Court Opinion

ID: 9683699
Source: CourtListenerOpinion
Date Created: 2023-08-24 13:35:29.277005+00
Date Added: 2024-06-11T18:17:49.744592
License: Public Domain

BOND, Chief Justice.
This is an action in bill of interpleader for summary judgment instituted by The Praetorians, a fraternal benefit Association, to determine who is entitled to receive a fund deposited into Court under a death benefit certificate issued by the Association to Dora Gottlieb, payable at death to Eunice Blackman, beneficiary (appellee here).
*423In its petition The Praetorians alleged and the record shows that The Praetorians is a fraternal benefit society, incorporated, existing, and doing business under and by virtue of the laws of the State of Texas, Chapter 8, Title 78, Art. 4820 et seq., Vernon’s Texas Rev. Civ.St.; that on or about March 28, 1931, on application of Dora Gottlieb, it issued a benefit certificate No. 222749 in the sum of $2,000 on her life, with Eunice Blackman beneficiary; which certificate among other things states as follows: “That the certificate, the charter or articles of incorporation, the Constitution and laws of The Praetorians, and the application herefor, and the medical examination signed by the applicant, with all amendments to each thereof, shall constitute the agreement between The Praetori-ans and the insured”.
The interpleader further alleged that by reason of the misstatement of age on the part of the insured in her application for the insurance, there is due and owing on said certificate the sum of $1,454.50 which it tendered into court as belonging either to Eunice Blackman, the named beneficiary, or to the children of Sam T. Kaufman, deceased (appellants), by virtue of the assignment.
The benefit certificate, copy of which is attached to the interpleader’s petition, is made payable to Eunice Blackman, beneficiary, the daughter of Dora Gottlieb, subject to the right of change of beneficiary by the insured and subject to the other provisions therein named. One of the provisions, pertinent here, is: “The beneficiary or beneficiaries named in this certificate have no vested interest in same, and may be changed at any time by the insured making written request on The Prae-torians’ form therefor and filing the same at its home office and furnishing this certificate for endorsement of said change thereon.”
The certificate appears to have been dated April 6, 1931.
On or about March 10, 1941, the insured Dora Gottlieb executed, signed, and notarized an assignment of the aforesaid certificate to Sana T. Kaufman, a copy of which assignment on March 12, 1941, was filed with the interpleader (the insurer) and attached to the certificate. It reads as follows: “Absolute Assignment of Policy. State of Texas, County of Dallas. Know All Men By These Presents: For and in consideration of the sum of One Dollar to me in hand paid, and for other valuable consideration, the receipt whereof is hereby acknowledged, I hereby sell, assign, transfer, set over and convey to Sam T. Kaufman whose post-office address is 301 Fidelity Bldg., Dallas, Texas, all my right, title and interest in and to Policy No. 222749, issued on the life of Dora Gott-lieb, by The Praetorians, of Dallas, Texas, and all moneys due or to become due and payable under the same, together with full and complete authority to exercise any and all options, benefits and rights as provided in said policy, and all benefits accrued or to accrue under and by virtue of the terms, covenants or conditions thereof, inclusive of the absolute right to surrender said policy -and to receive and collect the cash surrender value thereof, without notice to or consent of the assignors or either of them, and at the sole option and/or election of the assignee; and for the same consideration I do also, for my heirs, ex-, ecutors and administrators, guarantee the validity and sufficiency of the foregoing assignment to the above named assignee, his heirs, executors, administrators, successors or assigns; and his title to said policy will forever warrant and defend. The as-signee 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, hereby releasing The Praetori-ans of and from all responsibility with reference to the application thereof and of and from all other and .further liability by reason of the payment so made. In witness whereof, I have hereunto set my hand this 10tA day of March, 1941. /s/ Dora Gottlieb. (Notarized by Certificate) Execute In Triplicate Attach one copy to policy, one to Company and policyholder.”
*424The Constitution and Laws of The Prae-torians, Article XXI, provides:
“Section 1. The beneficiary named in any application made by the insured may include the wife, any relative, fiance, business associate, trustee, charitable institution, persons dependent upon the insured or to the estate of the insured or any persons, interests or entity not forbidden by law. (Emphasis ours.)
“Section 2. If the policy holder desires to change beneficiary, or beneficiaries, he shall deliver his policy to the cashier of his Council, or direct to the Home Office of The Praetorians, together with a properly executed written application for such change on forms prepared by The Prae-torians.”
