Chute v. Old American Ins. Co.

• Decision Date: 05 June 1981
• Docket Number: No. 51961,51961
• Citation: 629 P.2d 734,6 Kan.App.2d 412
• Parties: Leah CHUTE, as Administrator of the Estate of Willis Upshaw, Deceased, Appellant, v. OLD AMERICAN INSURANCE COMPANY, Appellee.
• Court: Kansas Court of Appeals

Page 734

629 P.2d 734

6 Kan.App.2d 412

Leah CHUTE, as Administrator of the Estate of Willis Upshaw, Deceased, Appellant, v. OLD AMERICAN INSURANCE COMPANY, Appellee.

No. 51961.

Court of Appeals of Kansas.

June 5, 1981.

Syllabus by the Court

1. A beneficiary under a life insurance policy is precluded from recovering the proceeds of the policy when the beneficiary

is convicted of feloniously killing, or procuring the killing, of the insured.

2. The proceeds of a life insurance policy may become payable to the estate of the insured even though the insurer is otherwise relieved of liability in situations described in Syllabus P 1.

3. Where a life insurance policy is procured by the beneficiary with the predetermined intent to murder the insured, there can be no recovery, either on the part of the beneficiary or the estate of the insured, because the contract of insurance was void from inception by reason of fraud.

4. Proof of fraud in the procurement of a life insurance policy must be established by clear and convincing evidence.

5. In order to avoid liability to the estate of an insured killed by the beneficiary of the policy, the insurer must prove that the beneficiary possessed the intent to murder the insured prior to the effective date of the policy.

6. Even though fraud in the procurement of the policy must be proved by a preponderance of the evidence which must be clear and convincing, it may be proved by showing circumstances from which the inference of fraud is natural and irresistible.

7. In a civil action, an exception to the hearsay rule is provided under K.S.A. 60-460(j) for declarations against pecuniary, proprietary, penal or social interests by one not a party to the action nor in privity with the parties to the action without a showing that the declarant was unavailable to testify, so long as there is a "finding that the character of the declaration was of such nature a reasonable man would not make it unless he believed it to be true." Following Thompson v. Norman, 198 Kan. 436, 443, 424 P.2d 593 (1967).

8. The burden is upon the appellant to designate a record sufficient to present her points on appeal and in the absence of an adequate record, the claimed error will not be considered.

Robert D. Hecht of Scott, Quinlan & Hecht, Topeka, for appellant.

Herbert A. Marshall of Marshall, Hawks, Hendrix, Schenk & Nichols, Topeka, for appellee.

Before HERD, Justice Presiding, SWINEHART, J., and WILLIAM M. COOK, District Judge, Assigned.

WILLIAM M. COOK, District Judge, Assigned:

Plaintiff appeals from a judgment entered by the district court following a trial on the merits. The action was a sequel of sorts to the Carpenter murder cases which have been before the Supreme Court on three separate occasions. (State v. Carpenter, 215 Kan. 573, 527 P.2d 1333 (1974); Carpenter v. State, 223 Kan. 523, 575 P.2d 26 (1978); State v. Carpenter, 228 Kan. 115, 612 P.2d 163 (1980).)

Leah Chute, Administratrix of the Estate of Willis Upshaw, deceased, brought this action to recover from the defendant, Old American Insurance Company, the proceeds of two policies of life insurance issued by defendant upon the life of Upshaw. Tawnya R. Upshaw, Toni R. Upshaw and Troy W. Upshaw are the natural children of Leah Chute, born to her during and as a result of her marriage to Willis Upshaw, the natural father of said minor children. It is undisputed that the minor children are all of the heirs at law of Willis Upshaw under the law of intestate succession of the state of Kansas.

Willis Upshaw was employed by separate partnerships comprised of Jan Carpenter and Eben W. "Bill" Carpenter, as equal partners, d/b/a C & C Security Company and C & C Ambulance. He worked intermittently as a patrol guard and ambulance attendant for the two companies. On May 16, 1972, the Carpenters initiated the purchase of life insurance policies upon the life of Willis Upshaw. On that date Upshaw signed applications with Old American for two insurance policies of $50,000 each, naming C & C Security Company and C & C Ambulance Company, respectively, as beneficiaries under the policies. The defendant declined to issue policies in that amount but did issue two policies in the amount of $25,000 each, and these policies were delivered to the Carpenters on June 15 or June 16, 1972. A premium check in the amount of $239.10 dated June 15, 1972, was delivered to defendant's agent upon delivery of the policies.

