Life Ins. Co. of North America v. O'Brien
| Decision Date | 13 February 1980 |
| Docket Number | 6086 |
| Citation | 3 Phila. 529 |
| Parties | Life Insurance Company of North America v. Robert J. and Susan R. O'Brien and Rita Piskorski |
| Court | Pennsylvania Commonwealth Court |
(1) Life insurance is of testamentary nature and principles of testamentary capacity in will cases will be applied
(2) Evidence of execution of change of Beneficiary form creates presumption of lack of undue influence
(3) Burden of going forward with evidence shifts back to proponent, where, as here, there is evidence of a person in confidential relationship receiving insurance proceeds and other property from person of weakened intellect
(4) In light of evidence of weakened intellect, adverse influence could be drawn from failure of Defendant to call witnesses to change in designation of beneficiary form, which witnesses were friends of Defendant.
Judith B. Reap, Esquire, for Plaintiff
James M. Jacquette, Esquire, for Defendants
Kenneth M. Rodgers, Esquire, for Co-Defendant
Life Insurance Company of North America (hereinafter " insurer" ), filed an Interpleader Action to determine which of two claimants was entitled to the proceeds of Group Policy No. GL-1674. The policy was issued by Insurer to Philadelphia Electric Company on November 20, 1961. Joseph P. O'Brien (hereinafter " insured" ) was an eligible employee of the Electric Company and hence was insured under the policy for the sum of $7,500.00 as of the date of his death on January 1, 1979.
Shortly after Mr. O'Brien's death, the insurer received notice from defendant, Rita Piskorski, and plaintiffs, Robert J. O'Brien and Susan R. O'Brien, each demanding the proceeds of the policy. Mrs. Piskorski and Robert J. O'Brien are siblings. Defendant claimed as the designated beneficiary named in a Request for Change of Beneficiary form purportedly executed by the insured less than two months before his death, on November 7, 1978. Plaintiffs assert that as of that date Joseph P. O'Brien lacked the necessary legal capacity effectively to make the change of beneficiary, and that he was then subject to the undue influence of defendant, thereby rendering the change of beneficiary void. Hence plaintiffs claimed the proceeds as the last validly named beneficiaries under a designation executed by the decedent on October 27, 1976. We allowed the interpleader pursuant to the concurrence of the contestants, ordered the insurer to pay the proceeds of the policy into court and, after an unsuccessful effort to persuade the parties to avoid the unseemliness of a brother-sister rivalry by amicable adjustment, held a hearing on the merits of the issue joined.
Since the matter involved a contest between the last named beneficiary and one claiming under an earlier designation, the one claiming against the last named beneficiary had the burden of proof; the named beneficiary was entitled to rest on the prima facie right established by that most recent designation. Slavin v. Slavin, 368 Pa. 558, 84 A.2d 313 (1951); John Hancock Mutual Life Insurance Co. v. Weaver, 35 No. 122 (1959).
Many Pennsylvania cases involving adverse claimants to insurance proceeds have dealt with issues similar to that raised herein, i.e., capacity and undue influence. See, e.g., Waples et al. v. Police Beneficiary Association et al., 156 Pa.Super 592, 41 A.2d 342 (1944); Garland v. Craven, 156 Pa.Super 351, 41 A.2d 140 (1944); Hancock v. Equitable Life Assurance Society of the United States, 38 Dauph. 326 (1934). " Capacity" has been dealt with in terms of " weakmindedness" and " incompetence" ; " undue influence" has been considered with and without reference to the presence of a confidential relationship. For the reasons set forth below, we have adopted the standards of In re Estate of Clark, 461 Pa. 52, 334 A.2d 628 (1975) and the clear explication provided by its progeny.
In re Estate of Clark addressed the claims of a will contestant that the proponent had exerted undue influence upon the mind of the testatrix. While the matter sub judice is a dispute between rival claimants to proceeds of a life insurance policy, the parallel between the two cases is so complete that we are constrained to conclude that both fact situations are controlled by the same legal principles.
. . . with reference to the beneficiary it has frequently been said that a policy of life insurance is in the nature of a testament, and although not a testament, in construing it the courts will, so far as possible, treat it as a will and determine the effect of a clause designating the beneficiary by rules under which wills are interpreted.
