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

• Court: Court of Appeals of Tennessee
• Decided: January 24, 1996
• Docket: 01A01-9508-CH-00379
• Status: Published

Opinion

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

2 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)).

3 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

4 (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.

5 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

6 Assurance Co., 844 S.W.2d at 654. The court also stated as

[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