Gardner v. Nationwide Life Insurance Company

206 S.E.2d 818 (1974) 22 N.C. App. 404

William Bruce GARDNER, Administrator of the Estate of Carol Gardner Batton, Deceased
v.
NATIONWIDE LIFE INSURANCE COMPANY.

No. 748SC380.

Court of Appeals of North Carolina.

July 17, 1974. Certiorari Denied August 30, 1974.

Owens & Haigwood by Thomas D. Haigwood and James, Hite, Cavendish & Blount by Marvin K. Blount, Jr., Greenville, for plaintiff appellee.

Jeffress, Hodges, Morris & Rochelle by A. H. Jeffress, Kinston, for defendant appellant.

Certiorari Denied by Supreme Court August 30, 1974.

HEDRICK, Judge.

This appeal presents but one question for our consideration: Who is entitled to the proceeds of a life insurance policy when the insured feloniously kills the named beneficiary, then commits suicide, and the insurance policy contains a section designating classes of alternative beneficiaries who are to receive the proceeds when the named beneficiary(ies) does not survive the insured? Determination of this issue is governed by G.S. § 31A-11(b) which reads as follows: "If the decedent is beneficiary or assignee of any policy or certificate of insurance on the life of the slayer, the proceeds shall be paid to the estate of the decedent upon the death of the slayer, unless the policy names some person other than the slayer or his estate as alternative beneficiary." (emphasis added)

Plaintiff, notwithstanding the fact that alternative beneficiaries were enumerated in the insurance policy, contends that the proceeds should be paid to the estate of the decedent-beneficiary because the alternative beneficiaries enumerated in the insurance policy are designated by classes by the express language of the policy, and as such do not comply with G.S. § 31A-11(b)'s requirement that the alternative beneficiary must be some "person". Furthermore, the plaintiff attacks the payment of the proceeds to the slayer's mother as being contrary to the avowed policy of G. S. § 31A, to wit: "that no person shall be allowed to profit by his own wrong."

Conversely, defendant asserts that plaintiff's interpretation of G.S. § 31A is much too narrow and that it is unable to discern how the policy advocated by Chapter 31A will be undermined by awarding the proceeds to the mother of the slayer.

Our research discloses that since the enactment of G.S. § 31A in 1961, no cases have been decided under the specific provision now before us. Both plaintiff and defendant found their arguments upon the decision of Parker v. Potter, 200 N.C. 348, 157 S.E. 68 (1931). Although Parker was decided thirty years prior to the enactment of G.S. § 31A, we nevertheless believe it to be important to the determination of the question now before us.

In Parker, just as in the present case, the husband slayed his wife and then committed suicide; however, Parker differs factually from the present case in that two insurance policies were involved. The opinion of the court in Parker, although not specifically so designated, consists of two separate determinations—one for each policy involved. The first policy concerned the husband as the insured and the wife as the beneficiary. The administrator of the slayer-husband's estate claimed that the heirs of the slayer were entitled to the proceeds of the policy as the beneficiary did not survive the insured and no alternative beneficiary was named. The Supreme Court balked at this logic and determined that the proceeds were to be paid to the next of kin of the wife, because to hold otherwise would be to do harm to the maxim that no man should take advantage of his own wrong. Plaintiffs in the instant case point to this part of the Parker decision for support of their contention that the award of the proceeds by defendant to the slayer's mother was improper.

The second policy involved in Parker also named the slayer's wife as the beneficiary and then contained the following pertinent sections:

"Section 4: Applications—Applications must be made on Forms prescribed by the Sovereign Commander, stating the amount desired and naming the beneficiary and relationship to applicant, which beneficiary or beneficiaries shall be his wife, children, adopted children, parents, brothers and sisters, or other blood relations, or persons dependent upon the member. If the beneficiary named is not one of said class of persons, the certificate shall be null and void.

"Section 5: Beneficiaries—The beneficiary or beneficiaries shall be designated in every beneficiary certificate issued and shall be only of the class named above. In the event of the death of all the beneficiaries designated before the death of the member, if no new designation has been made, the benefits shall be paid to the surviving widow and surviving children of the member, share and share alike, provided such widow shall not be entitled to any benefits if she shall have been divorced; provided further, that if there be no surviving widow, the surviving children, if any, shall be entitled to all of such benefits, and if there be no surviving children, then the surviving widow, if any, shall be entitled to the benefits; but if there be no surviving wife or children, such benefits shall be paid to the next living relation of the member in the order named in class of beneficiaries named in paragraph 4 above, and those of the half blood shall share equally with those of the full blood."

The named beneficiary not surviving the insured, the court decided that the above quoted sections of the insurance policy controlled; and on this basis, the mother of the slayer was awarded the proceeds. In so doing the court stated, "If it be granted that Rebecca J. Groves [mother of the slayer] is in the class named in section four by reason of privity in blood with the insured, it does not follow that her status as beneficiary is not definitely fixed by the terms of the contract. Indeed, her interest is derived from the contract and is not affected by any asserted analogy between a devise and a contract of insurance." Parker v. Potter, supra, at p. 355, 157 N.E. at p. 72. Defendant asserts that this portion of the Parker opinion is the part which is critical to the instant case.

Although again recognizing the fact that Parker was decided three decades prior to the enactment of G.S. § 31A, still we are inclined to agree with the defendant that the court's decision as to the second insurance policy should serve as a guideline to our determination of the case sub judice. Clearly, by its action in awarding the proceeds of the second policy to the mother of the slayer, the Supreme Court in Parker manifested its belief that the payment of the proceeds to the mother of the slayer pursuant to the pertinent sections of the insurance policy would not frustrate the principle that one should not benefit by his own wrongdoing.

Similarly, we believe that allowing the slayer's mother in the instant case to receive the insurance proceeds pursuant to the applicable sections of the policy will not do violence to the legislature's codification in G.S. § 31A of the general principle barring a wrongdoer from unjustly enriching himself by his wrongful act. The legislature specifically included in G.S. § 31A-11(b) a proviso to deal with alternative beneficiaries, and we are of the view that the term "some person" contained within the proviso should not be narrowly construed as contended by plaintiff. The public policy sought to be fostered by the enactment of G.S. § 31A is predicated upon the theory that the murderer himself will not profit by his own wrongdoing; however, this principle does not extend to those related to the slayer, when, as here, they are named in the insurance contract as alternative beneficiaries.

For the reasons stated, the judgment appealed from is

Reversed.

BRITT and CARSON, JJ., concur.