Gristy v. Hudgens

ROSS, C. J.

I concur most cordially in the well-written opinion of Judge BOLLINGER, and insert this word of mine only for the purpose of emphasizing one feature of the case. “The Employees’ Benefit Association” mentioned in the statement of case, is in fact nothing more than a “voluntary relief department” of the Phelps Dodge Corporation, operating the Copper Queen mines in Cochise county. It is only a descriptive phrase of one of the activities of that company in connection with its employees. It is not a legal entity. It does not appear in this case as a party. It is therefore obvious that the contract of insurance involved was made and entered into by and between the Phelps Dodge Corporation, as one party, 'and William Gristy, as the other party; that Gristy, the insured, first named appellant, his wife, as the beneficiary, in ease of his death, and later, with the approval of the Phelps Dodge Corporation^ the only other party to the contract, he changed the beneficiary from his wife to his friend, Jessie May Hudgens. It is stipulated by the parties to this suit, and we know it to be a fact, “that the said Employees’ Benefit Association (Phelps Dodge Corporation) is a private concern and it is a fact that it is not included in any legal statutory classification of insurance companies of any kind or character as provided by the laws of Arizona.” It necessarily follows, then, that whatever contracts of insurance the Phelps Dodge Corporation should make are unaffected by any statutory law regulating insurance. Its power to make such contracts and to change and modify them is limited only by the general law of contracts; if they are not violative of any statutory law or *350against morals or public policy or ultra vires, they are valid and may be enforced as originally made or in accordance with their terms as modified.

The beneficiary in a contract of insurance has no tangible interest in the policy until the happening of the event insured against; her right is only inchoate until then. It is, in fact, contingent upon the will of the parties to the contract in a case like this one; for here there was no law to prevent William G-risty and the Phelps Dodge Corporation from abrogating the contract entirely or changing it as they saw fit, or making a contract in entire disregard of “object 1” of the Benefit Association of the Phelps Dodge Corporation. I see no reason why Gristy, with the consent of the Phelps Dodge Corporation, could not have named the Hudgens child originally as the beneficiary. But aside from that it seems to me that rule 17 of the by-laws clearly contemplates that the insured may designate any one as the beneficiary with the approval of the Phelps Dodge Corporation.

The arrangement of relief departments along similar lines is a common thing throughout the country, especially among railroad companies. Pittsburgh C., C. & St. L. Ry. Co. v. Carmody, 188 Ky. 588, 12 A. L. R. 469, 222 S. W. 1070. The courts have had occasion frequently to construe contracts of this nature, and they have invariably discussed them as contracts between the corporations and the employee, and, of course, subject to change or modification and performance by the parties thereto. I find no case involving the rights of the beneficiary under such contract, but, of course, her rights would be subject to the will of the contracting parties. The contract in this case, in its general features, is well described by the language employed in describing the contract in P., C., C. & St. L. Ry. Co. v. Cox, 55 Ohio St. 497, 35 L. R. A. 507, 45 N. E. 641, as follows:

*351“Moved thereto by the stipulations of the employee members, the company assumes the obligation to take charge, in part, of the administration of the association, to pay all its operating expenses, tq take care of its funds, pay interest thereon, and be responsible for their safekeeping, and to make appropriations to supply any deficiencies. The promises are concurrent and obligatory upon both. Both promise and both pay in consideration of promises and payment by the other, and the fact that third persons are interested does not impair the force of the obligation. If these stipulations do not supply consideration, it would be difficult to frame such as would; and, there being express assent to the terms of the contract by both parties, the element of mutuality is not wanting. ’ ’

The “obligation” thus described is that of the parties thereto, and there is no reason in law why they may not change or modify the contract in any manner that they may choose so long as they violate no law.