Summary
holding where an insured substantially complies with the terms of a contract of insurance regarding a change in beneficiaries, the change is effective as of the date of the written notice
Summary of this case from HOLZBERLEIN v. OM FINANCIAL LIFE INSURANCE COMPANYOpinion
No. 76-342
Decided May 5, 1977. Rehearing denied May 26, 1977. Certiorari denied August 15, 1977.
Interpleader action to determine whether decedent's wife or his stepfather should receive the proceeds of life insurance policy. From judgment in favor of wife, stepfather appealed.
Affirmed
1. INSURANCE — Change of Beneficiary — Only In Manner Specified — Contract of Insurance — Exception — Substantial Compliance — By Insured. Ordinarily, where a contract of insurance prescribes the manner in which a change of beneficiary may be accomplished, a change of beneficiary can be accomplished only in the manner specified in the policy; however, if the insured has done all within his power to comply with the requirements of the contract, substantial compliance with respect to the provisions regarding change in beneficiary is sufficient to effectuate a change.
2. Letter from Insured — To Insurer — Wished to Change Beneficiary — Effectuated Change — Failed to Complete — Printed Forms — Not Defeat Change. Where insured complied with the terms of the contract of insurance in that he sent a letter to the insured in which he stated that he wished to change the beneficiary of his life insurance policy to his new wife, that letter effectuated a change of beneficiary even though insured had thereafter failed to complete the change of beneficiary forms sent to him by the company.
3. Change of Beneficiary — Only Specific Requirement — In Writing — Additional Statement — "Satisfactory to Company" — No Additional Condition. The only requirements for a change in beneficiary of an insurance policy which are recognized are those that are clearly specified in the contract, and the insurer may not add unwarranted requirements thereto; thus, where the only specific requirement relative to a change of beneficiary contained in the contract of insurance was that the insured requested the change in writing, the phrase requiring that such a change be "satisfactory to the company" added no requirements which would be ascertainable to the insured at the time the policy was issued, or at the time the insured desired to effectuate a change in beneficiary, and consequently the phrase did not impose additional conditions or insurer's right to change his beneficiary.
4. Change of Beneficiary — Phrase — "Satisfactory to Company" — Not Require — Use of Printed Forms — Necessary — Specify in Policy. Phrase in insurance policy requiring that change in beneficiary be "satisfactory to the company" cannot be read to imply that the insured must use printed forms supplied by the company in order to change the beneficiary, and had the insured intended to impose such conditions on the insured's right to change his beneficiary, it would have been required to specify those requirements in the policy.
Appeal from the District Court of Garfield County, Honorable Charles F. Stewart, Judge.
No appearance for plaintiff-appellee ITT Life Insurance Corporation.
John L. Kemp, for defendant-appellee Kathleen F. Damm.
Martin G. Dumont, Charles H. Willman, for defendant-appellant Clifford L. Skiff.
This is an interpleader action brought by plaintiff, ITT Life Insurance Corporation, against defendant Kathleen F. Damm and defendant Clifford L. Skiff to determine which of them was entitled to the proceeds of an insurance policy insuring the life of Gary W. Damm, Kathleen's husband and Skiff's stepson. By stipulation of the defendants, the matter was decided by way of summary judgment and upon an agreed set of facts. The court decided the matter in favor of defendant Damm, and defendant Skiff brought this appeal. We affirm.
The policy at issue was in the face amount of $10,000 and was issued in May 1972. At the time the policy was issued, the named beneficiary was Gary's stepfather, defendant Skiff.
On November 15, 1972, four days after his marriage, Gary sent a letter to plaintiff in which he stated that he wished to change the beneficiary on his life insurance policy to his wife, Kathleen F. Damm. On December 8, 1972, plaintiff sent Gary its change of beneficiary forms, requesting that they be completed, signed, and returned to the company; however, the change of beneficiary forms were not received back by the company, and some 14 months later, on February 21, 1974, Gary Damm died.
