Estate of Revis by Revis v. Revis

Decision Date03 December 1996
Docket NumberNo. 2647,2647
CourtSouth Carolina Court of Appeals
PartiesESTATE OF Mitchell Reid REVIS, by his duly appointed Personal Representative, Dorothy F. REVIS, Appellant, v. Louella M. REVIS and Mitchell Revis, Respondents. . Heard

Tom W. Dunaway, III and J. Kirkman Moorhead, both of Dunaway & Associates, Anderson, for appellant.

Theodore A. Snyder, Jr., Walhalla; and William B. Long, Jr., Greenville, for respondents.

HOWARD, Judge:

This is an action brought by the personal representative of the estate of Mitchell Revis (Revis), deceased, for the return of life insurance proceeds paid to his estranged second wife, Louella Revis (second wife), following his death. The case was referred by consent to the master-in-equity with finality. The master ruled that a separation agreement executed between Revis and his second wife four years prior to his death which contained only general release language was not a contractual relinquishment of her entitlement to life insurance proceeds as the named beneficiary following his death. We agree and affirm.

FACTS

Mitchell Reid Revis was first married to Dorothy Revis, who appears in this suit as the personal representative of Revis's estate. 1 They were married on May 25, 1966 and divorced in October of 1981. Revis then The property settlement agreement did not specifically mention life insurance. It did contain the following language:

married Louella Revis in 1984. They separated on September 21, 1988, but were never divorced. On November 11, 1988, Louella and Mitchell Revis entered into a "Complete Property and Support [326 S.C. 475] Settlement Agreement" which was later incorporated into an order of the family court.

[T]he parties hereto now consider it to [sic] their respective best interests to settle between themselves all matters in issue and all matters heretofore arising or hereafter to arise from their marital union and [the parties] have reached a permanent and complete agreement and now wish to reduce their agreement to writing and desire that it shall constitute the total agreement between them with respect to all matters relating to alimony, property division, custody, support, attorney's fees, and all other matters which were raised or could have been raised between the parties hereto, other than the issue of divorce itself....

The property settlement agreement also provided:

The Husband and Wife hereby releases [sic] the other of all claims of support, maintenance and alimony, and also all rights and claims of property, inheritance, descent, distribution and administration in the estate of the other, real, personal or mixed, now owned or hereafter acquired, and all other rights or claims growing out of the marriage relation of the parties....

... The parties hereby acknowledge that they are in exclusive possession of the separate and marital properties to which they are entitled, and hereby release and relinquish any and all right, title and interest in and to the personal, real, and mixed property of the other. Further the parties each release and relinquish any and all right, title and interest, including but not limited to all title and equitable interest, which each may have in any other property, monies, checking and savings, stocks, certificates of deposit, investments, business interests and ventures of any nature, and in any and all properties owned by or in the name of the other....

By this language the estate maintains Louella Revis relinquished any interest she had in Revis's insurance policies.

After entering into the agreement, Mitchell Revis made no changes in his existing life insurance policies, pension, or health insurance plans. However, he did designate his adult son as the beneficiary of a newly purchased $250,000 life insurance policy.

When Revis died, life insurance proceeds of $282,000 were paid to his second wife as the named beneficiary. Dorothy Revis subsequently brought this action as personal representative for the return of the proceeds. Revis's heirs are his son from his first marriage and a daughter born after his first marriage but before his second marriage.

SCOPE OF REVIEW

This is a declaratory judgment action brought to determine the interests of Louella Revis and the heirs of Mitchell Revis in certain life and other insurance proceeds. Declaratory judgment actions can be either legal or equitable, depending upon whether law or equity would have had jurisdiction, absent the declaratory judgment procedure. Felts v. Richland County, 303 S.C. 354, 400 S.E.2d 781 (1991). To make this determination we look to the main purpose of the action as determined by the complaint. Insurance Fin. Servs., Inc. v. South Carolina Ins. Co., 271 S.C. 289, 247 S.E.2d 315 (1978). The main purpose of this action as determined from the complaint is the recovery of life insurance proceeds paid to Louella Revis.

