Opinion
October, 1920.
Louis Goldring, for plaintiff.
Roland Crangle, for defendant.
This is a motion for a new trial. The court directed a verdict for the plaintiff. The action is to recover on a policy of insurance issued by the defendant. The policy was upon the life of plaintiff's husband, and was made payable to the executors or administrators of his estate, "unless payment be made under the provisions of the next succeeding paragraph" — known as the "facility of payment" clause, which provided the insurance company might "make any payment * * * to any relative by blood or connection by marriage of the insured, or to any person appearing to said company to be equitably entitled to the same by reason of having incurred expense on behalf of the insured, for his or her burial," etc.
The evidence given on the trial is to the effect that at the time the policy was obtained, the agent of the defendant writing the same promised the plaintiff that the amount of the policy in the event of her husband's death would be paid to her. That she in fact paid the premiums and the funeral expenses. No administrator of the estate was ever appointed. The defendant contends that by the terms of the policy the death benefit is only payable to an administrator, and the plaintiff individually has no cause of action.
The plaintiff relies on the case of Shea v. United States Industrial Ins. Co., 23 A.D. 53, as sustaining her right to recover, where the terms of the policy were substantially the same as in this case, and where at the time of delivering the policy it was represented that the plaintiff would be the beneficiary if she continued to hold the policy and pay the premiums up to the time of the insured's death.
In the Shea case the court held that these representations operated as a present election by the company to exercise in her favor the option given to it by the provisions of the policy known as the "facility of payment clause."
The defendant here, however, contends that subsequent decisions of the courts of this and other states have so modified and overruled the Shea case that a different rule must be applied in this action. Defendant's counsel cites among other decisions the following as upholding his contentions: Nolan v. Prudential Ins. Co., 139 A.D. 166; Ferretti v. Prudential Ins. Co., 49 Misc. 489; Heubner v. Metropolitan Life Ins. Co., 146 Ill. App. 282; Prudential Ins. Co. v. Godfrey, 75 N.J. Eq. 484; 72 Atl. Repr. 456; affd., 77 N.J. Eq. 267; 76 Atl. Repr. 1067; Marzulli v. Metropolitan Life Ins. Co., 79 N.J.L. 271; 75 Atl. Repr. 473.
From these and other cases we may deduce the following propositions that under policies of this character, while industrial insurance companies may make payments to others than the representatives of the estate of the insured, the policy does not require such payment, and no action can be maintained on them except by representatives of the estate (same cases as above cited). When, however, the insurance company in good faith elects to make such payment to others than the representative of the estate of the insured, such payment will be a defense against the subsequent claims of the representative. Cohen v. Hancock Mut. Life Ins. Co., 135 A.D. 776; Thompson v. Prudential Life Ins. Co., 119 id. 666; Wokal v. Metropolitan Life Ins. Co., 53 id. 167.
The question still remains whether the promise made to the plaintiff at the time she took out the policy on her husband's life, that the amount of the policy would be paid to her in the event of his death, did not in fact amount to an election on the part of the company to make her the beneficiary, and whether she having herself paid the premiums until his death cannot avail herself of that promise to maintain an action on the policy for the amount payable. It was so held in Shea v. Prudential Ins. Co., 23 A.D. 53, and held that the company could not, under such circumstances, in good conscience, repudiate its promise. It will be noted that in this case the evidence established the promise to pay the plaintiff in consideration of her paying the premiums which she did. In the Shea case the court said that the promise to pay the party procuring the policy and paying the premiums "had the force of a present election upon part of the company to exercise the option in this regard in favor of the plaintiff. This does not change or vary the terms of the policy; it is an agreement in addition thereto, and entirely consistent therewith, which may rest in parol and be enforced according to its terms."
We do not understand that this doctrine has been modified or overruled by any decision, at least by any decision of the courts of this state.
In the case of Nolan v. Prudential Ins. Co., 139 A.D. 166, the plaintiff took out a policy on the life of a child, who became an inmate of her family. She paid the premiums and supported the child. The father contributed nothing. The amount of the policy was made payable to the administrator or executor. There was no proof, however, that the insurance company ever promised the plaintiff the proceeds of the policy. There was, therefore, not only an absence of an agreement to do so, but also absence of any election to make payment to her, and consequently the court properly held that as matter of law the plaintiff was not entitled to recover.
In the case of Ferretti v. Prudential Ins. Co., 49 Misc. Rep. 489, there was also an absence of any promise to pay.
In the cases above cited from other states there appears to have been no promise to pay any particular person upon the taking out of the policy, which distinguishes Shea v. Prudential from all the other cases.
We, therefore, reach the conclusion that the later cases of Nolan v. Prudential Ins. Co. and Ferretti v. Prudential Ins. Co. do not overrule the Shea case, and that until the Shea case is overruled this court should follow it.
Consequently the motion for a new trial must be denied.
Motion denied.