Hopkins v. Hopkins

• Decision Date: 01 September 1991
• Docket Number: No. 87,87
• Citation: 614 A.2d 96,328 Md. 263
• Parties: Sharon HOPKINS v. Bruce HOPKINS. ,
• Court: Maryland Court of Appeals

Page 263

328 Md. 263

614 A.2d 96

Sharon HOPKINS v. Bruce HOPKINS.

No. 87, Sept. Term, 1991.

Court of Appeals of Maryland.

Oct. 26, 1992.

Linda H. Lamone, Annapolis, for appellant.

Bryan Renehan (Ellen L. Lee, Brodsky, Greenblatt & Renehan, all on brief), Gaithersburg, for appellee.

Argued before MURPHY, C.J., and ELDRIDGE, RODOWSKY, McAULIFFE, CHASANOW, KARWACKI and ROBERT M. BELL, JJ.

ROBERT M. BELL, Judge.

We granted certiorari to decide whether the circuit court, in order to protect the income stream which alimony represents, may compel the obligor ex-spouse to cooperate with the obligee ex-spouse so that she may obtain, at her expense, an insurance policy on his life, of which she would be the beneficiary. Our research uncovered an issue, not raised by either party, which is dispositive. Thus, we need address only whether an ex-spouse recipient of alimony has an insurable interest in the life of the obligor ex-spouse and if, as a precondition to a valid contract of life insurance, a statute requires an insured to consent, a court may order a non-consenting obligor ex-spouse to cooperate so that the obligee-ex-spouse may acquire insurance on his life.

I.

The facts necessary to resolve this case are rather simple and straightforward. Sharon Hopkins, the appellant, was granted an absolute divorce from Bruce Hopkins, the appellee, after twenty-two years of marriage and the emancipation of their issue. The Circuit Court for Montgomery County awarded the appellant one-half of the value of the marital home, ¹ permanent alimony of $4,000 per month, and $25,000 toward her attorney's fees. No monetary award was made.

In its Memorandum Opinion and Order, the court explained the basis for the awards. The appellee, an attorney in a large law firm, earned, on a fixed salary basis, $140,000 per year. On the other hand, the appellant had only completed two years of college and, although she had been employed during the marriage and had even obtained a certificate permitting her to sell securities, she had never earned a significant salary. She had been, the court observed, the primary caretaker for the couple's two children and she had assisted her husband with his career.

Although suffering from the usual stresses and tensions resulting from a marital break-up, he was, the court noted, in good physical health. The appellant's health, the trial court found, was not good. Her "physical and mental conditions have deteriorated as a result of the marital breakup to the degree that she has lost twenty-eight pounds since the separation, has difficulty sleeping and suffers from a condition diagnosed as syncope, a condition associated with fainting spells which occur frequently and without advance warning." Noting the present state of the appellant's health, the court concluded that, "[a]t best, she will become marginally self-sustaining without supplementation of her income" and "that even after [the appellant] has achieved her maximum earning potential the disparity in income between Husband and Wife will be unconscionably disparate." The trial court found that the appellee's income approximated $16,000.00 per month and is likely to increase, while the appellant lacked special skills which would allow her to earn a substantial salary. At the time of the divorce the appellee was forty-eight years old and the appellant forty-five.

Approximately six weeks after the appellant was granted a final divorce, she contacted her ex-husband to request his cooperation in obtaining a $1,000,000 insurance policy on his life. Her reason for doing so, she related, was the serious concerns she had about the appellee's health and, thus, her perceived need to safeguard her alimony. She informed the appellee that she would pay the premiums and all other costs of the policy, and that all that was required of him was a physical examination. The appellee refused the appellant's request, citing the rancorous history between the parties. He also indicated that he did not want to be "worth more dead than alive...." The appellant filed a Motion To Compel Defendant To Cooperate With Plaintiff's Request For Life Insurance. The appellee urged the court to deny the motion, noting the lack of any cited authority. After a hearing, despite its expressed belief that the request was not unreasonable, the court denied the motion, with prejudice. While the court did not state its reasons, from the tenor of the arguments and colloquies during the hearing, it seems apparent that the court did not believe that it had the power to grant the motion. ² The appellant appealed to the Court of Special Appeals. We issued a writ of certiorari while the appeal was pending in the intermediate appellate court.

II.

At the threshold, we address whether the obligation of one ex-spouse to pay alimony to the other for an indefinite period ³ is an interest that may be insured by the recipient. Consistent with the appellant's argument, with which the appellee does not express serious disagreement, we hold that it is.

