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Wokal v. Wincy Belsky.
EMANUEL F. WOKAL, AS
ESTATE OF JOHAN WOKAL, DECEASED, APPELLANT, V. WINCY BELSKY, IMPLEADED WITH THE METROPOLITAN LIFE INSURANCE CO., RESPONDENT.
SUPREME COURT-APPELLATE DIVISION-FIRST DEPARTMENT, JULY TERM, 1900.
SS 446, 447, 452.
Life insurance—Action by insured's administrator—Effect of clause giving choice of beneficiary to insurance company.
M., á life insurance company, issued certain policies to one W., which contained clauses providing that in case of the death of the said W. the company might pay the amount due under said. policies to any relative by blood or connection by marriage of said W., or to any person appearing to it to be equitably entitled to the same, by reason of having incurred expense on behalf of the insured or for his burial. Plaintiff, as W.'s administrator, brought an action against M. to recover on said policies, joining B., an adverse claimant under the same policies, as a party defendant under section 447 of the Code of Civil Procedure, and praying that the respective rights of the parties might be finally determined and settled. B. demurred to the complaint on the ground that no cause of action was stated against her. The demurrer was sustained at Special Term, but on the ground that no cause of action was stated against the insurance company. Held that on failure of the insurance company to exercise the option granted by the policies, the right to enforce the obligations therein contained devolved upon the insured's estate, that plaintiff as administrator of the insured was entitled to maintain an action on the policies, and that therefore a good cause of action against the company was stated in the complaint.
The company could not use the option clause to avoid payment. The only effect of such a clause in a policy is to provide the company with a defense in case it has paid thereunder. It neither gives nor takes away a cause of action from any person.
Section 447 of the Code of Civil Procedure applies to actions at law
Wokal v. Wincy Belsky.
as well as in equity, and Held that B. was a proper party to the action.
(Decided, July, 1900.)
Appeal from interlocutory judgment entered upon an order sustaining demurrer to complaint.
Howard E. White, for appellant.
Edward Hymes, for respondent.
O'BRIEN, J.-The action was brought by an administrator upon two policies of insurance issued to John Wokal upon his life by the defendant The Metropolitan Life Insurance Company. The defendant Wincy Belsky is alleged to be an adverse claimant, and is joined as a party interested under section 447 of the Code of Civil Procedure; and though the demurrer was interposed upon the ground that no cause of action was stated as against the insurance company which was the principal defendant.
We think that a reading of the complaint shows that a good cause of action is stated against the company. It alleges, in addition to the facts relating to the issuance of the insurance, that the policies provided "that the defendant corporation in case of the death of the said Johan Wokal might pay the said amount under said policy to any relative by blood or connection by marriage of said John Wokal or to any other person appearing to the defendant corporation to be equitably entitled to the same by reason of having incurred expense on behalf of the insured or for his burial." The complaint further states that the terms and conditions of the policies were fulfilled and the proofs corporation to be equitably entitled to the same by reason of having incurred expense on behalf of the insured or for of death furnished, but the defendant corporation has refused and still refuses and neglects to pay the amount of the said policies.
That the allegations sufficiently charge the company
Wokal v. Wincy Belsky.
with liability is not seriously disputed; but the point upon which the demurrer was sustained was, that as the policies limited the classes of persons who may claim thereunder, the administrator, not being mentioned, was excluded, and therefore, a good cause of action in favor of this plaintiff was not stated. Although it is true that the policies mentioned classes of persons to whom payment might be made, which thereby left it optional with the company which one of the persons in the classes named it would select as beneficiary, this option cannot be regarded as relieving the company from its obligation to pay someone. Upon its failure, therefore, to pay to any of the persons in the classes specified, the plaintiff, as administrator, was entitled to maintain an action against the company in behalf of the personal representatives to enforce payment of the insurance. In other words, although the company might make a designation and a payment in accordance with the terms of the policies, upon its failure or refusal to exercise such right the fund was left in a position such that it could be recovered by the administrator of the insured.
