Court Opinion

ID: 9681769
Source: CourtListenerOpinion
Date Created: 2023-08-24 07:56:18.643226+00
Date Added: 2024-06-11T18:17:35.803333
License: Public Domain

YOUNG, Justice
(dissenting).
Appellees (heirs of Kaufman) concede, as does the present majority opinion, that the Kaufman assignment was not tantamount to a change of beneficiary;1 yet asserting in common that a vested right passed to the assignee which descended to his heirs. The fallacy of such conclusion may be demonstrated by application of a well settled rule of law to the policy contract of which the Company by-laws and Constitution are a part: “In accordance with the general principle prevailing as to assignees of nonnegotiable choses in action, an as-signee of an insurance policy as a general rule acquires no greater rights by virtue of the assignment than the assignor had * * 29 Am.Jur., p. 416; Modern Woodmen of America v. Shattuck, Tex.Civ.App., 266 S.W. 621. The instant assignment so declares in the recital that assignee “is authorized to receive, collect and receipt for any money or thing of value due or to become due under said policy, or as provided thereby, as fully and completely as the assignors, or either of them, might or could do if this -assignment had not' been made, * * (Emphasis mine.) Dora Gott-lieb, during her lifetime, could not make this policy payable to herself or heirs (Art. XXI, sec. 1, By-laws and Constitution) without complying with its provision with ■respect to change of beneficiary. The as-signee, in her stead, could likewise have ef~ *993fectuated such a change, 'but this he did not do. Assignee predeceased the insured with terms of the policy in status quo; and in consequence Eunice Blackman continued as the designated beneficiary. Requirements of this insurance contract must be followed if rights of the assignee are to become vested and superior.
A further word: The affirmance herein is premised on the “vested interest” of Sam Kaufman by virtue of the assignment. As to when and by what means the vesting of interest occurred, remains to the writer a puzzle. Can the status of assignee Kaufman be also that of a substituted beneficiary by way of contract as opposed to the usual method of appointment? 45 C.J.S., Insurance, § 416, p. 40. And the policy thereby transformed so that it became one payable to his estate or heirs? If so, this would constitute but another method of effectuating a change of beneficiary; and appellant as the designated beneficiary of fraternal benefit insurance can rightfully object to any such change unless accomplished in the manner provided 'by the policy. “When a mutual benefit society provides within its powers and limits of its charter a particular method of changing beneficiary or sets forth in its certificate a way by which the change may be made, no change of beneficiary may be made in any other mode, since the expression of one mode excludes other modes or manners of changing beneficiary.” (Emphasis mine.) Garabrant v. Burns, 130 Tex.Civ. 518, 111 S.W.2d 1100, 1101, syl. 3. See also Kotch v. Kotch, Tex.Sup., 251 S.W.2d 520.
Furthermore, this record emphasizes the wide distinction in terminology between an assignment and a change of beneficiary in the field of life insurance; thereby pointing to another ground for reversal. Typical of an assignment is the transfer of a security interest only, which is rarely, if ever, the function of a change of beneficiary. That such is the usual office of an assignment of an insurance policy in Texas is borne out by all the cases which I have 'had occasion to examine; and it is with reference to commercial transactions — a debtor-creditor relationship — that Texas cases are shown to be in accord with the following editorial note from 135 A.L.R.Annotations, p. 1041: “The great weight of authority is to the effect that where a life insurance policy reserves to the insured the right to change the beneficiary and is such that the insured has the right to assign the same, he may make such assignment without the consent of the beneficiary designated in the policy and without complying with the provisions of the policy prescribing the manner of changing the beneficiary, and upon the death of the insured, the assignee is entitled to the proceeds of the policy to the extent of his interest, as against the beneficiary.” (Emphasis mine.) The policy in suit was a benefit certificate of insurance issued on the life of Dora Gottlieb on March 28, 1931, face amount $2,000, with The Praetorians, a fraternal benefit Society incorporated under the laws of Texas, as insurer; and Eunice Blackman the named beneficiary. On March 10, 1941 Dora Gottlieb executed an assignment of the policy to Sam T. Kaufman who died in 1943, leaving as his heirs the appellees. Dora Gottlieb died November 10, 1949, with appellant daughter still listed as the named beneficiary. Neither the assignee Kaufman nor his children were related to insured. There was no record evidence of any debtor-creditor relationship between the two, nor was any indebtedness claimed by the estate of Sam T. Kaufman against Dora Gottlieb; the inventory of his estate not listing the Praetorian policy as an asset. Insured Dora Gottlieb made all premium payments on the policy except the last (September 1949) which was paid by Eunice Blackman during its delinquency, for purpose of reinstatement.
According to Mr. Mills, Company auditor, Mrs. Gottlieb at time of paying premiums appeared in a palsied condition, speaking broken English only; telling him she could not read, and other than signing name, he judged that she could not write. The form of assignment in question was furnished policyholders, said the witness, for their convenience in' evidencing “collateral for a debt”; and was distinctly foreign to the kind of instrument furnished for change of beneficiary. Such state of the record conclusively repels the inference of an absolute gift of the policy or even a purchase of all *994beneficial interest. Otherwise, why would Mrs. Gottlieb continue payment of annual premiums until the year of her demise ? On the other hand, the foregoing circumstances are susceptible of only a single inference, that is, of a past debtor-creditor relationship between assignor and assignee; the burden being on appellees (Kaufmans) to establish the existence of some pecuniary interest at time of trial; and when, as here, such burden has not been met, the claim that, perforce of an assignment absolute in form, appellant has been divested of all rights under the policy, should be disregarded.
This cause should be accordingly reversed and rendered in favor of appellant.

. If this assignment be given the effect of a change of beneficiary, then, ipso facto, any claim on part of the Kaufmans to the proceeds of the policy must fail. This is so because Sam Kaufman predeceased the policyholder, Dora Gottlieb; sec. 3, Art. XXI, Praetorian Constitution; then becoming effective to reinstate the original and designated beneficiary, Eunice Black-man. Section 3 provides, in part: “In the event of the death of a beneficiary prior to the death of a policy-holder, if said policy-holder fails to designate another beneficiary, then the amount which would have been due such deceased beneficiary under the policy shall be payable to the surviving beneficiary or beneficiaries, if any.”
Parenthetically, it may be here stated that under the early Supreme Court case of Cawthorn v. Perry, 76 S.W. 383, 13 S.W. 268, the Kaufman assignment, though absolute in form, must be condemned as wholly invalid, said assignee admittedly having no insurable interest. But since Castillo v. Canales, 141 Tex. 479, 174 S.W.2d 251, (construing a fraternal benefit policy and later civil statutes in connection), a designated party may collect the proceeds of such insurance though without insurable interest.