Castillo v. Canales , 141 Tex. 479 ( 1943 )

I most respectfully dissent from the rulings contained in the majority opinion in this case. It is my view that such rulings permit insurance societies such as the Woodmen of the World Life Insurance Society to violate both the law of this State, and their own laws, with reference to the classes of persons who may be made beneficiaries in policies of life insurance issued by them, and delivered in this State.

As shown by the opinion of the majority, prior to its amendment, Article 4831 of our Civil Statutes restricted life insurance societies such as the Woodmen of the World Life Insurance Society to certain named classes of beneficiaries. As amended, such article abolishes such named classes, and provides that "any beneficial member may direct any benefit to be paid to such person or persons, * * * as may be permitted by the laws of the society; * * *." This statutory provision places a very definite limitation on the classes of persons who may be made beneficiaries in policies of life insurance governed thereby. Such limitation is that the beneficiaries must be of the classes "permitted by the laws of the society." Under the express and unambiguous language of this statute the society must conform its insurance contracts, as regard beneficiaries, to its own law; and the naming of any beneficiary in contravention of the society's own law would violate our statute, because our statute confines the society to its own law. Also such would plainly violate the society's own law.

When we come to examine the pertinent law of this society, quoted in the opinion of the majority, we find that, under its very plain provisions, it cannot name a beneficiary in one of its policies of insurance if such beneficiary falls within a class prohibited by the law of the State in which the original certificate is delivered. In this regard the law of the society provides that "such beneficiary or beneficiaries shall be such as are not prohibited by the law of the State in which the original certificate is delivered to the applicant." In my opinion this conclusion is inescapable, and leaves nothing more to be determined, except: What is meant by the term "law," or the phrases "law of the State," as used in the law of the society just quoted, and what is the law of Texas in regard to who may be beneficiaries in a life insurance policy?

It is the general rule that where the term "law" is used without restriction or qualification it refers to the public law of the State or sovereignty; and includes the whole body or system of rules of conduct as announced by legislative acts, the common law, the court decisions. 36 C.J., p. 963, sec. 31, and authorities there cited.

An examination of the law of this society regarding who may be named beneficiaries in its policies of life insurance discloses that the term "law" or the phrase "law of the State" is used therein without restriction or qualification. It must follow that the terms or phrase mentioned has reference to public law as hereinabove defined.

It is the settled public law of this State that, absent any statute to the contrary, no person can be named beneficiary in a life insurance policy unless he has an insurable interest in the life of the person insured. 24 Tex. Jur., p. 762, sec. 71, and authorities there cited; Drane v. Jefferson Std. Life Ins. Co.,139 Tex. 101, 161 S.W.2d 1057; McBride et al v. Clayton et al, 140 Tex. 71, 166 S.W.2d 125. This rule applies alike to fraternal benefit societies and old line life insurance companies. Price v. Supreme Lodge Knights of Honor, 68 Tex. 361,4 S.W. 633; Schonfield v. Turner, 75 Tex. 324, 12 S.W. 626, 7 L.R.A. 189.

The construction given in this dissenting opinion to Article 4831, as rewritten in 1931, does not render the rewritten article ineffective or purposeless. On the contrary it gives full effect to the very apparent purpose of the Legislature in changing the law. Prior to 1931, as is shown by the majority opinion herein, the statutes, and particularly Article 4831 as rewritten in 1929 by Chapter 16 of the Acts of the 2nd Called Session of the 41st Legislature, named those who might be made beneficiaries in certificates issued by fraternal benefit societies. The law was radically changed by the amendment of Article 4831 in 1931, it being so rewritten as to depart from the former rule by which beneficiaries were expressly named by statute and to permit the societies by their own laws to designate those to whom benefits may be paid. The Woodmen of the World Life Insurance Society, acting under the authority, saw fit, as herein shown, to conform to the established law of the State in which the original certificate is delivered, and to authorize the naming of any beneficiary not prohibited by the laws of the State, thus excluding as beneficiaries under certificate delivered in Texas those who have no insurable interest. The effect of the majority opinion is to hold that this society is not bound by its own law, which law is fully authorized by our statute.

It is undisputed that this respondent had no insurable interest in the life of the insured. It follows that under Article 4831, supra, and the law of this society, above discussed, construed together, she ought not to be allowed to collect as beneficiary in this policy.

Opinion delivered July 14, 1943.