44 Am. Jur. 2d, Insurance 1728
In Shields v. Barton, 60 F.2d 351 (7th Cir. 1932), the court considered whether life insurance contracts should be included within the meaning of " testamentary disposition" :
The similarity between disposition by life insurance and by will is at once apparent. The date of the happening of the events is the same -- the death of a maker of the documents. The positions of the legatee and the beneficiary are legally quite similar. Neither has any vested or contractual rights which can not be lost either by the drawing of a new will or a change in the beneficiary. If we pass from the legal similarities to the more practical ones, such as the purposes which actuate one in drawing a will and in taking out life insurance, in the selection of or naming the legatee and the beneficiary, the date when the intended and arranged-for help to legatee or beneficiary shall occur, namely, upon the death of the insured or the testator, we are even more strongly impressed . . .
Id at 354. " Testamentary disposition" has been defined by various courts so as to include life insurance policies: Lehman v. Lehman, 215 Pa. 344, 64 A. 598 (1906); McNally v. Metropolitan Life Ins. Co., 16 Pa.Super 111, aff'd 199 Pa. 481, 49 A. 299 (1901); McEwan Trust, 48 D. & C.2d 356 (1969); Young v. O'Donnell, 129 Wash. 219, 224 P. 682 (1924); Landrum v. Landrum's Admx., 186 Ky. 775, 218 S.W. 274 (1920); Barbin v. Moore, 85 N.H. 362, 159 A. 409 (1932); Taylor v. U.S., 113 F.Supp. 143 (W.D. Ark. 1953).
Under the guidance of the above cited cases, we apply the standards enunciated in In Re Estate of Clark, supra, to the instant case. Once the defendant-proponent presents evidence of the formality of execution of the Change of Beneficiary form, a presumption of lack of undue influence arises, shifting the burden of coming forward with evidence of undue influence to the plaintiff-contestant. In Re Estate of Clark, supra; Abrams Will, 419 Pa. 92, 98, 213 A.2d 638, 641 (1965); Kerr v. O'Donovan, 389 Pa. 614, 623, 134 A.2d 213, 217 (1957). However, the contestant may shift the onus of going forward with evidence back to the proponent under the rule that where
(1) a person in a confidential relationship (2) receives the bulk of the testator's property (3) from a testator of weakened intellect, the burden of proof is upon the person occupying the confidential relation to prove affirmatively the absence of undue influence. Cuthbertson's Appeal, 97 Pa. 163, 171 (1881); Yorke's Estate, 185 Pa. 61, 69, 39 A. 1119 (1898); Button Estate, Pa., , 328 A.2d 480, 483 (1974), and cases cited therein at n. 6.
In Re Estate of Clark, supra, 461 Pa. at 59, 60, 334 A.2d at 632 (1975).
In an effort to establish the required prima facie case to shift the burden of going forward the plaintiff-contestants offered the following: Decedent, Joseph P. O'Brien died on January 1, 1979 at the age of eighty-five. During the several months preceding his death his health and mental state were rapidly deteriorating. He made several visits to his family doctor in the summer of 1978 for treatment of such ailments as a bad back, severe weight loss and a general " failing" . Decedent was hospitalized in early October, 1978 for treatment for all of these problems. He was released from the hospital on October 16, 1978.
The plaintiff-contestants visited decedent 8 to 10 times during his hospitalization. They observed him to be " very weak" and " unable to speak too loudly" . During one visit, decedent was unable to identify plaintiff Robert O'Brien, his son, who was then standing at the foot of his hospital bed. Plaintiffs offered uncontradicted testimony that Robert O'Brien's relationship with his father was an harmonious one, that he had regularly mowed decedent's lawn and performed other household chores for decedent for the preceding several years without incident or conflict.
Additional testimony was offered suporting a finding of weakened intellect. Plaintiff Susan O'Brien testified that decedent was unable to do any more than " mumble" when attempting to speak on the telephone. He also failed to identify the date of his birth. On one occasion decedent was visited in the hospital by his wife Margaret and the plaintiffs. He complained of the hospital food and asked that his wife cook his meals. In fact, decedent's wife notoriously never cooked, and one reason for his hospitalization was his malnutrition, apparently as a consequence of his wife's inability to cook well-balanced meals.
After discharge from the hospital, decedent went to live at the home of his daughter, defendant Rita Piskorski. (Apparently his wife left him for undisclosed reasons during the course of his hospitalization.) Decedent stopped at his own home only " to view his flowers", which, as all the testimony suggests, were his primary interest in his later years.
Defendant immediately went to the bank with her father to have his savings account funds transferred into her name. Decedent's entire savings in excess of $2,000.00 were thereafter expended by defendant in an unaccounted manner. Defendant also exercised full control and use of...
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