In Shea v. United States Industrial Insurance Co. (23 App. Div., 53), where just such a clause was involved, the court said: "This article corresponds with the representations made to the plaintiff, with this difference, that instead of being an absolute promise to pay, it is permissive at the option of the company." And in Prudential Insurance Co. v. Young (43 N. E. Rep., 253), where a similar clause appeared, it was said: "The policies sued on did not designate a beneficiary in whom the right to benefits under the policy vested. The insured had neither an executor nor administrator and could not have until after his death. There was no one, therefore, in whom title to the policy could vest, unless it vested in some one of the persons referred to in article second. We think no right vested in the persons to in this article, if for no other reason than
Wokal v. Wincy Belsky.
that their right depended upon the willingness of the appellant to recognize them, which it was not bound to do. But it is plain that the beneficiary designated was the insured's estate."
Bearing also upon this point are those cases where, upon exercising the option so granted, an insurance company may allege this as defense in an action brought against it on the policy, but, before it has made payment, cannot use such a clause by way of discrimination against a beneficiary specially designated or one of a designated class Brennan v. Prudential Ins. Co., 32 Atl. Rep., 1042; Carraher v. Met. Life Ins. Co., 11 N. Y. St. Rep., 665; Golden v. Met. Life Ins. Co., 35 App. Div., 569).
In other words, the right granted is distinctly an option to be exercised under certain conditions, but not to be used to defeat the purposes of the insurance, it being a general rule that an obligation of an insurance company cannot fail for want of a particular payee (Walsh v. Mutual Life Co., 133 N. Y., 408). The defendant must by the terms of the policy pay the amount of it to such person as has become entitled to it by reason of having incurred expense on behalf of the insured or for his burial. The plaintiff, the administrator of the estate of John Wokal, alleges in his complaint that he has actually paid the expenses of Wokal's burial, and therefore not only is entitled to recover as administrator if the corporation has not paid someone else, but he is also entitled to recover as a person equitably entitled under the terms of the policy.
Apart, however, from authorities, it is evident from the wording of this' clause in the policy that no particular beneficiary was designated, and, therefore, no one upon the death of the insured became entitled individually to enforce payment against the company, except to the extent that he might have paid debts or funeral expenses, when, as a creditor, he might seek to have his claim paid out of the fund. In the absence, however, of a specified or desig
Wokal v. Wincy Belsky.
nated beneficiary or beneficaries to whom the insurance money was absolutely payable, under the policy in question, it was left optional with the company whether it would or would not discharge its obligation by payment to any of the persons in the classes named. Upon failure to exercise such option the obligation still remained; and the right to enforce it, it seems to us, devolved upon the administrator, representing as he does the estate of the deceased. Unless this were so, as none of the persons in the classes named could enforce their claims in an action, because their rights were entirely dependent upon the company's exercising the option in their favor, it would follow that unless the administrator of the estate could enforce such liability, there would be no one who could do so, and thus the company would be able to escape entirely payment of its obligation.
Such a clause in a policy is inserted for the protection of the company to enable it in industrial policies, where, as here, the amount payable is small, to discharge its obligation by payment to any one of the classes designated without requiring administration; but it is not intended to relieve the company from payment to someone. And, as urged by the appellant, "the only effect of the clause is to provide the company with a defense in case it has paid thereunder. It neither gives nor takes away a cause of action from any person."
As to the claim of the defendant Belsky that no cause of action is stated against her, it will be seen that her argument proceeds upon the theory that this is an action at law. and the provisions of section 447 of the code, entitling a plaintiff to bring in an adverse party, applies only to actions in equity. We are not prepared to admit that this is an action at law, for, although it is brought to recover an amount due under policies of insurance, its purpose is to determine who is entitled to the insurance money, and it is in that connection that the defendant Belsky is joined,