Opinion
7 Div. 939.
February 7, 1933.
Appeal from Circuit Court, Calhoun County; R. B. Carr, Judge.
Action on a policy of insurance by Sadie Byrd against the Ætna Life Insurance Company. From a judgment of nonsuit, plaintiff appeals.
Reversed and remanded.
Count 4 of the complaint is as follows:
"The plaintiff claims of defendant the sum of one thousand dollars for, to-wit:
"That in connection with a group or master policy, of same date and conferring same benefits and rights, copy of which is attached hereto as Exhibit A, as it then existed, defendant issued to Bennie Byrd the certificate or policy, copy of which is attached hereto as Exhibit B, and made a part hereof, that she was his wife and the beneficiary named in said certificate; that, though on its face said policy or certificate indicates 'certain employees of Thomaston Cotton Mills,' it has application to Peerless Cotton Mills, owned by the same company, this form being used as a matter of convenience in issuance of policies to several milling plants of said company. She avers further that on or about August 1, 1927, while said policy or certificate was in force, and Bennie Byrd was an employee of Peerless Cotton Mills, of Thomaston, Georgia, and under the age of sixty years, the said Bennie Byrd became totally disabled within the disability clause of said policy or certificate in that he sustained, while at and in the line and scope of his said work, a permanent injury to one of his wrists or hands, which then and continuously until his death incapacitated him for the work in which he was engaged or such as he was qualified to do, for wage and profit, in that he could not carry on same without the use of the said injured member and the injury prevented the efficient use thereof, being of a nature that use thereof in such work would aggravate said injury and cause severe pain, being to such an extent as to incapacitate him for the work; that he died on or about July 9, 1929, and that no part of said insurance has been paid. She avers further that defendant has failed, on demand from her, to furnish blanks for her to use in making proof of this claim, has refused payment of said policy through letter of February 17, 1931, with words as follows:
"Inasmuch as our investigation discloses quite definitely that the deceased performed active service for compensation or pay quite some time after August 1927, we cannot consider the claim. Plaintiff, therefore, brings this suit without making to defendant a formal proof of her claim."
Count 5 is the same as count 4, except that it contains the added averment, after the words "that he died on or about July 9, 1929 and that no part of said insurance has been paid," as follows: "She avers further that the disability option rights in said policy given to Bennie Byrd were not exercised by him and she, as beneficiary in said policy, exercises same, selecting first option right, to-wit: Full amount."
Count 6 is as follows: "The plaintiff claims of the defendant the sum of one thousand dollars as damages for, to-wit: That she was the wife of Bennie Byrd at the time of his death and survived him as his widow; that he died on or about July 9, 1929, a resident and citizen of Georgia; that subdivision (1) of section 3931 Code of Georgia of force at that time reads: Upon the death of the husband without lineal descendants, the wife is his sole heir, and upon the payment of his debts, if any, may take possession of his estate without administration. That he did not have any children nor lineal descendants; that he did not leave any property, other than one thousand dollar claim against defendant company, as hereafter shown; that he died intestate; that there has been no administration on his estate; that there are no outstanding debts against his estate, she having paid such as existed. She avers further that Section 3964 of the Code of Georgia of force at the time of the death of Bennie Byrd reads: 'Nothing in this article shall be construed to authorize and require the ordinary to vest the administration in the county administrator, or any other person, where the heirs, distributees or legatees prefer to settle without administration.' And she avers that she desires and has elected to settle the estate of her deceased husband without administration, and she, as his widow, makes this claim against defendant on facts as follows. * * *"
The remainder of this count is a copy of count 5.
Count 7 contains the same preliminary averments as count 6, quoted last above. The remainder of this count is a copy of count 4.
