Chrysler Corp. v. Disich , 295 Mich. 261 ( 1940 )

The Chrysler Corporation, plaintiff in this suit, took out group life insurance on certain of its employees. This group insurance plan was subscribed to by Ziva Pellich and a certificate in the amount of $3,000 issued to him. On June 30, 1938, Ziva Pellich died, and, in compliance with the terms of the policy, $3,000 was paid to the Chrysler Corporation, which, by virtue of certain provisions in the policy, paid the funeral bill of $395, a hospital bill of $63, and $324.15 to the city of Detroit, department of public welfare, which represented the cost of hospitalization incurred by Ziva Pellich during his lifetime.

Madeline Disich, former wife of Ziva Pellich, and Anna Pellich, his sister, each claimed to be entitled to the proceeds of the insurance. A dispute having arisen, plaintiff corporation filed a bill of interpleader in the circuit court of Wayne county; and under authority of the court paid the remaining amount of the insurance policy into court. The trial court held that Madeline Disich was entitled to the balance of the insurance. Defendant Anna Pellich has appealed.

Madeline Disich, who claims the insurance by reason of having a vested interest in the certificate of insurance, was married to Ziva Pellich in 1921. In 1924; she loaned the deceased the sum of $3,300, which was used to purchase a part interest in a subdivision. Shortly thereafter, Ziva Pellich resold his interest in the subdivision to his vendor for the same amount that he had paid for it. Madeline Disich claims that she was never repaid the money loaned to Ziva Pellich. In February, 1930, Ziva Pellich was granted a divorce from Madeline Pellich (Disich) in an uncontested divorce action, but the divorce decree made no provision for the repayment of the loan.

In 1930, Ziva Pellich was working for the Chrysler Corporation; and worked intermittently for that company for several years. On July 7, 1930, a certificate under the Chrysler group insurance policy was issued to him with Anna Pellich, his sister, named as beneficiary, but within a short time a new certificate was issued and the beneficiary was designated — Madeline, wife, although at that time the deceased was divorced from Madeline Pellich.

The certificate involved in this case was issued to deceased on October 23, 1935, in which Madeline Pellich was named his beneficiary. On May 28, 1937, the beneficiary in the insurance certificate was changed to Anna Pellich, sister. The last change of beneficiary appears on July 12, 1937, at which time it was changed to city of Detroit, department of public welfare, in the amount of hospitalization costs, balance to Anna Pellich, sister.

Madeline Disich contends that she was made the beneficiary in the policy to secure the repayment of the loan made in 1924. The other contestant, Anna Pellich, contends that the reason for naming her beneficiary was to secure a debt of $2,000 owing to her by deceased.

The policy provided that "Each member may name his individual beneficiary to whom he desires the insurance paid, which beneficiary he may change at any time." When Ziva Pellich changed the beneficiary of his policy on May 28, 1937, and July 12, 1937, he stated as follows:

"I certify that I have made no assignment of benefits under said contract, and request that the beneficiary thereunder be changed so that the especial beneficiary to receive the benefits payable under said contract by reason of my death shall be as follows:"

By the terms of the insurance policy, the insured has the right to change the beneficiary at any time. An insured who retains the right to change the beneficiary may do so at his pleasure. MacDonald v. Conservative Life Insurance Co.,292 Mich. 182. But a court of equity will nullify a change of beneficiary which cuts off the rights of one named as beneficiary, which have become vested. Metropolitan Life Ins. Co. v. O'Brien,92 Mich. 584; Detroit Life Ins. Co v. Linsenmier, 241 Mich. 608.

It is the established law in Michigan that in order to obtain a vested right in an insurance policy, there must be an express contract founded upon valuable consideration between the assured and the beneficiary. Schiller-Bund v. Knack, 184 Mich. 95; Bland v. Bland, 212 Mich. 549; New York Life Ins. Co. v.Cook, 237 Mich. 303; MacDonald v. Conservative Life Ins. Co.,supra. Moreover, the burden of establishing the contract is upon the party claiming the vested interest. New York Life Ins.Co. v. Cook, supra.

The principal question in this cause is whether the evidence introduced establishes such a contract. Contestant Madeline Disich relies upon a promise by the deceased to do her "good" if she did not contest the divorce action. In our opinion such a promise is too indefinite to establish a contract. Moreover, an agreement between husband and wife that one shall bring a suit for divorce and that the other shall not contest it is illegal and void as against public policy. In LaFrance v.Cullen, 196 Mich. 726, 730, we said: "It is also the established law in this State that, if any part of the consideration of a contract is illegal, the whole consideration is void. See McNamara v. Gargett, 68 Mich. 454 (13 Am. St. Rep. 355)." Nor does the fact that the certificate of insurance was in the possession of Madeline Disich prior to the death of the insured, nor that she paid premiums on the policy, create a vested interest or prevent a change of beneficiary by the insured. Modern Brotherhood of America v. Hudson, 194 Mich. 124.

In Modern Brotherhood of America v. Hudson, supra, p. 132, we said:

"The right of a holder of a certificate, of the nature of the one before us, to change his beneficiary at pleasure, is one which this Court has uniformly upheld, and the right ought not to be and will not be denied unless it is plain that the beneficiary named in the certificate has by contract and by performance acquired a vested interest in the certificate and fund."

In our opinion the record fails to sustain the claim of Madeline Disich of a vested interest in the insurance policy. The decree is reversed and one may be entered in accordance with this opinion. Contestant Anna Pellich may recover costs from contestant Madeline Disich.

BUSHNELL, C.J., and BOYLES, CHANDLER, NORTH, McALLISTER, WIEST, and BUTZEL, JJ., concurred.