Sanders v. Great Am. Reserve Ins. Co.
| Decision Date | 27 November 1974 |
| Docket Number | No. 5376,5376 |
| Parties | Violet SANDERS, Appellant, v. GREAT AMERICAN RESERVE INSURANCE COMPANY, Appellee. |
| Court | Texas Court of Appeals |
Andress, Woodgate & Lodewick, Dallas, for appellant.
Elliott, Churchill, Hansen, Dyess & Maxfield, Dallas, for appellee .
This is a limited appeal involving the propriety of the trial court's actions of (1) denying Appellant statutory penalty and attorney's fees under Article 3.62 1 of the Insurance Code, Vernon's Annotated Civil Statutes, and (2) allowance of attorney's fees to Appellee Insurance Company as interpleader. We reverse the judgment of the trial court and remand same with instructions.
Appellee Great American Reserve Insurance Co. (hereinafter called 'the insurance company') filed its Petition in Interpleader citing Appellant Violet Sanders, Jessie Mae Sanders, and Hill Metropolitan Funeral Directors, Inc. (hereinafter called 'the funeral home') as Defendants. The insurance company paid $5000.00 into the registry of the court, same being the proceeds of a group life insurance policy certificate on the life of Nathaniel Sanders, its insured, who was then deceased. The Insurance Company alleged that conflicting claims to the proceeds were filed by Appellant Violet Sanders (ex-wife of the insured) and Jessie Mae Sanders (widow of the insured), that Violet Sanders had theretofore assigned $1213.60 of the proceeds of the policy to the funeral home for burial of the insured, and because of the foregoing the insurance company was honestly in doubt as to which Defendant had prior rights to the policy proceeds. The insurance company then prayed for a discharge of all its liabilities under said policy by virtue of such deposit into court, and an allowance of its attorney's fees as interpleader.
The case was submitted to the trial court upon an agreed statement of facts, whereupon said court allowed the insurance company an attorney's fee in the amount of $500.00 as interpleader out of the fund, awarded the funeral home $1208.60 out of the funds (by agreement of all parties), awarded the balance of the $5000 less the court costs to Appellant Violet Sanders, and discharged the insurance company from liability under the policy in question.
Appellant Violet Sanders alleged in effect that she was the named beneficiary in the policy, that she had physical possession of the policy certificate and surrendered same to the insurance company when filing her claim on May 9, 1973, and was therefore the only person entitled to the proceeds of the policy under Article 3.48 2 of the Insurance Code of Texas, and that the insurance company failed and refused to pay her claim within 30 days after her demand therefor. She prayed for recovery of the policy proceeds (subject to the assignment to the funeral home), for $12% Penalty and reasonable attorney's fees under the provisions of Article 3.62 of the Insurance Code.
Appellant appeals from the award of the $500.00 attorney's fee to the insurance company, and from the refusal of the trial court to award her 12% Penalty and attorney's fees. She (Appellant Violet Sanders) contends that the mere relationship of Jessie Mae Sanders as wife of the insured and her naked claim by virtue of the marital relationship as against the claim of Appellant (who was named beneficiary, possessor of the policy certificate, and creditor of the insured) did not relieve the insurance company of its duty to pay Appellant within 30 days, or else suffer the statutory penalty and attorney's fees. We sustain these contentions of Appellant and hold (1) the insurance company was not entitled to the $500.00 attorney's fee and (2) Appellant Violet Sanders was entitled to the penalty and attorney's fees under Article 3.62 of the Insurance Code .
Violet Sanders and Nathaniel Sanders (the deceased insured) were married in 1960 and five children were born to their marriage. On July 30, 1969, they were divorced, and by the divorce judgment the custody of the five minor children were awarded to Violet Sanders, and Nathaniel Sanders was ordered to pay $35.00 per week as child support.
In February of 1971, Nathaniel Sanders married Jessie Mae Sanders, at which time Nathaniel was delinquent in his child support payments to his five minor children. In early summer of 1971, Nathaniel Sanders and Jessie Mae Sanders separated and thereafter lived apart, but no divorce action was ever instituted between them. In September of 1971, Nathaniel Sanders was delinquent in his child support payments, but when Violet Sanders threatened to bring contempt proceedings against him, Nathaniel Sanders suggested that he take out life insurance thorugh the group plan at the City of Dallas where he worked to protect the minor children, and that he would thereafter keep up his support payments.