The contract of insurance involved in the instant case consisted of the policy and the application. In the body of the policy, under the heading, "Change of Beneficiary," is found the statement that the insured "may change the beneficiary, by filing at the Home Office of the Company a written request satisfactory to the Company." The application for insurance filled out by Gary Damm provides, immediately below the space provided for inserting the named beneficiary, that the beneficiary "may be changed on written request to the Company."
The trial court held that the insurance policy contained no specific method for changing the beneficiary, and that the insured's November 15, 1972 letter to the company effectively accomplished the change of beneficiary under the policy. Alternatively, the court held that even if the policy were considered to contain a specific method for such change, all that was required was reasonable notice, in writing, by the insured to the company, and that Gary's letter gave such notice. Further, the court held that under the "substantial compliance rule," the change of beneficiary had been effectively accomplished. Accordingly, the court held that Kathleen F. Damm was the rightful beneficiary under the policy, and that she was entitled to all the proceeds therefrom.
On this appeal, Skiff challenges the correctness of each of the trial court's rulings.
[1,2] Ordinarily, where a contract of insurance prescribes the manner in which a change of beneficiary may be accomplished, a change of beneficiary can be accomplished only in the manner specified in the policy. Roberts v. Johnson, 212 F.2d 672 (10th Cir. 1954). However, if the insured has done all within his power to comply with the requirements of the contract, substantial compliance with respect to the provisions regarding change in beneficiary is sufficient to effectuate a change. Finnerty v. Cook, 118 Colo. 310, 195 P.2d 973 (1948); see Johnson v. New York Life Insurance Co., 56 Colo. 178, 138 P. 414 (1914). In the instant case the insured complied with the terms of the contract of insurance, and accordingly a change of beneficiary was effectuated by his November 15, 1972 letter to the company.
[3] Here, the only specific requirements relative to a change of beneficiary contained in the contract of insurance is that the insured request the change in writing. The phrase "satisfactory to the company" adds no requirements which would be ascertainable to the insured at the time the policy was issued, or at the time the insured desired to effect a change in beneficiary. The phrase did not impose additional conditions on the insured's right to change his beneficiary, since the only requirements for a change of beneficiary which are recognized are those that are clearly specified in the contract, and the insurer may not add unwarranted requirements thereto. See Navassa Guano Co. v. Cockfield, 244 F. 222 (E.D.S.C.), rev'd on other grounds, 253 F. 883 (4th Cir. 1917); Rindlaub v. Travelers Insurance Co., 196 N.E.2d 602 (Ohio App. 1962), aff'd, 175 Ohio St. 303, 194 N.E.2d 577; Sun Life Assurance Co. v. Sutter, 1 Wash. 2d 285, 95 P.2d 1014 (1939); Cantala v. Travelers Insurance Co., 107 N.Y.S.2d 24 (Sup.Ct. 1951). See generally Annot., 19 A.L.R.2d 5 at 122.
[4] In the instant case, there is no requirement in the policy that the insured must use printed forms supplied by the company in order to change the beneficiary, and the term "satisfactory to the company" cannot be read to imply such meaning. Had the insurer intended to impose conditions on the insured's right to change his beneficiary, it was required to specify those requirements in the policy. See Townsend v. Fidelity Casualty Co., 163 Iowa 713, 144 N.W. 574 (1913).
The insured here did everything required of him under the specific terms of the policy. Further, we note that the letter sent by the insured to the company contained virtually all the information the company requested on its printed form, lacking only the date of his marriage and the statement that the policy had not been assigned and that he was not disabled. Accordingly, we agree with the trial court that reasonable notice in writing by the insured to the company was the only requirement to effect a change of beneficiary, and that the insured, by his November 15, 1972 letter, gave the required notice.
Our holding that the insured complied with the terms specified in the contract of insurance dispenses with the necessity of deciding whether Gary Damm's actions amounted to a "substantial compliance" with the terms of the policy.
Judgment affirmed.
JUDGE PIERCE and JUDGE STERNBERG concur.