Opinion
No. 35581.
March 27, 1944.
1. INSURANCE.
An insurer is free to issue its old line life policies to whomever it chooses, and its insured is free to make proceeds of his own policy, contracted for by him, payable to anyone whom he may select.
2. INSURANCE.
Where change-of-beneficiary provision in life policies required that beneficiary have insurable interest, but insurer consented, on death of original beneficiary, to designation of new beneficiary who had no insurable interest, such requirement was waived and new beneficiary was entitled to proceeds of policies as against insured's administrator.
APPEAL from the chancery court of Noxubee county, HON. T.P. GUYTON, Chancellor.
Snow Covington, of Meridian, J.P. Stennis, of Macon, and L.P. Spinks, of DeKalb, for appellant.
Payment of the proceeds of the insurance into court did not remit the question of who is the rightful claimant and had no effect at all as between the rival claimants themselves.
White v. White, 111 Miss. 219, 71 So. 322; Bank of Belzoni v. Hodges, 132 Miss. 238, 96 So. 97; Faulkner v. Faulkner, 192 Miss. 358, 5 So.2d 421; Hall v. Allen, 75 Miss. 175, 22 So. 4; Freeman v. Barnett, 146 Miss. 849, 112 So. 161; Henderson v. Woodmen of Union, 163 Miss. 210, 141 So. 345.
There is no difference in the rules of law applicable to a benefit certificate and to an ordinary life policy where the contract expressly permits a change of beneficiary.
Lamar Life Ins. Co. v. Moody, 122 Miss. 99, 84 So. 135; Bank of Belzoni v. Hodges, supra; Fleming v. Grimes, 142 Miss. 522, 107 So. 420; Faulkner v. Faulkner, supra; Carson v. Vicksburg Bank, 75 Miss. 167, 22 So. 1; Sykes v. Armstrong, 111 Miss. 44, 71 So. 262; Lyles v. Eubanks, 114 Miss. 587, 75 So. 447; Freeman v. Barnett, supra; Delaney v. Delaney, 175 Ill. 187, 195, 51 N.E. 961; 37 C.J. 584, Sec. 349; 37 C.J. 577, Sec. 343; 45 C.J. 196, Sec. 159.
Where the contract of insurance limits possible beneficiaries to a certain class, a claimant must be within that class in order to recover as a beneficiary.
Murphy v. Red, 64 Miss. 614, 1 So. 761; Carson v. Vicksburg Bank, supra; Rose v. Wilkins, 78 Miss. 401, 29 So. 397; Hawkins v. Duberry, 101 Miss. 17, 57 So. 919; Freeman v. Barnett, supra; Henderson v. Woodmen, supra; Grand Lodge of K.P. v. Smith, 89 Miss. 718, 42 So. 89; Brown v. Powell, 130 Miss. 496, 94 So. 457; American Life Accident Ins. Co. v. Nirdlinger, 113 Miss. 74, 73 So. 875; Continental Casualty Co. v. Hall, 118 Miss. 871, 30 So. 335; New Amsterdam Casualty Co. v. Perryman, 162 Miss. 864, 140 So. 342; Berry v. Lamar Life Ins. Co., 165 Miss. 405, 142 So. 445; Brotherhood of Railroad Trainmen v. Bridges, 164 Miss. 356, 144 So. 554; Mississippi Mut. Ins. Co. v. Ingram, 34 Miss. 215; 13 C.J. 541, Sec. 513; 37 C.J. 577, Sec. 342; 29 Am. Jur. 949, Sec. 1273; Note 36, 37 C.J. 584, Sec. 349. L.L. Martin, of Macon, and Wilbourn, Miller Wilbourn, of Meridian, for appellee.
At the time appellee was designated as beneficiary, the insured was the owner of, and had dominion over, the policies, and there was no other party who then had any vested or contingent interest therein. No one was concerned in the designation of a beneficiary excepting the insured and the insurer and it was competent for the insured and the insurer, notwithstanding the statement in the policies that "No person shall be designated as beneficiary in this policy unless such person shall have an insurable interest in the life of the insured," to agree, as they did do under the undisputed facts in this case, that the appellee should be named as the beneficiary therein.
The policies in this case, neither as originally taken out nor after the naming of the appellee as beneficiary, were not invalid, nor wagering contracts, nor violative of the public policy of the State of Mississippi. We do not understand that the appellant argues anything to the contrary.
It is settled law in this state that every person has an insurable interest in his own life; that, so far as the public policy of the State of Mississippi is concerned, and under the decisions of our Supreme Court, one may insure his own life upon his own initiative, pay the premiums thereon and provide that the benefits thereof shall go to any person whom he may wish to receive such benefits, regardless of whether or not such person has an insurable interest in his life.
Murphy v. Red, 64 Miss. 614, 1 So. 761; Grant v. Independent Order of Sons Daughters of Jacob, 97 Miss. 182, 52 So. 698; First-Columbus Nat. Bank v. D.S. Pate Lumber Co., 163 Miss. 691, 141 So. 767; Carnes v. Franklin Life Ins. Co., 81 F.2d 800.
