Universal Assurors Life Ins. Co. v. Hohnstein

• Citation: 500 N.W.2d 811,243 Neb. 359
• Decision Date: 29 April 1993
• Docket Number: No. S-91-047,S-91-047
• Parties: UNIVERSAL ASSURORS LIFE INSURANCE COMPANY, Appellee, v. Bertha HOHNSTEIN, Appellant, and Elizabeth A. Halstead, Appellee.
• Court: Supreme Court of Nebraska

Page 811

500 N.W.2d 811

243 Neb. 359

UNIVERSAL ASSURORS LIFE INSURANCE COMPANY, Appellee, v. Bertha HOHNSTEIN, Appellant, and Elizabeth A. Halstead, Appellee.

No. S-91-047.

Supreme Court of Nebraska.

April 29, 1993.

Syllabus by the Court

1. Divorce: Intent: Appeal and Error. After the time for appeal has passed, the meaning of a dissolution decree is determined as a matter of law from its language; neither what the parties thought the decree meant nor what the judge intended is of any relevance.

2. Divorce: Liability: Debtors and Creditors. A dissolution decree does not change a dissolution party's liability to a creditor.

3. Statutes: Appeal and Error. Statutory interpretation is a matter of law in connection with which an appellate court has an obligation to reach an independent, correct conclusion irrespective of the determination made by the trial court.

4. Insurance: Contracts: Words and Phrases. As used in Neb.Rev.Stat. § 44-370 (Reissue 1988), the phrase "person holding a policy" describes the owner of the insurance policy.

5. Insurance: Contracts. Neb.Rev.Stat. § 44-370 (Reissue 1988) grants the owner of a life insurance policy the right to change the beneficiary unless the appointment of the beneficiary was made irrevocable.

6. Insurance: Contracts. The owner of a life insurance policy need not be the insured, that is, the person whose death obligates the insurer to pay under the policy.

7. Summary Judgment. Summary judgment is properly granted only when the record discloses that there is no genuine issue concerning any material fact or the ultimate inferences deducible from such fact or facts and that the movant is entitled to judgment as a matter of law.

8. Summary Judgment: Evidence. A movant for summary judgment has made a prima facie case by producing enough evidence to demonstrate that the movant is entitled to a judgment if the evidence were uncontroverted at trial; at that point, the burden of producing evidence shifts to the party opposing the motion.

9. Insurance: Contracts: Intent. An insurance policy is to be construed as any other contract to give effect to the parties' intentions at the time the contract was made.

10. Insurance: Contracts. When the terms of an insurance contract are clear, they are to be accorded their plain and ordinary meaning.

11. Insurance: Contracts. When a clause in an insurance contract can be fairly interpreted in more than one way, there is ambiguity.

12. Contracts: Appeal and Error. The construction of a contract is a matter of law in connection with which an appellate court has an obligation to reach an independent correct conclusion irrespective of the determination made by the trial court.

13. Insurance: Contracts: Intent. The resolution of an ambiguity in a policy of insurance turns not on what the insurer intended the language to mean, but on what a reasonable person in the position of the insured would have understood it to mean at the time the contract was made.

14. Insurance: Contracts. In the case of ambiguity in an insurance contract, a construction favorable to the insured prevails so as to afford coverage.

Robert M. Brenner of Robert M. Brenner Law Office, Gering, for appellant.

James R. Hancock of Hancock & Denton, P.C., Scottsbluff, for appellee Halstead.

HASTINGS, C.J., and BOSLAUGH, WHITE, CAPORALE, SHANAHAN, FAHRNBRUCH, and LANPHIER, JJ.

CAPORALE, Justice.

I. STATEMENT OF CASE

The death of the decedent, David A. Halstead, obligated the plaintiff-appellee interpleader, Universal Assurors Life Insurance Company, to pay benefits under the provisions of three separate certificates of credit life insurance it had issued in favor of First State Bank, Scottsbluff, Nebraska, and others. Both the decedent's mother, the defendant-appellant claimant, Bertha Hohnstein, and the decedent's former wife, the defendant-appellee claimant, Elizabeth A. Halstead, demand the residual proceeds, that is, the amount of benefits exceeding the sums Universal remitted to the bank. Having paid the residual proceeds into court, Universal was dismissed from the action, and the cause then proceeded to adjudication upon the reciprocal motions for summary judgment filed by the two claimants. The district court overruled the mother's motion and sustained the former wife's motion. The mother's three assignments of error merge to assert that the district court erred in so ruling. We affirm.

