Warren v. Spurlock's Adm'r

• Decision Date: 15 January 1943
• Citation: 167 S.W.2d 858,292 Ky. 668
• Parties: WARREN v. SPURLOCK'S ADM'R.
• Court: Kentucky Court of Appeals

167 S.W.2d 858

292 Ky. 668

WARREN v. SPURLOCK'S ADM'R.

Court of Appeals of Kentucky

January 15, 1943

Appeal from Circuit Court, Harlan County; J. S. Forester, Judge.

Action by Ruby N. Warren against G. G. Spurlock, administrator of the estate of William H. Spurlock, deceased, for an adjudication that the plaintiff rather than the estate of the deceased was entitled to the proceeds of a life policy on the life of the deceased. From a judgment in favor of the defendant, the plaintiff appeals.

Judgment affirmed.

Cleon K. Calvert and W. L. Hammond, both of Pineville, for appellant.

Roy W House, of Manchester, for appellee.

STANLEY Commissioner.

The case is between a divorced wife, named as beneficiary in a policy of insurance upon the life of her former deceased husband, William H. Spurlock, and his estate as to who is entitled to the proceeds of $1,000. The trial court ruled that the right of the wife had been terminated by the decree of divorce and an agreed judgment settling all property rights between the husband and wife, which merely provided that the wife should have all the furniture in their residence and the husband should pay her attorney's fees. The judgment appealed from was that his estate was entitled to the proceeds.

It is held in many jurisdictions that the interest of a wife as beneficiary in an ordinary life insurance policy in which the right to change the beneficiary is reserved to the insured is not abrogated or extinguished by the divorce of the parties. The variable decisions affirming that rule or departing from it or modifying it depend upon conceptions of insurable interest or the contract or local statutes. Couch, Cyclopedia of Insurance Law, Secs. 440h, 440i; 29 Am.Jur., Insurance Sec. 1309. Our rulings stand out prominently in all the texts covering the subject as being founded upon Section 425 of our Civil Code of Practice and Section 2121, Ky. Stats. (now KRS 403.060), both of which provide that upon a judgment of divorce there shall be a restoration of all property either party obtained from the other. The two statutes are identical in meaning although not in language. Section 425 of the Code (which is a little more explicit) reads in part: "Every judgment for a divorce from the bond of matrimony shall contain an order restoring any property not disposed of at the commencement of the action, which either party may have obtained, directly or indirectly, from or through the other during marriage, in consideration or by reason thereof; and any property so obtained, without valuable consideration, shall be deemed to have been obtained by reason of marriage."

The provision is effective whether or not the return of the property is ordered by the judgment of divorce. Schauberger v. Morel's Adm'r, 168 Ky. 368, 182 S.W. 198, Ann.Cas.1917C, 265. Beginning with Sea v. Conrad, 155 Ky. 51, 159 S.W. 622, 47 L.R.A.,N.S., 1074, Ann.Cas.1915C, 318, and continuing through many cases down to Miller v. Miller's Adm'x, 266 Ky. 539, 99 S.W.2d 720, we have construed the two statutes as abrogating every right of the divorced party as beneficiary in a policy of insurance on the life of the other. This consistent construction is recognized by the appellant, but her counsel earnestly argues that it is unsound and should be overruled. The argument rests upon the premise that the right of a beneficiary in a policy reserving the power of the insured to substitute another is a mere expectancy and not property; that the statutes do not work a cancellation of an expectancy but merely authorize a restoration of property; that the courts have not power to alter the contract; and that the failure of the insured to exercise the power reserved evidences his purpose to continue the insurance for the benefit of his former wife for whom it was effected. It is submitted, particularly, that the basis of the interpretation of the statutes that a divorced wife has not insurable interest in the life of her ex-husband cannot be justified under our ruling that one may take out insurance on his own life for the benefit of a stranger.

We observed in Sea v. Conrad, supra, that it was unnecessary to determine whether the fact that a divorced wife has no insurable interest in the life of her former husband was in itself sufficient to divest her of every right in the proceeds of the policy, it being enough to...