In re Greenberg

271 F. 258, 20 A.L.R. 253, 1921 U.S. App. LEXIS 1779

• Court: Court of Appeals for the Second Circuit
• Decided: January 14, 1921
• Docket: No. 112
• Status: Published

Opinions

HOUGH, Circuit Judge

(after stating the facts as above). [1] The beneficiary of a life insurance policy, who may at any time be removed from the benefited position by the insured and against the beneficiary’s will, cannot have a vested interest. In Grems v. Traver, 87 Misc. Rep. 644, 148 N. Y. Supp. 200, affirmed 164 App. Div. 968, 149 N. Y. Supp. 1085, there was one policy considered much like the one at bar; but the court held as a fact that such policy “was taken out for the especial benefit of the wife under agreement that it should be held for her protection.” No such agreement is here shown, and it may be noted that the cases from United States courts cited and relied on in the Grems Case are from lower courts, and for the most part whollv inconsistent with the subsequent decision in Cohen v. Samuels, 245 U. S. 53, 38 Sup. Ct. 36, 62 L. Ed. 143.

This' being a petition to revise, we can inquire only into the law; the facts (unless without any evidence to support them) we must take as found by the lower court. That court having declared that the bankrupt’s wife never took out, owned, or paid for the policy, there is no ground for asserting that the'wife was within the protection of section 52 of the'Domestic Relations Law (Consol. Laws, c. 14) of this state. By “owned” we take it that the District Judge meant that the policy had not vested in the wife, which is the meaning in,which we used the word in Re Samuels, 254 Fed. 776, 166 C. C. A. 221.

[2] This case presents but one point, for, strictly speaking) the wife is not before us at all; she is not making any claim to the policy or the proceeds thereof; she is not a party to this proceeding, which is against tire insurance company alone, and at bar that company substantially takes the position that it can, by refusing consent to a change of beneficiary, secure to the'wife the enjoyment of that to which she makes no demand. This raises the question as to the scope of the phrase which gave to the insured the right of changing his beneficiary “from time to time with the consent of the company by written notice to said company.”

It is doubtless true that where a specific and formal manner of changing beneficiary, issuing new certificate or policy of insurance, or of assigning the policy itself, is agreed to and plainly expressed when the policy is obtained, no other method of effecting such change or assignment can ordinarily be recognized, at least as between conflicting claimants. The matter is amply discussed in Freund v. Freund, 218 Ill. 189, 75 N. E. 925, 109 Am. St. Rep, 283; and see a long list of citations in L. R. A. 1915A, 109.

But the contest here is not between 'the original beneficiary and another person selected for succession by the insured. By force of the bankruptcy statute the trustee has succeeded by operation of law to all the rights of the bankrupt in the premises. For practical purposes this contest is between the insured bankrupt and his insurer, and the question would be the same if Greenberg had attempted to substitute for his wife another beneficiary (within the class limited' in the policy) and the company refused consent to the change. Under such circumstances it is to be remembered that this exact provision for the consent of the company to the change is solely for its own protection. John Hancock, etc., Co. v. White, 20 R. I. 457, 40 Atl. 5. And so the question becomes this:' Can the insurer coerce the will of the insured in respect of change of beneficiary, although its own rights are not in any way endangered?

No similar proceeding on the part of an insurer can, we think, be discovered in the books.; but on principle the matter is covered by the decision of Justice Brown, then District Judge, in Supreme, etc., v. Cappella (C. C.) 41 Fed. 1, and Lahey v. Lahey, 174 N. Y. 146, 66 N E. 670, 61 L. R. A. 791, 95 Am. St. Rep. 554, to the effect that where the insured is physically unable to comply with the formalities, or where the insurer itself is so physically unable, equity will deem that to be done which ought to have been done and proceed accordingly. In the present instance-there is no physical inability; there is a flat refusal to perform on the part of the insurer, for reasons having no relation to its own security, or indeed to its own business. It is avowed at bar that the company prefers to pay the bankrupt’s wife the whole of the policy rather than pay the trustee the surrender value thereof.

Bankruptcy is equity, and just as it will presume on occasion that that has been done which ought to be done, so on other occasions it will compel that to be done which ought to be done. This is one of those occasions.

The order under review is affirmed, with costs.