Opinion
Department One
Appeal from a judgment of the Superior Court of Alameda County. F. W. Henshaw, Judge.
COUNSEL:
The certificate was in substance a policy of mutual life insurance. (Commonwealth v. Wetherbee , 105 Mass. 160; Weisert v. Muehl , 81 Ky. 340; Bacon on Benefit Societies, secs. 255, 304.) The beneficiary named in the certificate has a vested right in the policy. (May on Life Insurance, sec. 399; Bacon on Benefit Societies, sec. 292; Pingrey v. National Life Ins. Co ., 144 Mass. 374; Allis v. Ware , 28 Minn. 166; Greeno v. Greeno, 23 Hun, 482; Richards on Life Insurance, sec. 36; May on Insurance, sec. 399.) A designation of beneficiaries can only be made in accordance with the charter and by-laws of the company. (Richards on Insurance, sec. 171.) Where no mode is provided for changing beneficiaries a will cannot effect the change. (Olmstead v. Masonic Mut. Ben. Soc ., 37 Kan. 93.)
M. C. & E. C. Chapman, and T. M. Bradley, for Appellants.
A. A. Moore, and Fred V. Wood, for Respondent.
A beneficiary may be changed by will. (Splawn v. Chew, 60 Tex. 532; Catholic Ben. Assn. v. Priest , 46 Mich. 429; Bacon on Benefit Societies, sec. 291.)
JUDGES: Garoutte, J. Harrison, J., and Van Fleet, J., concurred.
OPINION
GAROUTTE, Judge
This litigation arises over the disposition of a certain sum of money coming from the Portuguese Union of the state of California, a mutual benefit society. One Flores, now deceased, was a member of said society, and his beneficiaries, as named by him in his certificate of membership, were the plaintiffs herein. Flores made no attempt to substitute other and different beneficiaries [42 P. 33] during his lifetime, but by his will provided: "I also give to my son Frank the money which will become due from said Uniao Portugueza de Estado de California at my death, and that the necessary expenses of my sickness and burial shall be first paid out of said money." The son is now claiming the money under this provision of the will, and is the intervenor and respondent.
The constitution of the society contains the following provision: "Any member of the Portuguese Union of the state of California, dying and standing clear on the books of the council to which he belongs, his heirs or a person or persons whom he may have designated shall be entitled to receive from the special fund of the union a sum equal to one dollar for each member in good standing in the union." There is no by-law or constitutional provision of the society, or statute of the state, providing for a change or substitution of beneficiaries in a certificate of membership issued by this society, and it is now contended upon the part of plaintiffs, such being the fact, that the present beneficiaries, plaintiffs, had a vested interest in the contract or certificate of insurance, the same as in the ordinary contract of life insurance, and that their consent was necessary to a valid substitution of a new beneficiary. This proposition of law is controverted by the other side; respondent insisting that, unless the right to change beneficiaries is restricted by some law of the order or statute of the state, the assured has the absolute right to make such change. And it may well be said respectable authority is found supporting both positions. Bacon, at section 304 of his work upon Benefit Societies, in speaking as to the difference between these two classes of contracts of insurance, says: "But, as in either case the rights of the beneficiary are dependent upon and fixed by the contract between the assured and the company or association, there seems to be no reason why the assured should have any greater power to change the beneficiary in one case than in the other, except as that power may be inherent in the nature of the association, or is reserved to him by the constitution or by-laws of the association, or by the terms of the certificate." Upon the same lines are Commonwealth v. Wetherbee , 105 Mass. 160, and Weisert v. Muehl , 81 Ky. 340; but to the contrary we find the court saying in Martin v. Stubbings , 126 Ill. 387, 9 Am. St. Rep. 620: "Most of the decisions seem to concur in holding that, in case of mutual benefit societies, the beneficiary named in the certificate of membership acquires no vested right to the benefit to accrue upon the death of the member, until such death occurs. The member may, therefore, during his lifetime, exercise the power of appointment without other limits or restrictions than such as are imposed by the organic law of the society, or the rules and regulations adopted in conformity therewith." To the same effect is Masonic Mut. Ben. Soc. v. Burkhart , 110 Ind. 189. But the merits of the present appeal may be disposed of upon other grounds, and we, therefore, refrain from stating our conclusions as to the true doctrine.
Conceding, for the purposes of the case only, that the assured had the power to change his beneficiary, and if it is necessary to go to that extent, conceding that he had the right to make such change of beneficiary in his will, still we see no change of beneficiaries in this case, and that brings us to a consideration of the provision of the will. Upon the most casual inspection, it is apparent that the testator attempted to deal with the prospective proceeds of the certificate of insurance as though it were money in hand, and his own; but it was neither. There was no money to bequeath, and the certificate of insurance at the time was the property of another, and not subject to his testamentary control. Therefore, looking at this provision of the will as an attempt to dispose of the money coming from the certificate of insurance, it was an entire failure. The provision was likewise barren of results, if we consider it an attempt to dispose of the certificate by his last will and testament, for as long as any living person was named in such certificate as a beneficiary, no revocation having taken place, the testator had no property in the certificate, and no interest therein with which a will might deal. If the testator had a property right in this certificate, or its proceeds, which he could control by will, then, if he had died intestate, the same property right would have passed to his creditors or heirs. Yet it cannot be questioned but that, if in this case the assured had left no will, the certificate, with the proceeds thereof, would have passed to the beneficiaries named therein.
This provision of the will can in no sense be construed as a revocation and substitution of beneficiaries. Such construction is wholly unwarranted by the language used. Even conceding such a thing could be done by the use of apt language in the testator's last will and testament, it would have to be held that the revocation and substitution took effect when the will was made, and not subsequent to the death of the testator, for the testator had no power to revoke and substitute after death. And, again, eo instanti, upon death, the proceeds of the certificate vested in the beneficiaries named therein. It would seem to follow that, if a revocation and substitution of beneficiaries could be made by will in a case like the present one, then the provision found in this will could only have life, and effect the purposes contemplated, when treated as an independent declaration in writing of the testator during life, and as of effect when made. Here there was no intention to accomplish such results. There is no language from which such conclusions might be drawn, but, upon the contrary, it is plain that the testator, by his will, attempted to make a disposition of this property, to take effect upon his death, and at the same time that the instrument [42 P. 34] would take effect upon other property belonging to him. The testator tried to make a testamentary disposition of this property, and this he could not do. These views are fully supported in Niblack on Benefit Societies, section 237.
We see no satisfaction to be gained by respondent from the provision of the constitution of the society heretofore quoted, even conceding that it gave the right to the assured to designate or substitute other beneficiaries. No change or substitution was designated by the assured during life, and it is settled law that such a provision gives no right to make the designation by will. Mr. Niblack, in discussing this question at section 237, supra, says: "Where the contract provides that each member shall designate in writing some person as nominee for the benefit fund, and that upon the death of a member the nominee so designated by him shall receive such fund, a designation of the beneficiary during the lifetime of the member is contemplated, and may not be made by will."
For the foregoing reasons the judgment and order are reversed and the cause remanded for a new trial.