Aetna Life Ins. Co. v. Bunt
| Decision Date | 15 June 1987 |
| Docket Number | No. 17284-1-I,17284-1-I |
| Parties | AETNA LIFE INSURANCE COMPANY, Respondent, v. Sandra Wick BUNT, Appellant, and Ann R. Bunt, individually and as the natural mother and guardian of Michael D. Bunt and Patrick D. Bunt, minors, Respondent. |
| Court | Washington Court of Appeals |
Rynold C. Fleck, Renton, for Sandra Wick Bunt, Ann R. Bunt, individually and as natural mother and guardian of Michael D. Bunt and Patrick D. Bunt, minors.
Fred T. Smart, Lee, Smart, Cook, Martin & Patterson, Inc., P.S., Seattle, J. Robert Walker, Bellevue, for Aetna Life Ins. Co.
Aetna Life Insurance Company brought this interpleader action to determine the owner of the proceeds of a policy on the life of George M. Bunt, decedent, a divorced and remarried man. Sandra Wick Bunt, surviving spouse, appeals the trial court's order on cross-motions for summary judgment awarding the proceeds of the policy to Ann R. Bunt, George's former wife, as guardian for minors Michael D. Bunt and Patrick D. Bunt.
On June 26, 1981, George and Ann entered into a separation agreement by which George agreed to name their two minor children as irrevocable beneficiaries of the Aetna life insurance policy available to George as a Boeing employee, and to maintain that policy for the children's benefit. The agreement further provided that George would retain ownership of the policy as his separate property. George and Ann were divorced on October 1, 1981. The decree incorporated the separation agreement and, in addition, expressly required George to name the children as beneficiaries of the policy to be maintained for their benefit during their dependency.
On August 27, 1982, George married Sandra. On January 13, 1983, George changed the beneficiary designation on the Aetna policy to Sandra. George died on December 18, 1984. Without notice of conflicting claims, Aetna paid an advance to Sandra of $8,437, which was 10 percent of the principal amount of $84,375.
This action was subsequently commenced, and on cross- for summary judgment, the trial court ordered the remaining funds to be paid to Ann, as guardian for Michael and Patrick, and entered judgment in favor of Ann against Sandra in the amount of the advance. Sandra appeals from the granting of Ann's motion and denial of hers.
A summary judgment motion under CR 56(c) should be granted only if the pleadings, affidavits, and admissions on file show that there are no genuine issues as to any material fact and that the moving party is entitled to judgment as a matter of law. Wilson v. Steinbach, 98 Wash.2d 434, 437, 656 P.2d 1030 (1982). The appellate court reviews a summary judgment de novo; that is, we engage in the same inquiry as the trial court. Wilson, 98 Wash.2d at 437, 656 P.2d 1030.
Sandra argues that there are no material facts at issue and she is entitled to (1) one-half of the proceeds by virtue of having been named as beneficiary by the decedent, and (2) the other half of the proceeds based on her community interest in the policy. We first address the issue of whether Sandra's rights as designated beneficiary overcome George's prior child support obligation pursuant to the decree and the separation agreement.
It is well settled that a parent must meet an antenuptial obligation to pay child support. Van Dyke v. Thompson, 95 Wash.2d 726, 730, 630 P.2d 420 (1981); RCW 26.16.205. The Aetna policy here served as security for George's obligation to support his dependent children. Such security for support provisions in separation agreements are valid and have been repeatedly upheld. See, e.g., Sutherland v. Sutherland, 77 Wash.2d 6, 459 P.2d 397 (1969); Riser v. Riser, 7 Wash.App. 647, 501 P.2d 1069 (1972).
However, Sandra asserts that by the terms of the decree, the policy, as property, became solely George's, and thus he was free to change beneficiaries as he wished. Sandra claims to find support for her contention in the recent case of Porter v. Porter, 107 Wash.2d 43, 726 P.2d 459 (1986), which she interprets as allowing an insured who owns the policy to freely designate a beneficiary without regard to prior antenuptial obligations.
