Life Insurance and The Homicidal Beneficiary:

 

The Insurer’s Responsibilities under State Slayer Laws and Statutes

 

 

Gary Schuman

 

 

I.

Introduction

The ability to name the beneficiary is one of the most important rights possessed by the owner of a life insurance policy.[1]  The person having the right to designate a beneficiary may name anyone he or she chooses and, generally, every person is eligible to be the beneficiary of an individual life insurance policy.[2]  There are, however, qualifications to this general rule which must be considered for any particular life insurance policy.  One such example is that a person may have been eligible to receive the insurance proceeds when named but later could be declared ineligible if the person named is responsible for the insured’s death.

“Life insurance policies are procured because life is, indeed precarious and uncertain”.[3] The insured wants to provide for others in the event of his or her untimely death.  Unfortunately, insurance coverage on the life of an individual can have the unintended effect of tempting a beneficiary to kill the insured in order to obtain the insurance proceeds.[4]

The insurer faces a problem when the insured is murdered and the named beneficiary is either suspected, accused or actually convicted of killing the insured.  Depending on the circumstances, the beneficiary may be disqualified to receive the insurance proceeds by reason of having killed the insured.   The contingent beneficiary or the insured’s estate may challenge the primary beneficiary’s right to recover, resulting in competing claims for the same proceeds.  The policy even may be declared void, and the insurer relieved of paying any proceeds. 

It is therefore necessary to identify the standards by which insurer conduct is governed, not only when the primary beneficiary sustains a criminal conviction, but more importantly, when the circumstances surrounding an insured’s death cast suspicion on the primary beneficiary who has yet to be convicted or enter a formal plea to the charges.  This article will examine the variable fact situations associated with the death of an insured at the hands of the beneficiary.  It also will address how the courts have ruled on these issues and what measures the insurer can take to protect itself from multiple liability.

II.

Slayer Laws

“Insurance coverage is a matter of contract.”[5] The rights of all parties under an insurance contract “are strictly governed by the terms and conditions of the insurance policy,” and an insurance company is liable for payment of insurance proceeds only under the terms contained in the policy of insurance.[6]   Thus, during the lifetime of the insured, “the interest of the designated beneficiary can only be divested by formal change in the manner prescribed by the policy.”[7] Ordinarily, once the insured dies, “the designated beneficiary of a life insurance policy has a vested interest in the proceeds” and is entitled to payment.[8]  However, there are exceptions to this rule.

A. Common Law

Throughout the United States, there exists a common law rule that a murderer, or his heirs or representatives, ordinarily may not profit by taking any portion of the victim’s estate.[9] The law “does not and cannot sanction any scheme which has as its purpose the certain infliction of death for . . . financial gain.”[10]  Likewise, “[t]he principle that no person shall be permitted to benefit from the consequences of his or her wrongdoing has long been applied to disqualify murderers from inheriting from their victims, whether the route of inheritance is a will, an intestacy statute or a life insurance policy.”[11]  The disqualification rests on the theory that it is contrary to public policy to permit a person who has unlawfully killed another to profit by his or her own wrong.[12] Often, this principle is referred to as the “slayer’s rule.”[13]

This common law principle prohibits a beneficiary from benefiting from life insurance policy proceeds when he wrongfully or feloniously kills the insured, or commits a wrongful act that directly results in the insured’s death.[14]  The United States Supreme Court long ago espoused this rule in Mutual Life Insurance Co. v. Armstrong[15] when it said: “[i]t would be a reproach to the jurisprudence of the country, if one were to recover insurance money payable on the death of the party whose life he had feloniously taken.”[16]

B. Statutes

Many states subsequently have enacted statutes codifying the common law rule that no one shall be allowed to benefit from his or her own wrong.[17] In these states, the statutes usually apply to life insurance proceeds.[18] The statutes providing for disqualification vary, however, regarding the nature of any killing that disqualifies the beneficiary.  Some prohibit recovery without regard to the nature of the killing,[19] while others refer to felonious or willful killing.[20] Still others are applicable only if the beneficiary is convicted of the criminal act.[21] These statutes are referred to as “slayer’s statutes.”[22]

C. Crimes Barring Recovery

As interpreted by judicial precedent, the slayer statutes and comparable rules almost always bar recovery to the named beneficiary when the crime involves murder. Both first and second-degree murder are per se felonious and intentional.[23] The issue differs when the crime is manslaughter.  Given that offense, a court must determine whether the manslaughter was voluntary or involuntary.  The relevant inquiry becomes more particular because “voluntary and involuntary manslaughter are separate offenses.”[24]  As generally defined, “[b]oth are killings without malice and without legal justification or excuse; however, voluntary manslaughter requires a general intent to do the act that caused death.”[25]  Involuntary manslaughter, on the other hand, constitutes an unlawful killing that is without malice, premeditation or the intent to kill or inflict serious bodily harm.[26]  Beneficiaries who have killed the insured by degree of voluntary manslaughter have been precluded from receiving benefits under the policy on an insured’s life.[27] If the killing is unintentional, however, it is outside the ambit of the slayer’s law or rule, even though it is felonious.  Thus, involuntary manslaughter in most cases does not qualify the beneficiary as a “slayer” and does not, per se, preclude receipt of insurance proceeds.[28]

The issue of manslaughter often results from a fight, if the fatal consequences of the fight reasonably could be regarded as unforeseeable under the circumstances.[29] Domestic disputes provide another context, where the husband continually abuses his wife or administers severe physical beatings, including death threats and drunken conduct.[30]  Manslaughter also presents an issue when the named beneficiary drives a vehicle with the insured (often the spouse) as the passenger, and the beneficiary loses control of the vehicle, whether or not intoxicated, causing an accident resulting in the insured’s death, and is convicted of vehicular homicide.[31]

Court decisions in this regard generally have held that to enforce the bar to benefits, the beneficiary must harbor an intent to kill the insured.[32] In the situations described above the intent to kill is not present, and the beneficiary is not barred from recovery.[33] “The requirement of intent, rather than a certain degree of criminal culpability . . . is to remove the temptation to kill for monetary gain.”[34] However, in order to bar the beneficiary from collecting insurance proceeds, a challenger  need not  prove that the beneficiary intended to kill the insured for the purpose of collecting insurance.  Rather, the challenger need only demonstrate that the beneficiary willfully caused the death of the insured.[35]

This distinction is illustrated in Cheatle v. Cheatle,[36] where the beneficiary’s right to the proceeds was challenged on the ground that she was the primary caretaker for the insured. In this capacity, she was alleged to have engaged in a pattern of conduct that undermined his health and shortened his life.  Specifically, her conduct allegedly failed to provide the insured with sufficient food and water, isolated him from friends, interfered with the administration of professional heath care and even encompassed sexual abuse. The trial court found that the beneficiary’s care and treatment did shorten the insured’s life and that her actions may have constituted actual gross neglect. However, because her conduct could not be described as willful or intentional, the beneficiary could still recover under the decedent’s will.

