McCord v. Spradling, 97-CT-01276-SCT.

• Decision Date: 21 November 2002
• Docket Number: No. 97-CT-01276-SCT.,97-CT-01276-SCT.
• Parties: Peggy Spradling McCORD, Executrix v. Nina M. SPRADLING.
• Court: Mississippi Supreme Court

830 So.2d 1188

Peggy Spradling McCORD, Executrix v. Nina M. SPRADLING.

No. 97-CT-01276-SCT.

Supreme Court of Mississippi.

November 21, 2002.

Cliff R. Easley, Jr., Bruce, attorney for appellant.

Lindsey C. Meador, Cleveland, attorney for appellee.

EN BANC.

ON WRIT OF CERTIORARI

COBB, J., for the Court.

¶ 1. Peggy Spradling McCord, executrix of the estate of J.W. Spradling, appealed the decision of the Calhoun County Chancery Court which awarded Nina M. Spradling (the widow) a judgment from Mr. Spradling's estate. On appeal, the executrix asserted five assignments of error in the trial court's:

(1) awarding the proceeds from Mr. Spradling's Federal Employee Group Life Insurance Act (FEGLIA), 5 U.S.C. §§ 8701-8716, policy to the widow;

(2) reimbursing the widow for the funeral expenses paid by the widow from funds in a joint bank account;

(3) awarding the widow

(a) all the 1996 cotton land rent, and

(b) half of the equitable interest in the 1996 hay crop;

(4) denying the executrix's claim for attorney fees and costs; and

(5) not requiring the widow to submit the lower court judgment to the executrix for approval or criticism as to form prior to the chancellor signing it.

¶ 2. The Court of Appeals initially affirmed in part and reversed and remanded in part, and the widow filed a motion for a new hearing. Although the Court of Appeals denied the motion, it withdrew the original opinion and substituted a revised opinion, which (1) affirmed the award of the FEGLIA proceeds to the widow and the finding of no constructive trust, but finding the proceeds were subject to a breach of contract claim based on the antenuptial agreement; (2) affirmed the reimbursement of funeral expenses; (3) reversed and rendered on the cotton rent check, but affirmed on the hay proceeds; (4) affirmed the denial of attorney fees; and (5) affirmed on the issue of the form of the judgment. Further, the Court of Appeals remanded the case to the chancery court for consideration of whether the antenuptial agreement was breached by the widow, and if so, a determination as to the measure of damages for such breach.

¶ 3. The widow timely filed a petition for writ of certiorari with this Court, which we granted. The sole issue for which certiorari was sought concerns $22,050 in proceeds from the FEGLIA policy, and is summarized as follows:

DID THE COURT OF APPEALS ERR IN HOLDING THAT, ALTHOUGH THE WIDOW WAS ENTITLED TO THE FEGLIA PROCEEDS AND WAS IMMUNE FROM A COURT-IMPOSED CONSTRUCTIVE TRUST, SHE WAS NOT IMMUNE FROM A BREACH OF CONTRACT ACTION STEMMING FROM HER ACTIONS?

¶ 4. We conclude that it was error for the Court of Appeals to affirm the chancery court's refusal to impose a constructive trust. Thus as to this issue, we reverse the decision of the Court of Appeals and remand to the chancery court with instructions to impose a constructive trust on the FEGLIA proceeds in favor of Mr. Spradling's children. All other issues addressed by the opinion of the Court of Appeals, and not addressed by this opinion, are affirmed.

FACTS

¶ 5. The following statement of facts is taken from the opinion of the Court of Appeals:

¶ 6. The decedent, J.W. Spradling, and the widow, Nina M. Spradling, first met on February 13, 1995 and were married on March 18, 1995. At the time of marriage, Mrs. Spradling was seventy-two years of age and had been married previously to Knox Barfield, who died on December 26, 1989. Four children were born of the marriage between the widow and Mr. Barfield. The decedent, J.W. Spradling, was eighty years of age at the time of his death on November 25, 1996, and had been married previously to Nadine Spradling, who died in 1993. Eight children were born of the marriage between J.W. and Nadine. Two of those children predeceased the decedent.

¶ 7. On or about February 23, 1995, ten days after the decedent, J.W. Spradling, and the widow, Nina Myrl Spradling, met, they had an antenuptial agreement prepared for them. Said agreement was executed on March 1, 1995. The antenuptial agreement ... provided that each of the parties would have the full control and management of all property that they then owned or thereafter acquired or accumulated. They also reserved the right to make disposition of the property owned by each, according to the will and pleasure of each, so that the property of each would descend to their respective child or children, or the heirs of their body, at the respective party's death. Said agreement further provided that it was the intent and purpose of each party to own, control and be secure in the full right, title and interest in and to all real or personal property which each then owned, to the same extent that each would, if they remained unmarried. Each of the parties agreed to waive and release any and all of his or her interest in the property of the other, either as a surviving spouse or otherwise. Each of said parties contracted and agreed to make no claim against the estate of the other on the basis of being the spouse of the other. The widow admitted that it was the intent of both, she and the decedent, that everything each owned would be left to their respective children.

