De Zotell v. Mutual Life Ins. Co.

• Decision Date: 15 November 1932
• Docket Number: 6977
• Citation: 60 S.D. 532,245 N.W. 58
• Parties: ELNORA DE ZOTELL, Respondent, v. MUTUAL LIFE INSURANCE COMPANY OF NEW YORK Appellant. and Burtch, as administrator of the Estate of Roy G. De Zotell, Deceased, Intervenor,
• Court: South Dakota Supreme Court

60 S.D. 532

245 N.W. 58

ELNORA DE ZOTELL, Respondent, v. MUTUAL LIFE INSURANCE COMPANY OF NEW YORK

Appellant.

and Burtch, as administrator of the Estate of Roy G. De Zotell, Deceased,

Intervenor,

South Dakota Supreme Court

Appeal from Circuit Court, Minnehaha County, SD

Hon. Ray E. Dougherty, Judge

#6977—Affirmed

Frederick L. Allen, New York City, NY

Ray F. Bruce, Bailey & Voorhees, Sioux Falls, SD

Attorneys for Appellant.

Conway, Feyder & Conway, Sioux Falls, SD

Tom Kirby, Sioux Falls, SD

Attorneys for Respondents.

Opinion Filed Nov 15, 1932

CAMPBELL, Presiding Judge.

January 3, 1928, Roy G. De Zotell effected a policy of insurance upon his life with defendant company in the amount of $2,000, paying the first annual premium thereon of $27.56, naming his wife, Elnora De Zotell, plaintiff herein, as beneficiary, and reserving to himself the right to change beneficiaries from time to time as he might desire. On August 9, 1928, Elnora De Zotell feloniously shot and killed her husband, the insured, and was subsequently convicted of first degree manslaughter. Roy De Zotell died intestate, leaving him surviving, in addition to his widow, his mother, two brothers, and two sisters, and the intervener Burtch was duly appointed administrator of his estate. The assets of the estate amounted to $500; claims of creditors and expenses of administration aggregated $1,650.

Subsequent to her conviction of manslaughter, plaintiff instituted this action to recover upon the insurance policy. The administrator, Burtch, intervened, and asked that plaintiff take nothing and that the amount of the policy be paid to him as administrator. Findings and conclusions below were in favor of intervener, and it was adjudged that the intervener, as administrator of the estate of the insured, recover the full face value of the policy with interest, and that the plaintiff take nothing. From this judgment and from a denial of its application for new trial, defendant insurance company has appealed.

This case tenders for consideration several phases of a problem that has been more or less frequently before the courts. It is unquestionably a shocking and abhorrent thing that a sane, felonious killer (or his heirs) should acquire money or property as a result of his crime. The principles which forbid such unconscionable enrichment of the criminal are implicit in the ancient common law maxim “Nullus commodum capere potest de injuria sua propria” (Co. Litt. 148b) anglicized as section 49 of our 1919 Code providing that “no one can take advantage of his own wrong.” These principles require no exposition, and are supported by an almost imperative public policy. A situation seeming to demand their application arises when a beneficiary feloniously killing an insured seeks recovery on the policy, and also when an heir feloniously killing an ancestor seeks to take from said ancestor by will or descent. Frequently, as in the instant case, elements of both these situations are involved in a single case by reason of the fact that the beneficiary named in the insurance policy is also an heir or devisee of the victim.

So far as concerns the question of collection of insurance money by a sane beneficiary who has feloniously killed the insured, the courts have had no difficulty. As stated by Mr. Justice Field (Mut. Life Ins. Co. v. Armstrong [1886] 6 SCt 877, 881, 29 LEd 997): “It would be a reproach to the jurisprudence of the country if one could recover insurance money payable on the death of the party whose life he had feloniously taken.” With a possible exception where the policy contains a valid incontestability clause (cf. Lee v. Southern Life & Health Ins. Co. [1923] 19 Ala. App. 535, 98 So. 696) the courts have been unanimous in holding, wherever and whenever the matter has been presented to them, that a sane, felonious killer cannot recover insurance money on the life of his victim. See Cooley’s Briefs on Insurance (2d Ed.) p. 5227 et seq.; Couch, Cyc. Ins. Law, § 342; cases collected in notes, 7 ALR 829; 27 ALR 1521; 70 ALR 1539.