Addressing similar circumstances, statutes enacted in several states have changed the law to bar recovery by a beneficiary who accidentally or unintentionally kills the insured.[37]  Most of these statutes make criminal responsibility the standard by which to judge a beneficiary’s right to insurance proceeds.[38]  By virtue of this language, it is generally understood that the legislature intended to exclude a beneficiary who does not intentionally and feloniously cause the death of the insured but is nonetheless criminally responsible for the insured’s death.[39] Thus, conviction for involuntary manslaughter would bar recovery of insurance proceeds by the beneficiary.[40]

It should be noted, however, that the rule barring a beneficiary who unlawfully causes the death of the insured generally does not apply when the beneficiary is not the legally responsible cause of the insured’s death.[41] Thus, a beneficiary who kills the insured under circumstances suggesting that the act is justifiable or excusable may not be disqualified from receiving the proceeds of the policy.  Typically, these circumstances occur when the insured’s death is caused by accident or in self-defense, or under other circumstances such that the beneficiary has no criminal responsibility for his or her conduct.[42] For example, a beneficiary found to be insane when he kills the insured will not be barred from recovery, even though the beneficiary would otherwise be guilty of murder if he were sane. The underlying premise applies the rationale that an insane person is incapable of forming the requisite intent to kill.[43]

It is the beneficiary’s participation in causing or procuring the death of the insured that bars recovery on the policy.  “The fact of the participation in the death, and not the method of participation is the critical issue which must be resolved.”[44] Thus, a beneficiary who intentionally and feloniously kills or procures the killing of the insured is barred from receiving any insurance benefits.

The case of United Benefit Life Insurance Co. v. Brady[45] illustrates this point.  In that case, the beneficiary pled guilty to a felony in that she conspired to murder the insured. She had initiated the chain of events which culminated in the insured’s death, and feloniously took the life of another, barring her recovery of the proceeds. The intent of the law is clear: one should not profit from his or her own wrongful conduct.

The decision in Reynolds v. American-Amicable Life Insurance Co.,[46] however, offers a distinction.   In that case, the primary beneficiary (wife) was convicted of the insured’s murder and barred from recovering insurance benefits. However, the estate also challenged the right of the contingent beneficiary, the insured’s stepdaughter, to receive benefits.  The stepdaughter had acted as an accessory after the fact because she helped her mother conceal the murder.  Nevertheless, she was not an accomplice in willfully bringing about her stepfather’s death. Furthermore, the wrongful acts were not undertaken in order to benefit under the insurance policy.  In fact, her actions in concealing the murder, if realized, would have enabled the primary beneficiary to recover the policy proceeds.  Thus, the court ruled she was not barred from recovering the insurance benefits.[47]

D. Need for Criminal Conviction

Some slayer statutes provide that a life insurance policy beneficiary first must be  convicted of killing the insured before the beneficiary can be disqualified.  These statutes, by express language, prohibit only those who are actually convicted of murder from profiting under the policy.[48]  In these states, courts have considered whether such a statute completely replaces the common law, making conviction an absolute condition to forfeiture.  As noted earlier, the common law does not require a criminal conviction to preclude a slayer beneficiary from recovering insurance proceeds on the life of the insured who was killed by the beneficiary.[49]

Some jurisdictions maintain that the statute supercedes the common law and is therefore the sole ground on which to disqualify the beneficiary.[50] The majority of the courts considering this issue have found otherwise, however, ruling that the statute only supplements common law.  Thus, either the statute or the common law provides a basis on which the beneficiary’s right to the proceeds is forfeit.  In this situation, a civil action might prove that the beneficiary was a willful slayer, despite the absence of a criminal conviction.[51] Thus, the beneficiary might be barred from collecting the proceeds of an insurance policy in a subsequent civil action under the common law rule without regard to whether he or she was tried and convicted for the insured’s murder.  A conviction or guilty plea is not a prerequisite to the beneficiary’s disqualification.[52]

In Eskridge v. Farmers New World Life Insurance Co.,[53] the insured carried three life insurance policies totaling approximately $350,000. The insured was found dead, but the medical examiner could not determine the exact cause of death due to severe decomposition.  Nevertheless, he did not eliminate death by homicide. The estranged husband had been listed as beneficiary and the insured’s children challenged his right to receive the proceeds. Though no criminal charges resulted, a subsequent civil action determined that the husband had murdered the insured, barring him from recovering the insurance benefits. The decision was affirmed on appeal.

This same determination has been extended to juveniles held culpable for a death by the juvenile courts.  In Huff v. Union Fidelity Life Insurance Co.[54] the court had determined that, pursuant to statute, a finding of guilt in juvenile court could “not impose any of the civil disabilities on a juvenile ordinarily imposed by conviction of a crime.” [55]  Thus, the slayer statute was inapplicable. However, the court noted in addition that “the statute does not purport to allow recovery by persons whose rights are curtailed by the common law.”[56]  Thus, “[a] minor whose age precludes convictions that statutorily bar recovery can still forfeit beneficial rights under the common law rule.”[57]

A number of slayer statutes also address the subsequent use of a beneficiary’s criminal conviction in a civil action over entitlement to life insurance proceeds.  Some of these statutes provide that a conviction of certain specified acts conclusively determines the beneficiary’s forfeiture.  No other evidence is necessary.[58]  Since a criminal conviction requires proof of guilt beyond a reasonable doubt, the standard of proof itself protects the defendant against unlawful conviction.[59]  When culpability is determined by this highest standard of proof, the beneficiary suffers no disadvantage from the preclusive effect of that finding in a subsequent civil trial.

