Lincoln National Life Insurance Company v. Blight

• Decision Date: 18 September 1975
• Docket Number: Civ. A. No. 75-1497.
• Citation: 399 F. Supp. 513
• Parties: The LINCOLN NATIONAL LIFE INSURANCE COMPANY v. Evelyn BLIGHT et al.
• Court: U.S. District Court — Eastern District of Pennsylvania

399 F. Supp. 513

The LINCOLN NATIONAL LIFE INSURANCE COMPANY v. Evelyn BLIGHT et al.

Civ. A. No. 75-1497.

United States District Court, E. D. Pennsylvania, Civil Division.

September 18, 1975.

William H. Lowery, Arthur H. Rainey, Philadelphia, Pa., for plaintiff.

Edward B. McDaid, Farage & Shrager, Philadelphia, Pa., for K. M. Wilson, D. P. Stanford & B. K. Howard.

Herman R. Testan, Philadelphia, Pa., for E. Blight and Santo A. DiDonato.

MEMORANDUM AND ORDER

CAHN, District Judge.

This is an action in interpleader brought by plaintiff, The Lincoln National Life Insurance Company (Lincoln), against competing claimants to the proceeds of a life insurance policy on the life of John H. Blight, who died on or about December 22, 1972. The claimants are the designated primary beneficiary, the contingent beneficiaries and the administratrix, c.t.a., of the decedent's estate. Lincoln interpleaded all of the claimants under 28 U.S.C. § 1335, the federal interpleader statute, which confers jurisdiction on this court in that the proceeds of the policy exceed $500 and there is minimal diversity of citizenship between at least two of the claimants. State Farm Fire & Casualty Co. v. Tashire, 386 U.S. 523, 87 S.Ct. 1199, 18 L.Ed.2d 270 (1967).

The proceeds of the policy are in the amount of $3,522.29 which was deposited in the registry of the court on July 10, 1975, pursuant to the aforesaid interpleader statute. By agreement of counsel for all of the claimants, summary judgment was entered in favor of Lincoln terminating its liability under the policy, setting a reasonable attorney's fee for its counsel in the amount of $400 and ordering reimbursement for its record costs in the amount of $38.56, which sums are to be disbursed from the amount previously paid into court.

Following an evidentiary hearing and oral argument I make the following findings of fact:

1. Lincoln issued a life insurance policy, No. 64-787609, to John H. Blight on August 15, 1946, in the face amount of $3,000.

2. On April 2, 1964, said policy was endorsed to name decedent's wife, Evelyn Blight, as the primary beneficiary if she survived the insured, and if not, the contingent beneficiaries were named as Santo A. DiDonato, stepson of the insured, Diane Blight and Brenda Blight, daughters of the insured.

3. On or about March 2, 1971, Evelyn Blight and John H. Blight entered into a Postnuptial Agreement which provided in paragraph 2(e):

"Each of the parties hereto shall be entitled to take over, assume, and retain title to any and all life insurance on her or his respective life, and shall execute in favor of each other all required assignments of interest, waivers, releases, and other documents that may be required to sever and abrogate the other's interest in all such life insurance policies;"

4. Evelyn Blight and John H. Blight were divorced in December of 1971, in Pennsylvania.

5. John H. Blight died on or about December 22, 1972.

6. Prior to his death, John H. Blight did not change the beneficiary designations which had been endorsed on policy No. 64-787609 on April 2, 1964.

7. Evelyn Blight and John H. Blight accompanied each other to social events following the entry of the divorce decree.

8. John H. Blight's mother died October 14, 1972, who was the named beneficiary on another life insurance policy, and after her death he designated the new beneficiaries to be Diane P. Stanford and Brenda K. Howard, his children.

9. Evelyn Blight is a citizen of Pennsylvania.

10. Santo DiDonato is a citizen of Pennsylvania.

11. Diane Stanford, formerly Diane Blight, is a citizen of Texas.

12. Brenda K. Howard, formerly Brenda Blight, is a citizen of Texas.

13. Kathleen M. Wilson, administratrix, c.t.a., is a citizen of Pennsylvania.

DISCUSSION

Evelyn Blight claims the proceeds of the policy as the designated beneficiary. Kathleen M. Wilson, administratrix, c.t.a., of the Estate of John H. Blight, claims the proceeds on the ground that the postnuptial agreement terminated Evelyn Blight's rights to receive the proceeds as designated beneficiary. The three contingent beneficiaries claim the proceeds on the grounds that the postnuptial agreement terminated the rights of the primary beneficiary but not their rights as contingent beneficiaries.

The conflict of laws rules of the Commonwealth of Pennsylvania determine which state law will apply to this case. 3A Moore's Fed.Practice ¶ 22.145. Pennsylvania uses the significant relationships test, see Griffith v. United Air Lines, Inc., 416 Pa. 1, 203 A.2d 796 (1964). In applying that flexible test, it appears that Pennsylvania has the most significant contacts since three of the claimants are Pennsylvania citizens, the marriage was entered into in Pennsylvania, the postnuptial agreement was made in Pennsylvania and the divorce decree was entered by a Pennsylvania court.

It is clear that general release provisions do not divest a named beneficiary of an interest in the proceeds of a life policy. Ninno v. Prudential Ins. Co. of America, 50 Pa.D. & C.2d 102 (1970). Pennsylvania cases, however, are silent on whether a relinquishment in a postnuptial agreement of any ownership interest in a life policy divests a divorced spouse of the right to receive the life insurance proceeds as the designated beneficiary. The administratrix relies heavily on Brewer v. Brewer, 239 Ark. 614, 390 S.W.2d 630 (1965), for the proposition that a provision transferring and releasing any and all interest in certain life insurance policies set forth in a postnuptial agreement is a cancellation of the spouse's designation as beneficiary. The force of this decision is minimized by the concurring opinion of Associate Justice McFaddin which states:

"However, I have concluded that we should now give notice to the Bench and Bar that we will re-examine our former cases when a case like this one is next presented to us. For myself, I hereby give such notice. I think the weight of authority, and certainly the better reasoned cases, are contrary to our holding in Mabbitt v. Wilkerson, supra 247 S.W.2d 201, and Roman v. Smith, supra 314 S.W.2d 225."

Another Justice dissented.

The better rule is set forth in Parrish v. Kaska, 204 F.2d 451 (10th Cir. 1953) which construed California law in a situation where husband and wife entered into a property settlement agreement whereby the wife assigned and transferred to her husband all of her right, title and interest in certain policies on her husband's life including the right to change the beneficiary. A divorce decree was entered and thereafter the husband died without having changed the beneficiary. It was held that the former wife was entitled to the proceeds of the policy in the absence of an express provision renouncing her expectancy under the policy. The court held (p....