Moore v. New York Life Insurance Company

Annotate this Case

146 S.E.2d 492 (1966)

266 N.C. 440

Flora C. MOORE, Executrix of the Estate of William Edward Moore, Deceased, v. NEW YORK LIFE INSURANCE COMPANY.

No. 606.

Supreme Court of North Carolina.

February 4, 1966.

*497 Smith, Leach, Anderson & Dorsett, by Henry A. Mitchell, Jr., Raleigh, for defendant appellant.

Wilson, Bain & Bowen, by Edgar R. Bain, Lillington, for plaintiff appellee.

LAKE, Justice.

The defendant assigns as errors, among other things, the denial of its motion for judgment as of nonsuit, the refusal to submit to the jury an issue as to whether Moore had sufficient mental capacity to change the beneficiary, and the refusal to instruct the jury that if Moore did not have sufficient mental capacity to surrender the policy he did not have sufficient mental capacity to change the beneficiary. All of these assignments rest upon the same contention, which is that Moore signed the request for change of beneficiary and the form for the surrender of the policy at the same time so that, if, as the jury has found, he did not have sufficient mental capacity to surrender the policy, neither did he have sufficient mental capacity to change the beneficiary and thus the plaintiff, executrix, as the new beneficiary, cannot maintain this action.

In its answer the defendant admitted that "by the express terms of said insurance contract said change of beneficiary became effective on April 23, 1963." After the trial was in progress and the plaintiff had virtually completed the introduction of her evidence, the defendant moved to amend its answer to assert, as an additional defense, that if Moore was mentally incompetent to surrender the policy he was also mentally incompetent to change the beneficiary. This motion was denied. Its denial was in the discretion of the court. Handley Motor Co. v. Wood, 238 N.C. 468, 78 S.E.2d 391. It may not be reviewed on appeal in the absence of a clear showing of abuse of discretion, which does not appear. Furthermore, while the defendant excepted to the denial of its motion to amend and assigned this ruling as error, the exception is not mentioned in its brief and no argument is made or authority cited with reference to it so it is deemed abandoned. Rule 28.

Issues arise upon the pleadings of the parties and need not be submitted to the jury with reference to matters as to which there is no controversy raised by the pleadings. General Tire & Rubber Co. v. Distributors, Inc., 253 N.C. 459, 117 S.E.2d 479; Wheeler v. Wheeler, 239 N.C. 646, 80 S.E.2d 755. There was, therefore, no error in the refusal of the court to submit an issue to the jury with reference to the validity of the change of beneficiary. There being no such issue before the jury, the denial of the requested instruction with reference thereto was not error.

The defendant argues in its brief that its motion for judgment as of nonsuit should *498 have been allowed because the plaintiff's own evidence shows Moore was mentally incompetent at the time he signed the request for the change of beneficiary. It is the defendant's evidence, not the plaintiff's which shows that the request for change of beneficiary and the form for surrender of the policy were signed contemporaneously. The plaintiff's evidence, consisting of the policy with the change of beneficiary form attached thereto, indicates that the request for change of beneficiary was signed on 23 April 1963, the day before the form for the surrender of the policy was signed. Nevertheless, the plaintiff's evidence as to the mental condition of Moore can lead to no conclusion other than that his condition was the same on the one day as on the other.

It does not follow that the motion for judgment of nonsuit should have been granted. Even if these two documents were executed contemporaneously, as the evidence of the defendant tends to show, they related to two separate and distinct rights of the insured under the policy. When completed, the two transactions were separate and distinct, each capable of standing alone without support from the other. The evidence offered by the defendant indicates that the company, for reasons not disclosed, customarily requests an insured, desiring to surrender his policy, first to change the beneficiary so as to make the policy payable to his estate, The policy, however, does not require this to be done. Under the policy Moore had the right to change the beneficiary without surrendering the policy, and vice versa.

As Denny, J. (now C. J.) said, in Walker v. McLaurin, 227 N.C. 53, 40 S.E.2d 455, "An agreement entered into by a person who is mentally incompetent, but who has not been formally so adjudicated, is voidable and not void." The same is true of the surrender or cancellation of a contract by such person. If he dies without regaining his mental competency, his right to disaffirm his contract passes to his heirs or to his executor, depending upon the subject matter of the contract. Walker v. McLaurin, supra; Cameron v. Cameron, 212 N.C. 674, 194 S.E. 102; Orr v. Equitable Mortgage Co., 107 Ga. 499, 33 S.E. 708; Bullard v. Moor, 158 Mass. 418, 33 N.E. 928; Verstandig v. Schlaffer, 296 N.Y. 62, 70 N.E.2d 15; Williston on Contracts, 3rd ed., § 253.

The exercise by an insured of his right under the policy to change the beneficiary thereof, effects an amendment of the former contract and is, itself, the making of a contract which is voidable at his option if he then lacks the mental capacity to make it. Similarly, the surrender by such a person of a life insurance policy for its cash value is voidable at his option. Upon his death, without regaining his mental capacity, his right to disaffirm each of these transactions passes to his executor. The executor, like the insured, may disaffirm and set aside both of the transactions, or neither, or he may disaffirm and avoid the cancellation of the policy while leaving the change of beneficiary in effect.

