Brown v. Lee, A-9402
| Decision Date | 02 October 1963 |
| Docket Number | No. A-9402,A-9402 |
| Parties | Mrs. Lorraine BROWN et al., Petitioners, v. Norman A. LEE, Individually and as Independent Executor of the Estate of Mrs. Norman A. (Marie) Lee, Deceased, et al., Respondents. |
| Court | Texas Supreme Court |
Fanning, Billings, Harper, Pierce & Gilley, Turner, Rodgers, Winn, Scurlock & Terry, John H. McElhaney, Dallas, for petitioners.
Knox W. Sherrill, John W. Collins, Jr., O. O. Touchstone and John B. Webster, Dallas, for respondents.
The controversy of this suit is over title to proceeds of several insurance policies, purchased with community funds, where both the insured-husband and the beneficiary-wife died in a common disaster. There was no evidence that the spouses died otherwise than simultaneously in the crash of their private airplane. Both died intestate and without children. The heirs of the husband are Petitioners in this Court, and the heirs of the wife are Respondents. Respondents also filed an application for writ of error.
Of the four policies insuring the husband's life and payable to the wife, two yielded proceeds totaling $50,820. Liability on the remaining two policies for $10,000 and $1,000, respectively, was denied by the insurance companies. The common administrator for the estates inventoried not only the cash received but also the rights to any future proceeds under the contested policies which the administrator valued at $1.00 each. The administrator then divided these assets equally between the two estates. However, the probate court ordered all present and future proceeds to be inventoried as assets of the husband's estate. On appeal by the wife's heirs, the district court, in a trial de novo, held that each estate was entitled to one-half of the total proceeds. The Court of Civil Appeals affirmed. Tex.Civ.App., 362 S.W.2d 381. This Court is in agreement with the order of the probate court.
In determining the rights of the opposing heirs, §§ 47(b) and 47(e) of the Texas Probate Code, V.A.T.S., relating to 'Passage of Title Upon Simultaneous Death' must first be examined:
The last phrase of § 47(e) clearly directs that § 47(e) shall be controlling where proceeds of insurance are involved. It is our opinion that the latter provision requires all of the proceeds to be distributed to the estate of the insured-husband. In the present case, there being no evidence of which spouse died first, it is statutorily presumed under § 47(e) that the insured-husband survived for purposes of distributing insurance proceeds. The enactment of this survivorship presumption in 1951 foreclosed the applicability of the equal distribution rule of Sherman v. Roe, 153 Tex. 1, 262 S.W.2d 393, (1953), wherein there was neither evidence nor statutory presumption to establish survivorship.
The legal theory of title to insurance proceeds heretofore followed by this Court and most recently reviewed in the majority opinion of Warthan v. Haynes, 155 Tex. 413, 288 S.W.2d 481 (1956) appears to have been altered by a recent legislative amendment. A 1957 amendment to article 23(1), Vernon's Ann.Civ.Stats., enlarged the statutory definition of 'property' so that it now includes 'insurance policies and the effects thereof.' 1 The legislature has thus aligned Texas with other community property states in adhering to the theory that the right to receive insurance proceeds payable at a furture but uncertain date is 'property.' Such property is said to be in the nature of a chose in action which matures at the death of the insured. The foregoing statement of the consequences flowing from the amendment is in agreement with Professor Huie's analysis in his article, Community Property and Life Insurance-Substantive Aspects-Developments in Texas, 2 Texas Institutes 104 (1957).
When purchased with community funds, the ownership of the unmatured chose logically belongs to the community, unless if has been irrevocably given away under the terms of the policy, i. e., where the purchaser has, without fraud, foreclosed any right to change the named beneficiary as in Evans v. Opperman, 76 Tex. 293, 13 S.W. 312 (1890). The proceeds at maturity are likewise community in character, except where the named beneficiary is in fact surviving, in which case a gift of the policy rights to such beneficiary is presumed to have been intended and completed by the death of the insured.
Under circumstances where the uninsured spouse predeceases the insured spouse, settlement of the decedent's community interest in the unmatured chose has ordinarily been resolved by allocating one-half of the cash surrender value to the deceased's estate and the other one-half, plus ownership of the unmatured chose, to the surviving spouse. Thompson v. Calvert, 301 S.W.2d 496 (Tex.Civ.App.1957, no writ). But in the present case, where settlement of the deceased wife's community interest in the policies was not made prior to the death of the insured and her heirs were not guilty of laches in failing to seek such compensation, the wife's communiy interest was never extinguished and the policies retained their community status up to the time of maturity. Consequently, the proceeds are community.
Since the proceeds were community and the husband was the wife's survivor for insurance purposes under § 47(e), the wife's one-half of the proceeds passed to the husband's estate under the statutes of descent and distribution. Section 45 of the Probate Code contains the applicable rule of intestacy:
Our conclusions in the present case are in accord with those of our sister community property states. In re Saunder's Estates, 51 Wash.2d 274, 317 P.2d 528 (1957) and In re Wedemeyer's Estate, 109 Cal.App.2d 67, 240 P.2d 8 (1952), the Supreme Courts of Washington and California held that proceeds from policies maturing on the simultaneous death of the insured-husband and the beneficiary-wife were community property because they reflected a community chose in action. But in each since the wife died intestate and childless, and her husband was presumed to be her survivor under the insurance provision of the simultaneous death act, the wife's one-half of the proceeds passed from her estate to her husband's under ordinary rules of inheritance. As in the Saunder's case, the entire proceeds here in issue became the separate property of the husband's estate via (1) his intestate succession to his wife's one-half interest, and (2) his ownership of the other one-half as a member of the community. 2
The National Conference on Uniform State Laws has also focused upon the exact issue before us now in an amendment to the Uniform Simultaneous Death Act in 1953. Apparently realizing that their original draft of the insurance provision compelled the result reached here, the Commissioners adopted the following italicized amendment:
§ 5. Insurance Policies. Where the insured and the beneficiary in a policy of life or accident insurance have died and there is no sufficient evidence that they have died otherwise than simultaneously the proceeds of the policy shall be distributed as if the insured had survived the beneficiary, Except if the policy is community property of the insured, and his spouse, and there is no alternative beneficiary, or no alternative beneficiary except the estate or personal representatives of the insured, the proceeds shall be distributed as community property under Section 4.
As indicated by the Commissioners' comments in the 1953 Handbook of Proceedings, p. 251, this amendment was precipitated by the California Wedemeyer opinion, the reasoning of which we have here followed (though reaching a different result because our jurisdiction does not have the special tracing statute). Our 1955 Probate Code did not include the...
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