Gristy v. Hudgens

BOLLINGER, Superior Judge.

William W. Gristy, for some time prior to his death, was an employee of the Phelps Dodge Corporation, a corporation, plaintiff herein, and was also a member of the Employees’ Benefit Association of the Phelps Dodge Corporation. By virtue of his membership in said association, there was issued to. him a certificate or policy of insurance in said association, which certificate or policy of insurance, upon his death, entitled the beneficiary named *341therein to the proceeds of said certificate or policy of insurance.

William W. Gristy was a married man, his wife being Alexina Gristy, appellant herein, they having been legally married on August 22, 1909, which marriage existed as a valid one until the death of said William W. Gristy, which occurred on the twenty-third day of March, 1920. Deceased first applied for membership in said association on the twentieth day of December, 1909. His application was approved by the superintendent of said association, and a certificate of membership was duly issued on the first day of January, 1910, his wife being the first beneficiary, and the insurance amounting to $1,500. This contract was changed on or about the first day of January, 1914, when deceased discontinued his services and employment with the Phelps Dodge Corporation, plaintiff herein, but made application for a continuation of his membership in said association, which was permitted, but at this time the amount of his certificate or policy was reduced from $1,500 to $1,000. His contract was changed again on the third day of March, 1919, when he designated a beneficiary other than his wife. The real parties and only parties to this contract were the deceased, William W. Gristy, and the Phelps Dodge Corporation, plaintiff herein. At the time of the death of the said William W. Gristy there was due under his certificate or policy $1,000, which amount, after his funeral expenses were paid, was reduced to $769.10, which sum is involved in this suit.

Coufisel for respective parties hereto have filed in this court, under date of June 9, 1921, an agreed case on appeal, under and in accordance with paragraph 1257, Revised Statutes of Arizona of 1913. In addition to their stipulation as to the material facts in this case, they set forth the provisions of the constitution and by-laws of the Employees’ Benefit Associa*342tlon of the Phelps Dodge Corporation which are pertinent to this case, and are as follows:

“Object 1. The object of the benefit association is to provide its members with a certain income when sick, or when killed or disabled by accident off duty, or when disabled for less than two weeks by accident suffered on duty, and to pay to their families certain definite sums in case of an actual death; to create and maintain a fund ydfich s^ia^ belong to the employees to be used in payment of benefits to them, and to cost them the least possible considering the benefits received. ’ ’

Rule 17, paragraph 3, of the rules of the Benefit Association provides as follows:

“Unless I shall hereafter otherwise designate, in writing, with the approval of the superintendent of the Benefit Association, death benefits shall be payable to-, my-, residing at-, if living, and, if not living, to -, my -, residing at —-—, if living, and, if not living, to my legal representative; or, if proper claim is not made to the superintendent within one year of the date of my death, the death benefit shall lapse and the amount thereof shall become and remain a part of the benefit fund.”

On March 3, 1919, the said William W. Gristy changed the beneficiary in the said certificate or policy of insurance “to Jessie May Hudgens, my friend.” Jessie May Hudgens was a minor child about twelve years of age. She was not related to sáid William W. Gristy in any way, and was not a member of his family. Eula Hudgens, appellee herein, is the mother of said Jessie May Hudgens and is her duly appointed guardian. The Phelps Dodge Corporation, a corporation, plaintiff herein, filed a bill in interpleader in the superior court of Cochise county, Arizona, by which Alevina Gristy, appellant herein and widow of William W. Gristy, was made one of the parties, and Eula Hudgens, as guardian, and appellee herein, was *343made the other party, and the proceeds of the certificate or policy of insurance, amounting to $769.10, was paid into court subject to the disposition of the court by its final judgment. Said fund was claimed by both the appellant and the appellee, and proper pleadings were filed by each of them setting forth their claims to said fund. After a trial of the cause in the superior court of Cochise county, Arizona, judgment was rendered in favor of Eula Hudgens, appellee, as guardian, directing that the said fund which constituted the proceeds of the certificate or policy of insurance on the life of William W. Gristy be paid over to her. The Employees’ Benefit Association of the Phelps Dodge Corporation, plaintiff, is a private concern, and is not included in any legal or statutory classification of the insurance companies of any kind or character as provided by the laws of Arizona.

This case has been appealed by counsel for Alexina Gristy, and counsel for said appellant has based his argument upon three assignments of error which, in substance, are as follows:

First, because the constitution and by-laws of the Employees’ Benefit Association of the Phelps Dodge Corporation, as mentioned in the agreed statement, limit the right to take under policies of insurance issued to its members to members of the insured’s family.

Second, because Jessie May Hudgens, named as beneficiary in the policy to William W. Gristy, had no insurable interest in- the life of the said William W. Gristy.

