Gabler v. Minnesota Mut. Life Ins. Co.

• Decision Date: 14 August 1973
• Docket Number: No. 8165,8165
• Parties: Martha Shelton GABLER, Appellant, v. The MINNESOTA MUTUAL LIFE INSURANCE CO., Appellee.
• Court: Texas Court of Appeals

Page 413

498 S.W.2d 413

Martha Shelton GABLER, Appellant, v. The MINNESOTA MUTUAL LIFE INSURANCE CO., Appellee.

No. 8165.

Court of Civil Appeals of Texas,

Texarkana.

Aug. 14, 1973.

Rehearing Denied Sept. 4, 1973.

James K. Peden, III, Strasburger, Price, Kelton, Martin & Unis, Dallas, for appellant.

Larry Lesh, Locke, Purnell, Boren, Laney & Neely, Dallas, for appellee.

CORNELIUS, Justice.

This is a suit instituted by Martha Shelton Gabler against Minnesota Mutual Life Insurance Company to recover the proceeds of a life insurance policy in which she was the named beneficiary and to recover 12% Penalty and reasonable attorney's fees under Sec. 3.62 of the Texas Insurance Code (Tex.Rev.Civ.Stat.Ann.Ins.Code, Sec. 3.62 V.A.T.S.). The company filed an answer in the nature of a bill of interpleader, tendered the policy proceeds into the registry of the court and impleaded the administratrix of the estate of Howell H . Shelton, the insured. The administratrix filed no answer and the court directed payment of the funds to Mrs. Gabler, reserving for trial by jury the issue of Mrs. Gabler's entitlement to the 12% Penalty and her reasonable attorney's fees. The case was submitted to the jury on two issues. Issue No. 1 inquired if the insurance company '. . . acted in good faith because of rival claims in refusing to pay the policy proceeds to the plaintiff before suit was filed?' Issue No. 2 asked the amount of attorney's fees which would reasonably compensate Mrs. Gabler's attorney. The jury in answering Issue No. 1 found that the insurance company did act in good faith. Based upon this finding the trial court entered judgment denying Mrs . Gabler's claim for penalty and attorney fees.

Appellant, Mrs. Gabler, brings forth three points of error which urge two principal contentions. They are (1) that the jury's finding of 'good faith' on the part of the insurance company in its refusal, on the basis of rival claims, to pay the beneficiary is supported by no evidence, or insufficient evidence, or is against the great preponderance of the evidence because there was submitted to the company a legal precedent which it believed, and which in fact, rendered the rival claim insupportable; and (2) the trial court erred in admitting into evidence certain letters between the rival claimant and the group policy-holder and the insurance company which tended to show the existence of the rival claim and which contained discussions relating to the claim, on the ground that such letters were hearsay. We overrule both contentions and affirm the judgment of the trial court.

The insurance policy in question was a group policy which was issued to the town of Highland Park. Howell Shelton, one of Highland Park's employees, was insured for $5,000.00, and he named his wife, Martha Shelton, as the beneficiary. Howell H. Shelton and Martha Shelton were later divorced. Mrs. Shelton subsequently remarried and is now Mrs. Martha Shelton Gabler. Mr. Shelton died on April 28, 1971, without having changed the beneficiary. Mrs. J. H. Shelton, the insured's mother, was named as administratrix of his estate. Mrs. Gabler filed proof of loss and demanded payment of the policy proceeds on May 18, 1971. Four days earlier Mr. David Ivy, an attorney representing the administratrix of the estate, wrote a letter to the policyholder, the town of Highland Park, stating among other things:

'. . . it is our opinion that these policies and the proceeds thereof belong to Mr. Shelton's estate as a result of a property settlement agreement . . .

'We respectfully request that you not pay the proceeds of the above policies to the named beneficiary until this matter has been settled between the parties or litigated in court . . .'

On May 26, 1971 Minnesota Mutual wrote to Mr. Ivy stating:

'We have received a notice of the death of Howell H. Shelton, the certified copy of the death certificate, and the enrollment card of the deceased, dated March 1, 1968, naming Martha Goldsmith Shelton as the beneficiary. We do not have a change of beneficiary card naming the estate as beneficiary. Therefore, if there was a property settlement in the divorce decree of January 14, 1970 between Martha Shelton and Howell Shelton, we will need a certified copy of the divorce decree, which was issued at that time.

'When the proper beneficiary has been determined, we will return the certified copy of the divorce decree.'

