The Travelers Insurance Company v. Maudine Y. Lancaster Webb and Vicky Austin Lancaster

THE TRAVELERS INSURANCE COMPANY, )
)
Plaintiff/Interpleader, ) Appeal No.
) 01-A-01-9508-CH-00379
v. )
) Davidson Chancery
MAUDINE Y. LANCASTER WEBB, ) No. 94-2051-III
)
Defendant/Appellee, )
)
and )
)
FILED
VICKY AUSTIN LANCASTER, ) Jan. 24, 1996
)
Defendant/Appellant. ) Cecil Crowson, Jr.
Appellate Court Clerk
COURT OF APPEALS OF TENNESSEE
MIDDLE SECTION AT NASHVILLE
APPEAL FROM THE CHANCERY COURT FOR DAVIDSON COUNTY
AT NASHVILLE, TENNESSEE
THE HONORABLE ROBERT S. BRANDT, CHANCELLOR
W. WARNER McNEILLY, III
Watkins, McGugin, McNeilly & Rowan
214 Second Avenue, North, Suite 300
Nashville, Tennessee 37201
ATTORNEY FOR DEFENDANT/APPELLEE
MAUDINE Y. LANCASTER WEBB
DAVID W. PIPER
1808 West End Avenue, Suite 1000
Nashville, Tennessee 37203
ATTORNEY FOR DEFENDANT/APPELLANT
VICKY AUSTIN LANCASTER
AFFIRMED AND REMANDED
SAMUEL L. LEWIS, JUDGE
O P I N I O N
The Travelers Insurance Company ("Travelers") filed an
interpleader in the Chancery Court for Davidson County. It alleged
that both defendant/appellee, Maudine Y. Lancaster Webb ("Ms.
Webb"), and defendant/appellant, Vicky Austin Lancaster ("Mrs.
Lancaster"), claimed the proceeds of an insurance policy which
covered the life of decedent, Charles S. Lancaster.
Mrs. Lancaster presented two issues on appeal. The first
was whether "summary judgment in favor of ex-wife was precluded by
[a] genuine issue of material fact regarding [the] intention of
decedent." The second issue was whether "the owner of the life
insurance policy at issue substantially complied with the policy
requirements concerning a change of benefits such that [the] equity
maxim would apply and [whether the] court of equity should award
the proceeds from the policy of insurance to the owner's widow
rather than to one of the decedent's ex-wives." We discuss these
issues together.
The facts out of which this controversy arose are as
follows.
In 1982, Mr. Lancaster married Ms. Webb. They divorced in
January 1987. Mr. Lancaster and Mrs. Lancaster married in 1991.
Mr. Lancaster died on 25 December 1992 leaving Mrs. Lancaster as
his surviving spouse.
In 1985, Mr. Lancaster obtained life insurance with
Travelers through his employer, BellSouth. The group policy number
was G-104410. Mr. Lancaster had two policies with certificate
numbers 0159791 and 0159792. Certificate number 0159791 covered
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the life of Mr. Lancaster and listed Ms. Webb as the beneficiary,
and certificate number 0159792 covered Ms. Webb's life. After the
divorce, in 1987, Mr. Lancaster sent a letter through BellSouth
cancelling certificate number 0159792. In addition to the group
policy, Mr. Lancaster had a separate individual life insurance
policy through Travelers numbered 2644142. This policy had also
listed Ms. Webb as the beneficiary, but in 1992, Mr. Lancaster
changed the beneficiary designation to Mrs. Lancaster.
As far as this record shows, Travelers did not receive a
change of beneficiary form for certificate number 0159791. Mrs.
Lancaster admitted that, at the time of Mr. Lancaster's death, the
beneficiary of certificate number 0159791 was Ms. Webb and that Mr.
Lancaster did not send any correspondence to Travelers changing the
beneficiary of that policy.