By making the fact of conviction conclusive on the issue of guilt, “the law relieves a party from the burden of proving that the homicide was intentional and felonious, but it does not make a conviction the prerequisite to the beneficiary’s disqualification.”[60]  Thus, under this rule of collateral estoppel, a person against whom a judgment has been rendered which clearly establishes certain facts cannot relitigate those same facts in a second legal action.  The rule also applies when the second litigation turns on the same fact but intends a different purpose, provided that the party against whom the earlier decision is asserted had a full and fair opportunity to litigate the issue in question, and the issue was essential to the judgment.[61] The party opposing the application of collateral estoppel must demonstrate that he lacked a full and fair opportunity to litigate the issue.[62]

Conversely, unless a statute holds otherwise, it is not dispositive that no criminal charges were filed or that the charges were dismissed at trial or that the individual was acquitted for some reason.[63] Nor is the disposition of a criminal case conclusive of the nature of the homicide for purposes of a civil proceeding to decide entitlement to the decedent’s assets.[64] Hence it is possible that the defendant may be acquitted of a murder charge, or found guilty of some lesser crime such as involuntary manslaughter. But if that same person claims proceeds as an heir or beneficiary of the decedent, he may be barred from sharing in the estate or policy if he is found to have feloniously and intentionally killed the decedent, in a subsequent civil action.[65]

This result obtains from the general rule that acquittal in a criminal case does not necessarily preclude litigation regarding the facts of the offense in a civil case to determine whether the beneficiary is entitled to the proceeds.[66] Different considerations and a different burden of proof control the finding of guilt in the criminal prosecution.  Clearly, the burden of proof is higher in a criminal proceeding than in a civil case.[67] A person may be acquitted because guilt cannot be proved beyond a reasonable doubt.  However, acquittal in the criminal case does not preclude the finding of a disqualifying act under the less onerous burden of proof that applies in a civil case.[68]

These principles were articulated in State Mutual Life Assurance Co. of America v. Hampton.[69]  The beneficiary in that case argued that her acquittal of criminal charges automatically qualified her as eligible for life insurance benefits. The court rejected her position, however, noting that the state’s statutory language did not support her conclusion that a beneficiary’s right to insurance proceeds could be denied based only on a criminal conviction.  The court stated:

 

[H]ad the state legislature wished to make a conviction of murder or first degree manslaughter of the insured the only basis for denying insurance proceeds to a beneficiary, they could easily have inserted language . . . restricting disqualification to only those beneficiaries who are convicted.  The statute, however, does not declare such a limitation.[70]

 

The beneficiary also argued that her acquittal should conclusively establish her right to the insurance proceeds, since her criminal responsibility for the insured’s death had been adjudicated.   She protested that her criminal responsibility should not be relitigated in a civil proceeding. Once again, however, the court rejected this argument:

 

Proof beyond a reasonable doubt is not necessary in order to establish the existence of a crime in a civil proceeding, and an a acquittal may merely mean failure to meet the higher standard of proof required in a criminal proceeding. A subsequent civil action based on the same facts could produce a different result since a lesser burden of proof, a preponderance of the evidence, is required.[71]

 

The court also noted that the contingent beneficiaries, who were entitled to take under the slayer statute if the primary beneficiary was barred, were not parties to the criminal prosecution.  The court therefore concluded that “[d]ue process standards preclude their being bound by the result of proceedings in which they did not participate.”[72]

Case law differs regarding the effect of a criminal conviction or a guilty plea when there is no state statutory provision controlling its use in a subsequent civil proceeding.  Some courts have determined that the divestment issue must be decided by the civil court without reference to any criminal proceedings; a conviction or guilty plea therefore is not admissible in the civil case as evidence of guilt.[73] Other courts hold that the disposition of the criminal proceeding may have probative value, although it is not res judicata in the civil action.  A judgment entered in a criminal prosecution on a guilty plea may be introduced in the civil action to establish an admission against interest.  It does not, however, establish the truth of the facts upon which the judgment of guilt was rendered, as a matter of law.[74] In some states, the common law rule continues, under which the beneficiary’s conviction is not required.  Nevertheless, a conviction, in the event there is one, is made conclusive proof that the beneficiary had killed the insured.[75]

“A beneficiary retains an interest in the proceeds . . . until a court decides the beneficiary killed the insured.”[76] Using the full implication of this rule, some courts hold that a criminal defendant convicted of a crime is entitled to pursue the right of appeal before any extraordinary civil forfeiture (such as a bar to the receipt of insurance proceeds) takes effect.[77] If a criminal conviction is appealed, the funds should be held in escrow pending determination of the appeal.[78] Other jurisdictions have determined that the mere pendency of an appeal does not prevent the use of the challenged judgment in a subsequent civil proceeding.[79] These courts hold the slayer’s act is not penal and must be construed broadly to effectuate the state’s policy that no person shall be allowed to profit from his own wrong.[80] Thus, as a matter of law, the convicted beneficiary is not entitled to the insurance proceeds, and a pending appeal does not diminish the finality of a judgment of conviction when applying the doctrine of collateral estoppel.[81] In these states, to await the outcome of an appeal, the beneficiary must demonstrate some compelling reason why it would be unfair to rely on the criminal conviction.  Such unfairness might take the form of inexperienced or incompetent counsel or the magnitude of the charge or the forum of the litigation, which discouraged the beneficiary from vigorously contesting guilt.[82]

E. Civil Actions

If there has been no criminal conviction and none is required, a civil court must determine whether the beneficiary committed an act that precludes recovery of the life insurance policy proceeds.[83] The beneficiary who seeks the insurance benefit bears the initial burden to establish, by a preponderance of the evidence, the existence of the insurance contract, the death of the insured covered by the policy, and his or her status as beneficiary under the policy.  By meeting this burden, the named beneficiary has established a prima facia case for receipt of insurance proceeds.[84]

The burden then shifts to the person who is challenging recovery to prove that the named beneficiary should be disqualified or excluded under the slayer’s rule.[85]  Thus, the party seeking to disqualify the beneficiary must produce evidence from which the trier of fact could find that the beneficiary caused or procured the death of the insured in such a manner as to constitute a felonious, intentional and unjustified homicide.[86] The party seeking this remedy will find it necessary to produce at trial sufficient factual circumstances relating to the killing of the decedent from which the issue can be determined.  Since  a culpable state of mind is not ordinarily the subject of direct proof, circumstantial evidence is often necessary.[87]

