Estate of Foleno v. Estate of Foleno

• Decision Date: 30 July 2002
• Docket Number: No. 76A05-0111-CV-496.,76A05-0111-CV-496.
• Citation: 772 N.E.2d 490
• Parties: ESTATE OF Charlotte A. FOLENO, by Ronald G. THOMAS, Co-Personal Representative, Appellant-Plaintiff, v. ESTATE OF Billy J. FOLENO; Craig T. Benson, as Personal Representative of Estate of Billy J. Foleno; Cigna Corp., d/b/a Connecticut General Life Insurance Company; Keith Foleno; Rick Foleno; Barry Foleno; and Occidental Petroleum Company, Appellees-Defendants.
• Court: Indiana Appellate Court

772 N.E.2d 490

ESTATE OF Charlotte A. FOLENO, by Ronald G. THOMAS, Co-Personal Representative, Appellant-Plaintiff, v. ESTATE OF Billy J. FOLENO; Craig T. Benson, as Personal Representative of Estate of Billy J. Foleno; Cigna Corp., d/b/a Connecticut General Life Insurance Company; Keith Foleno; Rick Foleno; Barry Foleno; and Occidental Petroleum Company, Appellees-Defendants.

No. 76A05-0111-CV-496.

Court of Appeals of Indiana.

July 30, 2002.

Christopher J. Wheeler, Stout & Wheeler, LLP, Angola, IN, Attorney for Appellant.

J. Frank Stewart, Angola, IN, Attorney for Appellees.

OPINION

BAKER, Judge.

Today we are asked to impose a constructive trust on proceeds of a life insurance policy in favor of the heirs of a woman killed by her husband, in clear contravention of the terms of the insurance contract. The trial court ruled that the terms of the insurance contract should prevail and so awarded the proceeds to the policy's contingent beneficiaries. We affirm.¹

Appellant-plaintiff Ronald Thomas, copersonal representative of the Estate of Charlotte Foleno, appeals the trial court's award of insurance proceeds to appellees-defendants Keith, Rick, and Barry Foleno (the Foleno brothers)—contingent beneficiaries of a policy insuring the life of Billy J. Foleno. They were contingent beneficiaries in the event Billy survived his wife Charlotte, the primary beneficiary. Rules of equity, long-standing contract law, and well-established property transfer law favor the distribution of the proceeds according to the terms of the insurance policy.

FACTS

On the morning of July 15, 2000, Billy Foleno found his wife of thirty-five years, Charlotte Foleno, and her companion, Barry Crowle, at a Holiday Inn hotel room in Fremont, Indiana. Armed with a .45 caliber automatic pistol, Billy shot Charlotte at least three times as she ran from the hotel room into the hallway. Following her into the hallway, Billy shot Charlotte in the head. He then returned to the room and shot Crowle, who survived the attack. Believing that he killed both Charlotte and Crowle, Billy ended his own life. The parties agree that Charlotte died before Billy.

Billy owned a life insurance policy carrying a death benefit of $40,000, designating Charlotte as the primary beneficiary. In the event there was "no designated beneficiary living at the death of the insured," the insurance company would "pay the benefits to the persons surviving the Insured who are listed in the order they appear:"

1. first the Insured's spouse;

2. next the Insured's children;

3. next the Insured's parents;

4. next the Insured's brothers and sisters.

Appellant's App. p. 17. Under the terms of the policy, Billy was the insured. Both Charlotte and Billy died intestate with no children. Billy was survived by his three brothers, Rick, Keith, and Barry Foleno (the Foleno brothers).

On April 25, 2001, Ronald Thomas, a copersonal representative of Charlotte's estate, filed a Verified Complaint for Imposition of Constructive Trust and Injunction against the Estate of Billy J. Foleno, its personal representative, Craig T. Benson, Cigna Corp., d/b/a Connecticut General Life Insurance, the Foleno brothers, and Occidental Petroleum. Over three months later, Thomas filed a motion for summary judgment, and the Foleno brothers subsequently filed a cross-motion for summary judgment. The parties disputed none of the material facts before the trial court. After a hearing, the trial court granted the Foleno brothers' motion for summary judgment and denied the motion made by Thomas. In so doing, the trial court ordered the insurance proceeds, which had been deposited with the clerk of the court by Connecticut General Life Insurance Company, paid to the Foleno brothers. Thomas now appeals the award² of the insurance proceeds to the Foleno brothers.

DISCUSSION AND DECISION

I. Standard of Review

The parties agree to the material facts of this case. Accordingly, our task on review is to determine whether the trial court correctly applied the law to the undisputed facts. Fox v. Hawkins, 594 N.E.2d 493, 495 (Ind.Ct.App.1992). Appellate courts review questions of law under a de novo standard and owe no deference to a trial court's legal conclusions. Wayne Metal Prods. Co. v. Ind. Dep't of Envtl. Mgmt., 721 N.E.2d 316, 317 (Ind.Ct.App. 1999), trans. denied.

