Bowers v. Kushnick, 45S04-0111-CV-00591.

• Decision Date: 11 September 2002
• Docket Number: No. 45S04-0111-CV-00591.,45S04-0111-CV-00591.
• Citation: 774 N.E.2d 884
• Parties: Carolyn BOWERS, Third Party Defendant-Appellant, v. Robert KUSHNICK, et al., Third Party Plaintiff-Appellee.
• Court: Indiana Supreme Court

774 N.E.2d 884

Carolyn BOWERS, Third Party Defendant-Appellant, v. Robert KUSHNICK, et al., Third Party Plaintiff-Appellee.

No. 45S04-0111-CV-00591.

Supreme Court of Indiana.

September 11, 2002.

Ray L. Szarmach, Szarmach & Fernandez, Merrillville, IN, Attorney for Appellant.

Michael W. Bosch, Bosch & Banasiak, Hammond, IN, Attorney for Appellee.

On Petition To Transfer

DICKSON, Justice.

In this case involving a change of life insurance beneficiary executed but not delivered to the insurance company before the insured's death, the trial court granted summary judgment in favor of the prior beneficiary, and the Court of Appeals affirmed. Bowers v. Kushnick, 743 N.E.2d 787 (Ind.Ct.App.2001). We granted transfer, Bowers v. Fortis Benefits Ins. Co., 761 N.E.2d 423 (Ind.2001), and now reverse.

The facts are not in dispute. Katherine Kushnick was the owner and named insured of a $40,000 term life insurance policy issued by Fortis Benefits Insurance Company in which she had named her husband, Robert Kushnick, as the sole beneficiary. Afflicted with terminal cancer, Katherine obtained and gave her sister, Jane Amrai, a blank Fortis change of beneficiary form and requested that Jane type in the names of Carolyn Bowers (Jane's daughter and Katherine's niece) and Renee Krick as replacement co-beneficiaries.¹ Katherine then signed the completed change of beneficiary form, placed it into a sealed envelope, and told Jane that "if something happens," she was to deliver it to Barbara Gilbertson, who was Human Resource Assistant for the Visiting Nurses Association of Porter County, Indiana, Katherine's former employer, through whom the Fortis life insurance policy had been obtained. Katherine died five weeks later. In the course of Katherine's funeral proceedings, Jane gave the envelope containing the signed Fortis change of beneficiary form to Gilbertson, who transmitted it to Fortis. Robert submitted his claim for the insurance benefits twelve days after Katherine's death. One day later, Fortis received Katherine's signed change of beneficiary form. Renee Krick subsequently disclaimed her interest in the policy benefits. After Carolyn filed this action, Fortis interpleaded Robert, deposited the proceeds with the Clerk, and was dismissed from the case. Both Carolyn and Robert filed motions for summary judgment. The trial court granted Robert's motion, finding that Katherine did not substantially comply with the policy's change of beneficiary requirements. In her appeal, Carolyn contends that the trial court erred in granting Robert's motion for summary judgment and that it should have granted her motion.

In reviewing a summary judgment ruling, an appellate court applies the same standards used by the trial court. Trotter v. Nelson, 684 N.E.2d 1150, 1152 (Ind.1997). Summary judgment is appropriate if the designated evidentiary matter establishes that there is no genuine issue of material fact as to a determinative issue and that a moving party is entitled to a judgment as a matter of law. Ind. Trial Rule 56(C); Progressive Ins. Co. v. General Motors Corp., 749 N.E.2d 484, 486-87 (Ind.2001). All facts and reasonable inferences drawn from those facts are construed in favor of the party opposing summary judgment. Colonial Penn Ins. Co. v. Guzorek, 690 N.E.2d 664, 667 (Ind.1997).

Robert contends that his interest in the life insurance proceeds vested upon Katherine's death and that the change in beneficiary form subsequently received by Fortis had no effect. He acknowledges, however, that his entitlement to the proceeds is subject to defeat by a change of beneficiary that was made according to the terms of the insurance contract. He argues that Katherine's attempt to change the beneficiary was insufficient under the doctrine of substantial compliance because she did not do all that was in her power to effect the change of beneficiaries. Carolyn contends that Katherine's compliance with the change of beneficiary terms of the Fortis policy was not only substantial but complete.

The interest of an insurance policy beneficiary vests at the time of the insured's death. Metropolitan Life Ins. Co. v. Tallent, 445 N.E.2d 990, 992 (Ind. 1983); Quinn v. Quinn, 498 N.E.2d 1312, 1313 (Ind.Ct.App.1986); Wolf v. Wolf, 147 Ind.App. 240, 243-44, 259 N.E.2d 93, 95 (1970). A change in beneficiary that has been executed in accordance with the terms of the insurance contract, however, defeats this interest. Holland v. Taylor, 111 Ind. 121, 127-29, 12 N.E. 116, 119-21 (1887); Quinn, 498 N.E.2d at 1313; Cook v. Equitable Life Assurance Soc'y of U.S., 428 N.E.2d 110, 114-15 (Ind.Ct.App.1981). When the terms of the policy have not been met, substantial compliance is an equitable doctrine employed "to aid in completing an incomplete change of beneficiary in an insurance policy." Elliott v. Metropolitan Life Ins. Co., 116 Ind.App. 404, 421, 64 N.E.2d 911, 917 (1946); see also Quinn, 498 N.E.2d at 1313; Borgman v. Borgman, 420 N.E.2d 1261, 1265 (Ind.Ct.App.1981). For substantial compliance to apply, an insured must have "done everything within his power to effect such a change." Quinn, 498 N.E.2d at 1313.

Contracts of insurance are governed by the same rules of construction as other contracts. Bosecker v. Westfield Ins. Co., 724 N.E.2d 241, 243 (Ind.2000). "If the policy language is clear and unambiguous, it should be given its plain and ordinary meaning." Eli Lilly and Co. v. Home Ins. Co., 482 N.E.2d 467, 470 (Ind. 1985). "Public policy requires that the insurer, insured, and beneficiary alike should be able to rely on the certainty that policy provisions pertaining to the naming and changing of beneficiaries will control except in extreme situations." Cook, 428 N.E.2d at 116.

The Fortis insurance policy provided:

Beneficiary. You may change the beneficiary at any time. Any request to name or change the beneficiary must be in writing on a form acceptable to us and signed by you. After we receive the request at our home office, the change will take effect on the date you signed it. A beneficiary change will be without prejudice to us for any payment we made before we receive notice in our home office.

Record at 63 (emphasis added). The italicized language has the effect of authorizing a change in beneficiary request to be received after the death of the insured, and provides that the beneficiary change will take effect on the date it was signed. If Fortis had intended that beneficiary change requests must be received before the death of an insured, there would be no reason to provide for an effective date retroactive to the date of signature. To hold that the death of the insured forecloses the right of the insured to change the beneficiary in accordance with the terms of...