The challenging party’s burden of proof in the civil case is different from the state’s burden in a criminal proceeding.  When proving criminal conduct in a civil action, it is only necessary to prove the crime by a preponderance of the evidence,[88] or by clear and convincing evidence,[89] depending on the applicable state law.  It is not necessary to meet the burden of proof beyond a reasonable doubt.  The trier of fact would then make findings about whether the killer intended to kill the insured, apply the applicable standard of proof and render a decision.[90]

F. Payment of Policy Proceeds

            Once the primary beneficiary is disqualified, it is necessary to determine who, as between the insured’s estate and the named contingent beneficiary, is entitled to the proceeds of the life insurance policy.  Ordinarily the policy does not expressly cover this situation, since the language contained in many insurance policies states that the contingent beneficiary takes only when the primary beneficiary dies before the insured.[91]  In this situation, however, the primary beneficiary is still living; thus, the contingency upon which the alternative beneficiary would prevail has not arisen.[92]

Some courts have strictly construed the terms of the insurance contract, finding that the contingent beneficiary cannot succeed because the contingency of the primary beneficiary’s failure to survive the insured has not occurred.[93] These courts provide that the proceeds should be paid to the other persons who would take under the decedent’s will or to the heirs of the decedent, according to the laws of descent and distribution, or by court order to any person equitably entitled.[94]

The majority rule holds that when the primary beneficiary is disqualified from receiving proceeds for having murdered the insured, the proceeds will be distributed as if the slaying beneficiary had predeceased the insured.  Thus, the contingent beneficiary receives the proceeds.[95] Courts which adopt this rule typically do so to implement the intent of the insured. The insured designated an alternate beneficiary, and that result would probably have been chosen by the insured, despite the technical policy language, had he faced the question.[96] Courts reason that the statutory or common law rule barring recovery by the wrongdoing primary beneficiary should not be invoked so as to prejudice the rights of the contingent beneficiary.[97]

There are situations when the primary beneficiary, although disqualified, derives the insurance benefit indirectly if the contingent beneficiary is permitted to receive the proceeds.[98] In these situations, the issue concerns whether a beneficiary who is barred from receiving the proceeds in his status as beneficiary may nevertheless receive the proceeds as heir to the insured’s estate when there is no contingent beneficiary designated in the insurance policy.[99]

In some jurisdictions, the beneficiary has been permitted to share in the proceeds where he or she receives them as heir of the insured’s estate.[100] Increasingly, however, the beneficiary who unlawfully kills the insured has been disqualified because “it is not personal to him, but bars anyone claiming as successor to the rights of the beneficiary.”[101] Some courts have decided that the best way to decide this issue and be certain that the murderer does not benefit is to disqualify all the murderer’s relatives.  This rule avoids a result which turns the funds over to the killer’s relative who “by gift, devise or intestacy, would have the power to place all or part of those funds back in [the killer’s] hands.”[102] Similarly, since an assignment of the insurance proceeds by or to the murderer would contravene public policy and the slayer’s laws, it is  void.[103] Accordingly, when the beneficiary is barred from participating in the proceeds of insurance, neither the administrator of the beneficiary’s estate nor the heirs have any rights to the proceeds.[104]

This rule, however, is not absolute.  In Salak v. Protective Life Insurance Co.,[105] the wife murdered her husband and then committed suicide. The wife’s father was named as the contingent beneficiary. The administrator for the husband’s estate sought to prevent payment to the contingent beneficiary arguing, in part, that to allow such a payment would violate the statutory public policy which proscribes any “benefit” to the person causing death.  The administrator contended that the murderer could benefit if the father was paid, and to avoid this result, “the statute should be construed to also disqualify persons directly related to the murderer.”[106]

The court rejected this argument, noting that the legislature did not provide for the disqualification of innocent beneficiaries solely because of their relationship to the person who caused the death. In addition, the court observed that such a rule would be “premised on the unwarranted assumption that payment to the slayer’s relatives always is solely an indirect benefit to the slayer.”[107]  Independent reasons may exist for the designation of such a beneficiary and, under the law, no reason at all is necessary.

Similarly, in Lee v. Aylward,[108] the husband insured had named his wife as beneficiary.  She was later convicted of his murder.  The three contingent beneficiaries were their children. The estate argued that since the children of the slayer were named as contingent beneficiaries, the estate should recover the proceeds. The Missouri Supreme Court rejected this position, reasoning that “[a]ny thought that [the insured] would exclude them if he had realized that their mother would kill him introduces inappropriate speculation. We believe that it is better to have a rule of general application.”[109]

III.

Insurer’s Liability

A. Voiding Coverage

When the named beneficiary has forfeited the policy proceeds by killing the insured, the insurer in most instances remains liable on the policy and must pay the proceeds to someone. There are, however, three circumstances under which the beneficiary’s slaying of the insured will relieve the insurer of all liability for the payment of proceeds.

The first occurs when the insurance contract was procured by the slayer-beneficiary with the present intent to kill the insured and collect the proceeds.  In this situation, the insurance contract is considered to be fraudulent at its inception and void ab initio.[110] In order to void the policy, the insurer must usually prove all the necessary elements by clear and convincing evidence.[111] For example, if it is established that the beneficiary conceived the idea of murdering the insured prior to the time of procurement and, with the thought of murder, procured the policy himself, the insurance policy in essence becomes a contract between the beneficiary and the insurance company.  That policy is void for fraudulent concealment despite the innocence of the insured who signs the application, and those who claim the proceeds.[112]

In order to avoid payment of the policy proceeds under these circumstances, the insurer must prove that the insured had “no independent motivation to insure [his or] her own life, and that the sole motivation for procuring the insurance was supplied by the beneficiary who planned the murder to procure the insurance.”[113]  However, where there is evidence that the decedent procured the insurance for his or her own purposes, such as to preserve the home and provide family support, the insurer generally will not be relieved of its obligation to pay benefits.[114]

