McKinney v. Fidelity Mutual Insurance

193 S.W. 564, 270 Mo. 305, 1917 Mo. LEXIS 26

• Court: Supreme Court of Missouri
• Decided: March 12, 1917
• Status: Published

Opinion

BOND, P. J.

^ Statement. — I. Action on a policy of life insurance to recover amounts totalling thirty thousand dollars, or the commuted value thereof of $21,522. The answer was a general denial and the cause was . -, , , , „■ tried without a jury on an agreed statement ot facts, resulting in a judgment for plaintiffs for $2760, less costs. The plaintiffs appealed.

The agreed statement of facts, in substance, is as follows:

That this case shall be submitted to the court upon an agreed statement of facts and such other testimony as either party may deem material, all objections by .either party to the sufficiency of the pleadings being hereby waived.

The defendant is a corporation organized under the laws of the State of Pennsylvania and licensed to do the business of life insurance in the State of Missouri; that on the 29th day of December, 1903, defendant issued and delivered to Charles S. McKinney its policy of. life insurance, dated December 29, 1903, in the sum of $30,000, a copy of which is hereto attached, marked “Exhibit A,” to this agreed statement; that on December 29, 1903, Charles S. McKinney resided in the city of St. Louis, State of Missouri; that said policy (Exhibit A) remained in the possession of the said Charles S. McKinney until November 25, 1912, when it was surrendered by the said Charles S. McKinney to the defendant as hereinafter stated.

The plaintiffs, beneficiaries named in said policy, had no knowledge of the surrender of the same by said Charles S. McKinney until after his death; that all the premiums provided for in said policy were duly paid by the said Charles S. McKinney to the defendant up to November 1, 1912; that the premium due November 1, 1912, was not paid on that day, or within the thirty-day-grace period provided and allowed for such payment in the clause headed, “G-eneral Precedent Conditions,” on the second páge of Exhibit A; that said policy, on December 1, 1912, had a paid-up value of $2760, and, if not legally surrendered on or before that date, was entitled to be continued in force for the full amount thereof for a period of three years and one month from that date; that on November 19, 1912, said Charles S. McKinney wrote to the defendant company as follows:

St. Louis, November 19, 1912.

Mr. L. G. Fouse, President

Fidelity Mutual Life Insurance Co.,

Philadelphia, Pa.

My Dear Sir: •

I have a policy with your company No. 148,948. I want to take paid-up insurance on this policy.

I inclose you self-addressed envelope so that you may further direct my steps in this direction.

Thanking you in advance.

Yours truly,

C. S. McKinney.

That said letter was dnly received by said L. G-. Fonse on or before November 22, 1912; that on November 22, 1912, the defendant company, through its authorized agent J. B. Franks, assistant actuary, wrote to said Charles S. McKinney the following letter:

Philadelphia, Pa.

November 22, 1912.

IN RE: PAID-UP INSURANCE LOAN.

No. 148,948.

Mr. Charles S. McKinney,

4109 Westminister PI.,

St. Louis,.Mo.

Dear Sir:

We have your favor of November 19. Your policy of the above number can be surrendered at the present time for a paid-up policy of $2760 payable in one sum at your death, etc.

Yours truly,

J. B. Fbanks,

Assistant Actuary.

That said letter was dnly received by said Charles S. McKinney on or before November 25, 1912; that on November 25, 1912, the said Charles S. McKinney wrote to L. Gr. Fonse, president of the defendant company the following letter;

St. Louis, November 25, 1912.

Mr. L. G. Fouse,

Fidelity Mutual Life Insurance Co.,

Philadelphia, Pa.

Dear Sir:

I am enclosing you my policy 148,948. Also I am returning you-blank form No. 375, properly filled out, and you may return to me the paid-up value on this policy.

Thanking you in advance,

Yours truly,

Charles S. McKinney.

That said letter was duly received hy said L. C. Fouse, president, on Or before November 28, 1912; that on November 25,1912, the said Charles S. McKinney, executed and sent to the defendant company with his said letter of that date the following paper, to-wit:

SURRENDER AND CANCELLATION OF POLICY CONTRACT.

I, the insured under policy 148,948, issued on the 29th day of December, 1903, on the life of Charles S. McKinney, of St. Louis, Mo., by the Fidelity Mutual Life Insurance Company, of Philadelphia, Pa., do hereby in consideration of the issuance of a paid-up policy for $2760, payable in one sum at death, request a cancellation of said policy and do, for myself and my legal representatives, hereby release and forever discharge the said Fidelity Mutual Life Insurance Company from all actions, causes of action, suits, controversies, claims and demands whatsoever, for and by reason of said policy No. 148,948, or of any matter, cause or thing connected therewith.

In Witness Whereof I have hereunto set my hand the 25th day of November, A. D. 1912.

Charles S. McKinney.

Witnesses:

Omab Hilton.