The claim of appellants (the children of the assignee, Sam T. Kaufman) is grounded upon the assignment and the applicable terms of the certificate and the Constitution and Laws of the Society; the claim of ap-pellee Eunice Blackman upon her rights as named beneficiary in the certificate in consonance with the findings of the trial court as hereinafter related.
The record evidence is not in dispute. The assignee, Sam T. Kaufman, died on March 10, 1941; the insured, Dora Gott-lieb, died some eight years later, on November 10, 1949, without making any change in the named beneficiary or in the assignment to Sam T. Kaufman. Eunice Blackman remained the named beneficiary and Sam T. Kaufman the assignee at the time of insured’s death. Neither the as-signee nor his children were related in any degree to the insured and there is no evidence that any of them had or hold a valid subsisting debtor claim against the insured, or that the assignment was given as security for any debt due the assignee by the insured.
On trial without a jury, the court entered judgment in favor of the named beneficiary, Eunice Blackman, for the fund tendered into court; released the inter-pleader from all liability under the certificate, allowing it $125 as reasonable attorney fees; and divided the court costs equally between appellants and appellee. To which judgment the appellants excepted and duly perfected this appeal; and here present appropriate points of error germane to their contentions, supra, attacking the judgment as having no support in law and evidence. Appellee counters to sustain her contentions, and cross assigns error to the effect that all costs should have been taxed against the appellants.
The trial court at request of appellants filed findings of fact substantially as above related; and conclusions of law as follows: (1) That the assignment to Sam T. Kaufman is not effective as a change of beneficiary, the Bylaws of the Association providing for such change not having been complied with. (2) That no debt having been established from Dora Gott-lieb to Sam T. Kaufman, there can be no recovery by reason of the assignment of the proceeds of the certificate. (3) That Eunice Blackman is entitled to the proceeds of the certificate. And (4) that the court costs should be taxed equally against both claimants.
The law of life insurance in this State, where the change of beneficiary is reserved in policy or certificate, is that during the lifetime of the insured the beneficiary named in the policy has no vested interest therein, — only an expectancy; and that a new beneficiary of the beneficial interest in the policy or certificate may be substituted without consent of the named beneficiary. If the right of change in beneficiary is reserved and the named beneficiary has no vested interest under the terms of the certificate, in absence of law to the contrary the insured has the inherent right to sell, assign, or give away his own property. An insurance certificate with all its present and future contractual benefits is property, a chose in action, and assignable agreeable to the conditions fixed by the insurance carrier under its policy, Constitution and Laws, and such other conditions as not forbidden by the laws of the State.
The rules of fraternal benefit societies or associations are regulated and controlled by statute, Chapter 8, Title 78, Arts. 4820-4859e, exempt from all provisions of the insurance laws applicable to stock and mu*425tual insurance companies. Any fraternal society or association organized and carried on solely for the mutual benefit of its members and their beneficiaries, not for profit, Art. 4820, supra, is governed by the laws of such society or association; and such fraternal organization may enter into contracts in such form and grant such benefits as its laws may authorize, and make pertinent provisions for the payment of such grants and benefits. Art. 4824, sub-sec. 2. Article 4831, supra, provides: “Any person may be admitted to beneficial, or general, or social membership in any society in such manner and upon such showing of eligibility as the laws of the society may provide, and any beneficial member may direct any benefit to be paid to such person or persons, entity, or interest as may be permitted by the laws of the society ; provided, that no beneficiary shall have or obtain any vested interest in the said benefit until the same has become due and payable in conformity with the provisions of the contract of membership, and the member shall have full right to change his beneficiary, or beneficiaries, in accordance with the laws, rules, and regulations of the society. * * * ”
In Wirtz v. Sovereign Camp W. O. W., 114 Tex. 471, 268 S.W. 438, our Supreme Court holds that the rights, powers and obligations of fraternal benefit societies are determined by the particular rules of law applicable to such societies; and the legality of their action is not to be tested by rules which apply to commercial insurance organizations. The laws of the society with reference to the insured, the beneficiary, and third persons, should govern agreeable to the revised statutes relating to fraternal benefit societies; and the construction, interpretation, and effect given to ordinary contracts not prohibited by the certificate, the 'Constitution and Laws of the society, and the revised statutes of this state, must be applied to contracts of beneficial associations. Such contracts are to be construed to carry out the intention of the parties in the light of their accepted meaning and legal import.
