Bennett v. Rosborough
116 S.E. 788
Ga.
1923
Check Treatment

Lead Opinion

Atkinson, J.

It is declared in the Civil Code, § 2498: “The assured may direct the money to be paid to his personal representative, or to his widow, or to his children, or to his assignee; and upon such direction given, and assented to by the insurer, no other person can defeat the same. But the assignment is good without such assent.” The principle of this section was applied in Smith v. Head, 75 Ga. 755. That was a case *271where a husband obtained a policy of life-insurance which was payable to his wife. It was held that the policy was the property of the wife, and could not be subjected by creditors of the husband. In the third division of the opinion, after referring to the language of the above-quoted statute, which was contained in the first and all subsequent codes of this State, it was said: “ This is too plain for argument. The assured directed the money paid to his wife. He made no change. No other person can. . . We conclude that in any view of the ease, under our own law, the money is Mrs. Head’s;' and we deem it unnecessary to follow counsel into the learning and elaboration of other points made upon text-books and adjudications under other laws and by other courts. Nor is it necessary to go into the means the assured used to pay the premiums, or his solvency or insolvency, as affecting creditor’s rights, because our statute [the provision above quoted] allows no person to defeat the direction the assured gave to the payment, that is, to whom it should be made, at his death.”

The case of Hubbard v. Turner, 93 Ga. 753 (30 S. E. 640, 30 L. R. A. 593), was where a person took out a policy of insurance payable to his “heirs or assigns.” A contest arose between creditors of the assured and his heirs at law, over the fund derived from the policy. There was no evidence that the insured was insolvent when the policy was taken out or when the premiums were paid, or that any of the claims of the creditors existed at the time the premiums were paid. It was held that the heirs were entitled to the proceeds of the policy. In the course of the opinion it was said: “ The proceeds of this policy were not, under the facts of this case, any part of the estate of the assured, and therefore not subject to the claims of his creditors. Had any fraud, actual or constructive, been committed by the assured upon their rights, either in taking out or keeping up the policy, they might be equitably entitled to follow and reclaim money which the assured had invested in the policy and which ought to have been used, or reserved for use, in satisfying their demands. No reference is here intended to the class of cases falling under section 3830 of the Code [of 1883]. Where the assured directs the money due upon a policy to be paid to any. of the persons designated in that section, even though he may be insolvent, and use, in paying premiums, money to which his creditors are equitably *272entitled, no person can defeat the policy. This is so because the law so declares in express terms.” That decision announced two propositions: (1) That if the insured commits fraud, actual or constructive, upon his creditors, either in taking out or keeping up the insurance, the latter may be equitably entitled to follow up and claim money which the assured has invested in the policy. (2) Where the assured directs the money due upon a policy to be paid to any of the persons designated in the statute, “even though he may be insolvent, and use, in paying premiums, money to which his creditors are equitably entitled,” the creditors can not complain. While announcing the first proposition, whether or not it was necessary to a decision of the case or stated a sound principle of law, it was explained that such statement was not intended to refer to the class of cases falling under section 3498 in the Code of 1910, above quoted. Under that law, where the beneficiary is “the personal representative” or “the widow” or “the children” or “the assignee” of the insured, the money payable under the insurance policy must follow the direction pointed out in the policy, which is the contract of insurance under which the money is to be paid. Where the husband takes out a policy payable to his wife and does not change the beneficiary, creditors of the husband can not in this State, in a contest with the wife, take the money, even though premiums might have been paid at a time when the husband was insolvent or with money which had been stolen from the creditors. Whether or not this ruling comports with the weight of authority in other jurisdictions does not affect this case. The case is within the class specified in the code section, and the widow is entitled to the money under the decisions of this court construing and applying that provision of law. The request to review and overrule the decision in the case of Smith v. Head, 75 Ga. 755, is denied.

