Court Opinion

ID: 3828264
Source: CourtListenerOpinion
Date Created: 2016-07-06 08:00:30.240866+00
Date Added: 2024-06-11T07:40:00.438998
License: Public Domain

Plaintiff, Mina Harjo, contends that the Secretary of the Interior actually was the legal beneficiary within the meaning of the insurance contract, and was trustee of the fund for the ultimate beneficiaries who were in all legal intent and purpose his cestuis que trustent, and that there was no legal reason to prevent the insured from changing the ultimate beneficiaries without consent of anyone.
And further, since the insured had made his written request to the trustee for a change of the beneficiaries of the trust, the insured, who was the trustor, had done all within his power to change the beneficiaries, and that such change was fully and legally effective.
This case, says plaintiff, does not call for the application of the general rule governing the change of beneficiary under the ordinary clause reserving such right, but is governed by the laws pertaining to the change of beneficiaries of an express trust of the contingent or anticipated variety.
I agree with plaintiff that according to the terms of the insurance contract the Secretary of the Interior was made the legal beneficiary of the policy with authority to accept payment of the insurance as trustee for the use and benefit of Mina Harjo and Mary Fox. In the absence of a subsequent designation of another beneficiary trustee by the insured Legus Harjo and the approval thereof by said Secretary, the latter was the only party authorized to accept payment of the insurance.
The creation of such a trust in the proceeds of a life insurance policy is well recognized. It may be created by a declaration in the policy or by collateral declarations from which the intention to create a trust appears, such as an agreement between the insured and the designated beneficiary that the latter shall pay the proceeds over to a third party. 65 C. J. 300, § 70. Here, the policy contained the express provision that the trustee beneficiary pay the proceeds to third parties.
In the instant case, the Secretary of the Interior by the terms of the policy became the trustee, under an express trust, of the proceeds of the policy, for the benefit of the cestuis que trustent named in the insurance contract.
In legal significance this case is not unlike Stowe v. Phinney, 78 Me. 244, 3 A. 914, wherein it was held as follows:
"By the terms of a life insurance policy, the insurance company promised to pay to the assured, his executors, administrators, or assigns, for the sole use and benefit of his four children, therein named, and the survivor or survivors of them, the amount expressed in the policy, after deducting therefrom any indebtedness the company might have on account of the contract, within 90 days after notice and proof of death. Held, *Page 677 
(1) that the insurance, although for the sole use and benefit of the children, was payable, not to them, but, by the expressed terms of the contract, to his own legal representative, who, upon payment of the insurance, would become a trustee, under an express trust of the money thus collected for the cestuis que trust; (2) that the administrator of the assured was the only proper party to maintain an action at law upon the contract;".
To the same effect is Gould v. Emerson, 99 Mass. 154, 96 Am. Dec. 720.
Contrary to defendant's contention, the mere fact that the Secretary of the Interior, by virtue of 47 Stat. 777, exercises supervisory control over the funds and securities belonging to restricted Indians and coming into his hands, makes the Secretary nonetheless a trustee in this case. However, the legal effect of the trust with reference to the trustee's duties and powers obtaining in the ordinary case may be modified, enlarged, and controlled generally here by the supervisory powers resting in the Secretary by virtue of the Act of Congress, supra.
The reservation in an insurance policy of the right to change the beneficiary named therein ordinarily contemplates merely the right of the insured to designate another as the party to whom the insurer may pay the insurance money. Here, no change in this respect was attempted. The insured attempted to change, or, more specifically, to eliminate, one of the parties designated in the insurance contract as a potential beneficiary of the proceeds thereof coming into the hands of the party named in the policy as the one to whom the insurance money should be paid.
The contract created an express trust to take effect in the future without vested interest in the cestuis que trustent. This case is, therefore, controlled by the laws relating to the change of beneficiaries of trusts, not the change of beneficiaries named in a life insurance policy, subject, however, to such of the powers of the Secretary of the Interior that may have intervened.
