Marriage of Sager, In re, 14293-7-II

• Decision Date: 07 December 1993
• Docket Number: No. 14293-7-II,14293-7-II
• Citation: 71 Wn.App. 855,863 P.2d 106
• Parties: In re the MARRIAGE OF Ocie (NMI) SAGER, (Deceased), Respondent, and Estelle Loretta Sager, Appellant. Division 2
• Court: Washington Court of Appeals

Page 855

71 Wn.App. 855

863 P.2d 106

In re the MARRIAGE OF Ocie (NMI) SAGER, (Deceased), Respondent,

and

Estelle Loretta Sager, Appellant.

No. 14293-7-II.

Court of Appeals of Washington,

Division 2.

Dec. 7, 1993.

Bertha R.S. Houser, Seattle, for appellant.

Timothy P. Coogan, Tacoma, for respondent.

MORGAN, Judge.

This is a dispute over the proceeds of a life insurance policy. We reverse and remand for further proceedings.

The record is so poorly developed that it is difficult to marshal the facts. Nevertheless, it appears that the following facts are not truly disputed.

Estelle and Ocie Sager were married on December 7, 1968. Four children, Benita, Regas, Carolynn and Michelle, were born to the marriage.

In 1984, Ocie petitioned for dissolution. The matter was tried, and a decree was entered on February 22, 1985.

The decree stated in paragraph 5 that Ocie was to pay $700 per month in child support "as long as the oldest minor child, Regas, is in high school." ¹ After that, Ocie was to pay $600 per month "for the two remaining minor children, Carolynn and Michelle" until Carolynn "graduates from high school or later reaches the age of 18 years of age or is otherwise sooner emancipated." ² After that, Ocie was to pay $450 per month for Michelle until she "graduates from high school, or later reaches the age of 18 years or is sooner emancipated." ³

Additionally, the decree stated in paragraph 8 that Ocie "shall make the minor children of the parties ... beneficiaries of the medical and life insurance policies which exist through his place of employment." ⁴ By its terms, this provision did not apply to Benita, because she had reached majority before it was entered. It did apply to Regas, Carolynn, and Michelle, all of whom were minors when it was entered. ⁵

After dissolution of his marriage to Estelle, Ocie married Julie Marie Oquist, now Julie Sager. He and Julie were still married when he died on March 17, 1990. At that time, Michelle was still a minor, but the other children were not.

In February 1985 and March 1990, Ocie had group life insurance through the State, by whom he was employed. Sometime after dissolution of his marriage to Estelle, he made Julie the sole beneficiary of that insurance. After Ocie died, the proceeds of this insurance were paid into the Pierce County Superior Court by Northwestern Life Insurance Company. Peculiarly, Northwestern did not start an interpleader action. Instead, it paid the money into the 1984 dissolution action, to which Ocie and Estelle had been the original parties.

Estelle and Julie then made competing claims in the 1984 dissolution case. Relying on the 1985 decree, Estelle claimed the entire proceeds on behalf of Michelle. Relying on her status as named beneficiary, Julie also claimed the entire proceeds. The trial court granted judgment in favor of Julie, and Estelle now appeals.

I.

The first problem is whether Estelle has any claim against the proceeds of the Northwestern policy. We ask (A) whether the 1985 decree encumbered the Northwestern policy as of the date the decree was entered, and (B) whether the encumbrance continued until Ocie's death.

A.

A decree does not encumber a particular life insurance policy unless it adequately identifies it. Sullivan v. Aetna Life & Cas., 52 Wash.App. 876, 879, 764 P.2d 1390 (1988), review denied, 112 Wash.2d 1009 (1989); see Aetna Life Ins. Co. v. Bunt, 110 Wash.2d 368, 754 P.2d 993 (1988). The decree in Bunt incorporated a separation agreement stating that the husband would "name their two minor children as irrevocable beneficiaries of the Aetna life insurance policy available to George as a Boeing employee." 110 Wash.2d at 370, 754 P.2d 993. The decree in Sullivan stated only that "[e]ach party shall maintain a minimum of $10,000 life insurance with their minor child as beneficiary until said child attains majority." 52 Wash.App. at 877, 764 P.2d 1390. The decree in Bunt adequately identified the policy in issue, but the decree in Sullivan did not.

The decree in this case is more specific than the decree in Sullivan, but less specific than the decree in Bunt. Like Bunt, it said Ocie was to required to maintain life insurance that existed through his employment. Like Sullivan, it did not identify the employer or the insurer.

Although the decree here is less specific than the one in Bunt, we believe it adequately identified the Northwestern policy. It encumbered life insurance that existed through Ocie's employment, and the life insurance existing through Ocie's employment was the Northwestern policy.

B.

