Mullenax v. National Reserve Life Ins. Co., s. 70--547

• Decision Date: 11 May 1971
• Docket Number: 23906,Nos. 70--547,s. 70--547
• Parties: Sarah A. Wisley MULLENAX, Plaintiff-in-Error, v. NATIONAL RESERVE LIFE INSURANCE COMPANY et al., Defendants-in-Error. . I
• Court: Colorado Court of Appeals

Page 137

485 P.2d 137

29 Colo.App. 418

Sarah A. Wisley MULLENAX, Plaintiff-in-Error, v. NATIONAL RESERVE LIFE INSURANCE COMPANY et al., Defendants-in-Error.

Nos. 70--547, 23906.

Colorado Court of Appeals, Div. I.

May 11, 1971.

Edward O. Geer, Bill D. LaRue, Denver, for plaintiff in error.

No appearance for defendant in error National Reserve Life Ins. Co.

Yegge, Hall & Evans, Wesley H. Doan, Denver, for defendant in error Rufus A. Wisley, a/k/a Rufus H. Wisley.

Donald L. Dill, Denver, for defendant in error Lucy Morris, formerly known as Lucy A. Spradlin.

Richard B. Bauer, Westminster, for defendant in error Estate of Robert C. Wisley, Rufus A. Wisley, Admr.

Before COYTE, DUFFORD and PIERCE, JJ.

COYTE, Judge.

This case was transferred from the Supreme Court to the Court of Appeals, pursuant to statute.

The parties appear in the same order here as they appeared below and shall be referred to in the same manner or by name.

The facts are undisputed. In 1949 the plaintiff, Sarah A. Wisley, now known as Sarah A. Wisley Mullenax, married Robert C. Wisley. In 1955 Robert Wisley purchased an insurance policy on his life from the defendant, National Reserve Life Insurance Company, naming as beneficiary: 'Sarah A. Wisley, wife, or should she not live to receive payment, to Rufus A. Wisley, father, and Lucy A. Spradlin, mother-in-law, equally or survivor'.

The parties to this marriage were divorced two years later, at which time a property settlement was executed, paragraph 8 of which provided:

'The wife hereby conveys, signs and sets over unto the husband all of her right, title and interest in and to any and all other property presently standing in the name of the husband * * *.'

Similar terms were applied to the husband as well.

Nine years later, in 1966, Robert Wisley died as the result of an accident, with no change of designated beneficiaries made in the insurance policy.

The plaintiff, Sarah A. Wisley Mullenax, claimed under this policy as principal beneficiary. Also, making a claim was the decedent's father, Rufus A. Wisley, as secondary beneficiary. The defendant, National Reserve Life Insurance Company, admitted liability in general, but stated that it did not know if it should pay Sarah Wisley as principal beneficiary, or Rufus Wisley and Lucy Spradlin as secondary beneficiaries, or the Estate of Robert C. Wisley. Accordingly, it tendered into court the amount of the policy, stipulated to by all parties as the correct amount, and moved for interpleader against all the other parties. This motion was granted and the National Reserve Life Insurance Company no longer is a party to this action.

The trial court found in favor of the defendants, Rufus Wisley and Lucy Spradlin, and against the plaintiff Sarah Wisley and defendant Estate of Robert Wisley, on the grounds that the plaintiff, by her separation agreement entered into in 1957, released all of her rights to the proceeds of this policy. Plaintiff has brought error, urging that as principal beneficiary she is entitled to the full amount of the policy.

The defendant Rufus A. Wisley argues that the trial court was correct in refusing to permit the plaintiff to recover, but erred in allowing the defendant Lucy A. Spradlin to recover one-half of the proceeds.

The first argument to be considered is the defendant Rufus Wisley's contention concerning the policy itself. It is his theory that this is an 'Old Line Legal Reserve policy,' which requires by its terms that, in order to recover, the beneficiary must have an insurable interest in the life of the insured at the time of the insured's death. Because of the divorce, according to the defendant Rufus Wisley, neither the plaintiff nor her mother is entitled to recover because the divorce severed all of the plaintiff's and her mother's insurable interest in the decedent's life.

Even if the above assertions are true, it would not defeat recovery by the plaintiff or her mother. The record clearly reveals this as an interpleader action in which the insurance company has paid the proceeds into the court and is not interested in the outcome of the suit. The insurer may assert the lack of insurable interest on the part of the beneficiary, but another claimant to the proceeds may not raise this issue. Girdner v. Girdner, 337 P.2d 741 (Okl.); Feely v. Lacey, 133 Mont. 283, 322 P.2d 1104; Bynum v. Prudential Insurance Co., D.C., 77 F.Supp. 56; Matthews v. Matthews, 163 Kan. 755, 186 P.2d 233; Gristy v. Hudgens, 23 Ariz. 339, 203 P. 569. We need not determine if the policy requires plaintiff to have an insurable interest in the decedent's life, for this would be a defense to liability only on the part of National Reserve Life Insurance Company, which chose not to raise it as a bar to plaintiff's recovery when it interpleaded the other parties in this action.

The assertion is also made that, regardless of the policy terms, a former wife does not have an insurable interest in the life of her former spouse so as to be able to recover the proceeds of a life insurance policy.

The...