The trial court properly determined that there were no
genuine issues of material fact and that the law entitled Ms. Webb
to a judgment. Recently, the Tennessee Supreme Court has
reaffirmed the important role of Rule 56 of the Tennessee Rules of
Civil Procedure. Byrd v. Hall, 847 S.W.2d 208 (Tenn. 1993). As
stated by the court, this rule provides "a quick, inexpensive means
of concluding cases ... upon issue as to which there is no genuine
dispute regarding material facts." Id. at 210. The Byrd court
stated that summary judgment is not a "disfavored procedural
shortcut but rather an important vehicle for concluding cases that
can and should be resolved on legal issues alone." Id. "If, after
a sufficient time for discovery has elapsed, the nonmoving party is
unable to demonstrate that he or she can [produce sufficient
evidence to withstand a motion for a directed verdict], summary
judgment is appropriate." Id. at 213 (citing Celotex Corp. v.
Catrett, 477 U.S. 317, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986)).
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In the instant case, Mrs. Lancaster admitted the following
undisputed facts: (1) Travelers' policy number G-104410 is a group
life insurance policy insuring eligible employees of BellSouth
Corporation; (2) Travelers' policy number G-104410 covered Mr.
Lancaster; (3) the beneficiary designation of Travelers' policy
number G-104410 is contained in the record and is a copy of a
genuine document; (4) at the time of Mr. Lancaster's death, the
beneficiary of certificate number 0159791 was Ms. Webb; and (5)
there were no correspondence from Mr. Lancaster to Travelers
changing the beneficiary of certificate number 0159791 to Mrs.
Lancaster.
The chancellor correctly applied Tennessee law to the
foregoing facts. He held that the person entitled to a policy's
benefits is the person designated as the beneficiary in the
insurance contract. In this case, that person was Ms. Webb. There
were no disputed facts to preclude summary judgment. On the motion
to alter or amend the judgment, the chancellor correctly stated as
follows:
An insurance contract -- insurance policy is a
contract between the policy owner and the insurance
company, and the policy owner can designate the
beneficiary he or she desires. This man [Mr.
Lancaster] designated the beneficiary. He never
changed it, and there is no evidence that he ever
took any steps to change it. Those facts are not
in dispute, so I conclude I reached the correct
result.
Mrs. Lancaster argued that Mr. Lancaster's intent was a
material fact that precluded summary judgment. This case involved
an insurance contract, which on its face, designated Ms. Webb as
the beneficiary. The policy contained no ambiguities and was
enforceable as written because a party's intent is irrelevant when
the language of the policy is clear and unambiguous. See
Interstate Life & Accident Ins. Co. v. Gammons, 408 S.W.2d 397, 399
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(Tenn. App. 1966). The law of this state is that courts are to
construe insurance contracts from their four corners. Id. "Where
the insurance contract is not ambiguous it is the [court's] duty to
apply to the words used their ordinary meaning and neither party is
to be favored in their construction." Wallace v. State Farm Mutual
Auto. Ins. Co., 216 S.W.2d 697, 701 (Tenn. 1949).
Mrs. Lancaster also argued that Mr. Lancaster's expression
in his will that he wanted Mrs. Lancaster to receive the insurance
proceeds amended the insurance contract. This argument is without
foundation because the language in a will does not operate to
deprive the named beneficiary of her rights to the policy proceeds.
Cook v. Cook, 521 S.W.2d 808, 813 (Tenn. 1975). When there is no
attempt to change the beneficiary according to the procedures set
forth in the policy, the law of this state provides that a
constructive trust does not arise, requiring distribution according
to the terms of the will, even though the testator clearly
indicated in his will that he wanted the insurance proceeds to
benefit an individual other than the named beneficiary. Stoker v.
Compton, 643 S.W.2d 895, 898 (Tenn. App. 1981). Thus, Mr.
Lancaster's will did not affect his life insurance contract.
Another argument propounded by Mrs. Lancaster was that Mr.
