Summary
In Pioneer Homeowners Life Ins. Co. v. Hogan, 110 Ga. App. 887 (140 S.E.2d 212), it was held that the estate of the deceased debtor is entitled to the benefits of a credit life policy when the creditor is paid from estate funds while the policy is in force.
Summary of this case from National Life v. Massey-FergusonOpinion
41015.
DECIDED JANUARY 6, 1965.
Action on insurance policy. Berrien Superior Court. Before Judge Lott.
Reinhardt, Ireland Whitley, Glenn Whitley, for plaintiff in error.
W. D. Knight, E. R. Smith, Sr., contra.
A policy of credit life insurance insures the life of the debtor and not the debt under the provisions of the Georgia Insurance Code of 1960; and such insurance is not wholly for the benefit of the creditor beneficiary since it is expressly provided in Code Ann. § 56-3306 (2) that "wherever the amount of insurance may exceed the unpaid indebtedness . . . any such excess shall be payable to a beneficiary, other than the creditor, named by the debtor or to his estate."
DECIDED JANUARY 6, 1965.
This was a suit on a policy of credit life insurance brought by the wife of the deceased insured debtor as administratrix of his estate. The petition as amended alleged that the decedent borrowed the sum of $3,275 from the Bank of Alapaha on January 16, 1963, as evidenced by a promissory note of that date and due August 15, 1963; and that on January 16, 1963, a policy of credit life insurance was issued by the defendant company on the life of the decedent in consideration of the payment of premium of $43.77. The insurance was in the level amount of $3,275 for a term of eight months, naming the bank as creditor beneficiary "as its interest may appear." The policy, a copy of which was attached as an exhibit to the amended petition, provided that in the event of the death of the insured debtor "any excess may be paid to the wife, husband or other blood relative, or to any other person who appears to be equitably entitled to such payment because of having incurred expenses for the maintenance, medical attention or burial of the Insured Debtor."
The petition further alleged that the insured died on January 26, 1963, while the policy was in full force and effect; and that thereafter, the petitioner on August 17, 1963, paid to the bank the sum of $3,231.22 out of the funds of the insured's estate in settlement of the promissory note issued on January 16, 1963, and that the note is now held by her as administratrix of the estate of her late husband, the insured debtor. The petition alleged that due and timely demand had been made upon the defendant company for this amount and that it had failed and refused to pay such sum. The petition sought to recover the sum of $3,231.22 plus penalties and attorneys' fees for bad faith.
The trial court overruled the defendant's general and special demurrers and the exception is to that judgment.
It is the contention of the defendant insurance company that the trial court erred in overruling its general demurrer for the reasons that a policy of credit life insurance is wholly for the benefit of the creditor beneficiary and the sole right of action to recover on such policy is therefore in the creditor beneficiary to the exclusion of the insured debtor or anyone claiming under him.
This contention is without merit. Under the provisions of the Georgia Insurance Code of 1960 (Ga. L. 1960, pp. 289, 743; Code Ann. Ch. 56-33) regulating credit life insurance, as such provisions have been interpreted by the Supreme Court in Betts v. Brown, 219 Ga. 782 ( 136 S.E.2d 365), a policy of credit life insurance insures the life of the debtor and not the debt; and such insurance is not wholly for the benefit of the creditor beneficiary since it is expressly provided in Code Ann. § 56-3306 (2) that "wherever the amount of insurance may exceed the unpaid indebtedness . . . any such excess shall be payable to a beneficiary, other than the creditor, named by the debtor or to his estate."
The case of Murray v. Life Ins. Co. of Ga., 107 Ga. App. 545 ( 130 S.E.2d 767), which is relied upon by the defendant as authority for its contention, is not applicable here since the credit life insurance contract dealt with in that case "was entered into prior to the effective date of the Georgia Insurance Code, Ga. L. 1960, supra. Hence, what was there held as to the insured's lack of interest in that contract and consequent inability to sue the insurer for breach thereof was not with the aid of the above mentioned Insurance Code provisions, which recognize the interest of the insured in the credit life insurance contract." Betts v. Brown, 219 Ga. 782, 787, supra.
The policy sued upon in this case was executed after the effective date of the Georgia Insurance Code of 1960, supra; and in construing this policy under the provisions of that Act, it is clear that the plaintiff as the administratrix of the insured debtor's estate was the party "equitably entitled" to payment under the terms of the policy as the indebtedness to the bank had been paid by her out of the estate of the insured debtor. Accordingly, the plaintiff, being entitled to the proceeds of the policy, was authorized to bring this suit to recover upon the refusal of the defendant insurance company to pay, and her petition was not subject to general demurrer as contended by the defendant.
The trial court did not err in overruling the defendant's sole special demurrer to the petition for the reason that the grounds of the demurrer were too general and incomplete in form. Cawthon v. Williams, 107 Ga. App. 886 (3) ( 132 S.E.2d 214).
Judgment affirmed. Bell, P. J., and Eberhardt, J., concur.