The evidence at trial revealed that the Carpenters had also made application on or about June 8, 1972, to American Home Life Insurance Company for life insurance on the life of Upshaw, with the Carpenters as beneficiaries, in the amount of $70,000 with double indemnity provisions. Although there was testimony that defendant would not have issued its two policies if knowledge of the additional insurance had been acquired, there were no provisions in defendant's application forms which required this information. The only information requested of the applicant was whether there was "any other application for life, accident, sickness or hospital insurance now pending in this or any other company." (Emphasis added.)

Willis Upshaw was murdered on July 2, 1972. Subsequently, Donald Brenner, the "trigger-man," and Jan Carpenter pled guilty to and Eben W. Carpenter was tried and found guilty of second-degree murder and were sentenced.

Following the death of Upshaw, the Carpenters attempted to collect the proceeds of the two policies but were precluded from recovery since they were guilty of the murder of Upshaw. This lawsuit was then brought by Leah Chute, Administratrix of the Upshaw estate. Following a trial on the merits, the court entered judgment for the defendant, holding that the Carpenters intended to murder Upshaw at the time the policies were obtained and thus the policies were void ab initio because of such fraud.

Plaintiff contends the trial court erred in the following respects: (1) by failing to find the plaintiff proved a prima facie case indicating that she should recover against the defendant; (2) in concluding that the policies of insurance were void ab initio; (3) in determining that the defendant's failure to return or tender the premiums paid did not preclude their presentation of defenses which involved misrepresentation; (4) in allowing hearsay testimony; and (5) in failing to sustain the plaintiff's motion for summary judgment. We will consider each of the contentions in the order designated.

Plaintiff first asserts she has proven that policies of insurance were issued on the life of Willis Upshaw; that the premiums thereon were paid and at no time prior to the death of Upshaw was any notice of cancellation given to anyone; that Upshaw was murdered by the beneficiaries of the policies who by reason of their felonious deeds are disqualified to receive the benefits of the policies; that an insurance company is not relieved of liability under a life insurance policy merely because the beneficiary's right to recover is forfeited by reason of the felonious killing of the insured by the beneficiary but, rather, is liable to pay the proceeds of the policy to the insured's estate; and that she, as the duly appointed administratrix of Upshaw's estate, is the proper party to bring this action to recover the proceeds of the policies. Therefore, plaintiff reasons she has "met her burden and proved that the Defendant is obligated to pay the Plaintiff all sums due under the policies in question ...."

Plaintiff's reasoning and conclusion would be correct except for the fact she ignores the finding of the trial court that the Carpenters had formed an intent to kill Upshaw at the time the policies were issued.

K.S.A. 59-513 provides that:

"No person who shall be convicted of feloniously killing, or procuring the killing of, another person shall inherit or take by will, by intestate succession, as a surviving joint tenant, as a beneficiary under a trust or otherwise from such other person any portion of the estate or property in which the decedent had an interest ...." (Emphasis added.)

In Noller v. Aetna Life Ins. Co., 142 Kan. 35, 41, 46 P.2d 22 (1935), the court, interpreting the prior statute containing similar language, held that the words "or otherwise" would apply to a case where the person who did the killing was the beneficiary in an insurance policy.

Plaintiff is correct in proclaiming that an insurer is not relieved of liability under its policy simply because the beneficiary killed the insured. 46 C.J.S. Insurance § 1171 states, in part, as follows:

"Liability of company to estate. Ordinarily where the assignee or beneficiary is defeated by his felonious act in causing the death of insured, the liability of the company, sometimes by virtue of statutory provisions, is not canceled or extinguished; and in such case the amount of the policy becomes payable, as part of insured's estate, to the heirs or personal representatives who in the absence of the assignment or designation of a beneficiary would have been entitled to the proceeds of the insurance, even though it is not expressly so provided by statute." (pp. 58-59.)

See Protective Life Ins. Co. v. Linson, 245 Ala. 493, 17 So.2d 761 (1944); Knights of Honor v. Menkhausen, 209 Ill. 277, 70 N.E. 567 (1904); Kascoutas v. Federal Life Ins. Co., 193 Iowa 343, 185 N.W. 125 (1921); National Life Ins. Co., etc. v. Hood's Adm'r, 264 Ky. 516, 94 S.W.2d 1022 (1936); Slocum v. Metropolitan Life Ins. Co., 245 Mass. 565, 139 N.E. 816 (1923); Sharpless v. Ancient Order of United Workmen, 135 Minn. 35, 159 N.W. 1086 (1916); Equitable Life Assur. Soc. of the U. S. v. Weightman, 61 Okl. 106, 160 P. 629 (1916); Smith v. Todd, 155 S.C. 323, 152 S.E. 506 (1930).

There is, however, an exception to the above rule which plaintiff has overlooked in her conclusion that she was entitled to recovery on her claim against defendant. That exception is set forth at 4 Couch on Insurance...