At the time of the designation by the insured of the appellee as the beneficiary thereof, not only were the policies valid, but the wife of the insured originally named as beneficiary having died, all of them were by their terms and under the law in effect payable to himself, his executors, administrators or assigns, in consequence of which the insured was the then real beneficiary thereof, with the right of dominion, control and disposition thereof.
Yale v. McLaurin, 66 Miss. 461, 5 So. 689; Rice v. Smith, 72 Miss. 42, 16 So. 417; Murphy v. Red, supra.
This dominion and control over the policies extended also to the right to dispose of the proceeds thereof by will.
Coates v. Worthy, 72 Miss. 575, 17 So. 606, 18 So. 916; Magee v. Bank of Hattiesburg Trust Co., 134 Miss. 126, 98 So. 541; Miller v. Miller, 43 A.L.R. 573; Code of 1930, Sec. 1757; Code of 1942, Sec. 309.
The language in each of the policies — "No person shall be designated as beneficiary of this policy, unless such person shall have an insurable interest in the life of the insured" — is a provision inserted by the insurer for the protection of the insurer alone.
In this case, no one but the insured and the insurer being involved or having any rights in the contract or the subject of it, it was perfectly competent for them, by mutual assent, to agree, as they did, that appellee should be named as the beneficiary.
13 C.J. 591, Sec. 606; 13 C.J. 597, Sec. 615.
Even though a contract stipulates that it can only be modified in writing, it has been held that the parties may still agree to be bound by a modification thereof that is oral.
New York Life Ins. Co. v. O'Dom, 100 Miss. 219, 56 So. 379; 13 C.J. 594, Sec. 611.
The administrator of the insured had no vested nor contingent right in the proceeds of the policies at the time the appellee was named as beneficiary therein by the insured with the consent of the insurer. While the insured lived, the policies were his and payable to him and under his control. An administrator's right in a policy does not come into existence until after the death of the intestate, and is then purely derivative and is only such right as remained in the intestate — in this case the insured — if any, as of the date of his death. In none of the policies here involved is any reference made to the legal representatives or to the heirs of the insured.
Bayse v. Adams, 81 Ky. 368; Gaines v. Gaines, 99 S.W. 600; 2 Bacon Benefit Society, Sec. 262; 29 Am. Jur. 967, Sec. 1295.
The provision in the policy that "no person shall be designated as beneficiary in these policies unless such person shall have an insurable interest in the life of the insured," being a stipulation for the protection of the insurance company, is one that it could waive, and, in this case, did waive. Such a stipulation with reference to change of beneficiary is similar in nature to one forbidding assignment thereof to any person not having an insurable interest in the life of the insured.
Neely v. Pigford, 181 Miss. 306, 178 So. 913; White v. White, 111 Miss. 219, 71 So. 322; Bank of Belzoni v. Hodges, 132 Miss. 238, 96 So. 97; Faulkner v. Faulkner, 192 Miss. 358, 5 So.2d 421; Hall v. Allen, 75 Miss. 175, 22 So. 4; Murphy v. Red, 64 Miss. 614, 1 So. 761; Franklin v. Hazard, 41 Ind. 116; Chamberlain v. Butler, 86 N.W. 481, 87 Am. St. Rep. 478 and note at page 496; Ketchley v. Coshocton Glass Co. (Ohio), 99 N.E. 299; Langford v. Freeman, 60 Ind. 55; Standard Life Accident Co. v. Catlin, 106 Mich. 138, 63 N.W. 897; Mechanics Nat'l Bank v. Cousins, 72 N.H. 12, 55 A. 191, 101 Am. St. Rep. 650; Homer v. Welch, 105 Mich. 470, 65 N.W. 280, 67 N.W. 504; Diffenbach Romer v. New York Life Ins. Co., 61 Md. 370; Grigsby v. Russell, 222 U.S. 149, per Holmes, J., page 155, 32 S.Ct. 58, 56 L.Ed. 133, 36 L.R.A. (N.S.) 642; 1 Insurance Law and Practice by Appleman, Sec. 11; 2 Insurance Law and Practice by Appleman, Sec. 772; 2 Insurance Law and Practice by Appleman, p. 105, note 47, Sec. 772; 13 Insurance Law and Practice by Appleman, Sec. 7423; 32 C.J. 1112, Sec. 206; 37 C.J. 398; last paragraph of Sec. 69; 29 Am. Jur. 291, Insurance, Sec. 320.
Melvin Van Zandt procured three life insurance policies of $5,000 each from the Lamar Life Insurance Company, payable to his wife as beneficiary. Upon the death of his wife he named L.B. Morris as beneficiary. After the death of the insured, Morris filed his bill against appellant, the administrator of the estate of the insured, and the Lamar Life Insurance Company for payment of the policies, alleging that the insurer was withholding payment because of a suit against it by the administrator. The latter filed answer and cross-bill, and the insurer with its answer filed a cross-bill of interpleader and tendered the net amount due, $14,459.63, into court.