Since pleadings are to be construed most strictly against the pleader, even if an innocent beneficiary, who was not a party to any larceny or fraud perpetrated by the insured in obtaining money with which to pay premiums on the policy of insurance, could in equity, under the statutes of this State, be compelled to reimburse, out of money payable on such insurance, the person so defrauded, allegations in a petition seeking such reimbursement, that “ all or a large portion ” of the money used in paying *273the premiums, or such money “entirely or largely,” was stolen etc., were subject to special demurrer. Babcock Lumber Co. v. Johnson, 120 Ga. 1030 (6) (48 S. E. 438); Fraser v. Smith & Kelly Co., 136 Ga. 18 (70 S. E. 792).

It was said in Smith v. Locomotive Engineers &c. Insurance Asso., 138 Ga. 717 (76 S. E. 44): “A mutual benefit association may make reasonable regulations defining the methods by. which a member may change the beneficiary named in his benefit certificate; and when such regulations are made they become part of the contract, and the right to change can be exercised in no other way. 4 Cooley’s Briefs on Insurance, 3766. If, however, the insured has done substantially all that is required of him, or all that he is able to do, to effect a change of beneficiary, and all that remains to be done is ministerial action of the association, the change will take effect though the details are not completed before the death of the insured. Ib. 3769; Nally v. Nally, 74 Ga. 669 (58 Am. R. 458); Brown v. Dennis, 133 Ga. 791 (66 S. E. 1080); Brown v. Dennis, 136 Ga. 300 (71 S. E. 421). Some affirmative act, however, on the part of the member to change the beneficiary is required; his mere intention will not suffice to work a change of beneficiary. Niblack’s Accident Insurance & Benefit Societies, § 218; Freund v. Freund, 218 Ill. 189 (75 N. E. 925, 109 Am. St. R. 283); 29 Cyc. 132-133.” Applying the law thus stated it was said: “ It follows, that where a mutual benefit association issued a certificate to a member, in which his mother was designated as the beneficiary, it not appearing that the right of the member to change the beneficiary was restricted by statute, or anything in the charter or the by-laws, or in the certificate, nor that any method for changing the beneficiary was prescribed, the member at the time being an unmarried man, who subsequently married, and as an inducement thereto he agreed that if the woman would marry him she should be made the beneficiary in the certificate in place of the member’s mother; and where it appeared that the member never did anything to carry out such contemplated change of the beneficiary, but did promise from time to time to have the change made, and about two years after the marriage wrote his wife that he had written the association requesting the change of beneficiary to be made, the beneficiary named in the certificate was, upon the death of the mem *274ber entitled to the benefit fund due upon the certificate, as against the widow of the member.”

The several policies of insurance involved in .this case specify the manner in which change of beneficiaries might be made. There was no attempt to change the beneficiary from the wife to some one else, in any instance, by complying with the specified form or otherwise. It is contended that the letter had that effect, but that contention is not well founded. The letter did not designate any particular policies, or purport to assign the policies, but was a statement by the insured having reference to a disposition of money that would be collectible on policies held by the insured after his death. If the money would be property of the insured, the letter would be testamentary in character and void for non-compliance with the requirements of the law with reference to the execution of wills. What has been said with reference to change of beneficiaries applies also to the contentions that if the letter did not amount to a change of beneficiary, it amounted to an assignment of the policies; and that if it did not amount to an assignment of the policies, its effect, considered in connection with the character of the policies and the circumstances of the payment of the premiums and source from which the money came to pay the premiums, was to create an implied or constructive trust in the money collectible under the policies for the payment of the creditors to the extent specified in the letter. In the circumstances there was no change of beneficiary, or assignment of the policies, or creation of a trust for the benefit of the creditors.

The court did not err in sustaining the demurrers to the petition.

Judgment affirmed.

All the Justices concur, except Gilbert and Hines, JJ., dissenting.



Dissenting Opinion

Hines, J.