Pertinent provisions of the policy are as follows:
"If any employee, before attaining the age of sixty years and while insured hereunder, becomes totally disabled and presumably will thereafter during life be unable to engage in any occupation or employment for wage or profit, or shall meet with the entire and irrecoverable loss of the sight of both eyes or of the use of both hands or both feet or of one hand and one foot, such employee shall be deemed to be totally and permanently disabled. Upon receipt at the Home Office of the Company, during the continuance of insurance on such employee, of satisfactory evidence of such disability, the Company will pay the amount of insurance in force upon such life at the time such disability commenced, in lieu of all other benefits provided for on such life under this policy, by that one of the following optional methods that shall be designated and requested."
"First: Payment to the disabled employee in one sum.
"Second: Payment in instalments to the disabled employee. The instalments shall be payable monthly, quarterly, semi-annually or annually, and shall cover a period of five, ten, fifteen or twenty years, the first payment to be made immediately. Any instalments remaining unpaid at the death of such disabled employee shall be payable as they become due to the duly designated death beneficiary, who shall have the right to commute such remaining instalments into one sum on the basis of interest at three and one-half per cent. (3 1/2) per annum.
"Third: Payment to the disabled employee of instalments of any fixed amount elected until the amount of insurance with interest thereon at three and one-half per cent. (3 1/2%) per annum is exhausted. Instalments may be payable monthly, quarterly, semi-annually or annually. At the death of the employee the balance of the fund will be paid in one sum to the duly designated death beneficiary.
"Fourth: Annual payment to the disabled employee of interest at the rate of three and one-half per cent. (3 1/2%) per annum upon the amount of insurance, and payment of this amount of insurance at the death of the disabled employee to the duly designated death beneficiary."
"It is a condition of this policy that the Company shall be permitted to examine any disabled employee insured hereunder at any time before such employee is admitted by the Company to be totally and permanently disabled."
The certificate contained the following provisions:
"Any sum payable as a death claim or permanent and total disability claim shall be paid by that one of the following optional methods as shall be designated and requested.
"1. Full sum.
"2. Instalments over 5, 10, 15 or 20 year period.
"3. Payment of instalments of any fixed amount until the amount of insurance with interest thereon at 3 1/2% has been exhausted. These instalments may be monthly, quarterly, semi-annually or annually, as elected.
"In event of a permanent and total disability claim being settled under option number 2 or 3, any balance remaining unpaid at death of disabled employee shall be payable in one sum or in instalments, as they become due, to the designated death beneficiary.
"A further settlement option in event of permanent and total disability is as follows:
"Payment of interest at 3 1/2% upon the amount of insurance to disabled employee and the principal sum at death to his designated death beneficiary."
Chas. F. Douglass, of Anniston, for appellant.
Where a party becomes totally and permanently disabled, with policy covering same and in force at the time, the liability becomes fixed, and is not affected by a subsequent lapse or cancellation. Burkheiser v. Mut. Acc. Ass'n (C.C.A.) 61 F. 816, 26 L.R.A. 112; Railway Mail Ass'n v. Dent (C.C.A.) 213 F. 981, L.R.A. 1915A, 314; Illinois Bankers' Life Ass'n v. Byassee, 169 Ark. 230, 275 S.W. 519, 41 A.L.R. 379; Simmons v. Western Ind. Co. (Tex.Civ.App.) 210 S.W. 713; 14 R. C. L. 975; 32 C. J. 1246, 1256. Where an insurance company declines payment of a policy on one ground, it limits its defense to that one ground. If that ground is not sustained, it owes the amount of the policy to some one. Where the insured designates a beneficiary, he or she becomes the