Capitol Life Ins. Co. v. Porter, 50535

• Decision Date: 30 September 1986
• Docket Number: No. 50535,50535
• Citation: 719 S.W.2d 908
• Parties: CAPITOL LIFE INSURANCE COMPANY, Plaintiff, v. Lynn G. PORTER, Defendant-Appellant, and Theresa Porter, Defendant-Respondent.
• Court: Missouri Court of Appeals

Page 908

719 S.W.2d 908

CAPITOL LIFE INSURANCE COMPANY, Plaintiff, v. Lynn G. PORTER, Defendant-Appellant and Theresa Porter, Defendant-Respondent.

No. 50535.

Missouri Court of Appeals Eastern District.

Sept. 30, 1986.

Motion for Rehearing and/or Transfer to Supreme Court Denied

Oct. 29, 1986.

Application to Transfer Denied Dec. 16, 1986.

Daniel T. Glowski, Clayton, for defendant-appellant.

Gregory D. O'Shea, Lemay, for defendant-respondent.

CRANDALL, Judge.

James A. Porter (insured) was issued a life insurance policy by the Capitol Life Insurance Company (insurer). The insurer's records listed Lynn G. Porter, insured's wife, as beneficiary under the policy. After the insured's death, a change of beneficiary form was found among his personal belongings. The form designated Theresa Porter, his mother, as the new beneficiary. ¹ Theresa Porter and Lynn S. Porter both claimed that they were entitled to the proceeds of the insurance policy. Insurer interpled the proceeds to the court and was discharged. Lynn Porter (wife) appeals from the judgment of the trial court, in a court-tried case, awarding the proceeds to Theresa Porter (mother). We affirm.

The record reveals that the insured was thirty-three years of age when he died. Prior to his death, he worked as a custodian for a school district in St. Louis County and also served in the United States Naval Reserve. He was issued a life insurance policy in the amount of $10,000 on which his wife was named as beneficiary. She and insured separated in December, 1982, after she brought an action for dissolution of their marriage. On December 20, 1982, insured executed a change of beneficiary form on which he designated his mother as the new beneficiary under the policy. The application was signed by the insured and witnessed by a family friend. The insured told his mother and the witness that he was changing the beneficiary on his policy because of the pending dissolution action. He also said that he was going to mail the form to the insurer.

At that time, the insured had been experiencing chronic pain and weakness in the upper left side of his body and, to a lesser extent, in his right arm. In fact, the insured had directed his mother to print her name on the beneficiary form because it was too painful for him to write.

From January 14, 1983 until January 28, 1983, insured was on active duty in the Naval Reserve in San Diego, California. Shortly after his return home, he entered the hospital. His illness was diagnosed as cancer. In March, a "forequarter" amputation was performed on the insured in which his left arm, shoulder, and part of his chest were removed. After his release from the hospital in May, 1983, he went to live at his parents' home.

From that time on, the insured was confined to a wheelchair. Five days a week, his father drove him 60 miles, one-way, to the hospital for radiation therapy. His muscle strength and physical condition were deteriorating rapidly. He needed assistance in performing all the basic bodily functions. He was fed and carried about by his parents. Characterized as a "slow learner" prior to his illness, he became even more "vague" as his physical condition got worse. In May, his parents and some friends drove the insured to Connecticut, a trip he wanted to make before he died. The insured died on June 2, 1983.

Throughout his illness his wife did not help care for him. She was not with him when he died and did not attend his funeral.

After his death, his parents found the completed change of beneficiary form among the insured's personal effects which he had stored in their basement during his illness. His mother forwarded the form to the insurer and filed a claim for the proceeds of the policy. Wife also filed a claim. Faced with conflicting claims, the insurer brought this interpleader action.

The trial judge awarded the proceeds of the insurance policy to the insured's mother. The court found that the insured had "substantially complied with the conditions imposed by the policy" and that the "circumstances concerning his illness [had] prevented him from forwarding the form to the insurance company."

Wife raises four points on appeal. She first contends that the trial court erred in awarding the policy proceeds to the mother because the insured did not do all within his power to exercise his right to change the beneficiary. The salient issue is whether the insured's acts constituted sufficient compliance with the change of beneficiary clause so as to effectuate a change in beneficiary.

Preliminarily, we note that this is not an action at law. It is not a suit on the contract between a claimant and the insurer, in which the failure of the insured to strictly comply with the terms of the contract might prevent the change in beneficiary from becoming effective. The terms regulating the manner in which a beneficiary can be changed are primarily for the benefit of insurers, to protect them against multiple liability from conflicting claimants. Provident Life and Accident Ins. Co. v. Buerge, 703 S.W.2d 590, 593 (Mo.App.1986). Here, the insurer proceeded by interpleader and paid the proceeds of the policy into court. By so doing, the insurer waived strict compliance with the method of recording notice of the change upon the policy and upon its books and records. Id.; Persons v. Prudential Ins. Co. of America, 233 S.W.2d 729 (Mo.1950). The insurer merely acknowledged its liability to someone and otherwise stood indifferent to the outcome.

This waiver by the company, however, is simply a waiver as to itself and does not act to confer rights as between the claimants. Although a beneficiary under this type of policy does not have any vested rights during the life of the insured, the right to the proceeds becomes vested upon the death of the insured. St. Louis Union Trust Co. v. Blue, 353 S.W.2d 770, 779 (Mo.1962). Because of this vesting of rights, it is important to understand how a court of equity can allow a substitution of a beneficiary where the insured has not strictly complied with the terms of the policy necessary to effectuate a change in beneficiary.

In Missouri, the equitable doctrine of substantial compliance prevails and is applicable where the insured has not strictly complied with the method provided by the policy for changing the beneficiary. If the insured has done all within his power to exercise his right to change the beneficiary, the irregular or incompleted change is effective as against the original beneficiary. Woodman Accident and Life Co. v. Puricelli, 669 S.W.2d 64, 65 (Mo.App.1984). Equity regards as done that which ought to be done. Postal Life and Casualty Ins. Co. v. Tillman, 287 S.W.2d 121, 127 (Mo.App.1956). The doctrine of substantial compliance simply carries out the intent of the insured. The insured's intention, however, must be established beyond question; and the insured must have done everything possible under the circumstances to effectuate his intent. Equity recognizes that the change of beneficiary was effective during the life of the insured, so that no vested rights of the original beneficiary are defeated. Postal Life, 287 S.W.2d at 127.

The parties do not question that substantial compliance...