“While there is a difference of opinion among the courts of other states as to whether or not a murderer can inherit from his victim under statutes containing no exceptions, there is no such difference of opinion as to the effect of the murder of an insured person by the beneficiary named in an insurance policy. In fact, although the plaintiff’s counsel has shown great diligence, he has been unable to find a single case in which a beneficiary has been permitted to recover upon a life insurance policy when he has murdered the insured. Decisions to the contrary are innumerable.”

Suavely v. Prudential Ins. Co. (1931) 157 A. 394, 395, 10 NJ Misc. 1.

As a corollary to the rule that the beneficiary in such cases could not recover on the insurance policy, there has developed since 1892 a view that the incapacity of the named beneficiary should not excuse the insurance company from paying the insurance money to someone, and it has been quite generally held (as we will notice in more detail hereinafter) that the insurance money should be paid to the estate or the other heirs of the insured.

Appellant does not appear very seriously to question the propriety of the view that incapacity of the beneficiary to take in these cases should not, as a general rule, excuse the insurance company from paying some one. But appellant points to those portions of section 701, subd. 2, Rev. Code 1919, as amended by chapter 186, Laws 1923; section 2661, Rev. Code 1919, as amended by chapter 148, Laws 1923, and section 9310, Rev. Code 1919, which read respectively as follows:

“If the decedent leaves no issue and the estate does not exceed in value twenty thousand dollars, all the estate goes to the surviving husband or wife. ...”

“The proceeds of any insurance upon the life of any person, residing in this state at the time of his death and who leaves a surviving widow, husband, or minor child or children, payable upon his death to his order or to the order of his assigns, estate, executor or administrator, and not assigned to any other person, shall, to any amount not exceeding Five Thousand Dollars ($5,000.00) inure to the use of such surviving widow, husband, minor child or children, and to such amount shall not be subject to the payment of any debt of such decedent, or of such surviving widow, husband, minor child or children.”

“The proceeds of a policy of insurance, to the extent of five thousand dollars, on the life of an individual, in the absence of an agreement or assignment to the contrary, shall inure to the separate use of the husband or wife and children of such individual, independently of his creditors, and of an endowment policy payable to the assured on attaining a certain age, to the amount of five thousand dollars, shall be exempt from any of his debts, and the avails of any life insurance, or any other sum of money, not exceeding in amount five thousand dollars, made payable by any mutual aid or benevolent society upon the death of a member of such society, are not subject to the debts of the decedent.”

—and urges that, if the administrator is allowed to recover in this particular case, then, by virtue of those statutes the insurance proceeds will necessarily pass from the administrator to the plaintiff (who admittedly cannot recover on the policy), and plaintiff will thereby be permitted to do indirectly what she cannot do directly. It is principally upon this ground that appellant urges that the judgment for recovery by the administrator should be reversed. Respondent administrator points to the general line of authorities allowing recovery upon the policy in behalf of the estate or other heirs of the insured when the beneficiary has incapacitated himself from recovery, and urges the question of the ultimate disposition of the insurance proceeds, after the same come to the hands of the administrator, is not material to the decision of the pending case, but will be a question subsequently to be determined by the county court as part of its proper functions in connection with the administration of the Roy De Zotell estate. We cannot acquiesce in the view of respondent that the question of what may become of the insurance proceeds in the hands of the administrator is immaterial in this case, for this reason: We are of the opinion, as will be more fully hereinafter stated, that the doctrine which permits recovery by the administrator or other heirs of the insured in cases where the named beneficiary is incapacitated to recover on the policy because of felonious killing is and must be founded upon the express condition precedent that the named beneficiary will not profit thereby. It follows that we ought not to affirm any judgment for the payment of this insurance money to the administrator of the insured or to any one else, unless it be demonstrably certain that such payment will not in any manner result in permitting the wrongdoing beneficiary to participate in the proceeds either directly or indirectly. We think, therefore, that we must examine into the whole matter somewhat further.

Many legal scholars and theorists have urged with considerable force the view that cases of this kind (both with relation to recovery of insurance money and concerning taking by will or succes sion) present an ideal situation for the establishment of a constructive trust. A constructive trust, as pointed out by Dean Pound (33 Har. Law Rev. 420), is purely a remedial institution. Or, in the words of Mr. Justice Cardozo (Beatty v. Guggenheim Exploration Co. [1919] 2225 NY 380, 380), “ ... [it] is the formula through which the conscience of equity finds expression. When property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest, equity converts him into a trustee.” Pursuant to this theory, the wrongdoer would take the legal title,...