Julie makes two arguments designed to show that even if the decree initially encumbered the policy, it ceased to do so before Ocie died. The first argument is based on the fact that the decree omitted to say that Ocie shall "maintain" the minor children as beneficiaries of such life insurance; rather, it said only that Ocie shall "make" the minor children beneficiaries of life insurance existing through his employment. The result, Julie says, is that Ocie's only duty was to "make" the minor children beneficiaries for a moment in time; once he did that, he had no further duty to "maintain" them as beneficiaries, and he could remove them at will. The children apparently were named as beneficiaries of the policy for a period of time following dissolution, so Julie concludes that Ocie's duty to "make" them beneficiaries ended before he substituted her as sole beneficiary on the policy.

We reject this reasoning. If we were to read the decree as requiring Ocie to "make" the children beneficiaries for only a moment in time, we would be reading it as requiring a vain and useless act. We decline to read it that way. Cf. Oak Harbor Sch. Dist. v. Oak Harbor Educ. Ass'n, 86 Wash.2d 497, 500, 545 P.2d 1197 (1976) (court will not presume legislature engaged in useless act); Kelleher v. Ephrata Sch. Dist. No. 165, 56 Wash.2d 866, 355 P.2d 989 (1960) (same); Fifteen-O-One Fourth Ave. Ltd. Partnership v. Department of Rev., 49 Wash.App. 300, 742 P.2d 747 (1987) (same); see also Orion Corp. v. Washington, 103 Wash.2d 441, 457, 693 P.2d 1369 (1985) (court will not require party to do "vain and useless" act). Instead, we read it in accordance with its obvious intent, which was to require that Ocie "make" the minor children beneficiaries for as long as they were dependent minors.

Julie's second argument starts with the proposition that the decree failed to require Ocie to make the children irrevocable beneficiaries. As a result, she says, he remained free to remove them from the policy at any time.

We reject this reasoning also. As further discussed below, it is apparent that the intent of the 1985 decree was to secure Ocie's payment of his child support obligation. "Where a life insurance policy is used as security for child support, equities arise in favor of the children that preclude the insured's right to change beneficiaries." Standard Ins. Co. v. Schwalbe, 110 Wash.2d 520, 523, 755 P.2d 802 (1988). Such equities arose here, and Ocie was not permitted to entirely remove his children as beneficiaries so long as his child support obligation continued.

II.

Having concluded that Estelle can make a claim against the policy, we turn now to the extent of that claim. We discuss two limitations.

A.

The first limitation is that Estelle cannot claim more than Ocie's half of the policy proceeds. It seems clear that when Ocie died, the Northwestern policy was his and Julie's community property. Aetna Life Insurance Co. v. Wadsworth, 102 Wash.2d 652, 659, 689 P.2d 46 (1984). It follows that Julie owns a one-half interest in the policy, and that Estelle cannot claim against that half. ⁶ Porter v. Porter, 107 Wash.2d 43, 726 P.2d 459 (1986).

B.

The second limitation is that Estelle cannot claim more than unpaid past child support, plus the present value of unpaid future child support that the decree would have obligated Ocie to pay if he had not died. Life insurance is commonly required as security for child support, because it provides "a relatively painless method of protecting children from the untimely death of an obligated parent." Bunt, 110 Wash.2d at 380, 754 P.2d 993. As already noted, it is obvious that this decree intended that life insurance existing through Ocie's employment would provide security for his obligation to pay child support. Both sides stated as much in oral argument before this court. Additionally, Estelle states in her brief:

Although the decree here does not state that the purpose of the provision requiring Ocie to "make" the children beneficiaries of his life insurance was to secure the support obligation, it is obvious that that was its purpose, and it must be so inferred.

Appellant's brief, at 9. And Julie states in her brief:

In this case we are forced to decide between the nonspecific language of the divorce decree which may have been intended to secure child support payments after Mr. Sager's death (even though death should extinguish the child support obligation) and Mr. Sager's clearly expressed wishes that his wife, Julie Sager, receive his Northwestern National Life policy proceeds.

Respondent's brief, at 7. Because the intent of the decree was to secure Ocie's payment of child support, Estelle's claim is limited to the amount needed for that purpose. Sutherland v. Sutherland, 77 Wash.2d 6, 10, 459 P.2d 397 (1969); In re Marriage of Donovan, 25 Wash.App. 691, 699, 612 P.2d 387 (1980); see Riser v. Riser, 7 Wash.App. 647, 650, 501 P.2d 1069 (1972) (parent not required to maintain life insurance in excess of that needed as security for support).

This conclusion disposes of Julie's argument that because the decree did not require Ocie to make the children sole beneficiaries, he remained free to name co-beneficiaries. ⁷ The decree precluded Ocie from designating co-beneficiaries whose interest would infringe on the amount of insurance needed as security for child support, Schwalbe, ...