Lancaster and Ms. Webb's divorce destroyed Ms. Webb's rights as the
named beneficiary. This argument is also without foundation. The
courts of this state have consistently held that "[t]here is no
presumption that an ex-spouse is removed as a beneficiary from an
insurance policy by the mere fact that the parties have been
divorced." Sun Life Assurance Co. v. Hicks, 844 S.W.2d 652, 654
(Tenn. App. 1992). The Tennessee Supreme Court held that neither
a divorce nor a property settlement agreement has any impact upon
the beneficiary designation of an insurance policy. Bowers v.
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Bowers, 637 S.W.2d 456, 459 (Tenn. 1982). Being a beneficiary of
an insurance policy is not a "right or claim arising out of the
marital relationship and thus [is] not 'relinquished' or 'waived'
by the property settlement agreement and therefore the proceeds of
the policy pass[] [to the designated beneficiary] by insurance
contract law." Id. at 457. Thus, neither the divorce nor the
property settlement agreement deprived Ms. Webb of her rights as
the named beneficiary of the policy.
Mrs. Lancaster also argued that there was a factual dispute
regarding whether Mr. Lancaster substantially complied with the
policy requirements for changing the beneficiary. Here, there is
no dispute by Mrs. Lancaster's own admission. She admitted that
the beneficiary was "Maudine Lancaster Webb" and that there were no
correspondence to Travelers from Mr. Lancaster attempting to change
the beneficiary of certificate number 0159791. Nevertheless, Ms.
Lancaster claimed that Mr. Lancaster's change of the beneficiary of
policy number 2644142 and his oral statements to Mrs. Lancaster and
his family were sufficient to invoke the doctrine of substantial
compliance. These claims are without merit and demonstrate a
misunderstanding of the doctrine of substantial compliance.
Substantial compliance means substantially complying with
the requirements of the policy for changing the beneficiary. In
order to change a beneficiary, the method provided in the policy
must be followed and "[a] mere unexecuted intention to change the
beneficiary is not sufficient." Sun Life Assurance Co., 844 S.W.2d
at 654 (quoting Cronbach v. Aetna Life Ins. Co., 153 Tenn. 362, 284
S.W. 72 (1926)). In Sun Life, the court held that in order to
uphold a finding of substantial compliance the court must determine
from the record that the insured "took all the reasonable steps
possible to meet the conditions imposed by the policy." Sun Life
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Assurance Co., 844 S.W.2d at 654. The court also stated as
follows:
[T]he change of beneficiary has been accomplished
where [the insured] has done all that he could to
comply with the provisions of the policy, as where
he sent a proper written notice or request to the
home office of the company but was unable to send
the policy by reason of circumstances beyond his
control, as where it had been lost, or was in the
possession of another person who refused to
surrender it or was otherwise inaccessible, or
where he sent both the policy and a proper written
notice or request and all that remained to be done
were certain formal and ministerial acts on the
part of the company, such as the indorsement of the
change of the policy, and these acts were either
not done at all or were done after the death of the
insured. Of course the rule is not applicable
where the insured has not done all that he
reasonably could to meet the conditions of the
policy.
Id. at 654 (quoting Cronbach v. Aetna Life Ins. Co., 153 Tenn. 362,
284 S.W. 72 (1926)). In this case, Mr. Lancaster made no attempt
to comply with Travelers' requirements for changing the beneficiary
of certificate number 0159791. Therefore, Mrs. Lancaster's
argument is without merit.
The judgment of the trial court is in all things affirmed,
and the cause is remanded to the trial court for the enforcement of
its judgment and any further necessary proceedings. Costs on
appeal are taxed to defendant/appellant, Vicky Austin Lancaster.
__________________________________
SAMUEL L. LEWIS, JUDGE
CONCUR:
_________________________________
HENRY F. TODD, P.J., M.S.
_________________________________
BEN H. CANTRELL, JUDGE
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