Halpern, Larner and King. The opinion of the court was delivered by Larner, J.A.D.
Plaintiffs Janis E. Hirsch and Carol E. Hirsch Bidwell are the daughters of the late John M. Hirsch who died on January 15, 1973. They instituted suit in the Superior Court against Travelers Insurance Company (Travelers), Equitable Life Assurance Society of the United States (Equitable) and United States Life Insurance Company (U.S. Life) to recover death benefits on life insurance policies issued by those companies on the life of their father. In addition, they joined the executors of the estate of John M. Hirsch on the alternative theory that their father breached a provision of a property settlement agreement between decedent and their mother in connection with a divorce in 1967, whereby decedent undertook to name the two children as irrevocable beneficiaries of the policies of insurance.
The central issue before the trial court was whether there was a proper change of beneficiary effectuated by the assured so as to bind the insurance companies to pay the proceeds to plaintiffs. Alternatively, if the assured failed to accomplish the change of beneficiary pursuant to the property settlement agreement, the court was required to determine whether his estate was liable in contract for such failure.
After a nonjury trial the judge entered judgments in favor of all the insurance companies and a judgment in favor of plaintiffs against the estate in the sum of $18,058.36, representing the amounts which would have been due on the Equitable and U.S. Life policies. Plaintiffs appeal from the adverse judgments entered on the several claims. The executors of the estate did not cross-appeal and did not file a brief in response to plaintiffs' appeal.
Preliminarily, it should be noted that under the facts herein the claims against the respective insurance companies must be determined by the contractual relationship between decedent and the companies and the communications between them. The liability of the insurance companies herein does not depend upon or flow from the obligations of the assured under the property settlement agreement with his wife. In a direct action against the companies, as this is, plaintiffs' claim must rest upon the responsibility of the insurers under the terms of their policies. If payments have been made in accordance therewith, the companies are absolved from further liability despite the private undertaking of decedent. N.J.S.A. 17B:24-5. See also 2A Appleman, Insurance Law and Practice , § 1163 at 306-308 (1966).
Thus, regardless of decedent's contractual duty to designate his daughters as irrevocable beneficiaries on the policies, that duty cannot serve to establish a right to recover from the companies unless the assured did properly bring about such change within the terms of the policies themselves.
The Travelers policy, written in 1965, is a group life insurance policy issued to Lafayette Drafting Service, Inc. (Lafayette) as employer, covering decedent, an employee and officer of the company, in the amount of $30,000. In 1968 this policy was renewed and benefits were increased to $40,000.
On March 14, 1967 decedent forwarded a letter to Travelers pursuant to his property settlement agreement in which he requested the following:
Please make the following irrevocable change of beneficiary on the above named insurance policy:
Payable upon the death of the assured, the beneficiaries shall be Carol E. Hirsch and Janis E. Hirsch, in equal shares, share and share alike.
The above clause shall be irrevocable and shall not be changed except with the consent of both the assured and the beneficiaries.
On April 6, 1967 Travelers responded by advising him that "all individual records are maintained and changes of beneficiary executed at the offices of Lafayette Drafting Service, Inc." and "we are referring your request to them for attention." On the same date Travelers wrote to Lafayette enclosing the correspondence with decedent and submitting an irrevocable change of beneficiary form. The letter instructed Lafayette as to the mode of execution of the form and advised that "It will be necessary that you note Mr. Hirsch's record card that this is an Irrevocable Change of Beneficiary."
Accordingly, on April 7, 1967 decedent executed the change of beneficiary form which unequivocally designated the two plaintiffs as beneficiaries in equal shares and also provided that the right of the employee to further change the beneficiary is revoked unless it be with the written consent of the newly named beneficiaries. This change of beneficiary form was retained by the employer as the designated record-keeper under the procedure outlined in the master policy. It also appears that this change of beneficiary was noted on the back of the record card maintained for the decedent, without a notation of irrevocability.
The evidence reveals that sometime subsequent thereto, and before the death of the insured, a Lafayette clerk assigned to the task of keeping the insurance records up to date erroneously placed the card in a file covering terminated ...