, Ben. Soc., section 292; Bliss, Ins., section 318; May, Ins., section 399, L.; Bidwell, Ins., section 285; Harley v. Heist, 86 Ind. 196; Damron v. Insurance Co., 99 Ind. 478; Assurance Fund v. Allen, 106 Ind. 593 (7 N. E. Rep. 317); Thomas v. Lodge (Wash.) 41 Pac. Rep. 882. It follows that such policies may be assigned, unless such act be contrary to the statute, the articles of incorporation or by-laws of the company, or to the provisions of the policy itself. 13 Am. and Eng. Enc. Law, page 646; Bidwell, Ins., section 268; Bacon, Ben. Soc., section 297; Plummer v. Bank, 65 Iowa, 405 (21 N. W. Rep. 699); McClure v. Johnson, 56 Iowa, 620 (10 N. W. Rep. 217). Appellant contends that the assured, in the case at bar, is given no authority, by the certificate, by-laws, or articles of incorporation, to change the beneficiary, hence, the beneficiary named in the certificate had a vested interest in it the moment it was issued. In other words, he says that no right has been reserved to the assured, in the contract or laws of the association, to change the beneficiary; therefore none exists; and the rights of Clarence C. Knapp would be the same, as to the assignment of the policy, as in case of an ordinary life policy. Appellant’s conclusions -do [725] not necessarily follow, even if the fact be as he claims. It is true that the rights of the assured are to be determined from the contract, and the contract embraces the certificate, by-laAvs, articles of incorporation, statute law, if any, and such rights as necessarily inhere in membership in such an associaation. Noav, if the contract be silent as to the rights of the assured to change his beneficiary, what right has he in that respect? It is also true that, in most of the cases in which it has been held that the assured had a right to change the beneficiary, it will be found that the contract expressly reserved such right to the assured; and that is true as to every such case decided by this court. The question, therefore, as now presented, is an open one in this state. In Niblack, Ben. Soc. section 212, it is said that it has been held with substantial unanimity, wherever the question has arisen, that in mutual benefit societies the member may change his beneficiary without other limitations or restrictions than such as are imposed by law, the articles of incorporation, the by-laws, or the certificate. In other words, the general doctrine is said to be that the assured has a right to change the beneficiary unless the contract or statute provides to the contrary. In Society v. Burkhart, 110 Ind. 192 (10 N. E. Rep. 80), it is said: “The general rule applicable to beneficiary or charitable associations is that' the beneficiary acquires no vested rights to the benefits which accrue upon the death- of a member, until the death occurs. During his lifetime the member may therefore exercise the power of appointment without other limits or restrictions except such as are imposed by the organic law, or by rules and regulations of the society duly adopted in compliance therewith.” In Assurance Fund v. Allen, 106 Ind. 593 (7 N. E. Rep. 317), the court said; “The weight of authority * * * [726] is in favor of the general doctrine that beneficiaries may be changed in cases where policies like the one before us are issued by such o associations as the present, and that in this respect such policies are not governed by the general rule which govern, ordinary insurance contracts.” Many cases are referred to in support of the above holdings. Thomas v. Lodge, (Wash.) 41 Pac. Rep. 882, was a case of a mutual benefit certificate, and it was held that the insured had the right at any time during his lifetime to change the beneficiary. On the trial a question arose as to whether a certain by-law, which gave the members the right to change the beneficiary named in the certificate, was in evidence, so that it might be considered. The court held, in effect, that it was immaterial whether it was in evidence or not, and said: “It will be presumed that he had full right to control the benefit, until the contrary is made to appear. The authorities upon this proposition are not entirely uniform, but, as above suggested, a great majority of the cases have so held." Referring to the statements, sometimes found in the cases, that it is difficult to assign any reason for the distinction between such certificates and the ordinary life policies as to the right of the assured to change the beneficiary, the same court says: “This may be true, but one good reason suggests itself, and that is that these certificates are not in themselves an absolute contract, which could, under the constitution and by-laws of the order, be entered into with any person. Under such constitutions and by-laws, these beneficiary certificates can only be issued to members. Hence it seems reasonable that anything which would affect the right to membership would affect the right to the beneficiary certificate, and that, since the membership can at any time be changed by the member without the consent of the beneficiary, he can also change the certificate. [727] Upon reason and authority, the beneficiary certificate should be presumed to be within the control of the members.” See, also, Hoeft v. Lodge (Cal.) 45 Pac. Rep. 185. Such associations are distinguishable from ordinary life insurance companies in many respects. By membership in