It should be noted, however, that some courts have voided a life insurance policy in this situation because the applicant for the policy made “misrepresentations with the intent to deceive or the misrepresentations made by the applicant materially affect[ed] the risk of the insurer.”[115] Thus, this situation is treated like any other rescission where the insured failed to disclose a material heath condition on the application.[116]  Under these circumstances,

 

[t]he failure of a beneficiary to reveal his intention to murder the insured at the time a life insurance policy is purchased would certainly be an untruth which would affect the risk assumed by the insurance company issuing a life insurance policy.  Therefore . . . if the beneficiary intends to murder the insured and procures an insurance policy on the life of the insured, the beneficiary-applicant has made a material misrepresentation to the insurance company. Consequently, the life insurance policy would then be void. [117]

 

Courts are reluctant to relieve an insurer of its obligation to pay benefits. The decision in Bradley v. Farmers New World Life Insurance Co.[118] is illustrative.  In that case, the insured had purchased several large life insurance policies listing her husband as the primary beneficiary.  She was murdered two months after issuance, and her husband was convicted of the crime.  The insurer argued that the policy was void because the insured had acted as the beneficiary’s instrumentality and unknowingly participated in his unlawful scheme to insure her life and then murder her.  The insured had thereby failed to inform the insurer of the true intent for the purchase of insurance.

Because the insurer’s argument required a transfer of intent from the beneficiary to the insured, the court rejected it.  A necessary premise of the insurer’s argument was that the insured had essentially acted as the agent for the beneficiary such that the beneficiary’s murderous intent must have legally transferred to the insured. The court noted, however, that “[a]gency is a contractual relation created by agreement of the parties.”[119]  Although one person may “authorize another to do for him whatever he may lawfully do for himself,”[120] no one may “delegate authority to do an act which is illegal or opposed to public policy.”[121]  The law will not recognize the existence of an agency that “contemplate[s] that the agent will procure property rights for the principal by fraud.”[122]  Thus, the court concluded that an unknowing agent could not persuade an insurer to issue a policy at the behest of the principal, whose purpose was to murder the insured (who was also his agent).  Absent that improbability, the policy was acquired for a lawful purpose, obligating the insurer to pay the proceeds to the contingent beneficiary.

The second situation that permits an insurer to avoid liability occurs if no one, other than the slayer-beneficiary or persons claiming through him, has an interest in the insurance policy.  This can arise when the slayer-beneficiary is the “owner” of the policy.[123]

Third, and finally, the beneficiary’s killing of the insured may relieve the insurer of all liability for the proceeds when the insurance policy itself contains a provision to that effect.   The insurer may include a contractual provision expressly terminating its liability in the event the beneficiary unlawfully kills the insured.[124] A provision terminating all liability on the insurance policy in such event has been validated notwithstanding a contrary statutory provision.[125]

B. Insurer Responsibilities to the Insured

Court decisions voiding life insurance policies when procured in contemplation of an insured’s murder often have deterred suspect beneficiaries who cannot recover.  Unfortunately, they have not also prevented insurance companies from negligently issuing policies where the potential for murder is present.[126] Accordingly, courts in Virginia,[127] Alabama[128] and South Carolina[129] have recognized that an insurance company has the duty to use reasonable care so as not to issue a life insurance policy to an individual who does not have an interest in the continued life of the insured.  If the court finds that the insured’s death was reasonably foreseeable, this duty is breached.[130] Consequently, civil actions have been allowed to stand against insurers who negligently issue life insurance policies that create a risk of murder.[131]

The tort of negligent failure to cancel an insurance policy has also been recognized where the beneficiary attempts to murder the insured to collect policy benefits, and the insurer has actual notice of the murder plot.[132] An insurance company with actual notice of the policy beneficiary’s murderous intent toward the insured has a duty to investigate and eliminate the motive for murder, either by canceling the policy or by warning the beneficiary that no proceeds would be payable in that event.

However, in practice, canceling a life insurance policy is not easily accomplished.  In Meehan v. Transamerica Occidental Life Insurance Co.,[133] the insured had made a gift of his insurance policies to his wife, relinquishing all rights thereunder. His wife was later convicted of attempting to murder her husband, and the husband sought to cancel the policies, arguing that individuals holding no interest in an insured’s continued life should not be able to maintain a policy of insurance since this would encourage illegal activity. The court rejected this argument, noting the dearth of evidence regarding any present conspiracy to take the insured’s life or any other danger because these policies existed. The court further reasoned that the former wife had been convicted of attempted murder and punished:

 

It seems to us an unwarranted assumption, one that runs counter to the presumed rehabilitative value of the sanctions imposed under the criminal code for conviction of criminal behavior, that because the former wife once attempted to murder her former spouse that she would do so again.  Furthermore, if she succeeded in so doing she could not recover the policy benefits, and this would seem to furnish adequate reason why she should not do so.[134]

 

IV.

Insurer Payment of Insurance Benefits

 

A. Duties to the Beneficiaries

 

Insurers are obligated to disburse insurance policy proceeds to the proper recipient in a timely and reasonable manner.  This duty is owed to the primary and the contingent beneficiaries.[135] Generally, an insurer which pays proceeds to the named beneficiary is discharged from liability on the policy if it acted in good faith.[136]  Thus, so long as the insurer has no notice that the beneficiary may be the insured’s slayer and therefore disqualified from receiving the proceeds, it may pay the proceeds to the named beneficiary without fear of incurring double liability.[137]

The issue of notice usually arises after the primary beneficiary’s criminal conviction.  “The wrongdoing is established when there is a conviction of an intentional homicide.”[138]  In a subsequent civil action, disqualifying facts may be established by introducing the conviction.[139] The insurer then disburses the money to the contingent beneficiary or as directed by the court.