I dissent from the opinion of the majority in this case. I can not agree to the proposition that where a husband' takes out a policy of life insurance, in which he names his wife as beneficiary, and dies without having changed the beneficiary or assigned the policy, “the wife will be entitled to the money payable under the policy after the death of the insured, in a contest with a creditor of the husband, although at the time the insurance was-obtained and the premiums paid the insured was *275insolvent and the premiums were paid with money stolen from the creditor.” The majority put their decision upon the Civil Code (1910), § 2498, Smith v. Head, 75 Ga. 755, and Hubbard v. Turner, 93 Ga. 752 (20 S. E. 640, 30 L. R. A. 593). These authorities do not sustain the above doctrine. The code section is as follows: “ The assured may direct the money to be paid to his personal representative, or to his widow, or to his children, or to his assignee; and upon such direction given, and assented to by the insurer, no other person can defeat the same.” The •meaning of this section does not justify the position taken by the court in this case. .Its meaning is clear. When the insured-takes out a policy of life-insurance and directs the money arising therefrom at his death to be paid to his personal representative, his wife, his children, or to his assignee, and when such direction is given and assented to by the insurer, no other person can defeat the same by giving any other direction as to how such money shall be paid. It does not mean that any person who may have an equitable interest in the proceeds of .such policy can not enforce the same against the beneficiary named therein. Persons who for any reason may have such equitable title or interest in such policy, or in its proceeds, upon the death of the insured can enforce the same. This doctrine has been recognized by a long line of decisions of this court.

In Nally v. Nally, 74 Ga. 669 (58 Am. R. 458), an unmarried man took out a policy of insurance on his life, naming his sister as beneficiary. The brother delivered the policy to the sister, and subsequently married, and as an inducement he agreed that if the woman would marry him she should be made beneficiary in said policy. When the next semi-annual premium fell due the insured paid it on condition that the beneficiary should be changed from his sister to his wife. The officers of the insurance company agreed to attend to the mattér, but overlooked it; and after the insured’s death, it was held that the wife was entitled to the proceeds of the policy, although the wife had never been substituted as beneficiary in place of the sister. The ruling in Nally v. Nally was followed in Brown v. Dennis, 136 Ga. 300 (71 S. E. 421), in Page v. Bell, 144 Ga. 650 (87 S. E. 887), and in Dell v. Varnedoe, 148 Ga. 91 (95 S. E. 977). In the latter ease a brother took out a benefit certificate in a mutual benefit *276association, in which his sister was designated as beneficiary. He afterwards married, and agreed with his wife that if she would pay out of her personal funds the premiums on this certificate as they fell due he would cause her to be named as beneficiary in the policy with the right to collect the proceeds thereof upon his death; and where the insured in accordance with the agreement designated, by his endorsement entered upon the policy, his wife as the beneficiary therein, and caused his signature-to be attested by the secretary of the local camp of said association and exhibited the same to his wife, but did not forward the policy to the association as required by its by-laws, so as to perfect the change of beneficiary, the wife in a contest with the sister over the insurance fund was, “ upon the application of equitable principles, entitled to the fund.”

We might multiply these decisions; but the above establish the doctrine that when the insured directs that the proceeds of a policy of insurance on his life be paid to the beneficiary therein named, persons having equitable claims on the proceeds can enforce the same against the beneficiary named in the policy. The decisions of this court cited in the opinion of the majority do not sustain the principle announced by this court. The case of Smith v. Head, 75 Ga. 755, involved a controversy between the wife of the insured, who was named in the policy as beneficiary, and a creditor of the husband, to whom the wife had assigned the policy to secure a debt due by the husband to the assignee. Tt was held that the assignment was void. The rights of creditors of the husband to the proceeds were not involved. In Hubbard v. Turner, it was distinctly recognized that creditors might have the right to subject the proceeds of an insurance policy to the payment of their claims, after the husband had paid the premiums when he was insolvent and while indebted to said creditors.

The principle announced by this court can not be the true law. If it were, one owning $100,000 worth of property and owing $75,000 of debts could convert his property into cash, invest the same in paid-up insurance, naming his wife as beneficiary, and the creditors of the husband could not subject the policy or its proceeds to the payment of their claims. If the doctrine announced by the majority is the true law, if a bank cashier were to steal $100,000 from a bank, invest it in paid-up *277insurance, and take out a policy in which his wife were named as beneficiary, the bank could not enforce its claim against the policy or the proceeds thereof and collect the same on the death of the insured. • This doctrine, it seems to me, is wholly untenable. The overwhelming current Of decisions in other jurisdictions declare it to be contrary to the true doctrine.

For the above reasons, I am unable to agree to the conclusion reached by the majority. I am authorized to say that Gilbert, J., concurs in this dissent.