Maryland law has long prohibited anyone, other than one with an insurable interest, from insuring another person's life. Rittler v. Smith, 70 Md. 261, 263, 16 A. 890, 891 (1889). See also Beard v. Am. Agency, 314 Md. 235, 243-44, 550 A.2d 677, 681 (1988). The primary purpose of the prohibition is to prevent wagering on the life of another, id., although, as other authorities recognize, see e.g. Edwin W. Patterson, Essentials of Insurance Law § 34, at 158 (1957), the prevention of murder is another rationale. At common law, an insurable interest connoted a relationship between the insured and the beneficiary such that, for the beneficiary, "there is a actual expectancy which will be curtailed by the insured's death." Robert E. Keeton & Alan I. Widiss, Insurance Law § 3.5(a), at 179 (1988). Such relationship may be pecuniary or based on blood or affinity. Id.

Maryland Code (1957, 1991 Repl.Vol. & 1992 Cum.Supp.) Art. 48A, § 366 is a codification of the common law rule. It provides, in pertinent part:

(a) When required.--Any individual of competent legal capacity may procure or effect an insurance contract upon his own life or body for the benefit of any person. But no person shall procure or cause to be procured any insurance contract upon the life or body of another individual unless the benefits under such contract are payable to the individual insured or his personal representatives, or to a person having, at the time when such contract was made, an insurable interest in the individual insured.

* * * * * * (c) Definition.--(1) "Insurable interest" with reference to personal insurance includes only interests as follows:

(i) In the case of individuals related closely by blood or by law, a substantial interest engendered by love and affection.

(ii)1. In the case of other persons, a lawful and substantial economic interest in having the life, health, or bodily safety of the individual insured continue, as distinguished from an interest which would arise only by, or would be enhanced in value by, the death, disablement or injury of the individual insurer.

* * * * * *

The husband/wife relationship is covered by subsection (c)(1)(i). The direct and intimate ties existing between husband and wife are such that each reasonably has an expectancy of a familial benefit, if not an economic one, from the continued life of the other. Patterson, Essentials of Insurance Law § 38 at 172-74.

An absolute divorce ordinarily terminates the insurable interest of each spouse in the life of the other. See Couch on Insurance § 24:126, at 219 (2d rev. ed. 1984). When, however, a divorce decree orders one spouse to pay alimony to the other, the insurable interest continues for the obligee ex-spouse. And it exists as long as the alimony is payable. Id. at 220; Art. 48A § 366(c)(1)(ii)(1). As the Court of Appeals of South Carolina put it, "[i]t is a well settled proposition of law that a former wife who is entitled to alimony has an insurable interest in her former husband's life." Shealy v. Shealy, 280 S.C. 494, 313 S.E.2d 48, 50 (1984). See also Mullenax v. Nat'l Reserve Life Ins. Co., 29 Colo.App. 418, 485 P.2d 137 (1971); Pitts v. Ashcraft, 586 S.W.2d 685, 695 (Tex.Civ.App.1979).

The appellant, as the recipient of court ordered alimony, for an indefinite period, from the appellee, will suffer a significant and substantial economic loss in the event of his death. Accordingly, she has "a lawful and substantial economic interest in having the life [of the appellee] continue," i.e. an insurable interest.

III.

The conclusion that the appellant has an insurable interest in the appellee's life, rather than ending our inquiry, requires us to consider the nature of the "consent" required by Maryland Code (1957, 1991 Repl.Vol.) Art. 48A, § 371, as a predicate to the validity of a life insurance contract. Section 371(a) provides:

"No life or health insurance contract upon an individual, except a contract of group life insurance or of a group or blanket health insurance shall be made or effectuated unless at the time of the making of the contract the individual insured, being of competent legal capacity to contract, applies therefor, or has consented thereto in writing[.]" (emphasis added).

The statute makes exception for insurance "effectuated": (1) by one spouse on the life or health of the other, § 371(a)(1); (2) by a person with an insurable interest in a minor, or upon whom the minor is dependent, on the life "or pertaining to" the minor, § 371(a)(2); (3) by the parents or step-parent, by way of a family policy on two or more family members, § 371(a)(3); and (4) by a person with an insurable interest on the life of a person legally incompetent to consent to such insurance. § 371(a)(4).

Section 371, along with four other sections concerned with insurance applications and another, present § 366, addressing insurable interests, became a part of Maryland law in 1956 when...