That said paper was duly received by the defendant on or before November 28, 1912; that pursuant to the request contained in the letter of Charles S. McKinney, of November 25, 1912, and in the paper designated “Surrender and Cancellation of Policy Contract,” hereinabove set out, the defendant prepared and executed its policy of paid-up insurance dated November 25, 1912, in the sum of $2760, a copy of which policy is hereto attached, marked “Exhibit B,” and on December 3, 1912, wrote to the said Charles S. McKinney the letter of that date, a copy of which is as follows;

Philadelphia, Pa., December 3, 1912.

IN RE: POLICY NO. 148,948; ENCLOSED.

Mr. Charles S. McKinney,

4109 Wesminster Place,

St. Louis, Mo.

Dear Sir:

We enclose herewith participating paid-up policy of aboye number for $2760 issued per instruction of our actuarial department, and your letter of the 25th enclosing policy and form No. 375.

Yours very truly,

R. L. Tuix,

Secretary Policy Dept.

That said letter dated December 3, 1912, and said policy (Exhibit B) were sent to the said Charles S. McKinney through the medium of the TJnited States mail, postage prepaid, on December 3, 1912, and were delivered at his residence, 4109 Westminster Place, St. Louis, Missouri, on December 5, 1912; but it is further stipulated and agreed that the letter of December 3, 1912, and said policy (Exhibit B) were not, delivered at the residence of Charles S. McKinney until after the death of said Charles S. McKinney, on December 5, 1912, as hereinafter set forth, and said policy was not seen by Charles S. McKinney prior to his death on said December 5, 1912.

Plaintiffs, beneficiaries named in said original policy, returned said second policy to the company and refused to accept same; that said policy was .afterwards returned to the attorney for plaintiffs by the company, and it is agreed that plaintiffs shall deposit said policy with the clerk of the circuit court of the city of St. Louis, upon the filing of this agreed statement of facts, to be retained by said clerk until the determination of this suit, when it shall be delivered to defendant; that the rights of the plaintiffs shall not be prejudiced by anything done by them in regard to -said policy; that said' Charles S. McKinney died on December 5, 1912, about one p. m., in- the city of St. Louis and at the Mercantile Club in said city; that his death was sudden; that the cause thereof was heart disease; that due proofs of death and demand for the payment of the sum of $30,000 were made by plaintiffs, and that the payment of said sum-was refused.

That the defendant admitted its liability for the sum of $2760, the sum insured by Exhibit B; that it tendered payment of said sum .to the plaintiffs; that acceptance of said sum was refused; that the defendant has at all times maintained its tender and upon the filing of this agreed statement has deposited in court the sum of $2760, which it still admits is due to the plaintiffs ; that said original policy referred to in paragraph two of the agreed statement of facts has a commuted value payable in lieu of the installments payable under said policy and under the conditions specified therein of $21,522; that should the finding and judgment of the court be that the defendant is liable to plaintiffs on said policy mentioned in paragraph 2 of this agreed statement of facts, being the original policy issued to Charles S. McKinney, then judgment may be rendered in favor of plaintiffs for the commuted value of the installments payable under said policy and the amount deposited in court shall be applied as part payment thereof, and the court costs shall be taxed against defendant; but, if, on the other hand, the court shall find and adjudge that the defendant is liable for only the amount of $2760, then the court costs shall be taxed against the plaintiffs and be deducted from the said deposit; that from and. after the issuance of the original policy and until it was surrendered by the insured, ■ said policy remained in the sole possession of the insured and was never in the possession of the plaintiffs, but plaintiffs had knowledge of the existence of said policy and that they were designated as beneficiaries therein; that the insured paid all the premiums that were paid on said policy and that said policy was never assigned or pledged by the insured or by the beneficiaries thereunder; that' said original policy was at all times free from debt within the meaning of that term as used in said policy.

Surrender of Policy. Change ofBeneficiary. II. The question presented by this appeal is whether the insured had the power to surrender his

original policy for a paid-up policy payable at bis death to the same beneficiaries, without their consent. The policy belonged to a class of insurance contracts wherein the rights of the beneficiaries were vested (U. S. Casualty Co. v. Kacer, 169 Mo. 313; Blum v. N. Y. Life Ins. Co., 197 Mo. 513) and could not be divested prior to the innovation of inserting in such policy a contract provision which entitled the insured to change the beneficiary. This latter provision is as broad as its terms and no broader, and hence it must be construed according to the terms and stipulations expressing it in a given case. [Grigsby v. Russell, 222 U. S. 149.] The right to change the beneficiary, whether as an incident to fraternal-beneficial insurance, or as one resting in contract expressed in an ordinary policy, is equally efficacious, and the power to exercise it is measured by the language on which it is' founded. Whether it arises by convention or from the the nature of the insurance, the beneficiary to be affected by its exercise has a conditional interest only in the policy proceeds, while the power to change such beneficiary continues to exist. [Rosman v. Travelers Ins. Co., 96 Atl. (Md.) 875; Diehm v. Ins. Co., 129 Mo. App. 256; Lewine v. Sup. Lodge K. P., 122 Mo. App. l. c. 554; Mut. Ben. Life Ins. Co. v. Swett, 222 Fed. 200; Bacon, Benefit Societies, sec. 291a.] There is some contrariety of view in the rulings in other states (cited in the briefs of counsel)respecting the interest remaining in the insured after he had procured a policy in accordance with the ordinary-life plan to be made payable to another, coupled with a reserved power to change the beneficiary. The conclusion we have reached from the agreed facts renders it unnecessary to review or attempt to reconcile the conflicting views expressed by the courts of sister states.

