Court Opinion

ID: 9551995
Source: CourtListenerOpinion
Date Created: 2023-08-07 19:03:10.176307+00
Date Added: 2024-06-11T15:25:22.233173
License: Public Domain

STEWART, Justice
(dissenting):
I agree with the majority opinion that all rights under the policy can be assigned to a newly-designated owner, but I do not join in the conclusion regarding the absolute character of the policy change in the instant case. Although the form provided by American Western Life Insurance Company contemplates the transfer of all rights under the policy to an assignee, the mere form of the policy is not conclusive on the question of ownership. Moser v. Moser, 117 Ariz.App. 312, 572 P.2d 446 (1977). Parol evidence is admissible to show the true nature of an assignment, though absolute in form. Boyle v. Crimm, 363 Mo. 731, 253 S.W.2d 149 (1952). As stated in Boyle:
“The majority of courts at the present time, however, are prone to look with reluctance upon absolute assignments and hold that if the assignment, though absolute in form, was intended only as collateral security, it will have only such effect. Thus, one having an equitable claim may show by parol that an apparently absolute assignment was intended as security, and such showing, whether demonstrated by written agreement or parol evidence, will be conclusive. And such evidence is admissible though contrary to the clear and unambiguous language of the assignment.” 2 Appleman, Insurance Law & Practice, Sec. 1312, pp. 759-761. “And it has also been held that the purpose of the written assignment may be shown by pa-rol, although the assignment is absolute in terms.” 2 Cooley’s Briefs on Insurance, 2d Ed., p. 1839. “It is generally considered that parol evidence is admissible where it is offered, not for the purpose of varying the terms of a written contract or instrument, but for the purpose of explaining and showing the true nature and character of the transaction evidenced thereby * * 32 C.J.S., Evidence, § 1015, p. 1037, citing Service Purchasing Co. v. Breenan, 226 Mo.App. 110, 42 S.W.2d 39. [253 S.W.2d at 155-56.]
The record in the instant case reveals that the first insurance policy taken out was purchased by Ronald shortly after mortgaging the house which his wife, Helen, had previously owned free and clear. The mortgage on Helen’s house financed the construction of an apartment building. The second policy was purchased in conjunction with a further loan against both *781Helen’s house and the apartment building to finance a new store for Ronald’s appliance business. According to Helen’s testimony, the insurance policies were taken out to insure repayment of the two mortgages on her home in the event of her husband’s death.
Operating under the misconception that unless Helen was the owner, the proceeds of the policies would go into probate, Helen was made the owner of the policies. Thus, evidence suggests that Helen’s position as beneficiary and owner of the policies was established in order to assure that she would be paid back the money borrowed on her home. That evidence could establish that an otherwise apparently absolute assignment of insurance was in fact intended as security, see Boyle v. Crimm, supra, and that Ronald’s payment of the debts in full would extinguish that security interest. See Green v. American National Insurance Co., Tex.Civ.App., 452 S.W.2d 1 (1970); Albrent v. Spencer, 275 Wis. 127, 81 N.W.2d 555 (1957). If the “assignment” of the policy was intended as security for a debt, as contended by American Western Life Insurance Company, the transfer of rights would not divest the insured of his ownership interest. Therefore, payment of the debt would discharge the lien securing it and cause the policy to continue in effect as if there had been no assignment, Green v. American National Insurance Co., supra; Males v. New York Life Insurance Co., 48 A.D.2d 50, 367 N.Y.S.2d 575 (1975), and Ronald would be free to change beneficiaries.1
Although appellant argues the assignment was binding and not subject to change, the record presents a dispute over its intended purpose. Since a document effecting an absolute transfer on its face may be shown by parol evidence to have been given for security purposes only, the evidence supporting the disputed issue of intent is admissible. Kjar v. Brimley, 27 Utah 2d 411, 497 P.2d 23 (1972). The presence of this disputed issue in the instant case renders summary judgment inappropriate. Rule 56(e) of Utah Rules of Civil Procedure; Kjar v. Brimley, supra. See also Riggle v. Daines Manufacturing Company, 20 Utah 2d 391, 438 P.2d 808 (1968).
I have further difficulty with the majority opinion’s treatment of the notice issue. Helen argues that there can be no forfeiture of Policy 43 because she did not receive notice of premiums due. She does not argue that no notice was sent to Ronald, nor does the record answer the question whether in fact a notice of premium due was sent to Ronald in December 1976. The portion of the policy which requires the sending of premium notices, and upon which the majority opinion relies to find the requisite duty, allows for alternative recipients of the notice other than the policy owner. Thus, the majority opinion’s conclusion that premium notices were required does not answer the remaining issue — that is, was Helen the party intended to receive them.
The fact that Ronald received premium notices subsequent to the assignment to Helen, and the fact that Helen agreed to have Ronald continue paying the premiums after the divorce, along with Helen’s failure to notify the insurance company in any way of her change of address after the divorce, indicate her acquiescence in Ronald’s remaining the appropriate recipient of premium notices. The majority opinion’s conclusion that American Western failed to send a premium notice to Ronald is not supported by the record. Whether Ronald received notice or not, however, Helen’s argument that she was personally entitled to notice must fail.
For these reasons I respectfully dissent and would remand the case for trial.
HALL, J., concurs in the dissenting opinion of STEWART, J.

. As Ronald’s wife, Helen had an insurable interest other than security on a debt; and the discharge of the debt would not automatically invalidate her status as beneficiary. However, the discharge of the debt and the removal of the absolute character of the transfer, if found to have merely served the purpose of securing the debt, would provide Ronald an opportunity to change her status as beneficiary.