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(158 Ga. 867, 124 S. E. 715.)

sired or undertaken to change the beneficiary, under the provision in the policy authorizing him to make such change, he would have been required to pursue the method of such change stipulated in the policy. For good and sufficient reasons the insured may not desire to change the beneficiary, but at the same time he might wish to assign the policy in order to enable him to borrow money thereon or as security for indebtedness due by him. He did assign the policy for the last-named purpose.

Under the policy the insured had the right to assign the same. Did the assignment by the insured, without a change of beneficiary by the mode provided in the policy, transfer to the assignee the rights and benefits under this policy, to the exclusion of the beneficiary named therein? This is the big and controlling question in this case. When the insured in this life policy, with the consent of the insurer, assigned the policy to the bank, the assignment purporting to convey all right, title, and interest of the insured, "together with all dividends, benefits, and advantages to be had or derived therefrom," there was a change of beneficiary as well as if there had been a substitution of the assignee for the beneficiary in that part of the policy in which the name of the beneficiary appeared. Such an assignment was, in effect, a substitution of a beneficiary. Mutual L. Ins. Co. v. Twyman, 122 Ky. 513, 121 Am. St. Rep. 471, 92 S. W. 335, 97 S. W. 391; Crice v. Illinois Ins. Co. 122 Ky. 572, 121 Am. St. Rep. 489, 92 S. W. 560; Mutual Ben. L. Ins. Co. v. Swett, 137 C. C. A. 640, 222 Fed. 200, Ann. Cas. 1917B, 298; Martin v. Stubbings, 126 Ill. 387, 9 Am. St. Rep. 620, 18 N. E. 657; Mente v. Townsend, 68 Ark. 391, 59 S. W. 41; Atlantic Mut. L. Ins. Co. v. Gannon, 179 Mass. 291, 60 N. E. 933; 14 R. C. L. 998, § 171; Rattray v. Banks, 31 Ga. App. 589, 121 S. E.

-effect of assignment of

policy.

516; Farmers State Bank v. Kelley,
155 Ga. 733, 118 S. E. 197.

But counsel for the defendant in
error with great zeal contends that
the above ruling is not the true law
of the case, and with much confi-
dence cites in support of this conten-
tion the cases of Johnson v. New
York L. Ins. Co. 56 Colo. 178, L.R.A.
1916A, 868, 138 Pac. 414; Sullivan
v. Maroney, 77 N. J. Eq. 565, 78
Atl. 150; Anderson v. Broad Street
Nat. Bank, 90 N. J. Eq. 78, 105 Atl.
599; Deal v. Deal, 87 S. C. 395, 69
S. E. 886, Ann. Cas. 1912B, 1142;
Schoenholz v. New York L. Ins. Co.
234 N. Y. 24, 136 N. E. 227; Muller
v. Penn Mut. L. Ins. Co. 62 Colo.
245, 161 Pac. 148. These author-
ities tend to support this contention
of counsel. The first of the above
cases, involving a parol assignment
of the policy, was a contest between
volunteers claiming as beneficiaries,
and the decision was by a divided
court. In the second case cited, the
insured and the beneficiary had sep-
arate interests in the policy, the as-
signment was specifically "of such
right, title, and interest" as the in-
sured had in the policy, and it does
not appear that the insurer ap-
proved or acknowledged the assign-
ment, and made proper indorsement
thereof on the policy. The court of
appeals of New Jersey held that this
assignment should be construed as
giving to the assignee only the sep-
arate interest of the insured under
the policy, and not as a substitution
of the assignee as beneficiary. The
assignment of the policy which we
have under consideration is of much
broader scope than that dealt with
by the New Jersey court. Ander-
son v. Broad Street Nat. Bank,
90 N. J. Eq. 78, 105 Atl. 599, clear-
ly supports the contention of coun-
sel. The provisions of the policy
as to change of beneficiary and as-
signment, dealt with in that case,
are the same as those under con-
sideration in this case. In that
case the assignment was on a form
furnished by the insurer, the assign-
ment was filed at the home office of
the insurance company, and the

