14 P.2d 1006 | Colo. | 1932
Lead Opinion
THIS is an action on a life policy issued by defendant to one James D. Hill. Plaintiff, surviving wife, was the *301 beneficiary. Hill's note was accepted in payment of the first year's premium. Within the year, as alleged in plaintiff's third cause of action, but without her knowledge or consent, the insured received back his note and surrendered the policy to defendant, which destroyed and assumed to cancel the same; to which cancellation and destruction the plaintiff did not consent. Defendant, tendering the same issue, alleged in its second defense to plaintiff's first cause of action that at the instance and request of the insured, and within the year for which the note had been given, on which nothing had been paid, it entered into an agreement with the insured whereby it would discharge the maker of the note and surrender it to him in exchange for the return of the policy and its cancellation, pursuant to which the note was returned to the insured and the policy to the defendant, which thereupon canceled it. Other or different consideration for such surrender or cancellation was not pleaded, neither was it alleged that plaintiff consented thereto or had knowledge thereof. Defendant demurred to plaintiff's third cause of action and plaintiff to defendant's second defense, each challenging sufficiency of statement. The trial court overruled plaintiff's demurrer and sustained defendant's. Plaintiff elected to stand on her demurrer, and judgment of dismissal was given against her. Plaintiff assigns error, and maintains that without her consent the cancellation was not effective. In consonance with its demurrer defendant argues contra.
[1] We have held, as has our court of appeals, that a note operates as payment of an insurance premium.New York Life Ins. Co. v. Pike,
[2] Does cancellation of the policy in consideration of the return of the premium to the insured, all that was attempted here, come within the privileges reserved to the insured? In the correctness of the ruling on the demurrers will be found the right answer to this question. At the time of the claimed cancellation the policy had no cash surrender value, for that right, as stated in the policy, would not obtain until "after three full years' premiums shall have been paid." It is not claimed that the transaction was a loan, and what was done was not a "change in" or "amendment to" the policy, for these words imply the continuance of the policy, modified to conform to any new agreement. What was yielded to the insured in return for the policy was not "other value which may be granted thereunder," for the policy contains no provision contemplating such procedure based on the simple return of the premium.
"In case of life insurance, where the beneficiary has a vested interest in the policy, insured cannot, by surrendering the policy, cut off the rights of the beneficiary *303 without his consent, unless permitted to do so by the terms of the contract, or unless the beneficiary consents to the surrender or joins therein." 32 C. J. 1257.
"While there is authority to the contrary, the rule is that the reserved right of the insured to change the beneficiary named in the policy does not entitle him to surrender and cancel it without the beneficiary's consent." 32 C. J. 1258, and cases cited.
"A policy of insurance may be canceled, or rescinded by mutual agreement so as to terminate the rights and obligations of the parties under the contract. However, while this is true both as to the company and as to insured, the rights of a beneficiary cannot be divested by an agreement for cancellation to which he is not a party and of which he is without knowledge, even though thepolicy authorities a change of beneficiary." 37 C. J. 439. See Griffith v. N. Y. Life Ins. Co.,
In point generally is Indiana Life Ins. Co. v. McGinnis,
In Roberts v. Northwestern Nat. Life Ins. Co.,
"It appears from the stipulation of the parties that the liability of the insurance company depends upon the right of the insured to surrender the policy and agree upon its cancellation, without the consent of the beneficiary named in the policy. The subject-matter of the action is an ordinary policy of life insurance. It is well established in this State, and in other jurisdictions, that `in ordinary life insurance, where no power of divestiture or to change the beneficiary is reserved in the policy, the issuance of the policy confers a vested right upon the person so named as beneficiary, and the insured can not transfer such interest to any other person without the consent of such beneficiary.' Perry v. Tweedy,
Authorities cited by defendant's counsel, based on varying degrees of similarity of facts, point to an opposite conclusion, but we are disposed to adopt and follow the reasoning of the cases to which we have made reference in this opinion. In our view they announce a *306
wholesome and reasonable rule. Indeed, while the precise question here has not heretofore been presented to this court, quite in point in essence is our holding in Johnsonv. N. Y. Life Ins. Co.,
The judgment is reversed and the cause remanded. Let the demurrers be disposed of conformably to this opinion, with leave to the parties to amend and plead as they are advised.
Mr. CHIEF JUSTICE ADAMS, Mr. JUSTICE CAMPBELL and Mr. JUSTICE ALTER concur.
On Rehearing.
Addendum
On rehearing, determined en banc, the court adheres to the original departmental opinion.
MR. CHIEF JUSTICE ADAMS and MR. JUSTICE ALTER dissent. *307