Rhodes v. Equitable Life Assurance Society of United States , 109 Or. 586 ( 1924 )

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] 1. Whatever rules the railroad company promulgates concerning the insurance of its employees are a part of the contract of insurance and are, stating the rule broadly, as binding upon the parties as any other provisions in the contract: IndependentForesters v. Keliher, 36 Or. 501, 510 (59 Pac. 324, 1109, 60 Pac. 563,78 Am. St. Rep. 785). The plaintiff invokes this general doctrine and says that Rule 11 is a part of the contract; and then after making Rule 11 a part of the contract the plaintiff argues that Addie M. Walker was ineligible and that the designation of her as the beneficiary was invalid, with the result that the administrator is entitled to the moneys. Policies issued by mutual benefit and fraternal insurance societies are frequently limited and controlled by a state statute or by a rule of the society defining and limiting the class of persons who may be designated as beneficiaries and declaring that the insurance moneys shall not be paid to an ineligible person; and such statutes or rules are usually fettered by another provision to the effect that if the person who is designated as the beneficiary is found to be ineligible, the insurance moneys shall be paid to some person or persons who belong to a specified class. Under the terms of such policies the insurer in effect says to the insured:

"You may designate the beneficiary, but in doing so you must name some person who under the statute or rule is qualified to be a beneficiary. If, instead of designating a qualified person, you name an ineligible person, the statute or the rule will by its own force ignore your designation and will name as the beneficiary whoever happens to belong to whatever class is specified by such statute or rule as the class entitled to the insurance moneys."

2, 3. Obviously, if a statute defines the class of persons who are eligible to appointment as beneficiaries and also specifies the person or persons to whom insurance moneys shall be paid in the event the insured has named an ineligible person as his beneficiary, the appointment made by the insured is invalid and void; and furthermore, the insurer cannot waive the statute. We may assume, too, that if the policy is governed only by a rule of the insurer defining the class who are eligible to appointment by the insured and declaring that if the insured names as the beneficiary an ineligible person the insurance moneys shall be paid to a person or persons coming within a prescribed class, the insurer cannot in such a situation waive the rule and pay the moneys to the ineligible person appointed by the insured as the beneficiary. All the following precedents relied upon by the plaintiff involve a state statute or a rule or both a statute and a rule like the ones above mentioned: Anderson v. Royal League, 130 Minn. 416 (153 N. W. 853, Ann. Cas. 1917C, 691, L.R.A. 1916B, 901); Logan v. Modern Woodmenof America, 137 Minn. 221 (163 N. W. 292, 2 A. L. R. 1676);Bush v. Modern Woodmen, 182 Iowa, 515 (152 N. W. 31, 162 N. W. 59);Supreme Lodge O. M. P. v. Dewey, 142 Mich. 666 (106 N. W. 140,113 Am. St. Rep. 596, 7 Ann. Cas. 681, 3 L.R.A. (N.S.) 334); O'Brien v.Massachusetts Catholic Order of Foresters, 220 Mass. 79 (107 N. E. 400);Murphy v. Nowak 223 Ill. 301 (79 N. E. 112, 7 L.R.A. (N.S.) 393);Gregory v. Sovereign Camp W. W., 104 S. C. 471 (89 S. E. 391);Modern Woodmen v. Comeaux, 79 Kan. 493 (101 Pac. 1, 17 Ann. Cas. 863,25 L.R.A. (N.S.) 814); Britton v. Supreme Council, 46 N. J. Eq. 102 (18 Atl. 675, 19 Am. St. Rep. 376).

4, 5. However, the facts in the instant case clearly distinguish it from the precedents relied upon by the plaintiff. Under the terms of Rule 11 the employee may as a matter of right and uncontrolled by the discretion of the railroad company designate any person who is related to the employee or who is wholly or partially dependent upon him. The rule does not declare that only such a person is eligible to receive the insurance moneys nor does this rule or any provision of the contract of insurance declare that if an ineligible person is named insurance money shall be paid to some other person specified by rule or by the policy. Rule 11 expressly provides that the employee may designate any person as his beneficiary, and, although this right of appointment is limited and controlled by the right of the employing company in its discretion to approve such appointment if the designated beneficiary is not related to or dependent upon the insured, the rule does not declare that a person who is neither a relative nor a dependent is ineligible to appointment. The contract of insurance goes no further than to say that —

"If there be no designated beneficiary surviving at the death of the insured, payment will be made * * to the executors or administrators of the insured."

There was a designated beneficiary surviving. See Taylor v.Hair, 112 Fed. 913; Wolfstern v. Pennsylvania R. R. Co., 76 N. J. Eq. 78 (74 Atl. 533); Smith v. B. O. R. R. Co., 81 Md. 412 (32 Atl. 181). There is nothing in the contract of insurance preventing the insurance company from waiving any right that it might have arising out of Rule 11; and the company has waived any right it might have had by paying the money into court: Woodmen of the World v. Rutledge, 133 Cal. 640 (65 Pac. 1105); Titsworth v. Titsworth, 40 Kan. 571 (20 Pac. 213);Hall v. Allen, 75 Miss. 175 (22 South. 4, 65 Am. St. Rep. 601). If it be said that the rule is for the benefit and protection of the railroad company the plaintiff cannot step into the shoes of the railroad company and complain for it: Pleasants v. Locomotive Eng. Mut.L. etc. Assn., 70 W. Va. 389 (73 S. E. 976, Ann. Cas. 1913E, 490). The railroad company is not attempting to prevent the appointed beneficiary from recovering. If by a rule of the railroad company or by some other express provision in the contract of insurance the in-tervener had not been eligible to appointment at all and if the rule or express provision in the contract of insurance declared that the insurance moneys must be paid to the administrator in the event the appointed beneficiary proved to be ineligible, then the plaintiff could complain: Logan v. ModernWoodmen of America, 137 Minn. 221 (163 N. W. 292, 2 A. L. R. 1676);Sanders v. Grand A. O. U. W., 153 Ill. App. 7; Supreme Lodge F. B. v.Price, 27 Cal. App. 607 (150 Pac. 803). But such is not the situation presented by the instant case. The record is devoid of any fraud unless it can be said that the designation of Addie M. Walker as "wife" was a fraud upon the railroad company. For aught that appears in the record, however, the insured may have been entirely free from any actual intent to deceive or to defraud the railroad company. But the railroad company is not complaining; and as already stated the plaintiff cannot occupy the shoes of the company and complain for it. The instant case does not involve any question of public policy such as possibly could be urged where the insured and the beneficiary have been unlawfully living together.

The conclusion of the trial court is affirmed.

AFFIRMED. MOTION TO RETAX COSTS DENIED.

BURNETT, J., took no part in the decision of this case.