such associations the assured obtains certain rights which inhere in the organization. So the class or classes of beneficiaries in them is limited, and such provisions, while in entire harmony with the object and purpose of such associations, are incompatible with the theory of regular life insurance, wherein the beneficiary, on the issuance of the policy, obtains a vested right therein. We conclude, therefore, in the absence of any provisions in the certificate, by-laws, articles of incorporation, or statute either providing expressly for a change of beneficiary or prohibiting such change, that by reason of the character and purposes of such associations it should be held that the power to change the beneficiary is vested in the member assured during his lietime. Fischer v. Legion of Honor (Pa. Sup.) 31 Atl. Rep. 1089; Voigt v. Kersten (Ill. Sup.) 45 N. E. Rep. 545. 5 II. From what has already been said, the conclusion follows that Clarence O. Knapp could have had no assignable interest in the certificate issued upon the life of J. T. Knapp, because he had no vested interest therein, as the power to change the beneficiary vested in the assured during his lifetime. That conclusion is sustained when we come to consider more carefully the character of the contract before us. It is what is called an “endowment certificate.” By its terms the assured, in case he is alive at the expiration of the endowment period, becomes entitled to his full share of the endowment fund of the association, upon surrendering the certificate. If the- assured dies prior to the expiration of the endowment period, and [728] Clarence C. Knapp survives him, upon furnishing proofs of death of said assured, said Clarence C. Knapp is entitled to the benefits of the policy. If the assured dies during the endowment period, and Clarence C. Knapp is not then alive, then the sum due is to be paid to the executors, administrators or assigns of the assured. Such a certificate, it seems to us, must of necessity be under the control of the assured until his death. How can it be claimed that Clarence C. Knapp had a vested interest in this certificate prior to the death of the assured, and within the limit of the endowment period? At the expiration of the endowment period, the ten years, if J. T. Knapp was living, he had the absolute right to deliver up the certificate and receive the endowment provided for therein. Such an act on his part would have satisfied the obligation of the association. So long as the assured was alive, and the endowment period had not expired, it could not be said that the assured might not outlive such period, and thus become the sole beneficiary under the certificate. Therefore it seems to us that during the entire endowment period, while the assured lived, he must be held to have the absolute right of control of the certificate, as against Clarence C. Knapp, and the latter could, within said time, have no vested right therein; hence his assignee, the intervener, took nothing by the assignment from Clarence C. Knapp. Under such a policy it is said the rights of the beneficiary named, who is to be paid the proceeds of the certificate in case of the death- of the assured before the expiration of the endowment period, do not attach until the decease of the assured within such period. 2 May, Ins., section 390, P, and cases cited. And see, also, as bearing somewhat upon this question, Insurance Co. v. Armstrong, 117 U. S. 591 (6 Sup. Ct. Rep. 877); Tennes v. Insurance Co., 26 Minn. 271 (3 N. W. Rep. 346); Evers v. Association, 59 Mo. 429. [729] 6 III. If the contract authorized the assured to change the beneficiary, then there can be no doubt that Clarence C. Knapp could acquire no vested interest therein during the lifetime of the assured, and hence could not make an assignment which would carry any interest therein to the intervener, unless by virtue of other provisions which may be claimed to modify the contract in that respect. The authorities are uniform in holding that when the right to change a beneficiary is reserved in the contract, and in the absence of other controlling provisions, the beneficiary named in the certificate acquires no vested interest until the death of the assured, and prior to that time the assured may change the beneficiary at will. Bacon, Ben. Soc., section 289; Niblack, Ben. Soc., section 212; Brown v. Lodge, 80 Iowa, 287 (45 N. W. Rep. 884); Hirschl v. Clark, 81 Iowa, 200(47 N. W. Rep. 78); Schmidt v. Association, 82 Iowa, 304 (47 N. W. Rep. 1032); Richmond v. Johnson, 28 Minn. 447 (10 N. W. Rep. 596); Byrne v. Casey, 70 Tex. 247 (8 S. W. Rep. 38); Sabin v. Phinney, 134 N. Y. 423 (31 N. E. Rep. 1087); Association v. Priest, 46 Mich. 429 (9 N. W. Rep. 481); Hellenberg v. Order, 94 N. Y. 580; Society v. Burkhart, 110 Ind. 189 (10 N. E. Rep. 79); Association v. Brown, 33 Fed. Rep. 11; May, Ins., section 399, L; Smith v. Society, 123 N. Y. 85 (25 N. E. Rep. 197); Assurance Fund v. Allen, 106 Ind. 593 (7 N. E. Rep. 317). 