Prudential Ins. Co. of America v. Burke , 614 S.W.2d 847 ( 1981 )

CORNELIUS, Chief Justice.

Riley P. Burke filed this suit against Prudential Insurance Company because it refused to change the beneficiary of his life insurance policy. The petition sought either damages, specific performance or declaratory judgment. The trial court rendered judgment declaring that Prudential had the duty to change the beneficiary in accordance with Burke’s direction, and allowing Burke a recovery of his attorney’s fees. Prudential has appealed.

The facts were stipulated. The policy was issued during the time Mr. Burke was married to Dorthy Jo Burke, and she was named beneficiary. Several years later, Mr. and Mrs. Burke were divorced. They subsequently remarried and again divorced. Neither divorce decree mentioned the insurance policy. Several months after the second divorce, Mr. Burke directed Prudential to change the beneficiary of his policy to Melba L. Burke, whom he married after his second divorce from the former Mrs. Burke. Prudential refused, contending that despite the policy provision allowing the insured to change the beneficiary,¹ it could not or should not do so because under Texas law the present beneficiary has a community interest in the policy and in the future right to the proceeds which cannot be divested by the ex parte act of the insured.

Prudential relies upon authorities which hold that when a beneficiary has a vested interest in the proceeds of an insurance policy the insured cannot change the beneficiary designation. See Tomlinson v. Lackey, 555 S.W.2d 810 (Tex.Civ.App.-El Paso 1977, no writ); Box v. Southern Farm Bureau Life Ins. Co., 526 S.W.2d 787 (Tex.Civ.App.-Corpus Christi 1975, writ ref’d n. r. e.); Leal v. Leal, 401 S.W.2d 293 (Tex.Civ.App.-San Antonio 1966, no writ); 4 Couch on Insurance 2d § 27.66 (1960). Those cases state the correct rule in their respective situations, but they do not govern this case. A party designated as beneficiary in an insurance policy requires a vested right in the future policy proceeds when there is a contract which obligates the insured not to change that designation, Tomlinson v. Lackey, supra; Leal v. Leal, supra, but that is not the situation here. In our case, the beneficiary’s interest in the policy arises from the operation of our community property law. By that law, a policy purchased with community funds is an unmatured chose in action owned by the community which matures at the death of the insured. The proceeds, when paid, constitute community funds, except where the beneficiary survives the insured, in which case a gift of the insured’s portion of such proceeds is presumed to have been intended and completed by the insured’s death. Brown v. Lee, 371 S.W.2d 694 (Tex.1963); Alexander v. Alexander, 410 S.W.2d 275 (Tex.Civ.App.-Houston 1966, no writ). That rule, however, does not prevent the insured from exercising the contractual right given in the policy to change the beneficiary. The insurance company has neither the contractual right to refuse such a change nor the standing to represent the owner of the other community interest to prevent such a change. Stewart v. Mutual Benefit Life Insurance Co., 522 S.W.2d 257 (Tex.Civ.App.-Amarillo 1975, writ ref’d n. r. e.); Salvato v. Volunteer State Life Insurance Company, 424 S.W.2d 1 (Tex.Civ.App.-Houston 1968, no writ). The insured may change the beneficiary and if he does his act constitutes a gift of his interest in the policy to the new beneficiary, but it does not affect the first beneficiary’s community interest in the proceeds of the policy when payable. In other words, the change of beneficiary is effective only as to the insured’s community interest. Amason v. Franklin Life Insurance Company, 428 F.2d 1144 (5th Cir. 1970); Berry v. Franklin State Bank & Trust Co., 186 La. 623, 173 So. 126 (1937); McBride v. McBride, 11 Cal.App.2d 521, 54 P.2d 480 (1936); 44 Am. Jur.2d Insurance § 1777, p. 691. See also Annot., 114 A.L.R. 545, s. 168 A.L.R. 342, 347. The trial court correctly concluded that Prudential was obligated to effect the change of beneficiary directed by Mr. Burke.

Prudential also complains of the court’s award of attorney’s fees. We sustain its point in that regard.

In general, attorney’s fees are not recoverable, either in actions in tort or upon contracts, unless authorized by statute or by contract. New Amsterdam Casualty Co. v. Texas Industries, Inc., 414 S.W.2d 914 (Tex.1967); Jay Fikes and Associates v. Walton, 578 S.W.2d 885 (Tex.Civ.App.-Amarillo 1979 writ ref’d n. r. e.); Whitten v. Alling & Cory Company, 526 S.W.2d 245 (Tex.Civ.App.-Tyler 1975, writ ref’d). The insurance policy involved here contains no provision for the recovery of such fees. Tex.Rev.Civ.Stat. Ann. art. 2226, which provides for the recovery of such fees in many types of cases, expressly excludes claims against insurance companies which are subject to the provisions of Tex.Ins.Code Ann. arts. 21.21, 21.21-2 (Supp.1980) and 3.62. Article 21.21 of the Insurance Code applies to any person or corporation engaged in the business of insurance in Texas, Jay Freeman Co. v. Glens Falls Ins. Co., 486 F.Supp. 140 (N.D.Tex.1980); yet none of the insurance code provisions allowing a recovery of attorney’s fees applies to this type of case. Neither does the declaratory judgment act allow for the recovery of attorney’s fees, unless they are recoverable by virtue of other statutory or contractual provisions. Allstate Insurance Company v. Zellars, 452 S.W.2d 539 (Tex.Civ.App.-El Paso), aff’d on other grounds, 462 S.W.2d 550 (Tex.1970); Kelsey v. Corbett, 396 S.W.2d 440 (Tex.Civ.App.-El Paso 1965, writ ref’d n. r. e.), appeal dism’d, 385 U.S. 35, 87 S.Ct. 240, 17 L.Ed.2d 34 (1966); Annot., 87 A.L.R. 3d 429 (1978).

The judgment of the District Court is reformed to delete the provision awarding attorney’s fees to Mr. Burke. As reformed, the judgment is affirmed.

BLEIL, J., not participating.

1 . “The beneficiary under this policy may be changed from time to time, upon proper written request, but such change shall become operative only if the policy is so endorsed by the company, whereupon it shall take effect and any previous beneficiary’s interest shall cease as of the date of such request, ...