1

bank advanced $8,800 to a corporation which the insured was operating, upon the assignment as security. That case is a pat authority for the position taken by counsel for the defendant in error. The reasoning in that case was that both the insured and the beneficiary had separate interests under the policy, that the assignment should be held to transfer only the interests of the insured in the policy, that an assignment of a policy and a change of beneficiary are not the same but different things, that an assignment is the transfer by one of his right or interest in property to another, that the power to change the beneficiary is the power to appoint, and that in consequence the assignment of the policy by the insured is not the exercise of the power to appoint. What is said of the case last discussed is applicable to the case of Douglass v. Equitable Life Assur. Soc. 150 La. 519, 90 So. 834, with the additional remark that the decision was by a divided court.

In Muller v. Penn Mut. L. Ins. Co. supra, the assignment was not filed with the insurer and was not accepted by him. In Schoenholz v. New York L. Ins. Co. 234 N. Y. 24, 136 N. E. 227, the assignment was not in writing, both the insured and the beneficiary had welldefined interests under the policy, and the decision was by a divided court. In Deal v. Deal, 87 S. C. 395, 69 S. E. 886, Ann. Cas. 1912B, 1142, the assignee was a volunteer. Under the policy involved in that case, both the insured and the beneficiary had separate and distinct interests. Besides, the policy was not sent with the assignment to the company for its indorsement of such assignment on the policy. If this had been done, Judge Gary, who delivered the opinion in that case, said "it might have been a request to have the change of beneficiary indorsed thereon."

We derive great benefit from the decisions of learned judges of the courts of last resort of other states, and gladly acknowledge our great

But we

indebtedness to them. should not blindly follow authorities. We should, as far as capable, subject them to the rule of reason. So doing, we cannot subscribe to the reasoning upon which the decisions. in the cases referred to rest. We do not believe that the conclusion reached by those courts is the true law on this subject. There is plausibility in the view that the mere assignment by the insured of his right, title, and interest in a policy, when both he and the beneficiary have distinct interests thereunder, does not amount to a substitution of the beneficiary. A mere general assignment of a policy might not have the effect of changing the beneficiary. But under the assignment involved in this case, in which the insured not only assigned all his right, title, and interest in and to the policy, but likewise assigned "all dividends, benefits. and advantages to be had or derived therefrom," and where such assignment was filed with the insurer at its home office, and its receipt duly acknowledged by the company, by the company, and proper indorsement of that fact entered on the policy, this was in effect a substitution of the assignee for the original beneficiary, and not a mere assignment of the policy.

The supreme court of Massachusetts, in dealing with this question in Atlantic Mut. L. Ins. Co. v. Gannon, 179 Mass. 291, 60 N. E. 933, has well said: "The only question in the case is whether there was a change and substitution of beneficiary by the assured with the consent of the association. The answer to this question depends on whether we construe the quoted provision broadly and liberally, or narrowly and strictly. The assured made an assignment of the policy for a valuable consideration, to one who was her creditor for a large amount and her nearest relative. This assignment was made on a printed blank furnished for the purpose by the association. The correspondence between the representative of the assured and the secretary of the com

(158 Ga. 867, 124 S. E. 715.)

pany shows very plainly that the change was consented to by the association. Was this a change of beneficiary and a substitution of a new one? The assignment purports to assign and convey all the right, title, and interest of the assured in the policy, and all benefit and advantage to be derived therefrom subject to all the conditions of the contract.' The principal 'benefit and advantage to be derived therefrom' was the right to receive payment of the stipulated sum after the death of the assured. This constituted the assignee the beneficiary under the policy, and put her in the place of the original beneficiary. In view of the fact that the assured had absolute control of the policy and of all rights under it, provided she acted with the consent of the association, we think it better to hold, in accordance with the manifest intent of the parties, that this assignment made with the company's consent constituted a change of beneficiary as much as if there had been a formal substitution of the second beneficiary for the first, with a reference to the part of the policy in which the name of the beneficiary appeared."

