Rice v. Garrison
| Decision Date | 14 July 1995 |
| Docket Number | No. 72,146,72,146 |
| Citation | 898 P.2d 631,258 Kan. 142 |
| Parties | Beverly J. RICE, Appellee/Cross-Appellant, v. Janet S. GARRISON, Kansas Public Employees Retirement System, and The Security Benefit Group/Security Benefit Life Insurance Company, Appellants/Cross-Appellees. |
| Court | Kansas Supreme Court |
Syllabus by the Court
In an action by the surviving spouse of an intestate decedent against the decedent's named beneficiary of certain life insurance and pension benefits and the administrator thereof, seeking to invalidate, on equitable grounds, the decedent's designation of his beneficiary and, alternatively, to bring the proceeds into the decedent's estate, the record is examined and it is held: (1) The district court erred in invalidating decedent's designation of his beneficiary as to his accumulated pension contributions and optional group life insurance proceeds and imposing a constructive trust thereon; (2) the district court did not err in denying relief relative to the decedent's basic group life insurance proceeds; and (3) the district court erred in holding that the disputed benefits were assets of the decedent's probate estate subject to the surviving spouse's 50 percent statutory claim, all as is more fully set forth in the opinion.
Arthur A. Glassman, of Sloan, Listrom, Eisenbarth, Sloan & Glassman, Topeka, argued the cause, and R. Scott Seifert, of the same firm, was with him on the brief for appellee/cross-appellant.
Bruce C. Harrington, Topeka, argued the cause and was on the brief for appellant/cross-appellee Janet S. Garrison.
David C. Wetzler, of Bennett, Lytle, Wetzler, Martin & Pishny, L.C., Prairie Village, was on the briefs for appellant/cross-appellee Kansas Public Employees Retirement System.
This is a declaratory judgment action brought by the surviving spouse of a deceased state employee seeking a determination that she is the owner of certain pension benefits and life insurance proceeds, notwithstanding the fact the decedent's former wife is the designated beneficiary thereof. The district court, on equitable principles of unjust enrichment, established a constructive trust in favor of the surviving spouse on the bulk of the proceeds. Alternatively, the district court held that the Kansas Public Employees Retirement System (KPERS) benefits were subject to the widow's right of election under K.S.A. 59-602 (Ensley); throughout this opinion the Ensley version of chapter 59 will be the applicable version. Appeals and cross-appeals have been filed by the various parties hereto from those portions of the judgment adverse to their respective positions.
The evidence presented at trial essentially falls into one of two categories, which shall be characterized as relating to "events," or as relating to oral statements made by the deceased Dale A. Rice. There is no claim by the widow nor did the trial court find that the events facts, alone, provide any grounds for the invalidization of the deceased's designation of his beneficiary.
The events facts uncontroverted and are summarized as follows. Janet Sue Custenborder and Dale were married on May 18, 1957. Between January 1958 and November 1963, six children were born to the marriage. At some point, both Janet and Dale became dissatisfied with the marriage but opted to stick it out until all of their children had become adults.
Dale was employed at the Kansas Division of Printing from August 21, 1972, until May 21, 1982, when he terminated his employment and withdrew his KPERS pension contributions. In September 1982, Janet filed for a divorce which was granted in January 1983. Dale was involved with plaintiff Beverly J. Kinnett (now Rice) at the time, and Janet, also, was seeing someone else. All marital assets were divided pursuant to a property settlement agreement and no order of support was entered. Sometime in the spring of 1983 Dale and the plaintiff began living together. Dale was approximately 18 years older than Beverly.
In September 1983, Dale resumed his employment with the state printer. He had debts from an abortive entry into the trucking business. Upon resuming his state employment, Dale executed a KPERS enrollment application. He designated Janet Sue Custenborder "ex-wife" as his beneficiary. At the time of his reemployment Dale applied for $50,000 life insurance through the Kansas Public Employees Retirement System Optional Group Life Insurance. As a state employee under KPERS, Dale received automatically, at no cost to him, a basic group life insurance policy in an amount equal to one and one-half times his annual salary. The life insurance program was administered by KPERS, but the actual insurer was defendant Security Benefit Life Insurance Company (SBL).
The application form for the optional life insurance provided, in pertinent part:
Both the basic group life and the optional group life insurance are term insurance with no cash value and payable only on the death of the insured. SBL has no contact with the insured. Once optional group life insurance is approved, KPERS issues an insurance certificate to be delivered to the insured. KPERS does not keep copies thereof. The certificate was not located in Dale's possessions after his death. There is no record of its actual delivery to Dale.