TIT. The legal questions presented on this appeal are readily resolvable, under the statutes and decisions, of this State.

contract by'&tatutes. Before calling specific attention to these, it is well to note that we are not called upon to deal with any change made by - the insured of the beneficiaries designated when he obtained the policy; for the paid-up policy received by him was payable to the same beneficiaries as the original ' policy, which was surrendered by him. Not having exercised any power vested in him under that provision of the policy, its terms need not be considered further than as affording an incidental support (in connection with any other provision incorporated in the policy by law or the agreement of parties) for what, was actually done by the insured culminating in the delivery to him of the paid-up policy. If there was warrant for this action on his part, either in the terms put into the original- policy by the parties or written into •the policy by force of the statutes of this State, then the judgment of the court below must be affirmed.

Sections 6946, 6947, 6948 and 6949, Revised Statutes 1909, govern the conduct of the business of foreign insurance companies in this State and are as much a part of an ordinary-life policy written by a foreign company licensed to do business in this State as if the language of the statutes- had been inserted in the policy as a part of the agreement of the parties to that contract. [Head v. Ins. Co., 241 Mo. l. c. 413, and 'cases cited.] Those statutes need not be copied into this opinion. In general their effect is that policies upon which three annual premiums have been, paid shall be non-forfeitable; shall carry extended insurance according to a statutory plan;. that the “legal holder” of such a policy (Sec. 6947) may; demand a paid-up policy for an amount computed by a statutory plan; that the “legal holder” of the policy (Sec. 6949) may himself surrender the policy and thus avoid the self-enforcing provisions of the statute. With the powers expressed by the terms of these statutes embodied in the original policy, it is difficult to see what impediment conld exist in the way of the transaction which was had between the insured and the défendant company. They were the parties to the convention and possessed an absolute right and power to frame their contract as they saw proper, provided its. terms and stipulations were not contrary to any rule of law or public policy of. this State. The insured was ex necessitate the “legal holder” of the policy issued to him, although payable to his wife and child, by virtue of the provisions contained in the policy and the rights secured to him by its terms. Foremost among these was the absolute power to substitute for the original beneficiaries, any other person including himself, at his own will and pleasure. Of coordinate importance to that right is the statutory alternative given to the insured after the payment of three premiums on the policy. As the result of the agreement when the policy was obtained, it was delivered to the insured. Under the terms of that instrument, inserted both by the act of the parties and by the law, certain rights were guaranteed to him which could only be enforceable -upon the assumption that he was legally, as well as actually, the holder of the policy; for under the terms of that instrument he could not, without the production of the policy, either alter the beneficiary or surrender it and obtain in lieu a paid-up policy. As to this the language of the policy is significant and conclusive, to-wit: “The insured, with the approval of the president or vice president, may, upon the surrender of this policy, change the beneficiary.” This demonstrates that the status of the insured, as the “legal holder” of the policy, inhered in the formation of the contract itself. The policy provided in a similar way for its surrender by the insured and the delivery to him in consideration thereof, of a paid-up policy in the exact sum for which judgment was rendered in the trial court. Our conclusion is that the policy in question was legally surrendered, unless this was prevented by the terms of another statute to which our attention is directed by the learned counsel for appellant.

Wife’s Separate Estate. IV. The statute relied upon is section 6944, Bevised Statutes 1909, and in substance and as far as material provides that a policy made payable to the wife of the insured “shall inure to her separate benefit, independently of the creditors, executors and administrators of the husband.” The design of this statute was to affect the quality of the estate given to the wife by virtue of her being a béneficiary in the policy and to make whatever should come to her thereunder, a part of her separate estate and exempt from the claims of the creditors of her deceased husband. It was not the‘design of the statute to disable the husband in the making of his contract, from entering into an agreement which would render the interest of his wife, as beneficiary, wholly contingent upon the non-exercise of such powers as were reserved to the insured under the conventional and statutory terms of the present policy. The statute did not intend nor provide, nor could it be rationally construed, that the husband, should not have full liberty to contract with reference to the interest which he might desire to give to his wife as beneficiary in a policy upon, his life. It only provides that whatever contract he does make — whether giving her an absolute or a conditional interest — shall result in making that interest, if it ever accrues to the wife, a part of her separate estate. [Clarkston v. Ins. Co., 190 Mo. App. l. c. 631, and cases cited; Hilliard v. Life Ins. Co., 117 N. W. 999; Hopkins v. Hopkins, 17 S. W. 865.]

Our conclusion is that the judgment in this case under the conceded facts is correct. It is, therefore, affirmed.

All concur.