assignee of the rights of the policy not used by the insured. Maryland Cas. Co. v. Terry, 24 Ala. App. 172, 133 So. 303; Travelers' Ins. Co. v. Plaster, 210 Ala. 607, 98 So. 909; Liverpool, etc., Ins. Co. v. McCree, 213 Ala. 534, 105 So. 901; McKinley v. Nat. Benefit Life Ins. Co., 223 Ala. 545, 137 So. 450; Irving Bank v. Alexander, 280 Pa. 466, 124 A. 634, 34 A.L.R. 834; McConnell-White-Terry Realty Ins. Co. v. Fid. Dep. Co., 212 Ala. 339, 102 So. 617; Standard Acc. Ins. Co. v. Hoehn, 215 Ala. 109, 110 So. 7; 14 R. C. L. 1371. In absence of specific requirement, the insured does not have to exercise an option right, and the question as to whether or not he has abandoned his policy is one for the jury. Haas v. Mut. Life Ins. Co., 90 Neb. 808, 134 N.W. 937, Ann. Cas. 1913B, 919. An option is a property right. If not exercised by the insured, it passes to the beneficiary. Hampe v. Metropolitan Life Ins. Co. (Mo.App.) 21 S.W.(2d) 926; Knapp v. John Hancock Mut. Life Ins. Co., 214 Mo. App. 151, 259 S.W. 862; McEachern v. New York Life Ins. Co., 15 Ga. App. 222, 82 S.E. 820; New York Life Ins. Co. v. Noble, 34 Okl. 103, 124 P. 612, 45 L.R.A. (N.S.) 391; 14 R. C. L. 992. Under the Georgia law, where one dies intestate, and there is no administration on his estate, no indebtedness, and no children, the widow, being the sole heir, may, without administration, sue for the property due the estate. She can maintain the suit under Alabama law. Code (Georgia) 1911, §§ 3931 (1), 3964; Union Ins. Soc. Co. v. Sudduth, 212 Ala. 649, 103 So. 845; Code (Alabama) 1923, § 5699. Under the averments of the complaint, appellant is the proper party to bring this suit. Norwich Union Fire Ins. Co. v. Prude, 145 Ala. 297, 40 So. 322, 8 Ann. Cas. 121; Code 1923, § 7925. At the time insured died, his right to exercise option had not expired. The policy fixes no time limit. His death therefore automatically merged this claim into a death benefit, payable to the beneficiary. Veal v. Sec. Mut. Life Ins. Co., 6 Ga. App. 721, 65 S.E. 714. There is a condition precedent clause in the policy, but it in no wise interferes with the right of appellant to recover. Proof of disability might have been made before or after the death of the beneficiary. Payment was declined on the sole ground there was no disability. Taber v. Royal Ins. Co., 124 Ala. 681, 26 So. 252; Richards v. Standard Acc. Ins. Co., 58 Utah, 622, 200 P. 1017, 17 A.L.R. 1183; Merchants' Nat. Bank v. Hubbard, 220 Ala. 372, 125 So. 335. The averments of the complaint as to the policy being in force are sufficient. Code 1923, § 9531 (12); Sovereign Camp v. Gunn, 224 Ala. 444, 140 So. 410; Knights of Modern Macabbees v. Gillespie, 14 Ala. App. 493, 71 So. 67; Travelers' Ins. Co. v. Whitman, 202 Ala. 388, 80 So. 470. When insured became totally and permanently disabled, he was relieved from further premium payment, and the liability of appellee became fixed. 3 Joyce on Ins. 2917.
London, Yancey Brower and Whit Windham, all of Birmingham, for appellee.
The cause of action, if any, arising in behalf of, and accruing to, the insured in his lifetime to collect money due him on the contract for disability occurring in his lifetime, passes to his personal representative, if to any one, and not to his widow personally. Norwich Union Fire Ins. Co. v. Prude, 145 Ala. 297, 40 So. 322, 8 Ann. Cas. 121; Nettles v. Barnett, 8 Port. 181; Gardner v. Gantt, 19 Ala. 666. The averment that a policy of insurance on a certain date was in force is but a mere conclusion, and, unless the further averments of the complaint furnish positive averment of facts to substantiate the conclusion, the complaint is bad. National L. A. Ins. Co. v. Hannon, 212 Ala. 184, 101 So. 892. Where a complaint on a policy of insurance sets forth as a portion of its averment the policy itself, or a portion of the policy, containing conditions or engagements to be performed on the part of the insured, or the owner of the policy, the complaint must contain also an averment that the provisions of the contract on the part of the owner thereof had been complied with. Brooklyn Life Ins. Co. v. Bledsoe, 52 Ala. 538; Southern Ind. Ass'n v. Ridgway, 190 Ala. 334, 67 So. 446.
