New York Life Insurance Co. v. Cook , 237 Mich. 303 ( 1927 )

On February 14, 1923, Oswald J. Cook took out two life insurance policies in the plaintiff company, one for $2,000 and one for $1,000, payable to his mother, Marguerite Cook, in the event of his death. Both policies contain the following privilege of changing the beneficiary:

"Change of Beneficiary — The insured may at any time, and from time to time, change the beneficiary, provided this policy is not then assigned. Every change of beneficiary must be made by written notice to the company at its home office accompanied by the policy for indorsement of the change thereon by the company, and unless so indorsed the change shall not take effect. After such indorsement the change shall relate back to and take effect as of the date the insured signed said written notice of change whether the insured be living at the time of such indorsement or not, but without prejudice to the company on account of any payment made by it before such indorsement. In the event of the death of any beneficiary before the insured the interest of such beneficiary shall vest in the insured."

Four or five months after taking out these policies Oswald J. Cook was married to defendant Jeanette Cook, and in pursuance of said privilege he changed the beneficiary named in the $2,000 policy to his wife. Soon after he changed the beneficiary named in the $1,000 policy to his sister, Ann M. Cook, one of the defendants. About a year after taking out these policies he became ill and was taken to the tuberculosis hospital in Grand Rapids, where he remained about eight months. He was removed to his wife's father's home for a short period, and was then taken to his own father's home, where he was cared for until he died, on November 8, 1925. In May, 1925, he filed a bill of complaint for a divorce. The testimony therein was later taken and submitted, but the trial court had not decided the case when he died. In March, 1925, Oswald J. Cook requested his wife to deliver the policies to him, but she refused to surrender them until he recovered. Later he procured a writ of replevin to obtain them, but the writ failed to produce them. Oswald J. Cook then made an assignment of the $2,000 policy to John Cook, his father, on one of the company's blanks, and explained to it that the beneficiary would not surrender the policy, and, therefore, he could not send it, and requested a change in the beneficiary from his wife to his father. This was not complied with before he died.

Upon the death of the insured the plaintiff admitted liability, but was in doubt as to which beneficiary was legally entitled to the fund, and, therefore, filed this bill of interpleader to obtain the advice of the court. The wife, Jeanette Cook, claims the policy was given to her in such a way as that it amounts in law to an absolute assignment. The sister claims the $1,000 policy was assigned to her to secure a loan of $500 she made to her brother. The father claims that Oswald J. Cook did everything within his power to assign the policy to him, and, therefore, he is entitled to the proceeds of the $2,000 policy. The trial court took the view of Jeanette Cook, and held that she was entitled to the proceeds of the policies, less the $500 to Ann M. Cook.

1. The proofs seem to indicate that the insured, Oswald J. Cook, made every reasonable effort to get possession of his policies so that he could comply with the conditions with reference to a change of beneficiary. Under such circumstances this and other courts have held that the law would regard that as done which ought to have been done, and regard the change as having been made (14 R. C. L. p. 1393, § 556). Speaking of a combination of facts similar to those presented here, the authority cited says:

"If the member does all that is within his power to effect a change in beneficiaries, and fails to surrender the certificate and have a new one issued only because such certificate is in the possession of the original beneficiary, who refuses to surrender it, the beneficiary thus thwarting the wishes of the member will not be allowed to profit thereby, and his rights to the proceeds of the certificate are subordinate to those of the new beneficiaries selected by the member, and to whom the issue of a proper certificate was prevented only by the act of the original beneficiary in refusing to surrender the old certificate."

This text is supported by the Michigan cases:Schiller-Bund v. Knack, 184 Mich. 95; Grand Lodge A. O. U. W. v. Kohler, 106 Mich. 121; Modern Brotherhood of America v.Hudson, 194 Mich. 124; Quist v. Insurance Co., 219 Mich. 406. Other authorities are 36 A.L.R. 771; 37 C. J. p. 585. We think the showing sufficient to entitle John Cook to the proceeds of the $2,000 policy, so far as this question is involved.

