(113 A.) been excluded merely because of his unsup- the insurer, having declared its willingness to ported contradiction of the strongly corrob- pay the fund to the beneficiary, held entitled orated witnesses for the state. to it. (138 Md. 155) DALY v. DALY. (No. 32.) (Court of Appeals of Maryland. March 3, Appeal from Circuit Court of Baltimore City; Robert F. Stanton, Judge. "To be officially reported." Bill of interpleader by the Equitable Life Assurance Society of the United States against Helen M. Daly and Patrick Daly. From decree for Patrick Daly, Helen M. Daly appeals. Decree reversed, and cause remanded for decree in accordance with the opinion. Argued before BOYD, C. J., and BRISCOE, THOMAS, URNER, STOCKBRIDGE, ADKINS, and OFFUTT, JJ. Alexander Preston, of Baltimore, for appellant. F. Stanley Porter and Addison E. Mullikin, both of Baltimore, for appellee. THOMAS, J. On or about the 15th of April, 1918, the Equitable Life Assurance Society of the United States, a body corporate of the state of New York, issued to the Standard Oil Company of New Jersey, what is called a policy of "group insurance" on the lives of such employees of the Standard Oil Company, called the employer, "as are enu1. Insurance 587- Interest of beneficiary merated on the record known as 'insurance subject to insured's right to change; require-register' of the Standard Oil Company, kept ments must be followed in changing benefi- by the society, in the amounts set opposite ciary. 1921.) Where the certificate or policy of insurance expressly reserves to insured the right to change the beneficiary named, whatever interest the beneficiary has in the certificate or policy is subject to such right of insured, and where the contract of insurance, or, in case of benefit societies, the policy, constitution, or by-laws of the association, prescribe the manner in which the change of beneficiary shall be made, such requirements must be followed by insured in order to effect the change desired. 2. Insurance 587-Wife entitled to proceeds of policy as against insured's father specified as beneficiary. Where a company taking out industrial insurance for its employees required them to specify beneficiaries in accordance with its schedule, which gave the wife the preference over parents, and an employee, prior to his marriage necessarily named his father as beneficiary, but after his marriage told the agent of the company in charge of such matters that he desired to change the beneficiary to his wife, and the change was not made merely because the agent had not been furnished proper blanks, and in waiting for such blanks overlooked the matter, the wife is entitled to the proceeds of the insurance as against the father, though the policy provides the change of beneficiary should be effective on entry of the same on the insurance register of the insurer, and, though the statute of the state of the insurer's domicile required its assent to such a change, their respective names, for the term of one year from the date hereof, or for such part of said term as they shall respectively remain in the employment of the employer," and agreed, on receipt of due proof of death during said term of any such employee, to pay, at its office in the city of New York, the amount "for which such employee's life is insured as aforesaid, to the beneficiary designated by such employee as entitled to receive the same." Among the provisions of said policy were the following: "Change of Beneficiary. "Any employee may from time to time during the continuance of this policy change the beneficiary by a written request (upon the society's blank) filed at its home office, but such change shall take effect only upon the receipt of the request for change at the home office of the society. No assignment by the employee of the insurance under this policy shall be valid." "The Contract. "This policy, together with the employer's application therefor, copy of which is attached hereto, and the insurance register herein referred to, a copy of the form of which is attached hereto, shall constitute the entire contract between the parties." Some time in the summer of 1918, and after the latter part of July, Charles A. Daly, of designated in the Standard Oil Company's life insurance plan stated on second page hereof, who shall survive all prior classes of designated beneficiaries. "No assignment of said insurance shall be valid. "This individual certificate is furnished in accordance with the terms of the Equitable Group Insurance Policy issued and delivered to said employer, which policy, with the employer's application therefor and the insurance register therein referred to, constitute the entire contract between the parties." "W. A. Day, President. "New York, April 15th, 1918." The plan of insurance referred to in the above certificate as printed on the second page thereof contains the following provision in regard to beneficiaries: Baltimore City, Md., who had been in the employ of the Standard Oil Company in Baltimore City as bookkeeper for several years, filled out and delivered to William N. Spear, of Baltimore City, who was the agent and employee of the Standard Oil Company in Baltimore