Case Name: Jane Neary vs. The Metropolitan Life Insurance Company et als.
Court: Connecticut Supreme Court
Jurisdiction: Connecticut
Decision Date: 1918-04-30
Citations: 92 Conn. 488
Docket Number: 
Parties: Jane Neary vs. The Metropolitan Life Insurance Company et als.
Judges: 
Reporter: Connecticut Reports
Volume: 92
Pages: 488–501

Head Matter:
Jane Neary vs. The Metropolitan Life Insurance Company et als.
Third Judicial District, New Haven,
January Term, 1918.
Prentice, C. J., Roraback, Wheeler, Beach and Shumway, Js
While the beneficiary named in a death-benefit certificate, issued by a fraternal benefit association and providing for a change of beneficiary, takes nothing more than a mere expectancy, this is not necessarily true of the beneficiary named in an ordinary life insurance policy, although the right to change the beneficiary in a prescribed manner is reserved therein.
The method prescribed in an ordinary life insurance policy for changing the beneficiary named therein, must be complied with, in order to render an attempted change effective against the rights of the original beneficiary.
In the present case a wife joined with her husband in an application for a policy of insurance upon his life, in which she was named as the beneficiary. The policy, which was issued as requested, provided that the insured might designate a new beneficiary by a written notice filed at the home office accompanied by the policy itself, the change to take effect upon its indorsement upon the policy by the company. A written notice of a change of beneficiary was left with the local agent and transmitted by him to the company, but the policy remained in the hands of the wife who paid all the premiums and had no knowledge of any attempt to change the beneficiary until after her husband’s death. Held that under these circumstances the insurance company was bound to see that the terms of the policy were complied with before assenting to a change of beneficiary; and that the change attempted was not effective to deprive the wife of her rights as the original beneficiary under the policy. (One judge dissenting.)
Submitted on briefs January 17th —
decided April 30th, 1918.
Action in the nature of interpleader to determine the respective rights of several claimants in and to the amount due under a policy of life insurance, brought to and tried by the Superior Court in New Haven County, Greene, J.; facts found and judgment rendered in favor of the defendant Catherine Neary, wife of the insured, from which the plaintiff, the insured’s mother, appealed.
No error.
In 1913 John Neary and Catherine, his wife, joined in an application to the Metropolitan Life Insurance Company for insurance upon the life of John. The policy in question was issued on that application naming Catherine as the beneficiary. All premiums on the policy were duly paid by Catherine, the last payment on August 2d, 1915, and the policy itself has at all times been in the possession of Catherine. The policy provided for a change of beneficiary, and that the insured might designate a new beneficiary by a notice in writing filed at the home office of the company and accompanied by the policy itself, the change to take effect upon the indorsement of the same by the company on the policy.
On July 28th, 1915, John Neary signed and delivered to the agent at New Haven, for transmission to the home office of the company, an application for a change of beneficiary from his wife, Catherine, to his mother, Jane Neary. The application was forwarded to and received by the home office at some date not otherwise shown than by the following indorsement thereon, “Recorded in policy register. J. F. B. 9/8/15 J. F. B. ” It was not accompanied by the policy, and no indorsement of any change of beneficiary was ever made on the policy. On September 2d, 1915, John and Jane joined in an application for a loan upon the policy, which was made by the company’s check to the joint order of John and Jane Neary. John died September 12th, 1916, and the amount of the policy less the loan is admittedly due and payable to the rightful beneficiary.
George E. Beers and Charles F. Roberts, for the appellant (plaintiff).
George E. Hall, for the appellee (defendant Catherine Neary).

Opinion:
Beach, J.
It is not claimed that the attempted change of beneficiary was completed in the manner provided for in the policy, by surrender of the policy and indorsement of the change thereon by the company. On the contrary, the finding is that the policy remained continuously in the possession of the original beneficiary, Catherine, who paid all the premims thereon and was never asked to give it up. She had no knowledge of any desire or attempt to change the beneficiary until she went to the company's office to prepare the proofs of death.
The plaintiff's claim is that the formalities prescribed in the policy for carrying out the reserved right of changing the beneficiary were solely for the benefit of the insurance company, and that it might and did waive their performance by treating Jane as the substituted beneficiary in making the loan of September 2d, 1915.
This claim is based on the supposition that Catherine had no legal interest in the fruits of the policy, but merely an expectancy of which she could be deprived without notice. It is true that a beneficiary named in a death-benefit certificate issued by a fraternal benefit association, and providing for a change of beneficiary, takes nothing more than a mere expectancy. Supreme Colony v. Towne, 87 Conn. 644, 648, 89 Atl. 462; Order of Scottish Clans v. Reich, 90 Conn. 511, 514, 97 Atl. 863. But that is not necessarily true of beneficiaries named in an ordinary life insurance policy, although the right to change the beneficiary in a prescribed manner is reserved. "In case of an ordinary policy (of insurance), the right of the person for whose benefit a policy is issued cannot be defeated by the separate or joint acts of the assured and the company, without the assent of the beneficiary." Masonic Mutual Benefit Asso. v. Tolles, 70 Conn. 537, 544, 40 Atl. 448. It seems logically to follow, that the insertion in such a policy of a provision for changing the beneficiary in a prescribed maimer ought not to extinguish the interest of the beneficiary, but to qualify it. The later decisions so hold. Indiana Nat. Life Ins. Co. v. McGinnis, 180 Ind. 9, 101 N. E. 289; Filley v. Illinois Life Ins. Co., 93 Kan. 193, 144 Pac. 257; Christman v. Christman, 163 Wis. 433, 157 N. W. 1099.
Moreover, companies authorized to carry on a gen eral life insurance business may contract directly with a beneficiary who has an insurable interest in the life of the assured; and there seems to be no reason why the interest of such a beneficiary may not be absolute or qualified according to the terms of the policy.
In this case the wife, having an insurable interest in the life of her husband, joined in the application for a policy which, on its face, provided for the presentation of the policy to the company, for indorsement, before any change of beneficiary should become effective. She took the policy into her own possession, apparently relying on that provision for her protection, and paid all the premiums. Under these circumstances she had an interest in the policy of which she could not be deprived except in the manner prescribed therein.
Assuming, without deciding, that she was bound to deliver up the policy to the assured on demand, the finding is that no such demand was made. Whether she had a lien upon the policy for premiums advanced— at least to the extent of its cash surrender value — need not be determined. She had a legal interest, as distinguished from a mere expectancy, of which she could not be deprived except in the manner prescribed in the policy, and therefore the provisions as to the mode of changing the beneficiary were not solely for the benefit of the insurance company. Even if they were so intended by the company, they hold out on their face an inducement for the payment of premiums by a beneficiary to whom the policy is delivered. In the long run the payment of premiums inures to the benefit of the company, and if a beneficiary pays premiums on the faith of an apparent protection afforded by the terms of the policy, he ought equitably to be protected as far as the terms of the contract will protect him.
It does not appear from the finding whether the company knew that the premiums were being paid by the beneficiary. It did know that she joined in the application, that she had an insurable interest in the life of the assured, and the policy contained provisions on the faith of which she might suppose herself to be protected in paying premiums. Under such circumstances it is not asking too much of insurance companies to see that the terms of the policy are complied with before assenting to a change of beneficiary.
This conclusion makes it unnecessary to pass on the somewhat doubtful question whether the company did in this case assent to an.informal change of beneficiary.
There is no error.
In this opinion Pbentice, C. J., Robaback and Shumway, Js., concurred.