55 Colo. 156 | Colo. | 1913
delivered the opinion of the court:
This action involves the disposition of a sura of money paid into court by the Locomotive Engineers Mutual Life and Accident Insurance Association, being the proceeds of two policies of insurance issued by it upon the life of one John O. Finnell.
The record discloses that in 1894 the association was incorporated under the laws of the state of Ohio, not for profit, but for the purpose, as stated in its charter, following the language of the statute, “to transact the business of life and accident insurance on the assessment plan, for the purpose of mutual protection and relief of its members, and for the payment of stipulated sums of money to the families, heirs, executors, administrators or assigns of deceased members of said association.”
In 1896 the general assembly of Ohio enacted a statute known as “House Bill No. 370,” entitled, “An Act Regulating Fraternal Beneficiary Societies, Orde'rs and Associations.” By the terms of this statute any corporation, society or voluntary association, without capital stock, formed or organized and carried on for the sole benefit of its members and their beneficiaries, and not for profit, and having a lodge system, with ritualistic form of work, and representative form of government, and which shall make provision for the payment of death
“Sec. 23. A policy holder of this association having designated his beneficiary or beneficiaries, may change the same at his pleasure, without notice to or consent of the beneficiary or beneficiaries, by returning through the division secretary of the division to which he belongs, former certificate issued, to the Home Office, and informing the President and General Secretary-Treasurer of changes desired; provided, however, that the new beneficiaries shall come > within the class named in article 1, for which a fee of twenty-five (25) cents will be charged. Any person or persons named as beneficiary or beneficiaries, accepting any interest in a policy or certificate issued by this association, do so upon the express terms or conditions contained in this article.”
‘ ‘ Sec. 24. Any member wishing to change beneficiary in his policy or policies can do so by returning through the division secretary of the division to which he belongs, the policy or policies in his possession. Being unable to return old policy or policies, new ones will be granted by members mailing affidavit of the facts on a form supplied by the Home Office, executed before an officer authorized by law to administer oaths, and waiving all benefits in former policy or policies held by him.”
John O. Finnell left a will which was duly probated on August 31, 1905. After making certain specific bequests he therein particularly mentioned the insurance
While it is conceded that no attempt was made in the manner and form prescribed by the by-laws to change the beneficiary designated in the policies, it is contended that the will constituted a change in that respect. We do not thiiik so. It is true that the purposes and objects of fraternal or mutual insurance associations are vastly different from those of ordinary life insurance companies. Nevertheless, the assured, under the rule in this jurisdiction, has no greater power to change the beneficiaries in one case than in the other, except as reserved to him by the law of the state under which the insurance was written, or by that of the association, or by the terms of the policy or certificate of insurance.—Love v. Clune, 24 Colo., 237, 50 Pac. 34; Pittinger v. Pittinger, 28 Colo., 308, 64 Pac. 195, 89 Am. St. 193; Hill v. Groesbeck, 29 Colo., 161, 67 Pac. 167.
In either case the terms of the contract of insurance govern. The contract, however, is not limited in all cases to the express provisions contained in the insurance certificate or policy. Uusally that entered into between a benefit association and a member thereof embodies, by necessary implication, the application for membership, the certificate of insurance, the charter and by-laws of the association, and the statutes of the state under which it is organized and the insurance is written. All these become a part of the contract to the same effect as if they
And if there be a conflict between the .stipulations in the policy and by-laws of the association issuing the same, on the one hand, and the charter of the association and the statutory law regulating such associations, on the other, the former must yield to the latter. —Havens v. Fire Ins. Co., 123 Mo. 403, 417, 27 S. W. 718, 26 L. R. A. 107, 45 Am. St. 570; Sturges v. Sturges, 126 Ky. 80, 102 S. W. 884, 112 L. R. A. (N. S.) 1014.