7 IY. Is there anything in this contract which modifies the general rule above stated? Appellant contends that the provision on the back of the policy, that “in case of assignment of the within certificate, the beneficiary must consent thereto, and said assignment must be approved by the secretary of the association, otherwise.the assignment shall be void,” — limited the right of the «assured to change the beneficiary, and hence Clarence 0, Knapp [730] took a vested interest in said certificate. It is conceded that the assignment above mentioned refers to an assignment made by the assured, not to one made by the beneficiary; and that is, no doubt, a correct construction of the contract. Attention is called to the case of Hirschl v. Clark, 81 Iowa, 200 (47 N. W. Rep. 78), wherein it was said that a change of beneficiary was the same thing, in effect, as an assignment. Hence it is claimed that the word “assignment," used above, embraced also a change in the beneficiaries made by the assured, and therefore he could not thus change without the consent of the beneficiary. We do not so regard it. Bearing in mind the fact that under the other provisions of the contract, and in view of the nature of the association, the assured had a right to change the beneficiary, we should not be justified in so construing the language under consideration as to deprive him of such right, unless such was plainly the intent, and unless there is no other way in which force and effect can be given to all of the provisions of the contract. If the word “assignment” be given its ordinary meaning (that is, of a formal transfer of the certificate from the assured to another person), the language used is given force and effect without limiting the right of the assured to change the beneficiary. We think it is clear from the words used that it was not intended to limit the power possessed by the assured to change the beneficiary at will during his lifetime. The language is, “In case of assignment of the within certificate," etc. These were apt words to protect the company from having the certificate assigned to a third person without their knowledge. They intended that no assignment should be made of the “within certificate” unless the beneficiary named therein consented, and not then until it was approved by the secretary of the association. The provision was chiefly intended for the protection of the association, It [731] would not be necessary in case the assured should change the beneficiary named in the certificate, because such formal change could only be made by notifying the association in some manner, and ordinarily it would be evidenced by a new certificate. There was therefore no limitation upon the right of the assured to change his beneficiary. Hence we need not determine what the effect might be of an assignment made without the consent of the beneficiary, and not approved by the association. [731] V. By section 7, of chapter 65, Acts Twenty-first General Assembly, which relates to mutual benefit associations, it is provided: “No corporation or association organized or operating under this act, shall issue any certificate of membership or policy to any person * * * unless the beneficiary under said certificate shall be the husband, wife, relative, legal representative, heir or legatee of such insured member, nor shall any such certificate be assigned, except an endowment certificate, and any certificate issued or assigned made in violation of this section shall be void. Any member of any corporation, association or society operating under this act shall have the right at any time, with the consent of such corporation, association or society, to make a change in his beneficiary without requiring the consent of such beneficiary.” Counsel discuss the questions of the applicability of this act to the case before us. The certificate in this case was issued prior to the passage of the act in question. If, as we hold, Clarence C. Knapp had, irrespective of this statute, no vested right in the certificate of insurance issued upon the life of his brother during said brother’s lifetime, then the attempted assignment of said certificate during the brother’s lifetime cast no rights upon the intervener. We need not, therefore, give this statute further consideration, We do not understand from the argument [732] of counsel that any claim is based upon the assignment made after the death of the assured. We hold that there was no inhibition, in the certificate, articles of incorporation, by-laws, or statutes which apply to this case, against the' assured changing the beneficiary during his lifetime; that, in the absence thereof, he had a right to change the beneficiary; that, in view of the purposes of the order, it was intended to confer such right upon the assured; that, under an endowment certificate like that at bar, the rights of the beneficiary named in the certificate do not attach until the decease of the assured, if he die within the endowment period. It follows that Clarence C. Knapp never had a vested interest in the certificate of his brother which he could assign during the brother’s lifetime, and therefore the intervener took nothing by the assignment relied upon. The title to the fund in court was therefore in Clarence C. Knapp, and subject to plaintiff’s attachment. We are agreed that the appeal of the intervener is properly before us for consideration, and, as upon the merits of the case is determined in plaintiffs’s favor we do not discuss the questions raised by his appeal. As the matters already considered are conclusive as to the rights of the parties, we are not justified in extending this opinion by the discussion of many other questions argued by counsel. On .both appeals the judgment and decree below are affirmed.