There are instances when no conviction or guilty plea has been obtained, but the insurer is placed on notice of facts suggesting that the primary beneficiary is not entitled to the policy proceeds. This is especially true when an insurer becomes aware of suspicious circumstances concerning the beneficiary’s involvement in the insured’s death.[140]  When this occurs, the insurer has a duty to make reasonable inquiry, and must consider withholding payment until its suspicion is dispelled.[141]  This duty of reasonable inquiry is not breached unless the investigation would have uncovered facts that defeated the beneficiary’s claim.[142] The “insurer cannot wait without paying on its policy unless the [beneficiary’s] complicity is established.”[143]

Similarly, insurers should not pay policy proceeds shortly after a murder where the insurance company is informed that the primary beneficiary is the principal suspect.  In particular, such payment should not be made when law enforcement is conducting an ongoing investigation or a prosecution is pending.[144]  If a prosecution actually is commenced, “the insurance company should delay payment until the outcome of the prosecution is known.”[145]

Any inquiry into an insurer’s disbursement of policy proceeds under circumstances where the primary beneficiary has been accused or suspected of killing the insured is necessarily fact-specific.  For example, in Doe v. American General Life Insurance Co.,[146] the insurer had adopted a standard policy for use in all cases where the insured was a homicide victim.  “This procedure is to determine whether the beneficiary is involved in the homicide.”[147]  Under the policy, the insurer would contact the police.  If the beneficiary was  suspect,  benefits were withheld.   In the instant case, three years had passed since the homicide but no charges had been brought.  The insurer periodically contacted detectives as well as the county District Attorney’s Office.  On each occasion, the insurer was informed that the beneficiary was a suspect and that benefits should not be paid.  Under such circumstances, the insurer’s “actions in waiting and attempting to ascertain [the beneficiary’s] involvement in the murder were proper and reasonable.”[148]

B. Interpleader

Life insurance companies are frequently faced with competing claims to insurance proceeds.  The homicidal beneficiary presents an appropriate example.  It may be difficult, if not impossible, for the insurer to know who is entitled to proceeds because it does not have, and may not be able to discover, all the facts affecting the claimants’ rights.  Even if the insurer could discover all pertinent facts, there would be no guarantee that its determination would be supported by a court.  If an insurer does not act in good faith in paying the proceeds to the named beneficiary, the insurer remains liable on the policy.[149]  The insurer thereby faces potentially conflicting claims as between the possible slayer and the insured’s estate or the contingent beneficiary.  The resulting risk is a multiplicity of lawsuits and double liability.  In such circumstances, an insurer can protect itself by filing an interpleader action and depositing the policy proceeds in court.[150]

Interpleader is available in both federal[151] and state[152] courts.  Basically, interpleader involves payment by the insurer of the disputed proceeds and any interest thereon into court.  The claimants are made party defendants and required to litigate between themselves their relative rights to the proceeds. In this litigation, the insurer is discharged and the court  determines which party defendant is the proper beneficiary.[153]

The question of whether to interplead policy proceeds is a business decision that insurers must make based on their potential liabilities. Where the death of the insured is criminally suspicious but there has been no formal plea or conviction, interpleader offers a means by which the insurer may protect itself from double liability.[154]  However, an insurance company that interpleads funds must use caution.  An insurer without grounds to believe there are valid and legitimate rival claimants to funds may be subject to damage claims by the primary beneficiary, including claims for bad faith breach of the insurance contract.[155]

The insurer’s dilemma in this regard is demonstrated in Lunsford v. Western States Life Insuranc.[156]  In that case, the insured’s body was discovered approximately seven months after his vehicle was recovered from a creek.  The Sheriff’s department ruled the death an accident. However, the insurers hired a private investigator who concluded that foul play was involved after an extensive investigation; he also concluded that the insured’s wife (primary beneficiary) was the principal suspect. Despite this report, the insurers determined that there was insufficient evidence to withhold payment of funds and paid the proceeds to the wife. Several years later the wife admitted killing her husband, pled guilty to murder and was sentenced to life in prison.

The contingent beneficiaries sued the insurers for negligence and breach of contract for violating Colorado’s Slayer Statute.[157]  The trial court ruled that an insurer was not protected from negligently disbursing policy proceeds to a primary beneficiary when faced with suspicious circumstances surrounding an insured’s death.  The “bottom line,” according to this court, was “whether the insurers acted in a reasonably prudent manner, and [whether] the negligence issue required determination of factual questions.”[158]

The Colorado Supreme Court later reversed a judgment against the insurers, finding the statute inapplicable. By its specific language, the statute prevents an individual from receiving a victim’s life insurance proceeds if that individual “is convicted of, pleads guilty to, or enters a plea of nolo contendere to the crime of murder in the first or second degree murder or manslaughter.”[159] The statute provides in part, that an insurer making payment pursuant to the policy terms “is not liable by reason of this section unless prior to payment it has received written notice of a claim under this section.”[160]   The statute is silent regarding a beneficiary’s entitlement to insurance proceeds in other situations.  Thus, the statute did not address the issue in which payment was made before the primary beneficiary’s guilt was established by trial or plea. The court surmised that the state legislature had deemed that a reliably established homicide would come to the attention of any contingent beneficiaries, who would then bear the burden of giving written notice of claim.

V.

Conclusion

Judicial determinations and statutory laws regulating the issue of homicidal beneficiaries are diverse and complex.  There is no uniform rule throughout the United States governing the rights of homicidal beneficiaries to life insurance benefits.  Insurance companies confronting this situation early on must conduct a thorough investigation, cooperate with law enforcement officials and review the applicable state law.  In many instances, an interpleader action will relieve the insurer of multiple liability.  Each such claim, however, must be decided on a case-by-case basis.


ENDNOTES

 



[1]           William F. Meyer, Life and Health Insurance Law § 11:2, at 376 (1972) (hereinafter “Meyer”).

[2]           Metropolitan Life Ins. Co. v. Kelley, 890 F. Supp. 746, 748 (N.D. Ill. 1995); Hughes v. Scholl, 900 S.W.2d 606, 608 (Ky. 1995).

[3]           Flood v. Fidelity & Guar. Life Ins. Co., 394 So. 2d 1311, 1313 (La. Ct. App. 1981).  Life insurance also is a vehicle to pass funds to others that are not subject to probate or claims against the estate.  See Life Ins. Co. of Virginia v. Cashatt, 206 F. Supp. 410 (E.D. Va. 1962).

