Mutual Benefit Life Insurance v. Willoughby

Mayes, C. J., delivered the opinion of the court. An extended discussion of the facts of this case seems unnecessary. In truth, there is very little room for dispute, in the attitude in which this record now comes to us, after the verdict of the jury finding that Mrs. Willoughby did not sign any of the documents leading up to the loan or surrender of the policy. In 1897 Julian H. Willoughby procured a policy of insurance on his life under a twenty-year payment plan, and named as beneficiary therein his wife, Mrs. Roberta Willoughby, in case she survived him, and, if she did not, the policy was then payable to the insured, his executors, administrators, or assigns. The insured died in 1908, and the beneficiary did survive him. In this aspect of the contention in this case, unless the beneficiary has done or acquiesced in something which defeats her rights in the policy as beneficiary, she is entitled to the full benefit of same.- There is nothing peculiar in the contract of insurance which is the subject of litigation in this case from other life insurance policies. The contract stipulates that, if the premiums thereon shall be paid twenty years, it then becomes a paid-up policy of insurance, and no further premiums are required to keep it up. The policy has certain provisions in it which provide for its non-forfeiture after two full annual premiums have been paid. It has certain stipulations giving it a loan value and a cash surrender value, and in case of a lapse of the policy after the second annual premium payment the contract provides for an automatic extension of the policy; the length of extension depending upon the number of premiums paid. All the premiums on the policy were paid by the insured until the year 1908. At that date a sufficient amount in premiums had been paid, according to the testimony, to automatically extend the policy until — 105 — February, 1914. The insured died on October 12, 1908. It is thus seen that the automatic -extension of the insurance carried the policy long past the date of the death of the insured. The main contention in this case is that the insured procured a loan, in accordance with the terms of the policy, in 1903, of the then loan value of the policy less the premium for the current year. Subsequently the premium for 1904 was paid on the policy, part in cash and the balance by an additional loan on the policy, which was the full loan value of same, and a new certificate of loan was executed, and the original certificate of loan, made in 1903, cancelled and returned. In 1905 the last premium was paid on the policy. On May 12, 1906, the insured wrote to the company that he was financially embarrassed and wanted to surrender the policy, because he was unable to pay the premiums. Accordingly, some time during the year 1906, the insurance company sent a check to the beneficiary and the insured of the then full cash surrender value of the policy of sixty-two dollars and twenty-eight cents and canceled the policy. All the applications for the loan on the policy were required by the company to be signed by the beneficiary and the insured — that is to say, Mrs. Willoughby and her husband — and were apparently so signed. When the checks were sent to cover the amount of the loan, they were made payable to the insured and the beneficiary, and both their names appear to have been indorsed on the check when it was collected at the bank. When the application was made for the cash surrender value, and the surrender receipt signed, it was required to be signed, and was apparently signed, by the husband and the wife, and the cheek made payable' to the husband and wife, and when collected from the bank they both apparently indorsed it. Mrs. Willoughby, the beneficiary, denies that she knew anything about the negotiations of the loans on the policy, or of the application for the sur — 106 — render of the policy, or the collection of any of the money paid on the loans or sent by the insurance company as a surrender value on the policy, and denies that she signed the checks with her husband, or any of the applications for loans, or the surrender receipt, or that she knew anything’ about it, or received any benefit in any way from any of the money so received. In short, her testimony is that all these signatures which purport to be of her name were made by the husband without her knowledge, acquiescence, or consent. These facts were submitted to the jury, and they have found as facts that Mrs. Willoughby knew nothing about these negotiations, did not consent, and did not sign the checks, or receive any of the money. We must therefore assume that, although Mrs. Willoughby was the beneficiary in the policy, Mr. Willoughby, the insured, undertook to collect and dispose of the benefits, of the policy without her consent. We held in the case of Johnson v. Bacon, 92 Miss. 156, at page 163, 45 South. 858; “ Where a life insurance policy is taken out for the benefit of named beneficiaries, it vests in the beneficiaries the absolute ownership, and it cannot be assigned, transferred, deposited as collateral security, or made in any way liable for the debts of the insured without the consent of the beneficiary expressly given. If there be any attempt to assign, transfer, or in any way dispose of the proceeds of the policy by the insured, or any attempt to make same liable for his debts, and it is done without the consent and authority of the beneficiary expressly given, it is as void as if the insured undertook to dispose of property belonging to an entire stranger; and this is true, whether the premiums are paid by a~ solvent or insolvent insurer. Jones v. Patty, 73 Miss. 179, 18 South. 