Appeal, No. 13, March T., 1964, from decree of Orphans' Court of Washington County, No. 146 of 1960 A.A., in re estate of Sam Green, deceased. Decree affirmed.
Robert L. Ceisler, for appellant.
Sanford S. Finder, for appellee.
Before Bell, C.j., Musmanno, Jones, Cohen, Eagen, O'brien and Roberts, JJ.
OPINION BY MR. CHIEF JUSTICE BELL
This is an appeal by Irving Saul, the named beneficiary in decedent's life insurance policy, from a decree of the Orphans' Court which dismissed his claim for subrogation against the estate of Sam Green. The question raised is whether such a beneficiary is entitled to subrogation against the estate of the insured decedent for that portion of the life insurance proceeds which were applied to satisfy a loan made by decedent for which the policy had been assigned as collateral.
Sam Green died testate on February 25, 1954, owning a life insurance policy with a face value of $5,000. Decedent had assigned this policy on October 2, 1946, to the Citizens National Bank of Washington, as collateral security for his loan.*fn1 The interest of Citizens National Bank was subsequently acquired by the Mellon National Bank and Trust Company. At the time of assignment to the Citizens Bank, the policy proceeds were payable to the decedent's estate.
On November 9, 1950, Ernest Furbee, a Vice-President of the Mellon Bank, at the request of decedent, notified the Insurance Company that Green wished to change the beneficiary to Irving Saul, a grandson of the decedent,*fn2 subject to the assignment in favor of the Mellon Bank. The beneficiary clause was changed to read: "Mellon National Bank and Trust Company, Washington, Pa., as interest may appear, the balance, if any,*fn3 to Irving Saul, grandson of the insured." On November 9, 1950, Green's indebtedness to the Bank, for which the policy was collateral, was $3,200. On March 19, 1953, Green executed and delivered to the bank a new note in the amount of $3,500; part of the loan thus obtained was used to liquidate prior obligations to the Bank. This new note, of $3,500 was the only debt for which the policy was collateral at Green's death.
Green executed his will on November 9, 1950, the same day on which he had Furbee request the insurance company to make appellant the beneficiary of his life insurance policy. In his will, Green directed his executor to pay his debts, and then gave his entire estate, with presently irrelevant exceptions,*fn4 to his son Max, who was also appointed executor.
The Bank collected the proceeds of the $5,000 policy, namely $5,040.33 (the face value plus accumulated dividends), retained $3,543.17 in satisfaction of its loan, ...