[4]           State v. Kimble, 535 S.E. 2d 882, 885 (N.C. Ct. App. 2000); see also Michael v. Michael, No. L-99-1397, 2000 WL 1005209, at *3 (Ohio Ct. App. July 21, 2000).  Ben Kingree & Louise Tanner, Life Insurance as a Motive for Murder, 24 Tort & Ins. L.J. 761 (1994).  This issue has arisen even in the viatical settlement business -- an industry that profits from turning life insurance policies into securities that are sold on the basis of when the policyholder will die.  See S.E.C. v. Life Partners, Inc., 87 F.3d 536, 537 (D.C. Cir. 1996).  According to the Chicago Tribune, senior citizens purchase large life insurance policies naming their children as beneficiaries.  They soon thereafter sell the policy to an investor for a large cash amount.  The investor receives the policy proceeds only when the insured dies, creating a motive for murder.  This results because an insurer will carefully examine the applicant to determine the applicant’s health and life expectancy, pricing the policy appropriately.  To benefit, the investor must depend on the insured dying sooner than expected, creating a strong incentive for murder.  Of course, to purchase the policy for this reason, the applicant must lie on the application about why he or she is buying the policy in the first place, which constitutes insurance fraud.  Chicago Tribune, Jan. 3, 2000, Business Section-5, at 3.

[5]           Callman v. Am. Gen. Fire & Cas. Co., 641 N.E.2d 261, 263 (Ohio Ct. App. 1994). See also Hughes v. Scholl, 900 S.W.2d 606, 607 (Ky. 1995); Estate of Revis v. Revis, 484 S.E. 2d 112, 116 (S.C. Ct. App. 1997); National Home Life Assurance v. Patterson, 746 P. 2d 696, 697 (Okla. Ct. App. 1987).

[6]           In re Estate of Pinnock, 371 N.Y.S.2d 797, 804 (Surr. Ct. 1975); see also Callman, 641 N.E.2d at 263.

[7]           Bennett v. Allstate Ins. Co., 722 A.2d 115, 117 (N.J. Super. Ct. App. Div. 1998); see also Manufacturers Life Ins. Co. v. Dougherty, 986 F. Supp. 928, 931 (E.D. Pa. 1997).

[8]           Bennett, 722 A.2d at 117; see also Peoples Sec. Life Ins. Co. v. Currence, 420 S.E.2d 552, 554 (W.Va. 1992).

[9]           Metropolitan Life Ins. Co. v. Pritchett, 843 F. Supp. 1006, 1008 (D. Md. 1994) (federal law); Ford v. Ford, 512 A.2d 389, 391 (Md. 1986); Moore v. Moore, 186 S.E.2d 531, 533 (Ga. 1971); Estate of Covert, 717 N.Y.S.2d 392, 394 (App. Div. 2000); Diep v. Rivas, 745 A.2d 1098, 1104 (Md. App. 2000); Bennett, 722 A.2d at 117; State Farm Life Ins. Co. v. Davidson, 495 N.E.2d 520, 521 (Ill. App. Ct. 1986); Higgins v. McElwee, 680 S.W.2d 335, 344 (Mo. Ct. App. 1984).

“ERISA (Employee Retirement Income Security Act, 29 U.S.C. §§ 1001 et. Seq.) . . . makes no provision for a situation where the insured is killed by the named beneficiary.”  Accordingly, equitable principles apply, including the principle that no one may profit from his own wrong. See Addison v. Metropolitan Life Ins. Co., 5 F. Supp.2d 392, 394 (W.D. Va. 1998).

[10]          Flood v. Fidelity Guar. Life Ins. Co., 394 So. 2d 1311, 1313 (La. App. 1981). A beneficiary is prohibited from receiving insurance proceeds if he kills the insured with the mens rea of intent of recklessness under circumstances where the risk of death is grave.  See Connecticut Gen. Life Ins. Co. v. Cole, 821 F. Supp. 193, 200 (S.D.N.Y. 1993); see also Equitable Life Assurance Soc. v. Weightman, 106 P. 629, 631 (Okla. 1916).

[11]          Prudential Ins. Co. of Am. v. Athmer, 178 F.3d 473, 475-76 (7th Cir. 1999); see also Cockrell v. Life Ins. Co. of Georgia, 692 F.2d 1164, 1170 (8th Cir. 1982) (Ark. law); Wilkins v. Fireman’s Fund Am. Life Ins., 695 P.2d 391, 392 (Idaho 1985). Public policy, even in the absence of a statute, bars a beneficiary who feloniously kills the insured from life insurance proceeds.  See Neff v. Massachusetts Mut. Life Ins. Co., 107 N.E.2d 100, 102 (Ohio 1952).

[12]          State Farm Life Ins. Co. v. Howell, 76 F.3d 216, 217 (8th Cir. 1996) (Mo. law); Metropolitan Life Ins. Co. v. Wenckus, 244 A.2d 424, 425 (Me. 1968); Stephens v. Adkins, 448 S.E.2d 734, 735 (Ga. Ct. App. 1994); Matter of McCarty, 762 S.W.2d 458, 461 (Mo. Ct. App. 1988);  New York Life Ins. Co. v. Henriken, 415 N.E.2d 146, 147 (Ind. Ct. App. 1981); Wilson v. Wilson, 144 Cal. Rptr. 180, 183 (Ct. App. 1978); Stacker v. Mack, 130 N.E.2d 484, 487 (Ind. Ct. App. 1955).

[13]          Metropolitan Life Ins. Co. v. Kelley, 890 F. Supp. 746, 748 (N.D. Ill. 1995); Pritchett, 843 F. Supp. at 1008 (federal law); Ford, 512 A.2d at 390; Diep, 745 A.2d at 1101.

[14]          Life Ins. Co. of N. Am. v. Wollett, 766 P.2d 893, 895 (Nev. 1988); Turner v. Travelers Ins. Co., 487 A.2d 614, 615 (D.C. Ct. App. 1985) (insurance proceeds are included by way of state common law); Pan Am. Life Ins. Co. v. Hancock, 415 So. 2d 422, 424 (La. Ct. App. 1982);  Schifanelli v. Wallace, 315 A.2d 513, 519 (Md. Ct. App. 1974).

[15]          117 U.S. 591 (1886).  In this case, Hunter obtained a $10,000 policy on the life of Armstrong under which Hunter would receive the death benefit.  Less than six weeks after the policy was issued, Armstrong was murdered.  Hunter was tried, convicted and executed for this murder.  The Court held that by such conduct, Hunter forfeited all rights under the policy.

[16]          Id. at 600.