Third, because William W. Gristy and Alexina Gristy, appellant herein, were husband and wife up until the time of the death of the said William W. Gristy, and under the community property system in vogue in Arizona the said William W, Gristy had no *344right to take out insurance in favor of any person who had not an insurable interest in the life of the insured.

By the first assignment of error which counsel for appellant attempts to sustain in his brief by argument and citation of numerous authorities objection is made to the judgment of the lower court because it is claimed that William W. Gristy, as a member of the Employees’ Benefit Association of the Phelps Dodge Corporation, was limited in his right to name a beneficiary. It is contended that he had no right or authority to name any one except some member of his own family. He named Jessie May Hudgens, a twelve-year old girl, whom he designated as “my friend”; she not being either a member of his family or related to him in any way. The court is of the opinion that William W. Gristy was not restricted by any statute of the state of Arizona or by any rules or regulations of the Employees’ Benefit Association of the Phelps Dodge Corporation from naming Jessie May Hudgens as his beneficiary. Object 1 of the Employees’ Benefit Association, as above set forth, merely declares the general purpose of the association. It does not limit or restrict the beneficiary in any certificate of insurance that may be issued, when read in connection with rule 17, paragraph 3, which provides that “unless I shall hereafter otherwise designate in writing.” This language makes it plain that a member reserves the right to designate his own beneficiary. A member of an association such as this has the absolute right to name any person he pleases as his beneficiary, provided there is no restriction by statute or by the constitution and by-laws of the association, except where the insurance is taken out under such circumstances that it comes within the rule requiring the beneficiary to have an insurable interest in the life of the member. This view of the law is sus*345tained by the following cases and authorities: 29 Cyc. 105; 1 Cooley’s Brief on Insurance, p. 797; Filley v. Illinois Life Ins. Co., 93 Kan. 193, L. R. A. 1915D, 134, 144 Pac. 259; Sheehan v. Journeymen B. P. & P. Assn., 142 Cal. 489, 76 Pac. 238; Mitchell v. Grand Lodge, 70 Iowa, 360, 30 N. W. 867; Berkeley v. Harper, 3 App. D. C. 308; Sabin v. Phinney, 134 N. Y. 423, 30 Am. St. Rep. 681, 31 N. E. 1087.

Counsel for appellant cited a number of authorities to sustain his contention that William W. Gristy was limited in his selection of a beneficiary to a member of his own family, but these authorities do not govern in this case, because they arose under statutory or charter provisions by which the insured was positively limited or restricted in his selection of a beneficiary. Furthermore, as the real parties to this contract were the deceased, William W. Gristy, and the Phelps Dodge Corporation, plaintiff herein, the court fails to see any reason why either their original contract of January 1, 1910, or their later contracts, which changed and amended the original one under the dates of January 1, 1914, and March 3, 1919, should be held invalid. There is no law in the state of Arizona which precludes them from making such a contract as the original one, or prohibits them from changing it as the record shows they did change it. Among the authorities cited by counsel for appellant and which the court finds do not control in this case are the following: Modern Woodmen of America v. Comeaux, 79 Kan. 493, 17 Ann. Cas. 865, 25 L. R. A. (N. S.) 814, 101 Pac. 1; Supreme Lodge, N. E. Order of Protection v. Sylvester, 116 Me. 1, L. R. A. 1917C, 925, 99 Atl. 655; Royal League v. Shield, 251 Ill. 250, 36 L. R. A. (N. S.) 208, 96 N. E. 45; Bush v. Modern Woodmen of America, 182 Iowa, 515, 152 N. W. 31, 162 N. W. 59.

*346But, even if counsel for appellant were correct in Ms position, and tMs were a case where a member of the Employees’ Benefit Association was positively limited or restricted in his selection of a beneficiary to a member of his own family, appellant could not profit by the situation. The general rule of law is that, even where the insured is limited by statute, by the common law, or by the charter or laws of the society in his right to designate a beneficiary, no one but the association or insurer can question the eligibility of the, person named. In this case the insurer has not questioned the right of William W. Gristy to name Jessie May Hudgens as his beneficiary, but has paid the proceeds of the certificate, amounting to $769.10, into court, and expressed its willingness to abide by the final judgment of the court. This rule of law is sustained by the following authorities: Johnson v. Supreme Lodge, K. H., 53 Ark. 255, 8 L. R. A. 732, 13 S. W. 794; Johnson v. Van Epps, 110 Ill. 551; Peek v. Peek, 101 Ky. 423, 41 S. W. 434; Finch v. Grand Grove, U. A. O. D., 60 Minn. 308, 62 N. W. 384; Coulson v. Flynn, 181 N. Y. 62, 73 N. E. 507; Starr v. Knights of Maccabees, 27 Ohio C. C. 475; Schoales v. Order of Sparta, 206 Pa. 11, 55 Atl. 766; Taylor v. Hair (C. C.), 112 Fed. 913.

