Opinion
43604.
SUBMITTED MAY 7, 1968.
DECIDED JUNE 12, 1968. REHEARING DENIED JULY 10, 1968.
Action on insurance policy. Clarke Superior Court. Before Judge Barrow.
L. D. Skaggs, for appellant.
Guy B. Scott, Jr., for appellee.
A clause of a credit insurance policy which is contrary to the provisions of Code Ann. Ch. 56-33 is void.
SUBMITTED MAY 7, 1968 — DECIDED JUNE 12, 1968 — REHEARING DENIED JULY 10, 1968 — CERT. APPLIED FOR.
Finance Corporation of America instituted a suit on a policy of life insurance against Universal American Life Insurance Company in the Magistrate's Court of Clarke County. The policy sued upon was issued to Milton Holloway for the purpose of securing a loan from Arrow Loan Insurance, Inc., to Margaret and Milton Holloway. The policy was for $702, the amount of the loan secured, and was issued under the provisions of Code Ann. Ch. 56-33 (Ga. L. 1960, pp. 289, 743). The policy was issued by W. C. Thornton, Jr., who is described therein as the "Authorized Agent" of the defendant Universal American Life Insurance Company; the agent deducted the premium from the amount of the loan.
While Milton Holloway was in life, Arrow Loan Insurance, Inc., endorsed the note which evidenced the loan to Finance Corporation of America and regularly transferred the Holloways' obligation to that institution. At Mr. Holloway's death a balance was owed by him and Margaret Holloway of $404.73 on the loan then owned by the transferee credit company. The defendant insurer tendered to the attorney representing the Holloway estate and Finance Corporation of America a check for $297.27 payable to Milton Holloway's estate, this being the amount the policy exceeded the sum then due on the loan. However, it refused to pay the finance company the sum of $404.73 to satisfy the loan.
The plea and answer in the present case set up the defense: "That said petition does not on its face, or exhibits thereto show any valid assignment from the first beneficiary, Arrow Loan and Insurance, Inc., to the plaintiff herein.
"Under the terms of the policy sued upon no assignment of said policy shall be binding on the defendants until said assignment is filed with the defendants at their home office. Your defendants further show that no assignment of the stated policy appears of record in defendants' home office.
"Your defendants further show that Arrow Loan and Insurance, Inc., was at the time of the filing of this petition, and is now indebted to your defendants in a sum in excess of thirteen thousand ($13,000) dollars for premiums due and that the aforesaid claim has been credited to the account of Arrow Loan and Insurance, Inc., on defendants' books and your defendants are therefore not indebted to the plaintiff in any amount whatsoever."
The defendant insurer insisted in the Magistrate's Court and on appeal in Clarke Superior Court that the transfer of the Holloway loan from Arrow Loan Insurance, Inc., to the plaintiff, Finance Corporation of America, was invalid on the sole ground that the policy sued upon contained the clause "no assignment of this policy shall be binding on the company until it is filed with the company at its home office," and that the assignment to the plaintiff finance company was not filed in the office of the defendant insurance company. Predicated upon this contention the defendant insurance company retained the $404.73 and insisted it had a right to apply the money to a debt it claimed against the original creditor and beneficiary named in the policy. The defendant insurer made a solemn admission during the progress of the trial that the policy sued upon was entirely valid, which necessarily included the concession that W. C. Thornton, Jr., was an agent authorized to issue the policy. On appeal to the superior court the judge entered a judgment in favor of the plaintiff for the sum of $404.73 and costs. The defendant filed notice of appeal and the case is here for review.
Obviously, the clause of the policy requiring the assignment of the loan to be filed in the office of the defendant is repugnant to the provisions of the Credit Insurance Act of Georgia, Code Ann. Ch. 56-33. Code Ann. § 56-3302 (3) (Ga. L. 1960, pp. 289, 743) reads in part: "`Creditor' means the lender of money . . . or any successor to the right, title or interest of any such lender." Another part of the Act, Code Ann. § 56-3306 (2) (Ga. L. 1960, pp. 289, 745) reads: "Each individual policy . . . shall state that the benefits shall be paid to the creditor to reduce or extinguish the unpaid indebtedness and, wherever the amount of insurance may exceed the unpaid indebtedness shall state that any such excess shall be payable to a beneficiary, other than the creditor, named by the debtor or to his estate."
The Act, as this court held in Pioneer Homeowners Life Ins. Co. v. Hogan, 110 Ga. App. 887 ( 140 S.E.2d 212), was passed for the benefit of the insured borrower, who pays the premium for the policy, as well as the creditor who makes the loan or extends the credit and the original creditor's successors. Code Ann. §§ 56-3302 (3) and 56-3306 (2) clearly provide that the transferee of the loan becomes the creditor entitled, upon the death of the insured, to the proceeds of the policy necessary to pay the amount due upon the loan. Under the statutes, no change in the creditor beneficiary originally designated in the policy or notice of the transfer to the insurance company is necessary to effect a valid transfer of the loan.
Judgment for the plaintiff was demanded.
Judgment affirmed. Bell, P. J., and Hall, J., concur.