Prudential Ins. Co. of America v. Burke

• Court: Court of Appeals of Texas. Court of Civil Appeals of Texas
• Citation: 614 S.W.2d 847
• Docket Number: No. 8844,8844
• Parties: PRUDENTIAL INSURANCE COMPANY OF AMERICA, Appellant, v. Riley P. BURKE, Appellee.
• Decision Date: 27 February 1981

Page 847

614 S.W.2d 847 PRUDENTIAL INSURANCE COMPANY OF AMERICA, Appellant,
v.
Riley P. BURKE, Appellee. No. 8844. Court of Civil Appeals of Texas, Texarkana. Feb. 27, 1981.
Appellant's Rehearing Denied April 7 and May 5, 1981.
Appellee's Motion Granted in Part and Overruled in Part April 7, 1981.

Page 848

Michael Stevens, Atchley, Russell, Waldrop & Hlavinka, Texarkana, for appellant.

Errol Friedman, Freidman & Hooper, Texarkana, for appellee.

CORNELIUS, Chief Justice.

Riley P. Burke filed this suit against Prudential Insurance Company because it refused to change the beneficiary of his life insurance policy. The petition sought either damages, specific performance or declaratory judgment. The trial court rendered judgment declaring that Prudential had the duty to change the beneficiary in accordance with Burke's direction, and allowing Burke a recovery of his attorney's fees. Prudential has appealed.

Page 849

The facts were stipulated. The policy was issued during the time Mr. Burke was married to Dorthy Jo Burke, and she was named beneficiary. Several years later, Mr. and Mrs. Burke were divorced. They subsequently remarried and again divorced. Neither divorce decree mentioned the insurance policy. Several months after the second divorce, Mr. Burke directed Prudential to change the beneficiary of his policy to Melba L. Burke, whom he married after his second divorce from the former Mrs. Burke. Prudential refused, contending that despite the policy provision allowing the insured to change the beneficiary, ¹ it could not or should not do so because under Texas law the present beneficiary has a community interest in the policy and in the future right to the proceeds which cannot be divested by the ex parte act of the insured.

Prudential relies upon authorities which hold that when a beneficiary has a vested interest in the proceeds of an insurance policy the insured cannot change the beneficiary designation. See Tomlinson v. Lackey, 555 S.W.2d 810 (Tex.Civ.App.-El Paso 1977, no writ); Box v. Southern Farm Bureau Life Ins. Co., 526 S.W.2d 787 (Tex.Civ.App.-Corpus Christi 1975, writ ref'd n. r. e.); Leal v. Leal, 401 S.W.2d 293 (Tex.Civ.App.-San Antonio 1966, no writ); 4 Couch on Insurance 2d § 27.66 (1960). Those cases state the correct rule in their respective situations, but they do not govern this case. A party designated as beneficiary in an insurance policy requires a vested right in the future policy proceeds when there is a contract which obligates the insured not to change that designation, Tomlinson v. Lackey, supra; Leal v. Leal, supra, but that is not the situation here. In our case, the beneficiary's interest in the policy arises from the operation of our community property law. By that law, a policy purchased with community funds is an unmatured chose in action owned by the community which matures at the death of the insured. The proceeds, when paid, constitute community funds, except where the beneficiary survives the insured, in which case a gift of the insured's portion of such proceeds is presumed to have been intended and completed by the insured's death. Brown v. Lee, 371 S.W.2d 694 (Tex.1963); Alexander v. Alexander, 410 S.W.2d 275 (Tex.Civ.App.-Houston 1966, no writ)....