Modern Woodmen of America v. Gray

DOOLING, J.,

pro tem.

On February 26, 1898, plaintiff herein issued to Arthur M. Gray, a certain benefit life insurance certificate in the sum of $2,000, payable to his then wife as beneficiary. On July 17, 1918, upon proof that the prior certificate was lost or destroyed, plaintiff issued to said Arthur M. Gray a substitute certificate payable in the sum of $1,000 each to his son Ernest G. Gray and his daughter Bertha M. Gray, now Bertha M. Neil. On March 19, 1921, the insured indorsed upon said certificate a request for change of beneficiaries to Bertha M. Neil, daughter, and Nettie M. Cartzdefner, described in said request as “friend”. No formal action was ever taken by plaintiff upon this request. On October 13, 1923, the insured and said Nettie M. Cartzdefner were married. After this marriage four quarterly premiums were paid to plaintiff from the community property of insured and his wife, Nettie M. (Cartzdefner) Gray and on September 16, 1924, the insured died. Conflicting claims under the certificate of insurance were made by the son and daughter on the one hand and the widow on the other; and the plaintiff interpleaded them and paid the $2,000 into court. From the judgment awarding $1,000 to the widow, Nettie M. Gray, and $500 to each of the children, all parties appeal.

Appellant Nettie M. Gray, the widow, urges that since the certificate is what is described as a renewable, lapsable policy, i. e., one in which the failure to pay any one premium

ipso facto

totally avoids the policy, the payment of each quarterly premium from community property constituted in effect a new contract of insurance and hence

[732]

that the entire proceeds of the policy were purchased with community funds and constitute community property.

That the policy under the by-laws of plaintiff society would become absolutely void upon the failure to pay any premium seems clear

(Valentine

v.

Head Camp,

180 Cal. 192 [3 A. L. R. 380, 180 Pac. 2]), but it does not follow that the payment of each premium amounted in effect to the making of a new contract of insurance. The by-laws under which the certificate of insurance was issued limit persons who may be insured _to the ages between sixteen and. fifty years and require the passage by the applicant of a satisfactory physical examination. In 1898 the insured’s application for insurance shows his age to have been at that time between forty-two and forty-three years. He was, in 1923, over fifty years of age and it was only by virtue of his having obtained the certificate of insurance prior to his marriage to appellant Nettie M. Gray and his having regularly paid the premiums thereon in the meantime, that he was entitled to continue to enjoy the protection afforded by the certificate. While the right of his beneficiaries to receive the proceeds of.the policy was dependent upon his continuing to pay the accruing premiums thereon, nevertheless he had acquired the right to have the contract of insurance continued in force by virtue of the payment of premiums from its issuance to him in 1898 until the date of his second marriage in 1923. This was a valuable right in the eyes of the law and it would be unreasonable to hold that the payment of the premiums after 1923 from community funds would convert the entire proceeds of the certificate of insurance into community property.