794; Bishop v. Curphey, 60 Miss. 23; Cozine v. Grimes, 76 Miss. 300, 24 South. 197; Central Bank v. Hume, 128 U. S. 195, 9 Sup. Ct. 41, 32 L. Ed. 370; Pence, Admr., v. Makepeace, 65 Ind. 345; — 107 — Hendrie & Blotfoff Mfg. Co. v. Platt, 13 Colo. App. 15, 56 Pac. 209; Stigler’s Ex’x v. Stigler, 77 Va. 163; Bank v. Williams, 77 Miss. 398, 26 South. 965.” And in Bank v. Williams, 77 Miss. 398, 26 South. 965: “Where the policy designates a person to whom the insurance money is to he paid, the person who procures the insurance, and who continues to pay the premiums, has no authority; by will or deed, to change the designation or title to the money. He is under no obligation to continue to pay the premiums, unless he has covenanted so to do; but, if he does so, the person originally designated in the policy will derive the benefit.” From the above authorities it is seen that this court has already held that the right of the beneficiary named in an insurance policy to the proceeds of the policy is absolute; that is to say, the right to the benefits under the policy during the life of the contract cannot be destroyed by the insured, or disposed of, except with the consent of the beneficiary. Of course, the party taking out the policy cannot be forced to pay the premiums thereon, and in this way the policy may be destroyed; but so long as the policy has any living force all rights accruing under same and all values belong to the beneficiary. But counsel for appellant argue that the rule announced by this court in the authorities above quoted has application only to an ordinary life policy, where there are no such incidents attached as loan value, cash surrender values, and automatic paid-up insurance, etc. We are unable to draw any distinction, in principle, whatever may be the nature of the contract, when there is a named beneficiary in the contract of insurance. It may be possible to so draw a contract of insurance as to leave in the insured a right to collect and appropriate the loan, or cash surrender value of a policy; but the contract must' be a different contract from the one in this case. The contract of insurance is taken out for the benefit of the named beneficiary in the contract. The — 108 — beneficiary gets all tbe benefits of tbe contract, and tbe legal right of the beneficiary is not changed by reason of the fact that the contract gives certain beneficial incidents that may give to the contract of insurance a cash value during the life of the insured, unless the contract is so worded as to reserve the cash value of the policy to the insured in case he chooses to take it. The beneficiary in the policy is in every true sense the owner of the policy, and the insurance company recognizes this by requiring the beneficiary to sign when any loan is made on the policy, or any surrender value paid. The beneficiary may not be the owner of the policy in the sense that the written contract is actually delivered to the beneficiary to be kept in custody; but the beneficiary is entitled to the benefits under the contract, and is in every true sense the owner in law. It is probable that the beneficiary cannot obtain the loan value of the policy without the consent of the insured; it is probable that the surrender value cannot be obtained without the consent of the insured; but if either value is obtained, it belongs to the beneficiary. . Counsel for appellant argue to the court that the principle that, where one or two innocent persons must suffer a loss, the loss must be borne by the one who by conduct, acts, or omissions has made possible the loss; but it is our view that this principle has no application to this case. The argument assumes the existence of facts warranting its application, when the facts do not exist. The fact that Mr. Willoughby was the husband of the beneficiary, and procured the life insurance policy .for her benefit, and afterwards, in disregard ■ of her right and without her acquiescence, undertakes to dispose of the policy, certainly creates no estoppel on her part to assert her rights under the policy. If we should hold that, after one has procured a policy of insurance in favor of a named beneficiary and then disregards the rights of the beneficiary and disposes of the proceeds — 109 — of the policy, such beneficiary would be estopped from asserting any claim under the policy, the cases of Bank v. Williams and Johnson v. Bacon, supra, and all the law declared by this court on this subject would be nullified. When the husband procured the loan on the policy, under the facts of this case as found by the jury, he had no authority so to do. He was not the agent of his wife, was not acting for her, and, not being her agent for the purpose of negotiating this loan, or cancelling the policy, he had no authority, either real or apparent, and, of course, could not have been acting within the scope of any authority, because he did not have any. This case is not without its hardships; but, while this is true, the insurance company was bound to protect itself from fraud, and, if it did not, Whatever may be the morale of the question involved, the law of the land is with appellee. The hardship on the insurance company is no greater in requiring them to pay the proceeds of the policy than would be the hardship on Mrs. Willoughby, should she be required to lose the benefit of the policy on which she claims to have helped pay the premiums by teaching, because of the misdoing of the husband, of which she had no knowledge and to which she did not consent.' The instructions in this case are free from error, and the case is affirmed.