Cook v. Equitable Life Assur. Soc. of U.S., 1-681A204

• Citation: 428 N.E.2d 110
• Decision Date: 30 November 1981
• Docket Number: No. 1-681A204,1-681A204
• Parties: Margaret A. COOK, Administratrix C.T.A. of the Estate of Douglas Daniel Cook, Deceased; Margaret A. Cook; Daniel Joseph Cook, a minor, Defendants-Appellants, v. The EQUITABLE LIFE ASSURANCE SOCIETY OF the UNITED STATES, Interpleader Plaintiff-Appellee, Doris J. Combs, Defendant-Appellee.
• Court: Court of Appeals of Indiana

Page 110

428 N.E.2d 110

25 A.L.R.4th 1153

Margaret A. COOK, Administratrix C.T.A. of the Estate of

Douglas Daniel Cook, Deceased; Margaret A. Cook;

Daniel Joseph Cook, a minor, Defendants-Appellants, v. The EQUITABLE LIFE ASSURANCE SOCIETY OF the UNITED STATES, Interpleader Plaintiff-Appellee, Doris J. Combs, Defendant-Appellee.

No. 1-681A204.

Court of Appeals of Indiana, First District.

Nov. 30, 1981.

Bruce R. Runnels, Cline, King & Beck, Columbus, Dongus, Cregor & Messick, Indianapolis, for defendants-appellants.

John T. Sharpnack, James F. Rosner, Sharpnack, Bigley, David & Rumple, Columbus, for interpleader plaintiff-appellee.

STATEMENT OF THE CASE

RATLIFF, Judge.

Margaret A. Cook, Administratrix C.T.A. of the Estate of Douglas D. Cook (Douglas); Margaret A. Cook; and Daniel J. Cook (Margaret and Daniel) appeal from an entry of summary judgment granted by the trial court in favor of Doris J. Cook Combs (Doris) in an interpleader action brought by The Equitable Life Assurance Society of the United States (Equitable). We affirm.

FACTS

Douglas purchased a whole life insurance policy on March 13, 1953, from Equitable, naming his wife at that time, Doris, as the beneficiary. On March 5, 1965, Douglas and Doris were divorced. The divorce decree made no provision regarding the insurance policy, but did state the following: "It is further understood and agreed between the parties hereto that the provisions of this agreement shall be in full satisfaction of all claims by either of said parties against the other, including alimony, support and maintenance money." Record at 85-86.

After the divorce Douglas ceased paying the premiums on his life insurance policy, and Equitable notified him on July 2, 1965, that because the premium due on March 9, 1965, had not been paid, his whole life policy was automatically converted to a paid-up term policy with an expiration date of June 12, 1986. The policy contained the following provision with respect to beneficiaries:

"BENEFICIARY. The Owner may change the beneficiary from time to time prior to the death of the Insured, by written notice to the Society, but any such change shall be effective only if it is endorsed on this policy by the Society, and, if there is a written assignment of this policy in force and on file with the Society (other than an assignment to the Society as security for an advance), such a change may be made only with the written consent of the assignee. The interest of a beneficiary shall be subject to Upon endorsement of a change of beneficiary upon this policy by the Society, such change shall take effect as of the date the written notice thereof was signed, whether or not the Insured is living at the time of endorsement, but without further liability on the part of the Society with respect to any proceeds paid by the Society or applied under any option in this policy prior to such endorsement.

the rights of any assignee of record with the Society.

If the executors or administrators of the Insured be not expressly designated as beneficiary, any part of the proceeds of this policy with respect to which there is no designated beneficiary living at the death of the Insured and no assignee entitled thereto, will be payable in a single sum to the children of the Insured who survive the Insured, in equal shares, or should none survive, then to the Insured's executors or administrators."

Record at 2 and 59.

On December 24, 1965, Douglas married Margaret, and a son, Daniel, was born to them. On June 7, 1976, Douglas made a holographic will in which he bequeathed his insurance policy with Equitable Life to his wife and son, Margaret and Daniel:

"Last Will & Testimint (sic)

I Douglas D. Cook

Being of sound mind do Hereby leave all my Worldly posessions (sic) to my Wife and son, Margaret A. Cook & Daniel Joseph Cook. being my Bank Accounts at Irwin Union Bank & trust to their Welfair (sic) my Insurance policys (sic) with Common Welth of Ky. and Equitable Life. all my machinecal (sic) tools to be left to my son if He is Interested in Working with them If not to be sold and money used for their welfair (sic) all my Gun Collection Kept as long as they, my Wife & Son (sic) and then sold and money used for their welfair (sic)