City, and who had charge of the annuities, benefits, and insurance department of that company, an application for insurance under the group policy issued to that company by the said assurance society. Mr. Daly had for a year or more been engaged to Miss Helen C. McKenzie, of Baltimore City, and when he applied to Mr. Spear, whom he had known for a number of years and who knew of his engagement to Miss McKenzie, for the insurance he asked Mr. Spear if he could not name Miss McKenzie as the bene ficiary of his insurance, and Mr. Spear told him that under "the schedule printed under the application" it would not be possible, the company would not permit it, because the insurance was intended for the employee's de pendents, and a fiancée could not be consid"The Employee's: 1. Widow or widower. 2. ered a dependent, but after his marriage he Children in payments to be made to surviving could make the change, and that in the mean- parents and adult children as trustees for the time he could name either his mother or equal benefit of the employee's children. father, who according to the schedule were Should any child have died before the employee, the preferred beneficiaries under the com- his or her share shall be payable in equal parts pany's plan of insurance. Mr. Daly accord- to such child's children then living. 3. Parents ingly named his father, Patrick Daly, of of the survivor of them. 4. Other blood relaWilmington, Del., as the beneficiary, and tion, conceded by the employer as being dethe following policy or certificate of insur-pendent upon the employee to at least 20% of his or her wages. ance was issued by the assurance society and delivered to him by Mr. Spear: "The Equitable Life Assurance Society of the United States, "Schedule of Successive Classes of Preference cordance with the following schedule: "The employee may, with the written consent of the employer, designate a beneficiary outside of the above four classes, in which event the amount of insurance shall be $500. The employer's consent will not be given in any case where a person included in the first four classes above is dependent upon the employee to the extent of 20% of his or her wages." "No. 5342425-Insurance Amount for $1140.00, There was also printed on the certificate the following statement of the Standard Oil Company: "Beneficiary-Patrick-Father. "Subject to the right of the employee, with the consent of the employer, to change the beneficiary to any of the preference beneficiaries designated in the Standard Oil Company's life insurance plan stated on the second page hereof and in accordance therewith, which change will be effective upon entry in said insurance register. If the beneficiary named as above does not survive the employee, the amount of the insurance will be payable to the first-named beneficiary or class of beneficiaries "Standard Oil Company. "New York, April 15th, 1918. "To Employee Named in Attached Certificate: "This certificate of life insurance is issued at the expense of the Standard Oil Company (New Jersey) in accordance with the provisions of its annuities and benefits plan. "Provision is made for the payment of a special sum in case of death from either sickness or accident, and payment on account of death by accident is independent of and supplemental to payment that may be made under the state Compensation Law. "Each employee is entitled to a copy of the pamphlet containing the annuities and benefits plan in detail, showing the provisions that have been made by the company for helping its employees and their dependents meet the financial contingencies that arise in times of sickness, accident, old age and death. (113 A.) "With hearty appreciation of your loyal cooperation. "On behalf of the board of directors, "Walter C. Tingh, President. "Approved: A. C. Bedford, Chairman." It appears from the evidence that Miss McKenzie had a policy of insurance on her life, and that she and Mr. Daly had agreed that she should make him the beneficiary in her policy, and that he should make her the beneficiary in his, that she had her policy written accordingly, and that when Mr. Daly got his certificate he gave it to her to keep and told her the reason his father was named as beneficiary was because he was not then contributing to her support, but that as soon as they were married he would have it changed. They were married on the 3d of September, 1918, and about a week later, as soon as they returned from their wedding trip, he went to see Mr. Spear and asked him to make the change in his certificate by making his wife the beneficiary. Mr. Spear testified that he could not make the change at that time because he had not received the blanks for changing beneficiaries from the New York office; that the company's plan of insurance was practically new at that time and he had not received all the blanks, and that he told Mr. Daly that as soon as the blanks were received from the New York office he would give him one to fill out and sign; that the blanks were received some time later, he could not tell just when, and that, not having made a note of Mr. Daly's request, he overlooked it, forgot it, and did not give him a blank; that