First, Sandra fails to recognize the distinction between George's present rights of ownership and the legitimate limitations placed on his right to control the beneficiary designation. See Kirk v. Continental Life & Accident Co., 85 Wash.2d 85, 530 P.2d 643 (1975). Since George's right to deal freely with the policy was restricted, his designation of Sandra as beneficiary is invalid.
Sandra also misinterprets Porter. Mr. Porter, like Bunt, was required by decree and separation agreement to name and maintain his child[ren] as beneficiaries of a term life insurance policy. Porter named his estate instead. Porter, 107 Wash.2d at 47, 726 P.2d 459. However, he then substantially fulfilled his obligation by designating his son's trust to take the remainder of his estate, which was comprised of Porter's one-half of the term insurance proceeds. See Porter, 107 Wash.2d at 53-54, 726 P.2d 459. Porter's second wife later made unauthorized expenditures from those estate funds. The court restored those funds to the son, reasoning that the policy proceeds passed through the estate free of creditor's claims which arose from the second wife's unauthorized spending. Porter, 107 Wash.2d at 46, 53-54, 726 P.2d 459. Porter cannot be read as condoning violation of the decree; the violation simply was not significant in that case since the new designation did not materially affect the result.
Thus, we uphold the decree's provisions ordering George to maintain his children as irrevocable beneficiaries during their dependency, and hold that that portion of the policy proceeds attributable to George's property interest in the policy should be awarded to Ann, as the children's guardian.
Our conclusion, however, does not end the analysis. We must next consider the question of whether George owned the entire policy as his separate property, or whether George and Sandra each had a half interest in the policy as their community property.
In the case of term life insurance, the character of funds used to pay the premium for the most recent term determines the character of the policy as community or separate. Aetna Life Ins. Co. v. Wadsworth, 102 Wash.2d 652, 659, 689 P.2d 46 (1984). Where insurance premiums are paid as a fringe benefit of employment to a married employee, the premiums constitute community earnings. Stephen v. Gallion, 5 Wash.App. 747, 749-50, 491 P.2d 238 (1971), overruled on other grounds in Aetna Life Ins. Co. v. Wadsworth, 102 Wash.2d at 659-60, 689 P.2d 46. This rule is simply a specific application of the general proposition that an asset onerously acquired during marriage is presumed to be community property. RCW 26.16.030; Yesler v. Hochstettler, 4 Wash. 349, 353-55, 30 Pac. 398 (1892). Thus, such a policy presumptively will be community in character.
In Porter v. Porter, supra, decided after the trial court rendered its opinion in the case before us, the court confronted the clash of policies presented by enforcing antenuptial child support obligations, on one hand, and upholding the community property rights of a non-obligated spouse, on the other. Porter holds that "an antenuptial obligation to maintain a minor child as beneficiary of a term life insurance policy as security for support may not invade the interest of a subsequent community in that policy." Porter, 107 Wash.2d at 51, 726 P.2d 459.
The community's interest in the policy consists of its contract rights, which include the inter vivos right of the insured spouse to designate beneficiaries as to that spouse's one-half, and the right of the noninsured spouse to receive one-half of the proceeds upon the death of the insured. See Wadsworth, 102 Wash.2d at 655-56, 689 P.2d 46; Francis v. Francis, 89 Wash.2d 511, 514, 573 P.2d 369 (1978); Cross, The Community Property Law in Washington (Revised 1985), 61 Wash.L.Rev. 13, 43, 84-85 (1986). Thus, any beneficiary named by the obligated spouse will be entitled to no more than one-half of the proceeds. See Porter, 107 Wash.2d at 51, 726 P.2d 459. This rule pertains whether the antenuptial obligation is viewed as a child support obligation under the decree or as a contractual obligation under a...
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Aetna Life Ins. Co. v. Bunt
...Petitioner Sandra Wick Bunt, the second wife of George M. Bunt (deceased), seeks a reversal of a Court of Appeals decision, 48 Wash.App. 238, 738 P.2d 322 which granted one-half of the proceeds of the deceased's term life insurance policy to his minor children by a former marriage, and gran......