¶ 8. A bank account was acquired in the joint names of the decedent, the widow, and a daughter of each. The decedent conveyed, by warranty deed, all of his real property to his children, but reserved unto himself, and if married at his death—unto his wife also, a life estate in the marital domicile and one acre of land. The last will and testament of J.W. Spradling, probated in this cause, left everything to his children.

¶ 9. The decedent was retired from the U.S. Corps of Engineers. He had a group life insurance policy with Metropolitan Life Insurance Company through the Federal Employees Group Life Insurance Act (FEGLIA). The designated beneficiary of the policy was the decedent's predeceased first wife, Nadine Spradling. The effect of this situation was that there was no designated beneficiary at the time of the decedent's death. The widow and the decedent's children testified at trial that it was their understanding that the proceeds from the FEGLIA insurance policy would go to the children.

¶ 10. The widow testified at trial that she telephoned the insurance company after the death of her husband to inquire about medical insurance and was informed that she was entitled to the proceeds from the life insurance policy. Claim forms sent to the widow were completed and returned, and the sum of $22,050.62 was paid to her pursuant to 5 U.S.C. § 8705 and the FEGLIA Regulations. The order of precedence for payment of the decedent's life insurance was the widow, if she made a claim, and then to the children of the decedent, if the widow made no claim within one year. It is the executrix's contention that the proceeds of the life insurance policy belong to the estate.

McCord v. Spradling, 2000 WL 1819539, at ¶¶ 6-10 (Miss.Ct.App. Dec.12, 2000).

DISCUSSION

¶ 6. Because Mr. Spradling's first wife was the named beneficiary on the FEGLIA policy, and she had predeceased him, the FEGLIA statute mandated that the widow would be the recipient of the insurance proceeds. The statute provides the following order of precedence in paying a death claim:

(a) Except as provided in subsection (e), the amount of group life insurance and group accidental death insurance in force on an employee at the date of his death shall be paid, on the establishment of a valid claim, to the person or persons surviving at the date of his death, in the following order of precedence:

First, to the beneficiary or beneficiaries designated by the employee in a signed and witnessed writing received before death in the employing office

....

Second, if there is no designated beneficiary, to the widow or widower of the employee.

Third, if none of the above, to the child or children of the employee and descendants of deceased children by representation.

....

5 U.S.C. § 8705(a)(emphasis added).

¶ 7. However, in some circumstances courts have imposed a constructive trust as an equitable remedy to prevent unjust enrichment. The Court of Appeals cited Saulsberry v. Saulsberry, 223 Miss. 684, 690, 78 So.2d 758, 760 (1955), for the definition of a constructive trust:

A constructive trust is one that arises by operation of law against one who, by fraud, actual or constructive, by duress or abuse of confidence, by commission of wrong, or by any form of unconscionable conduct, artifice, concealment, or questionable means, or who in any way against equity and good conscience, either has obtained or holds the legal right to property which he ought not, in equity and good conscience, to hold and enjoy. 54 Am.Jur., Trusts, Sec. 218. A constructive trust is an appropriate remedy against unjust enrichment. Ibid., Sec. 219.

(emphasis added).

¶ 8. The Court of Appeals held that a "constructive trust could not be utilized to preempt the widow's entitlement to the insurance proceeds under the order of precedence set forth in the statute creating FEGLIA, and the insurance proceeds were properly paid to the widow." McCord v. Spradling, 2000 WL 1819539, at ¶ 28 (Miss.Ct.App. Dec.12, 2000). However, the majority opinion went on to hold that the executrix and the children were not without a remedy:

¶¶ 32. The final question here then is not which designation of beneficiary provision controls but whether the executrix and beneficiaries of the decedent's estate may pursue a claim against the widow for an alleged breach of contract, i.e., breach of the antenuptial agreement. The dissent reads Metropolitan¹ and the other authorities cited to stand for the proposition that a designation of beneficiary under the FEGLIA or a beneficiary determined by the order of precedence under the FEGLIA trumps the entire provisions of the antenuptial agreement. We do not read Metropolitan so broadly Metropolitan simply establishes the preeminence of the beneficiary provision under FEGLIA. It does not,

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