he (witness) was very busy at that time and was working day and night trying to get all the employees insured before the first of the year, and was also busy helping to make out war questionnaires, and that that was the reason he overlooked Mr. Daly's request; that Mr. Daly was entitled to have the beneficiary changed be cause his status had changed; that the company requires an employee to change his beneficiary after he marries because under its plan of insurance the wife comes before the parents; that according to the usual course of procedure, if the employee makes the request for the change, he (witness) fills out the blank, which is signed by the employee and by him and forwarded to the New York office, and the New York office forwards one copy of it to the assurance society and retains the other; that if the employee does not make the request for the change, and the company finds out he is married, the company requires him to make the application in the manner stated because according to its schedule the wife comes before other authorized beneficiaries; that the applica tions for change of beneficiary are put through according to the blanks signed by the employee and by him. Shortly after he applied to Mr. Spear to make the change in his certificate, Mr. Daly was taken sick on the 5th of October, 1918, with the "flu" and double pneumonia, and he died on the 16th of that month without having received the blank from Mr. Spear. After his death the assurance society, in accordance with the terms of the certificate, paid to Mrs. Daly $150 for funeral expenses, but, as she and Patrick Daly, the father of the insured, both claimed and demanded the balance due under the certificate, the society filed in the circuit court of Baltimore City a bill of interpleader against them, and the court passed a decree requiring them to interplead, and the assurance society to pay into court to the credit of the cause the balance of said fund, amounting to $990, less a fee of $50 to its counsel. After a hearing upon the pleadings and evidence adduced by the parties, the court below passed a decree directing the clerk of the court to pay said sum of $990, less the fee of $50 referred to, and the cost of the proceedings, to Patrick Daly, the father of the deceased, and from that decree Mrs. Daly has brought this appeal. [1] Where the certificate or policy of insurance issued to the insured expressly reserves to him the right to change the beneficiary named therein, whatever interest the beneficiary has in the certificate or policy is subject to that right of the insured, and where the contract of insurance, or, in case of benefit societies, the policy, constitution, or by-laws of the association, prescribe the manner in which the change of beneficiary shall be made, such requirements must be followed by the insured in order to effect the change desired. These principles are generally recognized and are in accordance with the decisions in this state. 14 R. C. L. § 545; p. 1376, and section 555, p. 1390; Supreme Conclave, Royal Adelphia, v. Cappella (C. C.) 41 Fed. 1; Berkeley v. Harper, 3 App. D. C. 308; Thomas v. Cochran, 89 Md. 290, 43 Atl. 792, 46 L. R. A. 160; Dale v. Brumbly, 96 Md. 674, 54 Atl. 655; Fitzgerald v. Balto, L. Ins. Co., 133 Md. 619, 105 Atl. 775. It is said, however, in Supreme Conclave, Royal Adelphia, v. Cappella, supra, which is regarded as a leading case on the subject, that there are three exceptions to the general rule requiring exact compliance with the regulations in regard to the manner in which a change of beneficiary shall be made: "(1) If the society has waived a strict compliance with its own rules, and, in pursuance of a request of the insured to change his beneficiary, has issued a new certificate to him, the original beneficiary will not be heard to complain that the course indicated by the regulations was not pursued. "(2) If it be beyond the power of the insured to comply literally with the regulations, a court of equity will treat the change as having been legally made. * "(3) If the insured has pursued the course pointed out by the laws of the association, and has done all in his power to change the beneficiary, but, before the new certificate is ac tually issued, he dies, a court of equity will decree that to be done which ought to be done, and act as though the certificate had been issued." In the case referred to there was a bill of interpleader, and, after stating these exceptions to the general rule, the court said: "We think the case under consideration falls within these exceptions. Five days before the death of the insured, he signed and acknowledged before a notary a written application for a change in his certificate in the form prescribed by the by-laws, stating that the original certificate to Anna Cappella was in her possession, and beyond his control. This application was delivered to the secretary of the Carpenter Conclave at Milwaukee, who affixed the seal of the conclave, and forwarded it to the supreme secretary. is true he did not surrender the original certificate, as required by the regulations; but he had done all in this connection which was with It in his power, or