On September 22, 1971, the insurance company issued the insurance certificate in question (under the group policy) on the life of Nathaniel Sanders for $5000.00 death benefit, payable to Violet Sanders, ex-wife, as the named beneficiary therein. All of the premiums on said policy until his death were paid from the earnings of Nathaniel Sanders after his marriage to Jessie Mae Sanders in the total amount of $61.18.
On February 14, 1973, a Dallas County Domestic Relations Court entered a commitment for contempt against Nathaniel Sanders because of delinquent child support payments in the total amount of $2478.00, and suspended the commitment as long as he made the $35.00 per week payments.
On April 3, 1973, Nathaniel Sanders died while the insurance policy was in force. On April 5, 1973, Violet Sanders assigned $1213.60 out of said insurance policy to the funeral home, as a result of which $1208.60 was subsequently paid to the funeral home pursuant to an agreed partial summary judgment entered in this cause on September 17, 1973.
On May 9, 1973, Jessie Mae Sanders furnished proof of death of Nathaniel Sanders and claimed the proceeds of the policy. On the same day, May 9, 1973, Violet Sanders furnished proof of death and claimed the policy proceeds, and physically surrendered the certificate itself.
On June 15, 1973, the insurance company filed this action as a petition in interpleader, admitting liability under the policy and depositing $5000.00 into the registry of the court, claiming doubts as to the respective rights of Violet Sanders and Jessie Mae Sanders, and seeking allowance of $500.00 as attorney's fees.
On June 21, 1973, Violet Sanders pleaded herein, denying justification for the interpleader because she was the named beneficiary having possession of the policy, and demanding 12% Penalty and attorney's fees for the failure to pay or interplead within 30 days after her demand.
On June 16, 1973, Jessie Mae Sanders pleaded herein that the purchase of the insurance policy and the payment of the premiums from community funds was a fraud upon the community, and claiming a one-half interest of the policy proceeds.
On August 14, 1973, Violet Sanders pleaded that the policy was purchased to apply on child support and for the benefit and protection of the minor children. At no time did either Violet Sanders or Jessie Mae Sanders abandon her claim to the proceeds of the policy, and at no time did the insurance company deny liability under the policy but was at all times willing to pay the proceeds to the person entitled to same.
As stated above, the insurance certificate was issued naming 'Violet Sanders ex-wife' as beneficiary, and Violet Sanders had physical possession of the certificate at the time she made her claim. Under the provisions of Article 3.49--1, 3 Insurance Code of Texas, Violet Sanders as named beneficiary had an insurable interest in the life of Nathaniel Sanders. In other words, under Article 3.49--1, when the insured designates a beneficiary as provided in said Article, such beneficiary has an insurable interest in the life of the insured and is entitled to the proceeds. This statute applies to a divorced wife of the insured. See McCain v. Yost (1955), 155 Tex. 174, 284 S.W.2d 898; Partin v. de Cordova (Eastland, Tex.Civ.App., 1971), 464 S.W.2d 956, writ refused; Shaw v. Transport Life Ins. Co. (Texarkana, Tex.Civ.App., 1973), 498 S.W.2d 495, no writ history.
Appellee insurance company argues that the marital relationship of Jessie Mae Sanders to the insured as his widow and the assertion of her claim was sufficient as reasonable grounds for the insurance company to withhold payment to the named beneficiary and to interplead the funds, and thereby it (appellee) is relieved of being liable for the statutory penalty and attorney's fees. Appellee further contends that the insured's payment of $61.18 of community funds as premiums on the policy is prima facie fraudulent as a matter of law to Jessie Mae Sanders as his widow. We overrule these contentions.
The insurance company had the duty to make an investigation within the thirty-day period (after claim was made) allowed by Article 3.62, for the purpose of determining who was entitled to the policy proceeds. In the case at bar, both claimants filed their claims on the same day, May 9, 1973, so the insurance company had thirty days from said last-named date in which to make its investigation, and was in position to evaluate both claims. Even without making an investigation, the insurance company had in its files and knew that Violet Sanders was the...
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Great Am. Reserve Ins. Co. v. Sanders
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