Supreme Council of Royal Arcanum v. Behrend

Mr. Justice Robb

delivered the opinion of the Court on the rehearing:

The appellee, Sue B. Behrend, having filed a petition for a rehearing, it was allowed upon the following point: Had the beneficiary of the certificate a vested interest in the same, that could not be devested by the issue of a substitute certificate without the surrender of the original, and without the consent of the beneficiary named in the original certificate?

The so-called benefit certificate, which we have held to be in effect a policy of insuramce, was issued March 1, 1899. In it the appellant corporation promised to pay “to Sue B. Behrend (wife)" a sum not exceeding $3,000, “upon satisfactory evidence of the death of said member, and upon the surrender of this certificate; provided that said member is in good standing in this order at the time of his death, and provided also that this certificate shall not have been surrendered by said member and another certificate issued at his request, in accordance with the laws of this order.” Appended to the certificate was a “Form for Change of Beneficiary,” which apparently requires the surrender of the certificate as a condition to the issuance of another. In the affidavit of merit accompanying the declaration it is alleged that nothing was attached to or accompanied the certificate when it was issued; that Behrend, to whom it was issued, paid the first premium, and then delivered the certificate to his wife, the appellee, as a wedding present; that it since has been in her possession, and that she has “paid practically all of the premiums on the same out of her separate estate.” Attached to and made a part of the affidavit is a copy of a letter which she received from the company’s secretary, under date of September 4, 1913, and reading in part as follows:

“Madam: Your husband, Mr. Samuel K. Behrend, has made affidavit that Ms benefit certificate is held by you, and has furnished evidence which is satisfactory to me that it is beyond Ms control, and as provided in our law I have issued him a new benefit certificate, which canceled and rendered null and void any and all certificates previously issued to him.”

Appellant now seeks to avoid its liability upon the ground that under rule 336 of the order*, quoted.in full in the former opinion, a member was authorized to obtain the issuance of a new certificate by satisfying the secretary that the old was beyond his control. But in maldng this contention appellant entirely overlooks our ruling that the business in which it was .engaged in this District was “a system of-assessment life insurance,” and that the laws, of the District applicable to business of that kind apply.

When this policy was issued, the act of January 26, 1887 (24 Stat. at L. 367, chap. 47), required each life insurance company doing business here to attach to every policy issued by it “a copy of the application made by the insured, so that the whole contract” might appear in said application and policy. Later this act was superseded by section 657 of the code [31 Stat. at L. 1294, chap. 854], but as the effect of these two provisions of law is the same, it is unnecessary for us to determine which applies here. The later enactment simply makes plainer the intent of the former, namely, that no defense to a policy should be permitted that was based upon something not contained therein or not attached thereto. Metropolitan L. Ins. Co. v. Hawkins, 31 App. D. C. 493, 14 Ann. Cas. 1092; Metropolitan L. Ins. Co. v. Burch, 39 App. D. C. 397. It follows, therefore, that we must look solely to the terms of the contract, that is, to the terms of this so-called benefit certificate, to determine the measure of the insured’s right to change the beneficiary.

The appellee, as previously stated, was the wife of Behrend at the time this policy was issued, and was named as the beneficiary therein. Not only this, but the policy was delivered to and subsequently held by her, and the second policy was issued without her consent. In our view, the rule laid down in Central Nat. Bank v. Hume, 128 U. S. 195, 32 L. ed. 310, 9 Sup. Ct. Rep. 41, is controlling here. In that case it was ruled that a married man may rightfully devote a moderate portion of his earnings to insure his life for the purpose of making reasonable provision for his family after his death, without being held to intend to hinder, delay, or defraud his creditors, provided that no such fraudulent intent is shown to exist, or must necessarily be inferred from the surrounding circumstances. After pointing out that the wife and children have an insurable interest in the life of the husband and father, the court said: “We think it cannot be doubted that in the instance of contracts of insurance with a wife or children, or both, upon their insurable interest in the life of the husband or father, the latter, while they are living, can exercise no power, of disposition over the same without their consent, nor has he any interest therein of which he can avail himself, nor upon his death have his personal representatives or his creditors any interest in the proceeds of such contracts, which belong to the beneficiaries to whom they are payable. It is indeed the general rule that a policy, and the money to become due under it, belong, the moment it is issued, to the person or persons named in it as the beneficiary or beneficiaries, and that there is no power in the person procuring the insurance by any act of his, by deed or by will, to transfer to any other person the interest of the person named.” It was held that this rule applied “in respect to policies running to the person insured, but payable to another having a direct pecuniary interest in the life insured.” The court directed attention to the obvious distinction between the transfer of a policy taken out by a person upon the insurable interest in his own life and payable to himself or his legal representatives, and the obtaining of a policy upon the insurable interest of his wife and children and payable to them.

While it is unnecessary to determine what the rights of appellee would have been had we adopted appellant’s contention that it was merely a fraternal beneficial association, attention may be directed to the ruling in Supreme Lodge, K. L. H. v. Ulanowsky, 246 Pa. 591, 92 Atl. 711. There a member of a fraternal and beneficial society held a benefit certificate payable to his daughter. The rules of the organization permitted a change of the beneficiary at any time on the application of the member. Prior to his second marriage, this member entered into an agreement to give his intended wife the certificate upon their marriage, and this agreement was carried out. Thereafter the wife paid a large part of the dues of the society out of her earnings. The husband, without the consent of his wife, again made his daughter the beneficiary, and upon his death both claimed the proceeds of the certificate. The court held that upon delivery to the wife “she acquired a legal as well as an equitable right to the benefit of the certificate, which could not be taken away from her without her consent.” See also Lemon v. Phoenix Mut. L. Ins. Co. 38 Conn. 294.

In the present case the appellee had an insurable interest in the life of her husband, and when this certificate or policy was issued, naming her as the beneficiary, her interest therein became fixed and certain. It therefore is no defense to this action that a second certificate was issued in utter disregard of her rights. The judgment of the trial court therefore was correct, and is affirmed, with costs. Affirmed.

* See ante, page 264.