Holmquist v. Occidental Life Ins. Co. of California, 1281

• Decision Date: 28 April 1976
• Docket Number: No. 1281,1281
• Citation: 536 S.W.2d 434
• Parties: Oscar Burton HOLMQUIST, Jr., et ux., Appellants, v. OCCIDENTAL LIFE INSURANCE COMPANY OF CALIFORNIA et al., Appellees. (14th Dist.)
• Court: Texas Court of Appeals

Page 434

536 S.W.2d 434

Oscar Burton HOLMQUIST, Jr., et ux., Appellants, v. OCCIDENTAL LIFE INSURANCE COMPANY OF CALIFORNIA et al., Appellees.

No. 1281.

Court of Civil Appeals of Texas,

Houston (14th Dist.).

April 28, 1976.

Rehearing Denied May 19, 1976.

Conway L. Wallace, Houston, for appellants.

Donald H. Fidler, James W. Cox, Sheryl B. Johnson, Baker & Botts, Houston, for appellees.

CURTISS BROWN, Chief Justice.

This is a suit to collect the proceeds of a life insurance policy.

Oscar Burton Holmquist, Jr. and his wife, Beulah Dee Holmquist ('the parents' or appellants) brought suit against Occidental Life Insurance Company of California (Occidental) to recover the proceeds of a policy insuring the life of their son Ralph Burton Holmquist. Occidental filed an interpleader naming as defendants the parents, the insured's brother, Nelson Holmquist, and the insured's daughter, Cynthia Lynn Holmquist Cole ('the daughter'), by and through her guardian, and tendered into court the proceeds of the policy, $10,000.00, plus interest in the amount of $110.00. An interlocutory order was signed dismissing Occidental from the suit. Both the parents and the daughter filed motions for summary judgment. The trial court granted the daughter's motion and denied that of the parents. The parents have perfected the appeal.

The insured died March 23, 1974 from injuries sustained in an industrial accident. Through his employer the insured maintained, at the time of his death, a $5,000 group policy with a provision for double indemnity in the event of accidental death. No beneficiary was designated by the insured. The terms of the policy provided that where no beneficiary was designated the benefits would be paid.

'to the surviving person or persons in the first of the following classes of successive preference beneficiaries of which a member survives the individual:

The individual's (a) spouse; (b) children, including legally adopted children; (c) parents; (d) brothers and sisters; (e) executor or administrator.'

The insured was single at the time of his death, having been divorced from his only wife. Cynthia Lynn Holmquist Cole, the only child born of the marriage, had been adopted by her mother's second husband prior to the death of the insured.

Appellants' first point of error asserts that the trial court erred in awarding the proceeds of the policy to the daughter. The question is whether a child who has been legally adopted by another falls within the preference beneficiary class of '(b) children, including legally adopted children. . . .' If so, the daughter is entitled to the proceeds; if not, the parents are.

A life insurance policy is a contract. Such meaning should be given to the contract as will effectuate to the fullest extent the intention of the parties.

At the time this insurance contract was entered into in 1973, the law regarding the effect of an adoption on the status of the adopted child was contained in Tex.Rev.Civ.Stat.Ann. art. 46a, § 9 (1969). ¹ Article 46a contemplated a total and final severance of legal relations between parent and child after adoption. Rodgers v. Williamson, 489 S.W.2d 558 (Tex.Sup.1973); Patton v. Shamburger, 431 S.W.2d 506 (Tex.Sup.1968). Section 9 has been construed to deny visitation rights to natural grandparents. Smith v. Painter, 412 S.W.2d 28 (Tex.Sup.1967) (per curiam); DeWeese v. Crawford, 520 S.W.2d 522 (Tex.Civ.App.-Houston (14th Dist.) 1975, writ ref'd n.r.e.). It has been held that after an adoption the adopted child is no longer the 'minor child' of the natural father under the workmen's compensation statute. Patton v. Shamburger, supra; Zanella v. Superior Insurance Co., 443 S.W.2d 95 (Tex.Civ.App.-Eastland 1969, writ ref'd). Based on the above interpretations and the language of the statute itself, we believe the correct rule is that the terms 'child' and 'children' do not include a child adopted by another unless the context or express language of the instrument indicates otherwise. It was therefore error for the trial court to grant summary judgment for the daughter.

Appellants' second point of error asserts that the trial court erred in dismissing Occidental from the suit before a final judgment was entered. Appellant contends that because the interpleader was not filed within thirty days after demand was made Occidental is liable under Tex.Ins.Code Ann. art. 3.62 (1963) ² for a statutory penalty of 12% And attorney's fees.

By a letter dated July 25, 1975, the parents demanded payment 'either through the Administrator of the Decedent's Estate or by virtue of the right vested by Contract in the surviving Mother and Father. . . .' On August 28 the parents filed suit, seeking the principal amount, accrued interest, the statutory penalty, and attorney's fees. By a letter dated August 29, Occidental advised the parents that it would treat the matter as 'a rival claimant situation.' The letter further stated that if no compromise settlement could be reached Occidental would pay the proceeds into court. On September 19 Occidental filed its Original Answer, which consisted of a general denial. On October 24, ninety-one days after the parents' demand letter was sent, Occidental filed an interpleader and tendered the proceeds of the policy into the registry of the court. The trial court entered an order dismissing Occidental from the suit without allowing the statutory penalty or attorney's fees against it.

It has generally been held that where an insurer has reasonable grounds for anticipating rival claims, declines in good faith to pay a beneficiary, and, admitting liability, deposits the money into court to be paid to the rightful person as determined by the court, then a failure to pay the money into court within thirty days after demand may not render the insurer liable for the statutory penalty and attorney's fees. Great American Reserve Ins. Co. v. Sanders, 525 S.W.2d 956 (Tex.Sup.1975) (37 days); Gabler v. Minnesota Mutual Life Insurance Co., 498 S.W.2d 413 (Tex.Civ.App.-Texarkana 1973, no writ) (16 months); Givens v. Girard Life Insurance Co. of America, 480 S.W.2d 421 (Tex.Civ.App.-Dallas 1972, writ ref'd n.r.e.) (71 days); Murray v. Bankers Life Co., 299 S.W.2d 730 (Tex.Civ.App.-Fort Worth 1957, writ ref'd) (79 days); Franklin Life Ins. Co v. Greer, 219 S.W.2d 137 (Tex.Civ.App.-Texarkana), Rev'd on other grounds, 148 Tex. 166, 221 S.W.2d 857 (1949) (relevant holding specifically approved) (1 year). We hold that the present case is not one which would warrant the imposition of the statutory penalty and attorney's fees against the insurer; therefore, the trial court was correct in dismissing Occidental from the suit. See Hartman v. Crain, 398 S.W.2d 387(Tex.Civ.App.-Houston 1966, no writ); Davis v. Supreme Lodge K.P. Ins. Department, 31 S.W.2d 359 (Tex.Civ.App.-Galveston 1930, writ ref'd).

Appellants' third point of error asserts that the trial court erred in awarding $400.00 in attorney's fees to Occidental. Since interpleader was properly available to Occidental, the award of attorney's fees was proper. Great American Reserve Ins. Co. v. Sanders, supra; Givens v. Girard Life Ins. Co. of America, supra.

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