At the time Finnell became a member of the association and the policies in question were written, the charter of the association and the rights of the parties must be determined as affected by the act of 1896, supra, notwithstanding the by-laws of the association. That act and the action of the association thereunder constituted an amendment of the original charter of the association. Therefore, policy contracts, entered into between it and its members after that event, must be conformed to that act. Sturges v. Sturges, supra, so rules in considering the original charter of this association and the effect of this legislative act thereon.
Guided by these rules let us ascertain the terms of the insurance contracts in question existing on the life of John O. Finnell at the time of his death. The association obligated itself to pay the sums designated to W. S. Finnell, or Ms lawful heirs, upon the death of John O. Finnell, subject, however, to the right of the latter, in a certain designated way, to have substituted in the contracts, the name of a person or persons other than W. S. Finnell or his lawful heirs, to whom such payments should be made, provided however, that the person or persons so designated should sustain a cer
It is certain that John O. Finnell had, under these contracts, no interest or property in the benefits therein' named, but-simply the power to appoint some one to receive them. Rollins v. McHatton, 16 Colo. 203, 27 Pac. 254, 25 Am. St. 260. If the power of designation- had not been reserved, the beneficiaries first mentioned would have acquired a vested interest upon delivery of the policies, but with the power reserved they took a mere expectancy. Love v. Glune, supra. Under these circumstances, the right of substitution of other persons to receive the benefits is essentially a naked power, and, to be available, must be executed according to the terms of the contract.—Maryland Mutual Benev. Soc. etc. v. Clendinen, supra; Hellenberg v. Dist. No. 1, etc., supra.
Were the contracts silent as to the manner of changing the beneficiary designated therein, it might be immaterial as to how that was done, but here it is speck fied and compliance with the procedure prescribed is essential to the substitution or change. In other words, the right reserved in the assured was not absolute but qualified. This principle is announced and applied in Rollins v. McHatton, supra, where, in considering a contract of quite similar import and in answer to a similar contention to that here made, it is said:
“We discover that other persons than the one orig-inally named can receive the bequest only upon direction of the assured ‘by change of beneficiary entered , upon the record of the supreme secretary. * * * ’ This provision thus plainly declares how another person may be substituted in place of the one first desig" nated. The language used is too plain to be misunderstood, and we are not at liberty to supply new words or to ignore the clear import of those employed by the con-*163 trading parties. The intent to permit a change of beneficiary at the will of the assured is no more plainly declared by the preceding clause than is the manner of executing that intent by the expression under consideration. The resolution to substitute can be enforced in but one way, viz., ‘by change of beneficiary entered upon the record,’ etc. It will not do to say that the entry upon the record is directory merely, or that it is of no special importance. This entry is an essential part of the substitution, and the change is incomplete until it is made,” citing the following authorities:— Bacon’s Benefit Societies, etc,, § 307; Holland v. Taylor, 111 Ind. 121, 12 N. E. 116; Daniels v. Pratt, 143 Mass. 216, 10 N. E. 166; Natl. Mut. Aid Society v. Lupold, 101 Pa. St. 111; Stephenson v. Stephenson, 64 Iowa, 534, 21 N. W. 19; Coleman v. Knights of Honor, 18 Mo. App. 189; Kentucky M. M. L. Ins. Co. v. Miller, Adm., 13 Bush 489; Eastman v. Provident etc. Assn., 62 N. H. 555; Hellenberg v. Dist. No. 1, etc., 94 N. Y. 580.
In Charch v. Charch, 57 Ohio St. 561, 578, 49 N. E. 412, it is said: “When the by-laws provide, as those of these two orders do, a method by which the beneficiary may be changed, that method must be pursued; and, where no change is thus made, the company’s promise to pay runs only to the person named in the certificate.”
