11782 | S.C. | Jun 10, 1925
Lead Opinion
June 10, 1925. The opinion of the Court was delivered by Suit was begun in the Court of Common Pleas for Richland County, in January, 1923, by the respondent against the named insurance company, to recover the sum of $6,838.34, the commuted value of an insurance policy issued on the life of Charles H. Barron. By order of Court, the insurance company was permitted to pay into Court the amount in controversy, and thereupon the bank was substituted as the real defendant. During the life of Barron he had deposited the policy with the bank as collateral security to a note. Upon his death, the proceeds of the policy were claimed by Mrs. Barron as beneficiary and by the bank under its collateral note.
The foregoing facts being undisputed, the cause, was submitted to his Honor, Judge Townsend, for decision. Under this decree, the plaintiff, Mrs. Barron, was awarded the money so deposited with the clerk, and hence this appeal by the bank.
By five exceptions, error is imputed to the presiding Judge, all of which, however, make the sole point that the bank is entitled to the fund. The respective rights of the parties will therefore be considered.
We may say at the outset that we approve the decree of Judge Townsend, and, but for several late cases not referred *449
to by him, we would adopt his decree as the opinion of this Court. There are three cases reported in 114 S.C. all bearing on the point here in controversy: Brown v. LifeIns. Co.,
The Brown Case reviews the authorities relative to the vested right of the beneficiary, and concludes as follows:
"The insured and the insurer could not impair the rights of the plaintiff under the policy, by a subsequent contract to which she was not a party. Nor could the beneficiary be changed, except by strict compliance with the requirements of the policy in that respect."
In Taff v. Smith, the Court recognizes the force of the same rule, and holds that the rights of the beneficiary vested upon the execution of the policy. Under a reserved right to change the beneficiary, the insured complied with all the conditions of the policy, but could not send in the policy for indorsement by the insurance company because it was wrongfully withheld by the original beneficiary. The change of beneficiary was never indorsed on the policy. As this was no fault of the insured, the Court, with equitable aid, sustained the claim of the new beneficiary. This decision did not in any respect depart from the recognized law of this State.
Bost v. Insurance Company is the third one of the cases reported in 114 S.C. At first glance it would appear to work a departure from the recognizedly established rule in South Carolina, but such is not the case. In that case it is shown that the policy contained the usual clause as to change of beneficiary upon written notice to the company and indorsement by the company. It also contained the following clause:
"This policy is issued with the express understanding that the insured may, without the consent of the beneficiary, receive *450 every benefit, exercise every right, and enjoy every privilege conferred upon him by this policy."
Under this provision the Court held that the right of the beneficiary was not vested but expectant; that the insured had the right to change the beneficiary by complying with the terms of the policy. But the Bost Case was not one seeking a change of the beneficiary. It was for cancellation. The privilege of cancellation was one of the recognized rights of the insured. It may be that he would have had this right without the consent of the beneficiary, even without the reserve clause. However, as he certainly had it under the reserve clause, we are not called upon to decide that point. Moreover, Bost complied with all the terms and conditions relative to a cancellation.
The right to change the beneficiary according to the term of the policy, while a reserved right, was obliged to be accomplished in the manner set forth in the policy. If the reserve clause set forth above gave Barron absolute control of the policy, then the method of changing the beneficiary by written notice and indorsement amounts to nothing, and may as well have been omitted. Both clauses must be read together, and the reserve clause relates only to privileges, etc., conferred upon him by the policy. One of these was the right to change the beneficiary only in the manner prescribed. As this was not done, we see no reason in law why the plaintiff should be deprived of her rights as beneficiary under the policy.
The judgment of the Circuit Court is affirmed.
MESSRS. JUSTICES WATTS and FRASER concur.
MR. CHIEF JUSTICE GARY and MR. JUSTICE THOMAS P. COTHRAN did not participate.
Dissenting Opinion
I think, under the express terms of this policy, Barron, the insured, had a perfect right to assign the policy without the consent of the beneficiary, and that the pledge of the policy with the bank was, as between the pledgee and Barron or any one claiming *451
under him, as beneficiary or otherwise, a valid transfer of the policy. The conditions of the policy contract as to form of an assignment, etc., were intended for the benefit and protection of the company (25 Cyc. 770, 771, 772), not for the protection of the beneficiary who, at the time of the pledge, had only an expectant, not a vested, interest in the policy. Bost v. Volunteer State Life Ins. Co.,
To a case of this character the provisions of Section 4099, Code 1922, Vol. 3, are inapplicable. That Section, as I think, was plainly intended to protect the beneficiaries therein *452 named, the wife and children of an insured, from the claims of the representatives of the husband, or his creditors, in so far — and in so far only — as might be necessary to prevent the diversion of the proceeds of such life insurance to the payment of general creditors and claimants. Within the limits prescribed by that section, an insolvent husband and father has the right to provide for his wife and children by carrying life insurance. But the statute does not prevent him from exercising the reserved right of pledging such a policy to obtain money to provide for his wife and family during his life, or to keep his business bark afloat, or to subserve any other legitimate purpose. Under the statute, the insurance belongs to the wife or to the children so long as it is payable to them at the insured's death by virtue of the insured's intention to make it payable to them. When the insured pledges the policy to secure a loan during his life, and gets a creditor's money upon the faith of such security he has thereby manifested an intention to make the insurance payable to his creditor, not to the beneficiary — an intention which it was not the object of this statute to frustrate, and an intention which, in my judgment, may not be ignored or disregarded by the Courts without violating the cardinal principles of equity jurisprudence.