II. Application of the Slayer's Rule Where Killer Is the Insured

Thomas raises the sole issue of whether equity imposes a "constructive trust" on the proceeds from Billy's insurance policy. Thomas claims that equitable principles of constructive trust should apply here to prevent Billy or the contingent beneficiaries of the insurance policy from benefiting from his wrongful acts.

There is no dispute that the insurance contract named Charlotte as the primary beneficiary and provided three additional classes of contingent beneficiaries in the event Charlotte predeceased Billy. Billy had no children (second class) and his parents (third class) predeceased him. Therefore, the proceeds were to be paid to the fourth and final class of beneficiaries— Billy's brothers. Indeed, Thomas concedes that the terms of the insurance contract plainly direct payment of proceeds to the Foleno brothers.

Because the policy terms plainly afford no relief, Thomas seeks to extend equity to impose a constructive trust on the proceeds. Reviewing the history of and reasons for the equitable principle invoked— that is, the Slayer's Rule—shows that the rule has no application to the facts of the instant case.

The Slayer's Rule is of recent origin compared to other property rules whose roots are often embedded in feudalism. "In England, the common law doctrines of attainder, forfeiture, corruption of blood and escheat played a prominent part in the solution of the problem of the slayer and his bounty." Alison Reppy, The Slayer's Bounty—History of Problem in Anglo-American Law, 19 N.Y.U. L.Q. Rev. 229, 244 (1942). Application of these doctrines usually resulted in the Crown taking a murderer's property upon conviction, thus, destroying the line of descent. Ballard v. Bd. of Trustees of the Police Pension Fund, 263 Ind. 79, 86, 324 N.E.2d 813, 817 (1975); Reppy, supra, at 241. Soon after the founding of this nation, these ancient doctrines were constitutionally and statutorily abolished. Reppy, supra, at 244. They were also eventually abolished in England. See Marie Louise Fellows, The Slayer Rule: Not Soley a Matter of Equity, 71 Iowa L.Rev. 489, 540 n. 157 (1986) (citing Forfeiture Act of 1870, 33 & 34 Vict., ch. 23, para. 1).

Although the doctrines had the cruel effect of extinguishing the inheritance rights of a killer's innocent heirs, they provided one unintended benefit: separating a killer from his victim's property. The abolishment of attainder, forfeiture, corruption of blood, and escheat thus left an unanticipated void. No longer would the sovereign emerge to confiscate a killer's property, even when the killer acquired the property by means of his crime.

Two cases arising in the late-nineteenth century were the first to develop a judicial solution to the problem of a slayer attempting to profit from his victim through intestate succession, testate succession, or distribution of insurance proceeds. In Mutual Life Insurance Co. of New York v. Armstrong, an insurance company refused to pay proceeds on a policy that had been obtained by one who eventually killed the insured six weeks after procuring the policy. 117 U.S. 591, 6 S.Ct. 877, 29 L.Ed. 997 (1886). Reversing the trial court's judgment and ruling in favor of the insurance company, the Court wrote:

[I]ndependently of any proof of the motives of Hunter in obtaining the policy, and even assuming that they were just and proper, he forfeited all rights under it when, to secure its immediate payment, he murdered the assured. It would be a reproach to the jurisprudence of the country, if one could recover insurance money payable on the death of a party whose life he had feloniously taken. As well might he recover insurance money upon a building that he had willfully fired.

Id. at 600, 6 S.Ct. 877.

Three years later New York's highest court relied on Armstrong in part to deny a sixteen-year-old grandson from taking through his grandfather's will. Riggs v. Palmer, 115 N.Y. 506, 22 N.E. 188 (1889). When he learned that his grandfather intended to revoke provisions in the will favoring him, the grandson poisoned him. Id. at 189. According to the Riggs majority, a fundamental maxim of common law trumped both the probate code and the terms of the will, which would have awarded the grandson the victim's property. Id. at 190. The maxim was stated: "No one shall be permitted to profit by his own fraud, or to take advantage of his own wrong, or to found any claim upon his own iniquity, or to acquire property by his own crime." Id. The court believed that this equitable principle had been applied in Armstrong and was just as applicable to the will under question. Id. In the end, the grandson was barred from taking any of the property through the will. Id. at 191.

Many states, including Indiana, codified the rule enunciated in Riggs in one form or another.³ The General Assembly passed the following in 1907:

That no person who unlawfully causes the death of another and shall have been convicted thereof, or aids or abets in such unlawful killing of another, shall take by devise or descent any part of the property, real or personal, owned by the decedent at the time of his or her death.

Act of Mar. 2, 1907, ch. 95, § 1, 1907 Ind. Acts 136 (codified at Burns Ind. Stat. Ann. § 2995 (Bobbs-Merrill 1908)). The 1907 statute was substantially amended in 1953.⁴ The amendment declared that a person "legally convicted of intentionally causing the death of another" became a "constructive trustee" of any property acquired from the decedent or the decedent's estate. Act of Mar. 9, 1953, ch. 112, § 212, 1953 Ind. Acts 309 ...