2. But counsel argue that the situation was such in the present case as to amount to an absolute assignment of the policies at the time of marriage and in consideration of marriage. If they are right on this proposition, then the wife is entitled to the fund. Jeanette Cook would have no vested interest in the policies by reason of being named therein as beneficiary. Union Mutual Ass'n v. Montgomery, 70 Mich. 587 (14 Am. St. Rep. 519); Metropolitan Life Ins. Co. v. O'Brien,92 Mich. 588; Schiller-Bund v. Knack, 184 Mich. 95; New Era Ass'n v. Kuyat, 191 Mich. 646; Modern Brotherhood v. Hudson,194 Mich. 124; Hooton v. Hooton, 230 Mich. 689.

In Schiller-Bund v. Knack, supra, it was said:

"We have examined the cases cited in the briefs of counsel, and are unable to find a case in which it was held there was a vested right passing to the beneficiary where there was not an express contract founded upon valuable consideration (moving to the assured) between the assured and the beneficiary."

Under this rule we think Jeanette Cook must establish her case. Her claim of assignment was made by the testimony of her mother, the material part of which is:

"Previous before their marriage he said that there was an agreement in the marriage when we were talking about them getting married, he said, 'Well, he was insured for $4,000 and that there was an agreement with the marriage that he would turn over to her as soon as they were married, to be her property forever.' * * * On a Sunday noon, shortly after they were married, I was in the kitchen getting dinner, and then he came to me and says, 'Well, mother, I have had the policies made over to Jen.' He said part of it is to go to Anne, and she certainly will give Jen the other $500. He said she was to have the policies forever, it was her property. He says as long as she lived they belonged to her, he said, 'they are hers.' He said, of course, he felt it his duty he said it was his wife and he said before he was married he had it made out to his mother, but after his marriage he felt it his duty to have it made out to her after his marriage. He said, 'well, you know it was an agreement in the marriage that it was to be turned over to her, and,' he says, 'now I have done it.' "

Counsel argue from this testimony that the transfer of the policies to her was in consideration of marriage. We have not reached that conclusion from all of the proofs. The testimony relied upon shows that there was an agreement that Jeanette Cook should be made the beneficiary in the policies. There is nothing to indicate that the transfer was to be made in consideration of marriage, or that she was influenced by it, nor is there any proof that the transfer figured at all in their agreement to marry, but there is proof that after the marriage he felt it his duty to have her made the beneficiary. The most that can be made of the agreement was that he agreed to make her the beneficiary, not because of her agreement to marry him, but from a sense of duty. This does not satisfy the rule "that a vested interest must result from an express contract for a valuable consideration." There is a considerable difference between making a wife the beneficiary of an insurance policy because she was his wife, and making her the beneficiary in order to get her consent to become his wife. On this question counsel rely on Bland v. Bland, 212 Mich. 549. We do not think that case is in point because in the case cited it clearly appeared that the promise to assign the policy was a consideration for the marriage.

We have had some misgiving as to the good faith of her claim because (1) She made no claim in the divorce proceeding that she had any vested interest in the policies. (2) She made no claim that she had any interest in the policies at the time the husband demanded them. (3) She made no claim of any interest, other than as custodian, when the officer sought to take them on the writ of replevin. (4) She makes no claim in her answer in this proceeding that the policies were given to her in consideration of marriage. (5) It is obvious that the insured did not understand that he had disposed of the policies so he could not change the beneficiaries. (6) Her testimony in this case and her admission that she testified falsely in the divorce case, with reference to the whereabouts of the policies, do not strengthen our confidence in the good faith of her claim.

We conclude that Oswald J. Cook promised to, and did, make his wife the beneficiary of the policy in the same way that most men do to protect their wives against want in the event of death. They lived together only a short time. Trouble arose and he filed a bill for divorce. This altered the situation and also altered his mind, and he changed the beneficiary to one who was caring for him in his losing fight with the inevitable. We think he had a legal right to do this.

A decree will be made giving the father, John Cook, the proceeds of the $2,000 policy. The proceeds of the $1,000 policy will be given to the sister, Ann M. Cook. The proofs on the question whether Oswald changed his instructions to Ann with regard to paying $500 to Jeanette are too meager for us to make a holding on that question. The trial court will determine that question after taking further proofs.

The decree will be reversed, and one will be entered in keeping with this opinion.

SHARPE, C.J., and SNOW, STEERE, FELLOWS, WIEST, CLARK, and McDONALD, JJ., concurred.