UNUM Life Ins. Co. of America v. Craig

Decision Date17 July 2001
Docket NumberNo. CV-00-0184-CQ.,CV-00-0184-CQ.
Citation200 Ariz. 327,26 P.3d 510
PartiesUNUM LIFE INSURANCE COMPANY OF AMERICA, Plaintiff, v. Kenneth E. CRAIG, as personal representative of the Estate of William J. and Micah Craig, deceased; Kathleen Burr, as personal representative of the Estate of Diane Craig, et al., Defendants. Prudential Insurance Company of America, Plaintiff, v. Kenneth E. Craig, as personal representative of the Estate of William J. and Micah Craig, deceased; Kathleen Burr, as personal representative of the Estate of Diane Craig, et al., Defendants.
CourtArizona Supreme Court

Jardine Baker Hickman & Houston PLLC by Gerald T. Hickman, Phoenix, Attorneys for Plaintiff UNUM Life Insurance Company of America.

W. Lloyd Benner, Phoenix, Attorney for Defendants Burr/Pirie.

Randall L. Hodgkinson, Topeka, KS, Stephen M. Lee, Kingman, Attorney for Defendants Kenneth E. Craig, Personal representative of the Estate of William J. and Micah Craig and Chanda Craig.

OPINION

JONES, Vice Chief Justice.

I. Introduction

¶ 1 This is an interpleader action involving life insurance proceeds. The case comes to us as a certified question from the United States District Court for the District of Arizona. The question is which of two conflicting statutes, A.R.S. § 14-2702 or § 20-1127, articulates the applicable rule of survival for a designated beneficiary of an insurance policy? We accepted jurisdiction pursuant to Arizona Supreme Court Rule 27(d) and A.R.S. § 12-1861 (2001).

II. The Facts

¶ 2 William J. Craig ("William"), his wife Diane R. Craig ("Diane"), and William's son by a prior marriage, Micah, were involved in a head-on automobile collision near Prescott, Arizona. An off-duty police officer witnessed the accident and attempted to assist the victims at the scene. When the officer approached the Craig automobile, he was unable to detect any pulse or respiration from William, but heard gurgling and moaning noises from Diane. The officer spent ten to twenty minutes away from the Craig vehicle assisting other victims and directing traffic. When the officer returned to the Craig vehicle, he found that Diane no longer showed signs of life. The Yavapai County Medical Examiner, who examined the bodies the following day, indicated that both William and Diane died at the same time, 3:35 p.m., on February 27, 1999. William's son Micah also died in the accident, leaving William's daughter, Chanda Craig, also by the prior marriage, as his sole surviving child.

¶ 3 Before his death, William purchased a $490,000 accidental death and dismemberment policy from UNUM Life Insurance Company. He was also an insured member under a $177,000 group life insurance policy from Prudential Insurance Company.1 William designated Diane as the beneficiary on both policies, but did not designate an alternate beneficiary on either. Each insurance company admitted coverage on its policy. Both policies provided that the proceeds should be paid in the following order: (1) to the designated beneficiary or alternate; (2) to William's spouse/widow; or (3) to William's child or children.

¶ 4 Diane's estate2 argues it is entitled to the insurance proceeds under a provision of the Arizona Insurance Code, A.R.S. § 20-1127. William's estate3 argues it is entitled to the insurance proceeds under a provision of the Arizona Probate Code, A.R.S. § 14-2702.

¶ 5 The insurance companies filed this interpleader action, and the district court certified the relevant question of Arizona law to this court.

III. Analysis

¶ 6 Both potentially applicable statutes, although contained in separate titles of the code, are modeled after the Uniform Simultaneous Death Act ("USDA"). The USDA is a uniform statute originally drafted to apply in circumstances resulting in multiple related deaths where it is not possible to determine the order in which the deaths occurred. UNIF. SIMULTANEOUS DEATH ACT § 5, prefatory note (amended 1953, superseded 1991), 8B U.L.A. 268-69 (1993).

¶ 7 The first, A.R.S. § 20-1127, appears in Title 20 of the code, which is titled "Insurance." The second, A.R.S. § 14-2702, is included in Title 14, which is titled "Trusts, Estates and Protective Proceedings," also referred to as the probate code. Diane's estate contends that because we are dealing with life insurance proceeds, the fact that § 20-1127 is found in the insurance code (Title 20), whereas § 14-2702 is found in the probate code (Title 14), means that § 20-1127 is necessarily the applicable statute. We have stated that courts should be reluctant "to base construction of such important statutes on chapter headings and section titles." Estate of Hernandez v. Ariz. Bd. of Regents, 177 Ariz. 244, 250, 866 P.2d 1330, 1336 (1994).