I sighn (sic) this

June 7-1976

at Barth Conty

Hospital Room

1114 Bed 2

/s/ Douglas D. Cook

/s/ 6-7-76 Margaret A. Cook wife

/s/ Chas. W. Winkler

/s/ Mary A. Winkler"

This will was admitted to probate in Bartholomew Superior Court after Douglas's death on June 9, 1979. On August 24, 1979, Margaret filed a claim with Equitable for the proceeds of Douglas's policy, but Equitable deposited the proceeds, along with its complaint in interpleader, with the Bartholomew Circuit Court on March 14, 1980. Discovery was made; interrogatories and affidavits were filed; and all parties moved for summary judgment. The trial court found that there was no genuine issue as to any material fact respecting Doris's claim to the proceeds of the policy and entered judgment in her favor as to the amount of the proceeds plus interest, a total of $3,154.09. Margaret and Daniel appeal from this award.

ISSUE

Is the trial court's entry of summary judgment in this case contrary to Indiana law because the court entered judgment in favor of the named beneficiary of an insurance policy rather than in compliance with the insured testator's intent as expressed in his will?

DISCUSSION AND DECISION

Margaret and Daniel recognize that matters relating to summary judgment are controlled by Ind.Rules of Procedure, Trial Rule 56. Trial Rule 56(C) states, in pertinent part: "The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits and testimony, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Margaret and Daniel do not dispute the facts in this case, yet they contend that the court's entry of summary judgment was erroneous because Indiana law does not require strict compliance with the terms of an insurance policy relative to a change of beneficiary in all cases. They argue, therefore, that strict compliance with policy provisions is not required for the protection of either the insurer or the insured once the proceeds have been paid by the insurer into court in an action for interpleader and that the court should shape its relief in this case upon the equitable principle "that the insured's express and unambiguous intent should be given effect." Appellants' brief at 22. However, Margaret and Daniel cite no Indiana cases for this proposition stating that Indiana courts have never considered the precise factual combination giving rise to this appeal and citing instead cases from Minnesota and Arkansas. The latter jurisdiction they denominate as the leading proponent of the theory they espouse: "that the provisions of a Will, either alone or in conjunction with supporting circumstances, effectively change the beneficiary of a life insurance policy." Id. at 24.

Doris agrees that less than strict compliance with policy change requirements may be adequate to change a beneficiary where circumstances show the insured has done everything within his power to effect the change. Nevertheless, Doris asserts that Indiana adheres to the majority rule finding an attempt to change the beneficiary of a life insurance policy by will, without more, to be ineffectual. We agree with Doris.

Margaret and Daniel are correct in asserting that there are no Indiana cases involving precisely the same set of facts as occur in this case. Nevertheless, there is ample case law in this jurisdiction to support the trial court's determination. Almost one hundred years ago our supreme court in Holland v. Taylor, (1887) 111 Ind. 121, 12 N.E. 116, enunciated the general rule still followed in Indiana: an attempt to change the beneficiary of a life insurance contract ¹ by will and in disregard of the methods prescribed under the contract will be unsuccessful. See also, 44 Am.Jur.2d, Insurance § 1785 (1969); 46 C.J.S. Insurance § 1176 (1946); 25 A.L.R.2d 999 (1952) and Later Case Service (1981); 2A J. A. Appleman, Insurance Law & Practice § 1078 (1966). In Holland, the assured and testator, Charles D. Taylor, had been issued a benefit certificate by Royal Arcanum, a mutual benefit society, in which certificate Taylor's daughter, Anna Laura, was the named beneficiary. The certificate provided that Taylor could change the named beneficiary by following certain procedures. On the same day that Taylor applied for the certificate he made his will in which he acknowledged the certificate for his daughter's benefit, but also provided that the certificate benefits, under certain circumstances, were to inure to the benefit of his wife or estate rather than as provided in the certificate for the exclusive benefit of his daughter. After Taylor's death, Holland was appointed guardian of Anna Laura and brought an action requesting that the executors of Taylor's estate pay over to him the fund which they had collected from the Royal Arcanum. The trial court overruled a demurrer to the answer and held that the executors were entitled to dispose of the fund according to the will. On appeal, our supreme court reversed with instructions to the trial court to sustain appellant's demurrer to the answer. In doing so the court stated at 111 Ind. 130-31, 12 N.E. 116:

"Taylor, the assured, neither changed, nor attempted to change, the beneficiary in the mode and manner provided in the by-laws. He could not accomplish that end, nor affect the ultimate rights of the beneficiary by a will. Upon his death, therefore, Anna Laura became entitled to the amount to be paid upon the certificate, as her absolute property; appellees' executors, having collected from the Royal Arcanum, hold the amount so collected in trust for her, but they have...