Shelly v. McKimmons

NOURSE, P. J.

Plaintiffs sued upon a complaint stating three causes of action: For specific performance of a contract, to impress a trust, and for declaratory relief, each involving the proceeds of a war risk insurance policy. Plaintiffs had judgment, and the appeal is on a bill of exceptions.

Frank B. Shelly was a major in the regular army. In 1903 he married his second wife. In 1918 he took out a $10,000 war risk insurance policy naming Mary Shelly, his wife, as first beneficiary. In 1922 he died, and Mary Shelly received the monthly payments on the policy, amounting to over $5,000 until her death in 1934. The federal government thereafter paid the balance of the insurance to the administrator of the estate of Frank B. Shelly. In 1930 Mary Shelly married John Wesley Davis, the defendant herein, having previously executed a will leaving all her property to him. The plaintiffs are the sisters of Frank B. Shelly. The controversy involves the fund thus paid to the administrator of the estate of Frank B. Shelly. The plaintiffs’ claim rests upon the promise of Shelly that he would, in consideration for money advanced and services rendered, designate them as beneficiaries of the insurance policies to take in the event his wife should predecease them, and that a trust arose in their favor because of that. They also claim under an express contract to make them such beneficiaries, which they argue was partially performed. The defendant claims as legatee of his deceased wife.

The application for the insurance policy carried this specification which must be deemed to have been accepted and

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approved by the insured when he signed the application: “In case any beneficiary die or become disqualified after becoming entitled to an installment but before receiving all installments, the remaining installments are to be paid to such person or persons within the permitted class of beneficiaries as may become designated in my last will and testament, or in the absence of such will, as would under the laws of my place of residence be entitled to my personal property in case of intestacy.”

The act of the Congress of October 6, 1917, section 402, under which the policy was issued, provided: “Subject to regulations, the insured shall at all times have the right to change the beneficiary or beneficiaries of such insurance without the consent of such beneficiary or beneficiaries, but only within the classes here provided. If no beneficiary within the permitted class be designated by the insured, either in his life time or by his last will and testament, or if the designated beneficiary does not survive the insured, the insurance shall be payable to such person or persons, within the permitted class of beneficiaries as would under the laws of the State of the residence of the insured, be entitled to his personal property in case of intestacy.” By the amendment of December 24, 1919 (sec. 13), the Congress enlarged the “permitted class” by including uncles, aunts and others, but did not include the husband of the widow of the insured. In the same act the Congress provided (see. 15) : “That if any person to whom such yearly renewable term insurance has been awarded dies . . . then the monthly installments payable and applicable shall be payable to such person or persons within the permitted class of beneficiaries” as would succeed to the personal property of the insured under the laws of the state of his residence.