Generally, an action on a life insurance policy is a legal action involving a question of contract law. Rickborn v. Liberty Life Ins. Co., 321 S.C. 291, 468 S.E.2d 292 (1996). Thus, for example, where the action involves the question of the entitlement of a widow to life insurance proceeds after she has caused the death of her spouse, the action is one at law. Wilson v. Wilson, 312 S.C. 172, 439 S.E.2d 323 (Ct.App.1993), rev'd on other grounds, 319 S.C. 370, 461 S.E.2d 816 (1995).

In an action at law, tried without a jury, the judge's findings will not be disturbed unless they are without evidentiary support. Townes Assocs. Ltd. v. City of Greenville, 266 S.C. 81, 221 S.E.2d 773 (1976). A judge's findings are equivalent to those of a jury in an action at law. Id.

DISCUSSION

It is settled that an insurance policy is a contract between the insured and the insurance company, and the terms are to be construed according to contract law. Rickborn, 321 S.C. 291, 468 S.E.2d 292. An insured's designation of the beneficiary of his or her life insurance policy is a contractual matter between the insured and the insurer. Id. Consequently, divorce in and of itself has generally been held not to affect or defeat one spouse's rights as a designated beneficiary in a life insurance policy on the other spouse's life, absent a change in the designation of the beneficiary or a provision in the life insurance contract providing for the ineligibility of the beneficiary if the couple is not married at the time of death. See Duncan v. Investors Diversified Servs. Inc., 285 S.C. 467, 470, 330 S.E.2d 295, 296 (1985) ("Generally, and by analogy, with respect to an ordinary life insurance policy, it is an elementary principle of law that if a policy is validly issued, then, in the absence of a contrary provision in the policy, a contrary statute, or a contrary insurance regulation, the rights of the beneficiary are not affected even though the beneficiary ceases to have an insurable interest in the life of the insured.").

Although a divorce does not itself affect a beneficiary's right to insurance proceeds, it is generally recognized that a beneficiary may contract this right away through a separation or property settlement agreement, even if the beneficiary designation is not formally changed. See Moseley v. Mosier, 279 S.C. 348, 306 S.E.2d 624 (1983) ("[The parties] may agree to any terms they wish as long as the court deems the contract to have been entered fairly, voluntarily and reasonably."); see also Debra E. Wax, Annotation, Property Settlement Agreement as Affecting Divorced Spouse's Right to Recover as Named Beneficiary under Former Spouse's Life Insurance Policy, 31 A.L.R.4th 59 (1969).

Whether a property settlement agreement should be deemed to bar the divorced wife from receiving the insurance benefits is a question of the construction of the agreement itself. In South Carolina, the construction of a separation agreement is a matter of contract law. McDuffie v. McDuffie, 313 S.C. 397, 438 S.E.2d 239 (1993). Therefore, when construing separation agreements the intention of the parties is controlling. Id. at 400, 438 S.E.2d at 241. Where a property settlement agreement is ambiguous, the court may consider parol evidence to ascertain the intent of the parties. Id. "An ambiguous contract is one capable of being understood in more ways than one, an agreement obscure in meaning through indefiniteness of expression, or having a double meaning." Ebert v. Ebert, 320 S.C. 331, 338, 465 S.E.2d 121, 125 (Ct.App.1995), cert. denied (Oct. 17, 1996). Likewise, where an agreement is silent as to a particular matter and because of the nature and character of the transaction an ambiguity arises, parol evidence may be admitted in order to supply a deficiency in the language of the contract. Id.

The Revises' separation agreement does not have plain language which directly addresses the life insurance policies owned by Revis at the time. In Davis v. Southern Life Ins. Co., 249 S.C. 194, 153 S.E.2d 399 (1967), our supreme court ruled that during the lifetime of the insured the named beneficiary has no vested property right in a life insurance contract, but merely an expectancy, where a right to change the beneficiary has been reserved to the insured in the policy. Complete control of the policy remains with the insured. Id. Therefore, as the master ruled, the general language releasing property interests, as opposed to expectancies, is capable of more than one interpretation.

We, therefore, conclude that when a separation agreement does not specifically address a life insurance policy in which one spouse has an expectancy as a named beneficiary, general language of release such as that found in this case is not controlling on the issue. Where the insured spouse maintains ownership and control of the policy, including the right to change beneficiaries the question of whether or not the agreement extinguishes the right of the named beneficiary to claim the benefits upon the death of the...

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