The following facts are among those agreed to by the parties: The policies which were in force at the death of the insured provided that the insured could at any time with or without the consent of the beneficiary, change the beneficiary, such change to be effected upon endorsement thereof upon the policy. This provision included the following clause: "No person shall be designated as beneficiary in this policy unless such person shall have an insurable interest in the life of the insured." It is conceded that appellee had no insurable interest in the life of the insured, and that no question of public policy is involved.
The endorsement changing the beneficiary was duly made by an officer of the insurer after an exchange of correspondence between the insured and the company, in which, in answer to specific inquiries, the insured stated that Morris was not a relative, but was his physician and friend. The application for such change, and the endorsement effecting it were in order, and the endorsement executed by the assistant secretary designated the beneficiary as "Lawrence Boling Morris, friend of the insured, if living, otherwise unto the executors, administrators or assigns of the insured." In this connection there is a pertinent provision in the application which is made a part of the contract. It states, ". . . the . . . assistant secretary of the company can make, modify or discharge contracts, or waive any of the company's rights or requirements . . ."
Disregarding other allegations and contentions, the issue narrows to the point whether, in the face of the provision that any beneficiary "shall have an insurable interest in the life of the insured," the designation of Morris was valid. The trial court upheld the claim of Morris, and awarded decree to him for the amount tendered.
In deciding the point we must brush aside those cases involving fraternal or benefit insurance where the policies are integrated with and made subject to existing by-laws or constitutions, and are thereby limited to a particular class of beneficiaries. Such limitations take into account the theory and purpose of such associations, as expressed in their own constitutions. See Henderson v. Woodmen of Union, 163 Miss. 210, 141 So. 345; Hawkins v. Duberry, 101 Miss. 17, 57 So. 919; Freeman v. Barnett, 146 Miss. 849, 112 So. 161, 52 A.L.R. 375; Appleman, Insurance Law and Practice, vol. 2, Sec. 901. Nor are those cases in point which ground such policies upon particular statutes. See Rose v. Watkins, 78 Miss. 401, 29 So. 397; Carson v. Vicksburg Bank, 75 Miss. 167, 22 So. 1, 37 L.R.A. 559, 65 Am. St. Rep. 596. Appleman, op, cit. supra, vol. 2, Sec. 833, p. 208; Cooley, Briefs on Insurance (2nd Ed.), vol. 2, p. 864 sqq.
An insurer is free to issue its old line policies to whomever it chooses, and its insured is free to make the proceeds of his own policy, contracted for by him, payable to anyone whom he may select. Murphy v. Red, 64 Miss. 614, 1 So. 761, 60 Am. Rep. 68; Davis v. Gulf States Ins. Co., 168 Miss. 161, 151 So. 167; Grant v. Independent Order of Sons Daughters of Jacob, 97 Miss. 182,
52 So. 698; 37 C.J. 389, Sec. 53; Appleman op. cit. supra, vol. 2, Sec. 761, p. 81; Cooley, op. cit. supra, vol. 2, p. 336. The insurer may of course embody in its contract any lawful restrictions upon assignment or payment or, having written them in, may write them out by waiver or modification. The policies here provided that the contract included not only the original policy agreement but any rider or endorsements. The policies were not taken out by the beneficiary upon the life of the insured, but by the latter upon his own life, and, upon the death of his wife, who did not have a vested interest in the policy, and in the absence of any intervening interest of creditor or assignee, the parties to the insurance contract agreed to its change and modification. There being no extraneous domination of the contractual rights by statute, constitution or by laws, the power to contract was submissive only to public policy. Since the last named restraint is conceded not to override the amended contract, we are returned again to the question whether the original requirement that the beneficiary must have an insurable interest in the life of the insured is irrevocable even by the insured.
There should exist no doubt that the insurer could have omitted this requirement from its policies as originally written. Since no public interest dictates the inclusion of this provision, it could be to the interest of no one other than the insurer. 37 C.J., p. 398. Since it had the right to execute new contracts payable to appellee, it had the right to modify those existing. The policy is not rendered void by a contrary designation. We have held that in contracts of the kind here the insurer alone may avail of provisions inserted for its benefit. Hall v. Allen, 75 Miss. 175, 22 So. 4, 65 Am. St. Rep. 601; Murphy v. Red, 64 Miss. 614, 1 So. 761, 60 Am. Rep. 68; White v. White, 111 Miss. 219, 71 So. 322; Bank of Belzoni v. Hodges, 132 Miss. 238, 96 So. 97; Neely v. Pigford, 181 Miss. 306, 178 So. 913, 915, 122 A.L.R. 1188, and authorities cited; Appleman, op. cit. supra, vol. 2, Sec. 1061; Faulkner v. Faulkner, 192 Miss. 358, 5 So.2d 421; 32 C.J., Sec. 206, p. 1112; 37 C.J., p. 398, Sec. 69; 29 Am. Jur., Insurance, Sec. 320, p. 291.
Wherefore we need not seek additional support for these conclusions in implications of waiver consequent upon the paying of the proceeds by the insurer into court. Its only relevant significance here can be restricted to the fact that its act of voluntary payment is consistent with its assumption that it had and exercised the right to make and modify its own contract with the insured.
Affirmed.