II. FACTS

On August 10, 1988, the decedent and the former wife indebted themselves to the bank and, for a single premium, purchased the three aforementioned certificates of insurance, which were issued under and pursuant to an agreement between Universal and the bank entitled "Debtor-Creditor Group Master Policy Single Premium Term Life Insurance--Non-Participating." The master policy provides, in pertinent part:

[Universal] will pay, subject to all terms and conditions of this policy, to the [bank] the amount of insurance in force hereunder on the life of such Debtor at the time of such death, to reduce or extinguish the unpaid indebtedness and where the amount of insurance exceeds the unpaid indebtedness, the excess amount will be paid to a beneficiary other than the [bank], if living, named by the insured Debtor or to the estate of the insured Debtor.

Each of the three certificates named the decedent as "Insured Debtor," the former wife as "Insured Joint Debtor," and the bank as "Irrevocable Creditor Beneficiary." In an area denominated "Second Beneficiary," each certificate reads:

David A. Halstead--Beneficiary Elizabeth A. Halstead

Elizabeth A. Halstead--Beneficiary David A. Halstead

James D. Halstead.

The last named individual, born January 6, 1986, is the minor child of the debtors.

On November 16, 1989, the former wife filed a dissolution of marriage action which resulted in a decree of dissolution being entered on February 2, 1990. Through incorporating by reference the decedent's and the former wife's property settlement agreement, the decree provides, in relevant part:

The [former wife] and [the decedent] will keep all items of personal property currently in their respective possession. Each party will hold the other harmless from any liability upon the personal property in their possession.

[The decedent] shall receive the title and possession of the [marital residence] and [the former wife] will sign a Quitclaim Deed to [the decedent] regarding said property. [The decedent] shall hold [the former wife] harmless from any liability arising from any encumbrance upon said real property.

The decree makes no specific references to the debt owed the bank or to the Universal certificates, nor does it relate the insured debt to the marital residence.

Following the entry of the dissolution decree, the decedent, on August 6, 1990, issued a notarized letter directed to Universal, which referenced the three certificates of insurance and recited: "Because of my divorce, I hereby authorize you to change the beneficiary designations on the above [certificates] from my [former wife] to my mother...."

The decedent died August 10, 1990, as a result of injuries sustained in an accident. After Universal paid the bank the amount of the unpaid debt, there remained benefits totaling $6,067.10 due under the three certificates.

III. ANALYSIS

We begin by noting that although each certificate names the Halstead child as some sort of beneficiary, he was not made a party to this action. As a consequence, this litigation does not affect any interests he may have in the matter.

1. EFFECT OF DISSOLUTION DECREE

The decedent's mother asserts that because the marital residence was awarded to the decedent subject to the liability for any encumbrance thereon, for which liability he was obligated to hold the former wife harmless, the decedent became the sole owner of the insurance certificates and could do with them as he chose. Such, however, is not the case.

In the first place, as noted in part II, the decree in no way ties the insured debt to the marital residence. In reviewing the res judicata effect of dissolution decrees in later actions, we have declared:

"[N]either what the parties thought the judge meant nor what the judge thought he or she meant, after time for appeal has passed, is of any relevance. What the decree, as it became final, means as a matter of law as determined from the four corners of the decree is what is relevant."

Metropolitan Life Ins. Co. v. Beaty, 242 Neb. 169, 173, 493 N.W.2d 627, 630 (1993). Accord Neujahr v. Neujahr, 223 Neb. 722, 393 N.W.2d 47 (1986).

But even if the decree were to have related the debt to the marital residence, it only orders the decedent to hold the former wife harmless from the liability; it does not, nor could it, relieve the former wife of liability to the bank.

Although it appears we have not heretofore been called upon to rule on the effect of a dissolution decree upon a dissolution party's liability to a creditor, we have held that a contract for the lease of school land could not be altered by a dissolution decree and made enforceable against the other parties to the lease. Kidder v. Wright, 177 Neb. 222, 128 N.W.2d 683 (1964); State v. Kidder, 173 Neb. 130, 112 N.W.2d 759 (1962). Moreover, in Baker v. Baker, 201 Neb. 409, 267 N.W.2d 756 (1978), this court held that a dissolution court could not affect the rights of the transferees of gifts who were not before the court. We now specifically adopt the holdings of numerous other jurisdictions that a dissolution decree does not change a dissolution party's liability to a creditor. Bourdon v. Bourdon, 119 N.H. 518, 403 A.2d 433 (1979); Kujawinski v. Kujawinski, 71 Ill.2d 563, 17 Ill.Dec. 801, 376 N.E.2d 1382 (1978); Arneson v. Arneson, 38 Wash.2d 99, 227 P.2d 1016 (1951); Stevenson v. Stevenson, 680 P.2d 642 (Okla.App.1984); Wileman v. Wade, 665 S.W.2d 519 (Tex.App.1983); Glasscock v. Citizens Nat. Bank, 553 S.W.2d 411 (Tex.App.1977); Branch Banking and Trust Co. v....