which he could reasonably be required to do. * * * Were the nonsurren der of the certificate set up by the company in a common-law action brought by Kratzsch, it is possible the court might be compelled to hold that he had failed to establish his title; but when the company waives this defense, or at least disclaims any interest in the result of the controversy, the objection comes with ill grace from one who is solely responsible for such nonsurrender." In the case of Berkeley v. Harper, supra, which also arose on a bill of interpleader, and where the application for change of beneficiary was made out by the insured, who died before the papers could be transmitted to and acted on at the principal or home office of the order, in the opinion delivered by Mr. Chief Justice Alvey, the Court of Appeals of the District of Columbia said: take his certificate to the association and surrender it paying a fee of 50 cents, and request them to issue a new one payable to his wife. This was done, and a minute of the transaction was made on the records of the association for that day. On the following day the insured died. It was held that in doing this he had done all that the laws of the order required to be done on his part in order to have a new certificate issued; that his right to make the change was absolute, and that the association had no right to refuse his request; and, further, that the fact that the certificate was issued after his death was immaterial, since the certificate was not the right itself, but merely the evidence of the right. To the same effect are the cases of Kepler v. Supreme Lodge, Knights of Honor, 45 Hun, 274, and Scott v. Relief Ass'n, 63 N. H. 566. These authorities would seem to be founded upon principle, and we entirely concur in the propositions maintained by them." In Jory v. Supreme Council, American Legion of Honor, 105 Cal. 20, 38 Pac. 524, 26 L. R. A. 733, 45 Am. St. Rep. 17, the original certificate was in possession of the beneficiary named therein, who refused to give it up, and the insured was unable to surrender it as required by the by-laws, and the court held that, as the money had been paid into court, and the society was not resisting payment to the new beneficiary, and as the insured had done all he could do to effect the change, the new beneficiary was entitled to the fund. In the case of Marsh v. Supreme Council, etc., 149 Mass. 512, 21 N. E. 1070, 4 L. R. A. 382, where the certificate was not delivered, as required by the laws of the corporation, to the supreme secretary by reason of the fraud and collusion of the original beneficiary and a subordinate secretary, the court held that, the insured having done all he could do to effect a change of beneficiary, the new beneficiary was entitled to the fund, and said: "The controversy is solely between these two claimants. It is a matter in which the cor decree may be rendered that shall conclude these claimants as to any demands upon it." "Upon the evidence in this case no doubt can exist as to the intention of Wood, the member. He intended to change the beneficiary in the certificate of membership, and he did all in his power to accomplish that purpose. He did not live long enough to have all the forms prescrib-poration had no interest. It desires only that a ed actually complied with; but the particulars in which the defect existed were purely of a formal nature, and such as the order could and did properly dispense with. The revocation In the case of Luhrs v. Luhrs, 123 N. Y. and new appointment were substantially made; 367, 25 N. E. 388, 9 L. R. A. 534, 20 Am. St. and it was the right of the member to have Rep. 754, notwithstanding the new certifithe substituted certificate issued as he direct-cate was not in fact issued until after the ed, and, though death interposed before all the death of the member of the order, the court forms could be complied with, the right of sub-held that the new beneficiary was entitled to stitution of beneficiary previously exercised the fund. In the case of Lahey v. Lahey, 174 was no lost." N. Y. 146, 66 N. E. 670, 61 L. R. A. 791, 95 Am. St. Rep. 554, the association failed and neglected to issue a new certificate on the ground that it had no power to issue a new certificate while the original was outstanding, notwithstanding it had been advised that the original certificate was in the possession of the beneficiary named therein, who refused to surrender it. The court held that the case was not one in which the benefit association was interested, but one only be (113 A.) tween the claimants, and notwithstanding the requirements of the rules for the purpose of making a substitution of beneficiaries within the statute of New York authorized a change of the beneficiary in the certificate his power, he has done all that a court of of such a society, with "the consent of the so- equity demands." ciety," and notwithstanding the by-laws of the society required the application for a change of beneficiary to be made by filling out the blank on the back of the original certificate, the court held that the new beneficiary named in a written application to the society to change the beneficiary was entitled