Metropolitan Life Ins. Co. v. Tallent

• Decision Date: 09 March 1983
• Docket Number: No. 283S44,283S44
• Parties: METROPOLITAN LIFE INSURANCE COMPANY, Plaintiff-Appellee, v. Helen TALLENT, Defendant-Appellant, Shelia A. Kercher, Defendant-Appellee.
• Court: Indiana Supreme Court

Page 990

445 N.E.2d 990

METROPOLITAN LIFE INSURANCE COMPANY, Plaintiff-Appellee, v. Helen TALLENT, Defendant-Appellant Shelia A. Kercher, Defendant-Appellee.

No. 283S44.

Supreme Court of Indiana.

March 9, 1983.

Michael Rosiello, Indianapolis, for plaintiff-appellee.

Michael Bullington, Good, Bertram & Bullington, Indianapolis, for defendant-appellant.

James L. Lowry, Howard, Lawson & Lowry, Danville, for defendant-appellee.

GIVAN, Chief Justice.

This case is before the Court as a certified question of law from the United States Court of Appeals, Seventh Circuit pursuant to Ind.R.App.P. 15(O).

The facts giving rise to the case originated in dissolution proceedings instituted in Hendricks Circuit Court. Appellee Kercher filed a petition for dissolution from her husband, decedent, on October 20, 1980. On November 3, 1980, the court ordered her husband be "temporarily restrained and enjoined from transferring, encumbering, and concealing or in any way disposing of any property except in the usual course of business or for the necessities of life." At the time of this order, decedent had a term life insurance policy through his place of employment, Detroit Diesel Allison. The policy had no cash surrender value. Appellee Kercher was named as beneficiary of the life insurance policy.

On November 11, 1980, decedent executed a change of beneficiary naming his mother, appellant, Tallent as beneficiary and deleting his wife, appellee, Kercher. On December 11, 1980, decedent committed suicide while the dissolution proceedings were pending. The proceeds of the life insurance policy were interpleaded into the United States District Court for the Southern District of Indiana by Metropolitan Life Insurance Company to resolve whether appellee (wife) or appellant (mother) should receive the proceeds. The District Court held for appellee (wife). Appellant (mother) then perfected her appeal to the United States Court of Appeals for the Seventh Circuit.

The precise issue as certified to us is:

"Whether an insured may change the designation of beneficiary of a group life insurance policy during the pendency of a marriage dissolution proceeding in which a temporary restraining order, which restrains the insured from 'transferring ... or in any way disposing of any property except in the usual course of business or for the necessities of life,' is in effect."

The restraining order recites the provision for temporary restraining orders as set out in I.C. Sec. 31-1-11.5-7(b)(1) [Burns 1980 Repl.].

"Property," as defined by I.C. Sec. 31-1-11.5-2 [Burns 1980 Repl.] "means all the assets of either party or both parties, including a present right to withdraw pension or retirement benefits." In the case of Wilson v. Wilson, (1980) Ind.App., 409 N.E.2d 1169 at p. 1178, the Court of Appeals stated:

"However, where the pension is not present or vested in that the retiree must survive in order to receive the next periodic payment and is not entitled to receive payment on demand, the pension is not marital property which can be divided or awarded to the other spouse under I.C. Sec. 31-1-11.5-11."

A pension plan, contingent on continued employment is likewise not a marital asset. Wilson, supra. The Court of Appeals has held military retirement benefits, contingent upon the retiree's continued survival or amount of other income, were not "property" subject to distribution. Sadler v. Sadler, (1981) Ind., 428 N.E.2d 1305; Hiscox v. Hiscox, (1979) Ind.App., 385 N.E.2d 1166. The case of McCarty v. McCarty, (1981) 453 U.S. 210, 101 S.Ct. 2728, 69 L.Ed.2d 589, bars distribution of military retirement benefits in dissolution proceedings.

We similarly hold the group term insurance policy in the case at bar is excluded from the statutory definition of property. The policy had no present value. While in In Re Marriage of McDonald, (1980) Ind.App., 415 N.E.2d 75, a life insurance policy was termed an asset and was awarded to one of the parties, that policy had a cash surrender value. In the case at bar, the policy had no such value. The policy as a benefit of employment, was undoubtedly contingent on continued employment. Payment of policy proceeds was contingent on the insured's death. Because there was no present right to withdraw or to receive any benefits, the policy was not property under the statute. Therefore, the policy did not fall within the order restraining decedent from "transferring ... or in any way disposing of any property."

Decedent, by changing the designated beneficiary to his mother, appellant Tallent, exercised a statutory right. I.C. Sec. 27-1-12-14(a) reads:

"(a) Any person whose life is insured by any life insurance company may name as his payee or beneficiary any person or persons, natural or artificial, with or without an insurable interest, or his estate. Such designation at the option of the insured may be made either revocable or irrevocable, and the option elected shall be set out in and shall be made a part of the application for the certificate or policy of insurance. When the right of revocation has been reserved, the person whose life is insured, subject to any existing assignment of the policy, may at any time designate a new payee or beneficiary, with or without reserving the right of revocation, by filing written notice thereof at the home office of the corporation, accompanied by the policy for suitable indorsement thereon."

"[W]here by the terms of the policy the right is reserved by the insured to change the beneficiary at will, then the original beneficiary acquires only a defeasible vested interest in the policy, a mere expectancy, until after the death of the insured." Bronson v. Northwestern Mutual Life Insurance Company, (1921) 75 Ind.App. 39, 48, 129 N.E. 636, 639.

The companion cases of Wolf v. Wolf, (1970) 147 Ind.App. 246, 259 N.E.2d 96 and Wolf v. Wolf, (1970) 147 Ind.App. 240, 259 N.E.2d 93, presented identical issues involving the proceeds of two life insurance policies. When decedent (husband) and appellee (wife) were divorced, their settlement agreement was incorporated into their final decree. One term of their agreement released any interest and title wife had in personal property in which she had any claim, interest or title. Subsequent to the divorce decedent declined to remove his ex-wife as beneficiary. Upon decedent's death some three years later, his personal representative, appellant, brought suit claiming appellee ex-wife was prohibited from taking the policy proceeds because of the settlement agreement. The appellate Court concluded the first determination to be made was the status of a beneficiary to a...