This appeal is from a nonsuit by appellant in the court below superinduced by an adverse ruling sustaining appellee's demurrers to her amended complaint, consisting of counts 4, 5, 6, and 7.
Section 9479 of the Code abolishes the general demurrer, requires a demurrer to specify the defect, and provides that no objection can be taken which is not distinctly stated in the demurrer. Demurrers numbered 1, 11, and 14 are general demurrers within the purview of this statute, under the decisions of the Supreme Court (Alabama State Land Company v. Slaton, 120 Ala. 259, 24 So. 720; Denson v. Caddell, 201 Ala. 194, 77 So. 720; Donegan v. Wood, 49 Ala. 242, 20 Am. Rep. 275; Courts et al. v. Happle et al., 49 Ala. 254; Brewer v. Watson, 65 Ala. 88; Cook v. Rome Brick Company, 98 Ala. 409, 12 So. 918), and need not, therefore, be further considered.
The demurrers raise the question of plaintiff's right, as the designated beneficiary in the certificate, to maintain the action set forth in counts 4 and 5. Appellant insists that the plaintiff, as such beneficiary, can maintain the action declared on in the fourth count, and further, that as such beneficiary of the options referred to in count 5, she, as such beneficiary, is entitled to exercise such options and to maintain the action there declared upon. These two counts are not predicated upon a life policy maturing at death and by death, but are based upon a total disability. By the terms of Exhibit A to the counts, following total disability, the appellee was obligated to pay "the disabled employee" but not the designated beneficiary, and such payment when made was "in lieu of all other benefits provided for on such life." The contract further provided: "The amount of insurance payable at the death of an employee shall be paid to the death beneficiary." It seems clear, therefore, that the beneficiary, as such, could not, merely because she is designated as death beneficiary, recover sums due, not because of death, but solely because of a prior total disability and payable not to beneficiary, but to the insured himself.
In counts 6 and 7, plaintiff predicates a recovery upon the averment that she is the widow of the deceased insured, who left no lineal descendants, whose debts have been paid, and upon whose estate there has been no administration, and that she is therefore entitled to recover sums payable to the insured for his total disability, and to exercise the options mentioned in the contract which the insured failed to exercise. As a basis for such right, the complaint copies the statutes of Georgia (where both the plaintiff and the insured then lived). The Georgia statutes are sufficiently pleaded under the decisions of the Supreme Court. Cubbedge v. Napier, 62 Ala. 518; Dawson v. Dawson, 224 Ala. 13, 138 So. 414. The question as to who is a proper party plaintiff in the courts of Alabama, the forum, is determined by the law of Alabama. 47 Corpus Juris 17, 18. The specific inquiry then is, May a sole heir of an estate, owing no debts, and without any administration thereon, sue in his or her name in Alabama, to recover money on a contract payable to the deceased?