On November 13, 1984, Beverly and Dale were married. On September 12, 1985, Dale applied for an additional $50,000 of optional life insurance. This was approved, thereby giving Dale $100,000 of such insurance. Payment for optional life insurance is through payroll deductions.
In October 1986, Dale enrolled in a public employees deferred compensation plan issued in conjunction with Aetna Life Insurance and Annuity Company. Beverly was designated by Dale as his beneficiary. Proceeds of $11,000 therefrom were received by Beverly and are not at issue herein.
In the fall of 1988, Dale and Beverly applied for a loan to provide funds to build a home on land they owned in Auburn. On their loan application they listed total life insurance in the aggregate amount of $130,000. The life insurance was stated to have a cash value of $25,000. Dale's insurance at issue was term insurance with no cash value.
On September 19, 1989, Beverly purchased optional group term life insurance through her employer, designating Dale as her beneficiary.
On September 27, 1989, Dale applied for additional insurance. In all relevant parts, the application form was the same as the first application for optional life insurance. The application was approved by SBL. Effective January 1, 1990, Dale had a total of $200,000 optional life insurance provided through the KPERS optional life insurance plan underwritten by SBL.
The specimen copies of the insurance certificates for the optional insurance provide:
"BENEFICIARY--Payment of any Optional Group Life Insurance under this provision on account of the death of an Insured shall be made in the same manner and to the same Beneficiary as the proceeds under the Certificate to which this provision is attached."
The Basic Group Life Insurance Certificate states that death benefits will be paid to the person or persons designated as the beneficiary designated on the KPERS form. If no person is designated or if the designated beneficiary does not survive the KPERS employee, the proceeds are paid as specified in K.S.A. 74-4902(7).
Effective on the first anniversary of his reemployment, as per statute, monthly deductions of Dale's KPERS retirement contributions began. An employee may change his beneficiary designation at any time. Dale did not do so. Janet Custenborder, Dale's ex-wife, continued to be his designated beneficiary. A KPERS eligible employee cannot designate one beneficiary for pension benefits and another for life insurance. All KPERS benefits, whether pension, basic life insurance, or optional group life insurance must carry the same beneficiary designation.
Each year KPERS-eligible employees receive an annual statement of benefits on which, in the upper left-hand corner, is prominently displayed the name or names of the employee's designated beneficiary or co-beneficiaries. There was no testimony that Dale actually received or did not receive these annual statements. Beverly testified she never saw any such form.
One of Dale's six children, Derrick, has a severe hearing disability and is a schizophrenic. Although Derrick received federal and state disability payments and did not live with either parent, both parents assisted him financially and in securing necessary medical treatment. Derrick's future was an ongoing concern of Dale and of other family members.
After leaving his state employment, Dale engaged in the trucking business. He went into debt. Beverly assisted in the payment of these debts and often worked two jobs. Beverly was the couple's money manager and wrote most of the checks. During the marriage the couple shared a joint bank account and filed joint tax returns with Beverly being responsible for the preparation of the annual tax returns.
Dale died suddenly of a massive heart attack on December 2, 1991. He was 55 years old at his death with no history of heart disease. He died intestate. At Dale's death the following were available through KPERS for distribution:
1. Basic Group Life Insurance $ 52,200.00
2. Optional Group Life Insurance $200,000.00
3. Accumulated Pension Contributions $ 17,058.94
Janet Custenborder was the designated beneficiary of all such proceeds.
We now turn to the oral statements upon which Beverly relied, and which the district court found warranted the granting of equitable relief, invalidating Dale's legally executed designation of beneficiary form. The district court found each of...
To continue reading
Request your trial
-
Wear v. Mizell
... ... William cites Rice v. Garrison, 258 Kan. 142, 898 P.2d 631 (1995), for the proposition that a court has equitable power to find that a change of life insurance ... ...
-
Farm Bureau v. Progressive Direct Ins.
... ... guise of exercising its equitable powers may not right what it perceives as a wrong or unfairness absent an adequate equitable basis therefor." Rice v. Garrison, 258 Kan. 142, 151, 898 P.2d 631 (1995). Accordingly, the doctrine of equitable subrogation will not be applied to relieve a party "of a ... ...
-
In re Albert
... ... 351, 356, 424 P.2d 555 (1967) ... The most recent case addressing the issue of constructive trust in Kansas is Rice v. Garrison, 258 Kan. 142, 898 P.2d 631 (1995), in which the district court invalidated beneficiary provisions in the decedent husband's pension and ... ...