to the fund. In that case the court refers with ap-ance with a preference schedule prescribed by proval to the case of Nally v. Nally, 74 Ga. 669, 58 Am. Rep. 458, in reference to which it said: * an unmarried * SubseThe sister had [2] In the case at bar the insurance we are considering is what is termed industrial insurance. It is paid for by the employer, and the beneficiaries are not only limited to specified classes, but the insured or employee is required to select the beneficiary in accord the employer. The insured is not only expressly authorized by the certificate or policy issued to him, and by the policy issued by the society to his employer, to change the beneficiary, but according to the plan of insurance adopted by his employer, and which is referred to in the contract between the employer and the assurance society, where his status is changed by marriage, he is required to change the beneficiary by naming his wife as the person to receive the benefits of his policy. In pursuance of the right expressly reserved to him in his certificate, and in accordance with the plan of insurance adopted by his employer, Mr. Daly, the insured, ap "In Nally v. Nally man took out a policy of insurance on his life, one condition of which was that the policy was issued and accepted upon the express condition that the assured might, with the consent of the company, at any time assign it, or, before assignment, change the beneficiaries, or make any other change. The person named as the beneficiary was the sister of the assured and to her he delivered the policy. quently he married. the policy and would not give it up. The agent was uncertain whether the change could be made without the policy, but promised to no-plied to Mr. Spear, the agent of the employer, tify the company and have the change made if possible. The officers agreed to attend to the matter, but overlooked it. After the death of the assured, the company filed a bill to require the wife and sister to interplead and have the question determined as to who was entitled to the money. It was held that the gift to the sister was not perfected, so as to be absolute to change the beneficiary of the policy, and whether such change was to be effected by parol or in writing was a matter entirely between the assured and the company." and irrevocable, and the assured had the right A number of cases to the same effect as those to which we have referred are collected in a note to 34 L. R. A. (N. S.) 277, and among them is the case of John Hancock Mut. L. Ins. Co. v. White, 20 R. I. 457, 40 Atl. 5, in which, the note says "the proceeds of a policy of life insurance in which the assured reserved the right to change the beneficiary with the consent of the company were decreed to one whom the assured had designated by an appropriate paper forwarded to the company's office, although, owing to the neglect of the company, no attention had been given to the paper, and no change ever recorded in its books." The same principle is recognized in 14 R. C. L. 556, p. 1392, where it is said: "While it is true as a general rule as stated in the preceding paragraph, that a change in beneficiaries cannot be made except by a substantial compliance with the regulations of the society, yet courts of equity recognize exceptions to this general principle. Equity does not demand impossible things, and will consider as done that which should have been done, and, when a member has complied with all of a who had charge of the insurance department of the employer, to make the change in his certificate by making his wife the beneficiary, and the only reason it was not done at once was because Mr. Spear did not have the blanks which were to be furnished him for that purpose. He promised the insured to give him a blank as soon as he got them, but this he neglected or failed to do because he overlooked it. There can be no doubt of the insured's desire and intention to change the beneficiary or that he did all in his power to effect the change, and the only reason more formal application was not made, and noted on the insurance register of the society, was because the society or the employer had failed to furnish its or their agent the blanks used for that purpose, or because its or their agent failed to give him a blank in accordance with his promise to do so. Under such circumstances the claim of Patrick Daly, whose interest in the policy was subject to the right of the insured to change the beneficiary, should not be allowed to prevail over that of his widow, for whom the insured clearly intended the fruits of his policy, and to whom it should be awarded by a court of equity upon the principle we have stated. It is urged on the part of the appellee that, as the policy provided that the change of beneficiary should be effective upon the entry of the same upon the insurance register of the society, and as the statute of New York required the assent of the society to such a change, no change of beneficiary could be accomplished without such entry and assent, But in this case the suit is between the claimants, and the society has declared its willingness to pay the fund to the one the court decides is |