It is not necessary for us now to determine, and we do not determine, what, if any, rights the original beneficiary under the policy may have when the insured, lacking mental capacity, changes the beneficiary. In the present case, the original beneficiary was Mrs. Flora C. Moore, wife of the insured, who now sues, as the executrix of his estate, to enforce the policy pursuant to the change of beneficiary effected by him. It is true that she has sued in her official capacity as executrix. However, she has testified in support of this action as an individual and she verified the complaint. If, as the original beneficiary of the policy, she was entitled, upon the death of the insured, to attack his act in changing the beneficiary, she has by these acts of her own, subsequent to his death, acquiesced in, ratified and affirmed his change of the beneficiary. The judgment in favor of the plaintiff in this action will be a complete bar to any recovery by her, as an individual, in another action.

*499 Since there has been no disaffirmance of the change of beneficiary by the only person or persons having the right to do so, and there has been a disaffirmance of the surrender and cancellation of the policy, the policy is now valid and effective and is payable to the new beneficiary so designated by the insured in accordance with the terms of the policy. Consequently, the motion for judgment of nonsuit was properly denied.

We have examined the numerous assignments of error with reference to the admissibility of testimony relating to the physical and mental condition of Moore prior to these transactions and during the short interval between their occurrence and his death. The lay witnesses, including his wife, testified to their respective observations of his physical condition, his habits, disposition, appearance and actions shortly before the date on which he undertook to surrender the policy. Although they had separated some six months earlier, his wife testified that she saw him frequently between their separation and his undertaking to surrender the policy. She also visited him in the hospital several times in the short interval thereafter prior to his death. There was no error in permitting these witnesses, each upon the basis of his or her own observation of Moore, to state an opinion that he did not have sufficient mental capacity on 24 April 1963 to know and to understand the nature and effect of signing a paper cancelling his life insurance policy for its cash surrender value. "Anyone who has observed another, or conversed with him, or had dealings with him, and a reasonable opportunity, based thereon, of forming an opinion, satisfactory to himself, as to the mental condition of such person, is permitted to give his opinion in evidence upon the issue of mental capacity, although the witness be not a psychiatrist or expert in mental disorders." In re Will of Brown, 203 N.C. 347, 166 S.E. 72; State v. Witherspoon, 210 N.C. 647, 188 S.E. 111; Harris v. Aycock, 208 N.C. 523, 181 S.E. 554; Whitaker v. Hamilton, 126 N.C. 465, 35 S.E. 815; Clary's Adm'rs v. Clary, 24 N.C. 78; Stansbury, North Carolina Evidence, § 127. Here, each witness based his or her opinion upon circumstances observed by the witness within a reasonable time before or after the date in question.

Dr. Andrews, stipulated to be a medical expert, testified that he saw Moore for the first time at the hospital in Wilmington, where he examined him on 27 April 1963, just three days after Moore undertook to surrender the policy. He testified concerning Moore's physical condition then so observed by him and, over objection, was permitted to testify that these conditions "could have existed prior to April 27 and possibly did." This was not error. It is a matter of common knowledge that "cirrhosis of the liver with severe jaundice" does not come about over night. In any event, the expression by a medical expert of the opinion that such condition possibly existed prior to the date of his examination is well within the limits of admissible expert opinion testimony.

The doctor was also permitted, over objection, to testify that in his opinion it was unlikely that Moore's mental status was of such nature that he could understand legal matters for a few days prior to April 27." While the use of such general terms as "legal matters" in testimony of this nature is not to be commended, we do not believe it was prejudicial to the defendant or confusing to the jury in this instance. See: Beard v. Southern R.R., 143 N.C. 136, 55 S.E. 505; Stansbury, North Carolina Evidence, § 127.

The Reverend Frank Grill, pastor of the church of which Moore was a member, testified as to his observations of Moore's habits, conversations, physical condition and general attitude. In response to a question, proper in form, calling for his opinion, based upon his observation and conversation with Moore, as to "whether or not Ed Moore had sufficient mental capacity on April 24 or April 30 to know and comprehend or *500 understand the nature and effect or consequences of signing any paper writing cancelling his life insurance policy with New York Life Insurance Company for the cash surrender value," he answered:

"It is my opinion the man interpreted that decision as he interpreted a lot of other decisions, and that is, I have somewhat stated, not realizing the consequences, the results, seeing things in their normal perspective, knowing that without this, he has no insurance. I think he was not rational to make that or any decision, and how he drove an auto I don't know. That has been mentioned, but how he was safe on the highway, I don't know."

The defendant's counsel immediately moved to strike the answer on the ground that it was not responsive. The court, in the presence of the jury, promptly ruled, "Motion allowed," but did not instruct the jury to disregard the answer of the witness. The witness then went on to say, "My opinion as to whether he knew, understood and comprehended the nature of signing a paper writing cancelling his insurance with the New York Life is that I don't think he was rational enough to make that decision."

Although the proper procedure, upon allowing a motion to strike an answer not responsive to the question, is for the court immediately to instruct the jury not to consider the answer, we think that the failure to do so in this instance, in view of the court's prompt allowance of the motion to strike, is not prejudicial error. The jury could only have interpreted the ruling of the court as meaning that the answer given by the witness was not to be regarded as evidence in the case.

There was no error in permitting the witness Baggett to testify as to property owned by Moore. It was relevant to the question of his lack of reason to surrender the policy so as to get its cash value for his own use, especially in view of the evidence that he had lost his job and was sick and despondent. It had relation to the question of the reasonableness, that is the rational quality of his act in surrendering the policy.

We have examined the defendant's exceptions to the charge of the court, including the court's repetition of the above mentioned testimony by Dr. Andrews in its summary of the evidence, and find these to be without merit.

No error.

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