This, we think, states the true law of the case. The insured paid the premiums on this policy. He

reserved the right to change the
beneficiary, and to assign the policy.
He did assign it to the bank, and
secured a sum of money equal to the
face of the policy. By his assign-
ment he, in effect, directed the in-
surer to pay the amount of the policy
on his death to the bank, to reim-
burse it for the sum it had loaned
to him. The insurer consented to
the assignment. It was filed at its
home office. The proper indorse-
ment of the assignment was made
on the policy. This was, in effect, a
substitution of the assignee for the
original beneficiary.
original beneficiary. The amount
due on the policy should be paid to
the bank, or so much thereof as is
necessary to discharge its debt. The
balance, if any, should go to the
original beneficiary.

We have been asked to review and
reverse the case of Farmers State
Bank v. Kelley, supra. We believe
that case is correct, and we decline
to review and reverse it.

Appeal-suf

The petition in this case failed to
set out a cause
of action, and the ficiency of
judge erred in over-
ruling the demurrer.

Judgment reversed.

pleading.

All the Justices concur, except
Russell, Ch. J., dissenting.

Rehearing denied October 2, 1924.

ANNOTATION.

Insurance: assignment of life or benefit policy for valuable consideration as change of beneficiary.

As to the effect upon an attempted change of designation, of the original beneficiary's refusal to surrender the policy, see annotation in 36 A.L.R. 771. This annotation will deal only with the assignment by the insured alone, of policies payable to persons other than the insured, his personal representatives, or assigns, and will be limited to a discussion of the rights of the beneficiary named in the policy and the assignee as between themselves. It is not concerned with the rights of either of the parties as against the insurer alone, and hence,

does not deal with cases involving the
assignment of the policy by insured
to the insurer as collateral security
for a loan.

It is assumed in this discussion that
insured has by the terms of his con-
tract a right to change the beneficiary
named in his policy, upon complying
with certain requirements imposed by
the insurer; and the question here
considered is whether an assignment
by insured, for a valuable considera-
tion, without a change of beneficiary.
in the mode provided in the policy,
will transfer to the assignee the rights

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and benefits under the policy, to the exclusion of the beneficiary named therein.

The authorities are not in accord on this question. By what is perhaps the larger number, it is held that a noncompliance with the procedure required by the policy in case of a change of beneficiary will prevent the assignee from taking the proceeds of the policy as a new beneficiary, as against the beneficiary named.

Thus, in Hotel-Men's Mut. Ben. Asso. v. Brown (1887) 33 Fed. 11, it was held that insured's assignment of his mutual benefit policy, as collateral security, without any application to change the beneficiary being made, or any notice of the assignment being given to the insurer, could not affect the right of the beneficiary to the whole proceeds of the policy. It was there said: "There can be no doubt, I think, but what a voluntary association of this kind can prescribe the manner in which its benefits may be assigned or transferred, and that these regulations become a part of the contract. There would, I think, be no right to change the beneficiary of this assured, but for the provisions for doing so in the constitution and bylaws of the association; and a transfer, to be valid, must conform to the mode in which the constitution and by-laws of the company say it may be changed. Any attempt to make such a transfer should be strictly construed. The application for membership designated the wife of the assured as his beneficiary, and she was so designated on the books of the association. This made a contract in her favor on which a suit could have been maintained for this death loss. The constitution and by-laws of the association provided a mode by which her right to this benefit fund could be devested; but, in order to so devest it, that mode must be strictly followed. It was not so followed, and hence I am of opinion that what was done in that direction was not operative to devest her of her right, and the amount of the death loss which has been paid into court by the association should be paid to" the beneficiary.

So, in Muller v. Penn Mut. L. Ins. Co. (1916) 62 Colo. 245, 161 Pac. 148, it was held that insured's attempt, without the insurer's indorsement, to "sell, assign, transfer all (his) right, title, and interest" to the policy, as collateral security for an indebtedness in an amount exceeding the benefits payable under the policy, was not effectual as against the beneficiary named in the policy, on the ground that the rights of the beneficiary could not be devested in any other manner than that prescribed by the policy.