In the case of Castillo v. Canales, 141 Tex. 479, 174 S.W.2d 251, 253, the Supreme Court had before it the question, similar as here, of the applicability of the statutes relating to fraternal associations in regard to a change of beneficial interest in a certificate issued by the Woodmen of the World life insurance society to one who had no insurable interest in the life of the insured, upon his death to collect the proceeds of such certificate. The Court in extenso reviewed the various changes in the law regulating fraternal benefit societies, and finally said:
“Prior to the amendment of Article 4831 the statutes definitely limited the beneficiaries in certificates of insurance to certain persons, and a designated beneficiary not included in the list of persons named in the statutes could not collect for himself the proceeds of a certificate naming him as beneficiary. The courts also held that it was against public policy to allow anyone to be named a beneficiary in a policy who had no insurable interest in the life of the insured, and collect the proceeds of such policy for his own benefit. Cheeves v. Anders, 87 Tex. 287, 28 S.W. 274, 47 Am.St.Rep. 107; Price v. Supreme Lodge, Knights of Honor, 68 Tex. 361, 4 S.W. 633; Wilke v. Finn, Tex.Com.App., 39 S.W.2d 836. * * *
“Article 4823 of Chapter 8, Title 78, Revised 'Civil Statutes 1925, provides that all fraternal benefit societies in Texas shall be governed by that Chapter alone ‘for every purpose.’ It says that the fraternal benefit societies ‘shall be governed by this law (meaning Chapter 8), and shall be exempt from all provisions of the insurance laws of this State, not only in governmental relations with the State, but for every other purpose. No law hereafter enacted shall apply to them, unless they be expressly designated therein.’ * * *
“As the law now stands, any beneficial member of a fraternal benefit society ‘may direct any benefit to be paid to such person or persons, entity, or interest as may be permitted by the laws of the society.’ ”
As the law now stands, an absolute assignment of a certificate by the insured of a fraternal benefit society, as here, evidencing the sale, assignment, set-over and *426conveyance, for a consideration valuable and sufficient in law, all “right, title and interest in and to” the designated certificate, and “all moneys due or to become due and payable under the same, together with full and complete authority to exercise any and all options, benefits and rights as provided in said policy, and all benefits accrued or to accrue under and by virtue of the terms, covenants and conditions thereof,” warranting title unto the assignee named therein and the assignment accepted by the society, such assignment vests in the assignee the absolute indefeasible beneficial interest in and to the certificate, —revoking the named beneficiary’s expectancy as effectively as the insured might have done in a change of the beneficiary named in the policy.
In the case here it will be seen that the benefit certificate expressly provides that the named beneficiary (Eunice Blackman) had no vested interest in the certificate, and the naming of her as such beneficiary was subject to be changed at any time by the insured. The Constitution and Laws of the society expressly designate those who may be named to take under the certificate, including any persons, interest or entity not forbidden by law. The term “law” as therein used and as said' in Castillo v. Canales, supra: “* * * ordinarily _ includes both the common law, as evidenced by the decisions, as well as the statutory law; but the solution of this question does not solve the problem here before us. Prior to the adoption of the statute above referred to regulating fraternal benefit societies, it was the public policy or ‘law’ of this State, with a few exceptions, that no one could be' named as a beneficiary in a life insurance policy who did not have an insurable interest in the life of the insured. As previously stated, the Legislature had the right to change this public policy. By the statute above referred to that public policy was changed so that it then became the ‘law’ of this State that a member of a fraternal benefit society, with the consent of the society, as evidenced by its laws could name as beneficiary in a life insurance policy whomsoever he pleased, and regardless of whether the named beneficiary had an insurable interest in the life of the insured. It was the ‘law’ as it then existed, and with the public policy thus changed by the statute, that was referred to in the Society’s by-laws, wherein it was provided in substance that any one not prohibited by the law of the State could be named as a beneficiary in a policy. When thus construed the policy is perfectly valid.”
Thus, the insured having assigned the certificate as shown by the transfer quoted above, its proceeds never became vested in the appellee. Therefore appellants, as the heirs at law of the assignee, are entitled to the fund deposited in court by the in-terpleader.
We sustain appellants’ points of error. The judgment of the trial court should be reversed, except as to the division of costs and attorney fees, and judgment here rendered in favor of the appellants for the fund thus deposited, less one-half of the costs and attorney fees taxed against them in the court below. Accordingly, the judgment is affirmed in part, reversed and rendered in part. All costs on appeal taxed against appellee.