On June 14, 1971 Minnesota Mutual wrote to appellant stating:

'We have received the claim forms, certified copy of the death certificate, and the enrollment card for the deceased insured. We have not, however, received the certified copy of the divorce decree which was requested of Attorney David M. Ivy in a letter dated May 26, 1971. 'When we receive the certified copy of the complete divorce decree, we should be able to continue the processing of this claim.'

On June 29, 1971, John D. Griggs, Appellant's attorney, wrote Minnesota Mutual advising:

'Please be informed that I represent Mrs. Martha Shelton Galber, the beneficiary of the above life insurance policy.

'This letter is a demand of payment of the policy as provided and agreed to by your company.

'Should you have any doubt as to payment to the named beneficiary it is suggested your attorney read the recent Supreme Court of Texas case Partin v. de Cordova . . .

'It is suggested you give this important matter your immediate attention.'

Again, on July 8, 1971 Griggs wrote Minnesota Mutual stating:

'Your letter of June 14, 1971 stated that you were waiting for a certified copy of a divorce decree which you had requested from Attorney David M. Ivy. I do not know the purpose of the request for the certified copy of the divorce decree nor why you have contacted Mr. David M. Ivy for such copy. However, for your information the divorce was granted January 14, 1970 . . . If you desire a certified copy of the divorce decree you may write the District Clerk of Dallas County, Texas, and ask for said certified copy of the divorce decree.

'Please also consider this letter a further demand upon your company for payment to my client, the named beneficiary under the policy of insurance.'

On July 12, 1971 Minnesota Mutual wrote to Mr. Griggs, appellant's attorney, stating:

'Pursuant to your letter of June 29, 1971, we have reviewed the Court of Civil Appeals of Texas case, Partin v. de Cordova . . .

'The above noted case seems to be directly on point and thus, clearly seems to indicate that your client, Mrs. Martha Shelton Gabler, is entitled to the proceeds of the above numbered policy.

'Since we wish to pay out the proceeds of the policy to the proper beneficiary as soon as possible, I am today writing the attorney representing the estate of Mr. Shelton, and requesting that he immediately inform us of his position in view of the above mentioned case and its decision. It may be possible that he knows of other information relative to the present situation that would act adversely against Mrs. Martha Shelton Gabler's claim for the proceeds.

'If the attorney representing the estate of Mr. Shelton does possess such adverse information, and thus, continues to demand the proceeds for the estate, we will undoubtedly have to file an action of interpleader to avoid the possibility of double liability.

'As mentioned before, based on the facts we now have, it would appear your client has the superior right to the policy proceeds. I hope you will bear with us until we receive an answer as to the position of the estate.

'Thank you for your cooperation and information supplied. I will write again immediately upon ascertaining the position of the estate .'

On the same date, July 12, 1971 Minnesota Mutual wrote David M. Ivy, counsel for the insured's estate, stating:

'Pursuant to the above numbered claim, we have recently received a letter from an attorney representing Mrs. Martha Shelton Gabler, former wife of Howell H. Shelton, and the named beneficiary of the policy.

'You will note that Mrs. Gabler demands the proceeds of the policy as the named beneficiary thereof. Mrs. Gabler makes this claim in spite of the fact that the ownership of the above numbered policy was given to Mr. Shelton by their divorce decree.

'You will note that Mrs. Gabler's attorney suggested that we read the case which he cited in his letter of June 29, 1971. We have reviewed that case, and it is our opinion that decision of such case does in fact give Mrs. Gabler the superior right to obtain the proceeds of the policy . . .

'In view of Mrs. Gabler's claim and the decision of the above mentioned case, I would appreciate your immediate reply as to the estate's position in view of such holding. In view of the holding of that case, do you still continue to demand the proceeds of the policy for the estate of Mr. Shelton? If so, I would appreciate knowing the basis of such claim.

'We are most anxious to pay you the proceeds of this policy, and hope that an action of interpleader can be avoided.'

There was evidence that several times the attorney for Mrs. Gabler and the attorney for the estate discussed the possibility of settling the claims, but no agreement was reached. On August 27, 1972, the insurance company was served with citation in this suit and on September 14, 1972, it filed its answer and bill of interpleader.

Sec. 3.62 of the Texas Insurance Code provides that when a life insurance company fails to pay life benefits within thirty days after demand therefor such company shall be liable for an additional 12% As penalty, together with reasonable attorney's fees. This statute, however, is not applicable when the insurance company is faced with rival claims for such proceeds and in...