Court Opinion

ID: 3877904
Source: CourtListenerOpinion
Date Created: 2016-07-06 09:10:21.876466+00
Date Added: 2024-06-11T07:41:49.577901
License: Public Domain

I think, under the express terms of this policy, Barron, the insured, had a perfect right to assign the policy without the consent of the beneficiary, and that the pledge of the policy with the bank was, as between the pledgee and Barron or any one claiming *Page 451 
under him, as beneficiary or otherwise, a valid transfer of the policy. The conditions of the policy contract as to form of an assignment, etc., were intended for the benefit and protection of the company (25 Cyc. 770, 771, 772), not for the protection of the beneficiary who, at the time of the pledge, had only an expectant, not a vested, interest in the policy. Bost v. Volunteer State Life Ins. Co., 114 S.C. 405;103 S.E., 771. The construction given this particular contract in the Bost Case is, in my opinion, correct. Under that construction, as I apprehend, the reserved right of the insured "to act with the policy as he saw fit" (Bost Case) embraced the right to pledge the policy to secure a loan, either for the purpose of keeping the policy in force, for the purpose of obtaining money to feed and clothe his wife and family, or for any other purpose. Barron could not bind the company to recognize the validity of such an assignment so as to give the assignee the right to hold the company for the amount of the insurance, without complying with the terms of the policy as to the form of an assignment or as to the change of beneficiary. But he could bind the beneficiary by such pledge or parol assignment to the same extent he could have bound her by surrendering and canceling the policy or by terminating it for nonpayment of premiums. Barron had the same right in life, if he saw fit, to provide for his wife by borrowing money upon this policy, as he had to provide for her out of the policy at his death. Having exercised the privilege of borrowing money upon the security of this policy, such pledge of the policy was, as against any one claiming by or through Barron (Thompson v. Equitable Life, etc., 95 S.C. 16;78 S.E., 439), an assignment entirely valid — certainly, in equity, which considers as done all that should have been done.
To a case of this character the provisions of Section 4099, Code 1922, Vol. 3, are inapplicable. That Section, as I think, was plainly intended to protect the beneficiaries therein *Page 452 
named, the wife and children of an insured, from the claims of the representatives of the husband, or his creditors, in so far — and in so far only — as might be necessary to prevent the diversion of the proceeds of such life insurance to the payment of general creditors and claimants. Within the limits prescribed by that section, an insolvent husband and father has the right to provide for his wife and children by carrying life insurance. But the statute does not prevent him from exercising the reserved right of pledging such a policy to obtain money to provide for his wife and family during his life, or to keep his business bark afloat, or to subserve any other legitimate purpose. Under the statute, the insurance belongs to the wife or to the children so long as it is payable to them at the insured's death by virtue of the insured's intention to make it payable to them. When the insured pledges the policy to secure a loan during his life, and gets a creditor's money upon the faith of such security he has thereby manifested an intention to make the insurance payable to his creditor, not to the beneficiary — an intention which it was not the object of this statute to frustrate, and an intention which, in my judgment, may not be ignored or disregarded by the Courts without violating the cardinal principles of equity jurisprudence.