Egan contracted with Barton to buy Barton's business. The contract provided that Egan would pay the business debts Barton owed Ness and that the balance of the purchase price would be paid to Barton over a 10-year period. The contract also required Egan to take out a decreasing term life insurance policy naming Barton and Ness as beneficiaries to ensure that the amounts owed Barton and Ness would be paid if Egan died.
Barton's contract rights were assigned to Vim and Egan was notified of the assignment. Despite the assignment, Egan continued making payments to Barton. Egan died before completing payment, and Vim sued Barton for the insurance proceeds and the other payments on the purchase price received by Barton after the assignment. To which of the following is Vim entitled?
Incorrect A.
Payment on purchase price
B.
Insurance proceeds
C.
Both payment on purchase price and insurance proceeds
D.
Neither payment on purchase price nor insurance proceeds
CORRECT ANSWER IS C.
Explanation:
Vim is entitled to both the payment on purchase price and the insurance proceeds because Vim received Barton's contract rights. Vim did properly notify Egan, but Egan continued to make payments to Barton. Vim's contract or assignment is valid, and therefore, Vim is entitled to recover the payments that were incorrectly made to Barton as well as the insurance
proceeds.
MY QUESTION:
I thought transfer of insurance benefits is personal that's not assignable. How could Vim have a claim against the insurance proceeds when Egan never changed/updated the beneficiary when he was still alive?
.