Appellant insists that by virtue of section 7925 of the Code, such suit can be maintained; but that exemption statute was and is without application to plaintiff or the estate of the decedent, since she and he were both residents of Georgia; nor are we advised that Georgia has a similar statute, hence we cannot know that this suit involves any exempt property. Appellant further insists she is the beneficial owner within the meaning of section 5699 of the Code, and hence can sue upon an insurance policy as was held in Union Ins. Soc. v. Sudduth, 212 Ala. 649, 103 So. 845. This question has been before the courts of this state many times. In Fretwell v. McLemore, 52 Ala. 124, Chief Justice Brickell considered many previous cases, and quoted the observation of Chilton, J., in Vanderveer v. Alston, 16 Ala. 494: "In case of a sole distributee, the claims of creditors aside, I see no principle of public policy requiring the party to push the property through the diminishing process of administration." Sullivan v. Lawler, 72 Ala. 68, was a bill in equity, and recognized the general rule that ordinarily the heirs or distributees, in the absence of an administrator and in the absence of special circumstances, cannot maintain suits for the collection of personal assets. Wood v. Cosby, 76 Ala. 557, held, in the absence of a personal representative, a sole legatee should not sue on a note due decedent, in the absence of proof as to due debts; thus impliedly holding that with such proof present the suit could be maintained, as was permitted in Carter v. Owens, 41 Ala. 217, following a division and allotment among the distributees. Cooper v. Davison, 86 Ala. 367, 5 So. 650, and Wright v. Robinson, 94 Ala. 479, 10 So. 319, recognized the rights of the heir to file a bill to foreclose a mortgage due the decedent when there were no debts and no administration. McGhee v. Alexander, 104 Ala. 116, 16 So. 148, upheld the right of the surviving husband and children of a Georgia resident to file a bill in equity in Alabama to enforce a vendor's lien, and to like effect in Mancill v. Thomas, 216 Ala. 623, 114 So. 223. Teal v. Chancellor, 117 Ala. 612, 23 So. 651, permitted one distributee to sue another in equity, without administration, when the estate owed no debts. Davenport v. Brooks, 92 Ala. 627, 9 So. 153, held the distributees could not maintain detinue for two reasons; the second being: "Their claim merely as distributees should be asserted through administration." In Wooten v. Steele, 98 Ala. 252, 13 So. 563, the Supreme Court said: "The rule is that the legal title of a decedent to personal property vests in the administrator, and the administrator alone can sue. This rule prevails for the purposes of administration. When there is no necessity for an administration, or where there has been a complete administration and final settlement, the rule does not apply." And in Mobile Temperance Hall Ass'n v. Holmes, 189 Ala. 271, 65 So. 1020, 1024, it is said: "We might add, however, that although the funds here in controversy be personalty, yet it is not in every such case that administration is necessary."
The sole beneficiary of a suit, prosecuted by an administrator, can settle the same out of court, and bind the administrator. Kennedy v. Davis, 171 Ala. 609, 55 So. 104, Ann. Cas.1913B, 225.
It thus appears that the obligation of the defendant to pay insured for a total and permanent disability, never having been discharged, may be enforced by his personal representative, and if there be no administration upon his estate, and the estate owes no debts, the obligation may be enforced by his widow under the facts alleged and under the statutes of the state of Georgia, who is thereby made "his sole heir," and, as such, entitled to "take possession of his estate without administration."
Neither of these counts aver nor show a compliance by the plaintiff or the insured with conditions precedent, as that notice was given as required by the policy, or evidence of disability furnished, or proof furnished during the continuance of the insurance. The necessity for so alleging was obviated by the averred refusal of the defendant to pay for a reason entirely apart from any failure to furnish such proof. Maryland Cas. Co. v. Terry, 24 Ala. App. 172, 133 So. 303, and authorities cited.
Appellee then insists it is not averred that the insured exercised any of the options provided in the policy as to the mode, amount, and time of payments, and, in effect, urges that since the insured failed to exercise such option, no one else can exercise the same, and hence its obligation to pay be never enforced. We think it clear that the owner of the obligation can exercise such options. See Couch on Insurance, vol. 3, §§ 643, 644; vol. 2, § 344.
Appellee also insists that to permit a recovery by this plaintiff upon proof of the absence of debts owing by the estate might subject the appellee to a double liability, in that some unknown creditor of the estate might hereafter qualify as administrator, and, not being bound by this action, might also sue the appellee. That such a possibility exists is undeniable; but it results from the law as heretofore declared by the courts of this state, and any remedy for such a situation must come from the lawmaking power of the state.
The last insistence of appellee to be noted herein is that neither count avers that the policy was in force and effect at the time of the insured's death. Sufficient to say that if in force and effect at the time the alleged total and permanent disability was suffered, the cause of action arose, and no demurrer takes the point that the complaint does not sufficiently aver the policy was then in force and effect.
Reversed and remanded.