The insurance contract did not vest a present interest in Mina Harjo and Mary Fox for the reason that the insured could have abandoned the same at any time and thereby render it inoperative. The trust did not become executed until the death of the insured, at which time the funds, the subject of the trust, became legally available. In such case the insured may at any time change the beneficiary of the potential trust, without consent of anyone, and in any manner by which his intent may be ascertained.
The situation here is somewhat similar to that in Staples v. Murray, 124 Kan. 730, 262 P. 558, wherein the insured and the named beneficiary agreed that one-half of the insurance money when collected should be applied by the beneficiary to the use and benefit of plaintiff. By letter to the named beneficiary who was the trustee, the insured revoked the agreement aforesaid, and his request that plaintiff receive a portion of the proceeds of the policy. Plaintiff in that case, the potential cestui que trust, attempted to establish a trust in the insurance money when it was collected. The court held that the request of the insured, agreed to by the beneficiary named in the policy, that plaintiff receive a portion of the insurance money did not vest a present property right in plaintiff; that it did not amount to a complete and executed trust beyond the power of revocation by the settlor.
And so it was here. Legus Harjo, the settlor, had the right to revoke the trust at any time. His letter to the Superintendent for the Five Civilized Tribes accomplished that end so far as Mary Fox was concerned, subject, however, to the veto power of the Secretary of the Interior.
My recognition of the Secretary's power to disapprove the change in the beneficiaries of the trust is prompted by the terms of the insurance contract and surrounding circumstances as disclosed by the record. In my opinion the evident purpose was to retain in the Secretary the power to control the distribution *Page 678 
of the insurance money to those beneficiaries named in the trust agreement or to confine any newly named beneficiaries to Indians whose funds and securities were subject to the supervision of the Secretary of the Interior. The insurance premiums were paid on behalf of Legus Harjo from the restricted funds of Sandy Fox. Those premiums actually constituted mere gifts by Sandy Fox to Legus Harjo, made with the approval of the Indian Agency. But those gifts constituted funds in the hands of the Secretary of the Interior belonging to a restricted Indian, Legus Harjo, and were applied in behalf of Harjo pursuant to the powers granted said Secretary by the Act of Congress aforesaid.
The Secretary of the Interior therefore had the power to reserve the right to disapprove any change in the beneficiaries of the trust as made by Legus Harjo, the settlor. That right was reserved. And it appears that the Secretary actually approved the change in beneficiaries of the trust as made and requested by Legus Harjo, but subsequently reversed his action on the advice of official counsel who based his opinion wholly upon the law relating to change of the ordinary beneficiary of a life insurance policy. The legal reason for the Secretary's withdrawal of his approval, and his subsequent refusal to approve the change, was summed up as follows:
"Therefore, in the instant case where the insured, even though through ignorance and lack of proper instruction, took none of the steps required of him under the express terms of the insurance contract; where after his death the discretionary decisions of the Secretary and, under the improper procedure here customarily used, of the superintendent, still remained to be made; where the necessary advice to the company was not given by the Department until after payment of the insurance money and even then without use of the required form; it is my conclusion that the attempted change of beneficiary did not go beyond the stage of a mere expression of intent and is, therefore, wholly ineffective in law. The claim of Mary Fox to one-half of the insurance proceeds is therefore recognized and the departmental decision of August 12 is hereby reversed."
Said opinion was based on a rule of law not applicable in this case, and produced an erroneous conclusion on the part of the Secretary of the Interior.
The trial court's judgment herein was specifically based upon that opinion, and was therefore erroneous, and should be reversed.
However, I do not say that we can control the discretionary powers of the Secretary of the Interior as conferred by the Acts of Congress. But I do think that under the law obtaining here, his discretionary power to approve or reject the change in beneficiaries of the trust as made by Legus Harjo could be exercised subsequent to the latter's death.
I therefore respectfully dissent.