¶ 8 The relevant insurance and probate statutes read as follows:

A.R.S. § 20-1127: [Insurance]
Where the individual insured or the annuitant and the beneficiary designated in a life insurance policy or policy insuring against accidental death or in an annuity contract have died and there is not sufficient evidence that they have died otherwise than simultaneously, the proceeds of the policy or contract shall be distributed as if the insured or annuitant had survived the beneficiary, unless otherwise specifically provided in the policy or contract.

A.R.S. § 20-1127 (1990).4

A.R.S. § 14-2702(B): [Probate]
Except as provided in subsection D of this section, for purposes of a provision of a governing instrument that relates to a person surviving an event, including the death of another person, a person who is not established by clear and convincing evidence to have survived the event by one hundred twenty hours is deemed to have predeceased the event.

A.R.S. § 14-2702(B) (1995).5

¶ 9 Diane's estate argues that because Diane appeared to survive William, if only by moments, Diane, as the primary beneficiary of the policy, became entitled to the proceeds outside the purview of the probate code. Accordingly, her estate claims the proceeds should be paid to it pursuant to § 20-1127.

¶ 10 William's estate contends that because the probate code includes insurance policies in its definition of governing instruments, the 120-hour survival rule applies and the proceeds should be paid to it pursuant to § 14-2702. "Governing instrument" is defined in Title 14 to include an insurance or annuity policy. A.R.S. § 14-1201(21) (1995).

¶ 11 Each statute takes a different approach to survival requirements for a designated beneficiary of a life insurance policy. When two statutes appear to conflict, we will attempt to harmonize their language to give effect to each. State v. Wagstaff, 164 Ariz. 485, 491, 794 P.2d 118, 124 (1990) (citing Powers v. Isley, 66 Ariz. 94, 100, 183 P.2d 880, 884 (1947)). The primary aim of statutory construction is to find and give effect to legislative intent. Mail Boxes etc., U.S.A. v. Indus. Comm'n, 181 Ariz. 119, 121, 888 P.2d 777, 779 (1995).

¶ 12 If a statute is clear and unambiguous, we generally apply it without using other means of construction. When an ambiguity or contradiction exists, however, we attempt to determine legislative intent by interpreting the statutory scheme as a whole and consider "the statute's context, subject matter, historical background, effects and consequences, and spirit and purpose." Aros v. Beneficial Ariz., Inc., 194 Ariz. 62, 66, 977 P.2d 784, 788 (1999) (internal citations omitted) (quoting Zamora v. Reinstein, 185 Ariz. 272, 275, 915 P.2d 1227, 1230 (1996)). If neither the statute's text nor the statement of legislative intent resolves the exact issue before us, "we must resolve any ambiguity by considering the legislature's overall purposes and goals in enacting the body of legislation in question." Id. at 66, 977 P.2d at 788 (internal citations omitted) (quoting Ariz. Life & Disability Ins. Guar. Fund v. Honeywell, Inc., 190 Ariz. 84, 87, 945 P.2d 805, 808 (1997)).

¶ 13 While the separate texts of these statutes now differ significantly, that has not always been true. In the mid-1950s, the life insurance survivorship provision contained in the insurance code (A.R.S. § 20-1127) was virtually identical to that in the probate code (A.R.S. § 14-225, subsequently renumbered as § 14-2808). Because of current differences between the two, we must address and resolve the conflict. We do that by examining the legislative history of each statute.

A. Legislative History

¶ 14 In 1940, the National Conference of Commissioners on Uniform State Laws promulgated the USDA. The original USDA provided:

Where the insured and the beneficiary in a policy of life or accident insurance have died and there is no sufficient evidence that they have died otherwise than simultaneously the proceeds of the policy shall be distributed as if the insured had survived the beneficiary.

UNIF. SIMULTANEOUS DEATH ACT § 5 (amended 1953, superseded 1993), 8B U.L.A. 289-90 (1993).6 The Arizona Legislature adopted the USDA on two separate occasions, in separate titles of the Arizona Revised Statutes, in the 1950s.

¶ 15 The 1940 version was the source of A.R.S. § 20-1127, which was passed by the legislature in 1954 as part of a newly enacted insurance code. See S.B. No. 1, 1954 Ariz. Sess. Laws, ch. 64, art. 11, § 27. The language of Arizona's § 20-1127 mirrored the USDA with only minor word changes not relevant to the present controversy.7

¶ 16 In 1953 the drafters of the USDA amended the Act in small detail to include a provision concerning community property. In 1959 the Arizona Legislature enacted the amended USDA as part of Title 14 in A.R.S. § 14-2808.8 See S.B. No. 101, 1959 Ariz. Sess. Laws, ch. 77, § 1. Although the enactment of § 14-2808 was essentially a recodification in the probate code of the subject matter already enacted in the insurance code by § 20-1127, the legislature did not repeal § 20-1127. In fact, since its enactment in 1954, § 20-1127 has never been modified. All subsequent changes to the original USDA in the Arizona...

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