Splawn v. Chew, 60 Tex. 532, is relied upon by defendant in error in support of his contention that the prescribed manner of changing the beneficiary is only directory, and a substitution may be made by will. If it can properly be said that the case so holds, it is in conflict with the decisions of this court and contrary to the great weight of authority. In § 222a, Mblack’s Benefit Societies and Accident Insurance, it is said that Splawn v. Chew, supra, is the sole exception to the holding that a change of beneficiary “to be effectual, must be made in compliance with the terms of the cer
Nor are we able to approve the contention of defendant in error, apparently adopted by the trial court, that the will constituted, in equity, a change of the beneficiary designated in the policy. While equity may aid an attempted but incompleted change in that respect, it does so only when the “assured has done his part towards perfecting the substitution in accordance with the method prescribed, but owing to circumstan'ces over which he has no control the change is not entirely consummated at the time of his death, * * *. But it is an essential prerequisite to the interposition of equity that the assured has in good faith attempted to comply with the prescribed mode of substitution.” Rollins v. McHatton, supra. In this case the assured did nothing to perfect a substitution in accordance with the modes prescribed, although he had full control over all the circumstances essential to that end. Such provisions were
This is the rule suggested in Rollins v. McHatton, supra, where, after declaring that the insured member of such societies has, himself, no interest in the fund, but possesses simply a power of appointment which, if not exercised, becomes inoperative, we said: “It would seem to follow that the insurance money could not in any event become assets of the insured’s estate.” This view is strengthened by the provisions of the statute under which the association was organized and the policies were issued. Section 8 thereof expressly declares that such funds shall not be liable to attachment, garnishment or other procéss and shall not be seized, taken, appropriated, or 'applied by any legal or equitable process, or by operation of law, to pay any debt or liability of a certificate holder, or of any benefieiary named in a certificate or any person having any rights thereunder. Moreover, the fund was created and brought into existence for the sole use and benefit of that class designated in the statutes of the state where the association was incorporated, and can not be lawfully diverted therefrom.— Love v. Clune, supra; Bacon Ben. Soc. etc., §§168, 244; Warner v. Mod. Wood. of Amer., 67 Neb. 233, 93 N. W. 397, 61 L. R. A. 603, 108 Am. St. 634, 2 Ann Cas. 650; Sturges v. Sturges, supra.
If the assured, during his lifetime, had attempted to change the beneficiary so as to include either his estate, the executor or administrator thereof, his creditors or a person not coming within the statutory prescribed class of beneficiaries, the designation in that re
In the latter case a policy of this association was under consideration, and it is said: “While the insured had the right to change the beneficiary, the one substituted must of necessity have belonged to the class permitted by the statute, else the attempted change would be void. It was not competent, then, for the insured to have designated his estate as the beneficiary of the policies. ’ ’
And in the same case quoting from Van Bibber v. Van Bibber, 82 Ky. 350, it is said: “The certificate of membership constitutes the contract; hut it is to be construed and governed by the company’s charter. In fact, it may be said that the charter is a part of the contract; and, if it declares who, in a certain event, shall be the beneficiary, the parties cannot alter this legislative. direction, because neither the company nor the insured can do anything in violation of it.”
In Daniels v. Pratt, 143 Mass. 216, 221, 10 N. E. 166, the deceased was a member of a benefit association organized under the laws of that state, authorizing such organization to provide for a benefit for the family, widow, orphans, or other dependents of deceased members. He had designated as his beneficiary “my estate.” The court says: “The designation by Dewey, (the assured) that his money should go to his estate, was invalid. If it were a part of his estate, it would be assets for the payment of debts and expenses of administration, and would be subject to an unrestricted disposition by will. But this is inconsistent with-the statutes, and so beyond the power of the parties.”
So, in the case at bar. If the assured in life could not, by positive act, confer the right to recover the amount named in the certificates, either upon his estate, the executor or administrator thereof, or his creditors, because they did not come within the recognized class, it is certain that his death could in no manner create such right. Nor is this rule affected, as claimed by defendant in error, by reason of the decease of the named beneficiary before the change, especially when, as here, there are claimants of the class for whom the association was authorized to raise the fund, and who might have been made beneficiaries under the statute.