It was held in Sullivan v. Maroney (1909) 76 N. J. Eq. 104, 73 Atl. 842 (affirmed in (1910) 77 N. J. Eq. 565, 78 Atl. 150), that insured's assignment for a valuable consideration of all her "right, title, and interest" in, and "all money payable under," a policy permitting her either to assign the policy or change the beneficiary therein with the written consent of the insurer, could not be considered as a change of beneficiary so as to deprive the persons originally named in the policy of the right to the proceeds thereof, although the insurer had waived its right to insist upon a formal compliance with the requirements imposed by the policy. It was there said: "It will be observed from a reading of the policy that the contract was, upon the death of [insured] to pay the insurance money either to [her] four children, if they were living at the time of [her] . . . death, otherwise to [her] executors, administrators, or assigns. There were, therefore, always two sets of interests in this policy,-the beneficiaries (who would get the money if they were living at the death of the insured), and the representatives of the insured (to whom the money would come if the insured outlived the beneficiaries). Each of these interests was undoubtedly subject to assignment. Neither one could, in my view, assign anything excepting that which would come to that one; and the assignment of neither could possibly impinge upon the rights of the other. In other words, the beneficiaries, if of age, could undoubtedly assign their interests under the policy, and the insured

could undoubtedly, as against her estate and so as to bind it, assign that interest,-i. e., the interest which would come to her estate. . . . The contention of the defendants

is that this assignment must be treated as if it effected a change of beneficiaries, and substituted in the place of the four children (the beneficiaries named in the policy) the person named in the assignment. I cannot accede to this argument, and, in fact, do not think that there is anything to support it. The paper, in form, is an assignment. It is made by a person who has an assignable interest, and carries that interest. The interest, as has been pointed out, was contingent but assignable. It does not purport in any way to make a change of beneficiaries, or to affect their interests. The method of change of beneficiary is pointed out in the contract, and that method was not pursued in any respect. It is not even attempted to be shown that it was effected according to the rules of the company, as required, or that any written notice thereof was given to the company, or that it took effect by indorsement on the policy of the company, all of which are requisites. And I do not find that there is anything in the contention of the defendants that the company, by not contesting the question concerning the change of beneficiaries, has altered inany way the rights of the parties as between themselves. If the provisions required by the contract, or by the charter, constitution, by-laws, or statute laws regulating a beneficial order, which make part of their contracts, have not been complied with, the change has not taken place,-the properly named beneficiaries have not been displaced; and the fact that the company, or the order, pays the money into court, or admits its liability to pay, cannot affect the question. The question always remains, Who are the beneficiaries?-and they must be named in accordance with the contract, including therein, of course, that which is held to be part of the contract in the cases where the whole contract is not

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comprised in one paper, certificate, or policy."

And in Anderson v. Broad Street Nat. Bank (1918) 90 N. J. Eq. 78, 105 Atl. 599, it was held that the assignment as collateral security by insured of his entire interest in the policy was not an appointment of a new beneficiary, and did not deprive the beneficiary named of the benefits of the policy, insured having made no effort to comply with the rules regarding a change of beneficiary. With reference to the clause of the policy permitting an assignment, and the statement in the "change of beneficiary" clause, to the effect that a change would be permitted "if there be no existing assignment," the court said: "They do not by implication reserve dominion over the policy in the insured. The former comprehends only such assignments as either the insured or the beneficiary may make of their respective interests. In the latter, the reference to assignments means simply that, when there is an outstanding one by the insured, his right to revoke is not to be exercised without the assent of the assignee. In other words, he is not permitted to substitute one or more beneficiaries whose expectancy of life is better than the named beneficiary, to the detriment of the assignee, without his consent. Circumstances have persuaded courts to variously interpret the condition of the clause 'if there be no existing assignment of the policy,' but I can attribute to it, in this case, no other function."

To the same effect was Metropolitan L. Ins. Co. v. Zgliczenski (1922) 94 N. J. Eq. 300, 119 Atl. 29.

And it was held in Barner v. Lyter (1906) 31 Pa. Super. Ct. 435, that an assignment in payment of loans and advances, of all of insured's "right, title, and interest in and to the policy, as well as all moneys due and payable (thereunder) at (his) death," not transmitted to the insurer in accordance with the procedure required by the policy in case of a change of beneficiary, could not be recognized as a substitution of the assignee as beneficiary in place of the persons originally named in the policy.

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