Counsel for appellant under his second assignment of error raises the objection to this judgment that Jessie May Hudgens, named as beneficiary in the certificate to William W. Gristy, had no insurable interest in the life of the said William W. Gristy, but the court is of the opinion that the facts of this case do' not bring it within the insurable interest rule. In this case William W. Gristy took out the insurance voluntarily and paid the premiums or assessments himself. Every person has an insurable interest in his own life, and has an absolute right to insure his own life for *347the benefit of any other person whom he may designate as beneficiary. While it is true that a valid contract of insurance cannot legally be taken on the life of another by one who has no insurable interest in said life, because such a contract contravenes public policy, yet each person has an insurable interest in his own life, and therefore he has a right to procure insurance upon his own life for the benefit of another regardless of an insurable interest which the beneficiary may or may not have in his life. Such a contract cannot be declared void because of the want of insurable interest in the beneficiary when it appears that the person whose life is insured was acting for himself and in good faith paid the premiums for the purpose of promoting the interest and welfare of the beneficiary in taking out the certificate or policy of insurance. A contract under such conditions is in no sense a wagering or speculative contract. ' A contract entered into by a mutual benefit society or association with a member is executory, and its terms will be ascertained from the certificate issued to the member in connection with the charter and by-laws of the association, subject to the law of the state under which said association was created, and, if nothing exists either in law or in the rules and regulations of the association to restrict or limit the appointment of a beneficiary, the member may legally name any person he pleases as beneficiary, and his right to do so cannot be questioned. 14 R. C. L. 920, par. 97; Connecticut L. Ins. Co. v. Schaefer, 94 U. S. 457, 24 L. Ed. 251 (see, also, Rose’s U. S. Notes); Aetna L. Ins. Co. v. France, 94 U. S. 561, 24 L. Ed. 287; Bloomington Mut. Ben. Assn. v. Blue, 120 Ill. 121, 60 Am. Rep. 558, 11 N. E. 331; Union Frat. League v. Walton, 109 Ga. 1, 47 Am. St. Rep. 350, 46 L. R. A. 424, 34 S. E. 317; Fidelity Mut. L. Assn. v. Jeffords, 107 Fed. *348402, 53 L. R. A. 193, 46 C. C. A. 377; 29 Cyc. 105; Walter v. Hansel, 42 Minn. 204, 44 N. W. 57; Heinlein v. Mutual L. Ins. Co., 101 Mich. 250, 45 Am. St. Rep. 409, 25 L. R. A. 627, 59 N. W. 615; Dolan v. Supreme Council, C. M. C. Assn., 152 Mich. 266, 15 Ann. Cas. 232, 16 L. R. A. (N. S.) 555, 116 N. W. 383; Sabin v. Phinney, 134 N. Y. 423, 30 Am. St. Rep. 681, 31 N. E. 1087; 19 R. C. L. 1279.

The third assignment of error does not challenge serious consideration, because the agreed statement of facts does not show that the premiums on this certificate of insurance, were paid out of community funds or the wages of the insured after January 1, 1914. This court has no right to assume that such was the case. Even if this court should assume that to be true, there is no showing or statement that such funds were paid in fraud of the wife’s'rights, and no showing that the wife had not received even more than her share of the community property. ■ Furthermore, it is elementary that the husband has a right to dispose of the personalty belonging to the community as he sees fit, provided that he does not, by his disposal of the same, thereby defraud his wife. There are also authorities to sustain the contention of counsel for the appellee even if it were shown that these premiums or assessments were paid from community funds. Some of these authorities also make the distinction between policies of old line insurance companies and mutual benefit societies. Section 3850, Rev. Stats. C. C. 1913; 21 Cyc. 1659, 1666; Clark v. Herschl, 81 Iowa, 200, 9 L. R. A. 841, 47 N. W. 78; Luhrs v. Luhrs, 123 N. Y. 367, 20 Am. St. Rep. 754, 9 L. R. A. 534, 25 N. E. 388; Mitchell v. Grand Lodge, Iowa K. H., 70 Iowa, 360, 30 N. W. 865; Sabin v. Phinney, 134 N. Y. 423, 30 Am. St. Rep. 687, 31 N. E. 1087.

The judgment appealed from is hereby affirmed.

*349FLANIGAN, J., being disqualified, Honorable E. ELMO BOLLINGER, Superior Judge of Mohave county, was called in to act in his place.