However, were we to assume that the assured had the right to make a change of beneficiary in any other manner than prescribed in the contract, and that such change could be made by will, it is clearly apparent that there was no change or attempted change made in that respect. As to a policy held by deceased in the Brotherhood of Locomotive Firemen the will purports, by express words, to revoke the beneficiary therein named and to designate another. Not so, however, with the policies in question. They are described in the will by date, number, and the name of the association, after which the will recites that it is the desire of the testator “that all sums which may become due upon said policies, or either of them, or any other policy in force at
But it is claimed that as the assured was the sole heir of the beneficiary first designated in the certificates, he became the designated beneficiary therein upon the death of the former and could dispose of the proceeds of the policies by will or otherwise. We do not think so. It would seem that the purpose and object of the association, the manner of accumulating the fund upon the death of a member by assessment, the character of
Upon the theory that there was no designated beneficiary in existence at the time of the death of the assured, it is contended that there was a resulting trust of the fund in favor of his estate, and as a matter of equity the right to recover would be transferred to the executor of the will of the deceased, to be distributed under the provisions thereof. -In the absence of limitations as to the class qualified to take the fund, it might pass to the estate of the assured. Especially would this be true if the association had surrendered its claim to the fund. Under such circumstances, equity would doubtless permit the fund to go where he whose acts brought it into existence, desired it should go, when that intention was ascertained in any way, or, in the absence of an expressed desire in that respect, permit it to become a part of his estate subject to administration, but that question is not involved and is not determined herein. In Ryan v. Rothweiler, 50 Ohio St. 395, 35 N. E. 679, relied upon by defendant in error, there was no
It would seem, therefore, under the principles of equity, that, upon failure of designation, the fund should go to the class, or some one or more thereof, named in the statute and for whose benefit alone it could be legally accumulated. The facts of this case do not present the question as to the eligibility of a named beneficiary, or the right of one within the class to successfully object to the payment of the fund to a beneficiary without the class, and cases cited thereon are not in point. Here no designated beneficiary survived the assured and the sole question is, which of these contending parties has the better right to the fund?
Plaintiffs in error are the heirs of the assured and had the latter predeceased W. S. Finnell, would thereupon have sustained a like relation to him. They, therefore, come clearly within the class for whom the association was authorized to raise the fund by exactment from its members, and could have been made beneficiaries under the statute. The defendant in error is not within the class, and if permitted to take the fund will, following the wish of the assured as expressed in his will, divert it from the purposes and objects for which alone the law authorized it to be brought into existence. Besides, the members of the association were not, nor
But apart from this view, it would seem that plaintiffs in error have a legal right to this fund, and might have, even as against the association, personally or through the executor for their benefit, maintained a suit therefor. It has been held that a failure to designate, or a defective designation of a beneficiary, might be supplied by construction of the charter and by-laws of the association. It was so ruled in Bishop v. G. L. E. O. etc., 112 N. Y. 627, 20 N. E. 562, where there had been no designation whatever. The objects and purposes of the corporation, which was a party to the contract, there under consideration, were quite similar to those of this association. There the fund was set aside to be paid over to the families, heirs or legal representatives of deceased or disabled members, or to such person or persons as the deceased might, while living, have directed. Here the statute expressly declares “payment of death benefits shall be to the families, heirs, blood relatives, affianced husband, affianced wife of, or to persons dependent upon the members,” and such is the de
And commenting upon Daniels v. Pratt, supra, Mr. Bacon in his work on Benefit Societies and Life Insurance, § 244 says: ‘ ‘ The executor may be the proper party to sue to recover a benefit in case of the death in the life-time of the member of the beneficiary, but in such case the fund is not assets as held in the preceding case, but is a trust fund for the persons for whose benefit the society was formed.” Plaintiffs in error are of the class of persons for whose benefit the association accumulating the fund in question was formed, while defendant in error is not. If the latter received it he would hold it in trust for the former. The fund is in
Judgment reversed.
Chief Justice Musser and Mr. Justice Garrigues concur.