[17]          Salak v. Protective Life Ins. Co., 19 F. Supp.2d 953, 956 (S.D. Iowa 1998); Moore v. State Farm Life Ins. Co., 878 S.W.2d 946, 947-48 (Tenn. 1994); United Presidential Life Ins. Co. v. Moss, 838 P.2d 1011, 1014 (Okla. Ct. App. 1992); Napoleon v. Heard, 455 A.2d 901, 903 (D.C. Ct. App. 1983).

[18]          Prudential Ins. Co. of Am. v. Athmer, 178 F.3d 473, 478 (7th Cir. 1999); Sun Mut. Life Assurance Co. of Am. v. Hampton, 696 P.2d 1027, 1029-30 (Okla. 1985); Rumbaut v. Labagnara, 791 S.W.2d 195, 196 (Tex. Ct. App. 1990); Prudential Ins. Co. of Am. v. Baitinger, 452 So. 2d 140, 141 (Fla. Dist. Ct. App. 1984); Wilson v. Wilson, 144 Cal. Rptr. 180, 183 (Ct. App. 1978).

[19]          Metropolitan Life Ins. Co. v. Wattley, 109 F. Supp.2d 1017, 1019 (N.D. Ind. 2000) (“intentionally and wrongfully”); Salak, 19 F. Supp.2d at 956 (“intentionally and unjustifiably”); Bennett v. Allstate Ins. Co., 722 A.2d 115, 117 (N.J. Super. Ct. App. Div. 1998) (“criminally and intentionally”); Baitinger, 452 So. 2d at 141 (Fla. Stat. § 732.802 (3) provides that a final conviction of murder in any degree is conclusive); Huff v. Union Fidelity Life Ins. Co., 470 N.E.2d 236, 238 (Ohio Ct. App. 1984) (aggravated murder, murder or voluntary manslaughter).

[20]          Life Ins. Co. of N. Am. v. Wollett, 766 P.2d 893, 895 (Nev. 1988) (murder); Quick v. United Benefit Life Ins. Co., 213 S.E.2d 563, 569 (N.C. 1975); Leavy v. Metropolitan Life Ins. Co., 581 P.2d 167, 169 (Wash. Ct. App. 1978).

[21]          McClure v. McClure, 403 S.E.2d 197, 199-200 (W.Va. 1991).  However, some courts interpret “final judgment” to mean not only a criminal conviction, but also a finding of wrongful conduct by a civil court in a wrongful death lawsuit, or an interpleader action which determines that the beneficiary intentionally and feloniously took the insured’s life.  California - Western States Life Ins. v. Sanford, 515 F. Supp. 524, 527 (E.D. La. 1981) (La. law).

[22]          Johnson v. Hebb, 729 F. Supp. 1524, 1526 (D. Md. 1990).

[23]          Rose v. Rose, 444 P.2d 762, 764 (N.M. 1968); Home Ins. Co. v. Butler, 922 S.W.2d 66, 68 (Mo. Ct. App. 1996); Napoleon v. Heard, 455 A.2d 901, 903 (D.C. Ct. App. 1983).

[24]          Turner v. Travelers Ins. Co., 487 A.2d 614, 615 (D.C. Ct. App. 1985).

[25]          Id.

[26]          Ford v. Ford, 512 A.2d 389, 396 (Md. 1986); Quick v. United Benefit Life Ins. Co., 213 S.E.2d 563, 567 (N.C. 1975); Turner, 487 A.2d at 615.

[27]          Franklin Life Ins. Co. v. Strickland, 376 F. Supp. 280, 283 (N.D. Miss. 1974); Huff v. Union Fidelity Life Ins. Co., 470 N.E.2d 236, 238 (Ohio Ct. App. 1984).

[28]          Davis v. Aetna Life Ins. Co., 279 F.2d 304, 309 (9th Cir. 1960) (Cal. law); Johnson v. Hebb, 729 F. Supp. 1524, 1526 (D. Md. 1990); Life Ins. Co. of N. Am. v. Wollett, 766 P.2d 893, 895 (Nev. 1988); Ford, 512 A.2d at 392; Quick, 213 S.E.2d at 567.  Proof of the insured’s death from injuries raises a presumption of accidental death.  This presumption will continue until overcome by affirmative proof to the contrary. See Cockrell v. Life Ins. Co. of Georgia, 692 F.2d 1164, 1167 (8th Cir. 1982) (Ark. law).  However, proving the elements of a crime negate that the death was accidental or unintended. Strickland, 376 F. Supp. at 283.

[29]          Metropolitan Life Ins. Co. v. Prater, 508 F. Supp. 667, 669 (E.D. Ky. 1981).

[30]          State Mut. Life Assurance Co. of Am. v. Hampton, 696 P.2d 1027, 1029-30 (Okla. 1985); Calaway v. Southern Farm Bureau Life Ins. Co., 619 S.W.2d 301, 303 (Ark. Ct. App. 1981).

However, this is not always the case.  In Seeding v. Dennis, 701 S.W.2d 354 (Tex. Ct. App. 1986), the husband began approaching his wife.  She fired a gun into the ground and then shot him in the leg.  The bullet struck an artery and the subsequent loss of blood resulted in his death.  The court found the shooting intentional, since her husband did not threaten her or possess a weapon.  Thus, the widow was barred from recovering her husband’s life insurance proceeds under Texas law.  So too, in Lynn v. Philadelphia Am. Life Ins., 543 So. 2d 807 (Fla. Dist. Ct. App. 1989), the evidence supported a finding that the beneficiary, who had been convicted of manslaughter, intentionally killed her husband.  In Lynn,  the husband had approached the wife with his hand raised to hit her. She picked up a knife, raised it and stabbed the insured in the chest, killing him.

[31]          Moore v. State Farm Life Ins. Co., 878 S.W.2d 946, 948 (Tenn. 1994); Smith v. Independent Life Ins. Co., 258 S.E.2d 864, 869 (N.C. Ct. App. 1979).

[32]          Dowdell v. Bell, 477 P.2d 170, 171-73 (Wyo. 1970); Pan Am. Life Ins. Co. v. Hancock, 415 So. 2d 422, 424 (La. Ct. App. 1982).

[33]          McClure v. McClure, 403 S.E.2d 197, 200 n.6 (W.Va. 1991) (Death resulting from negligence or gross negligence will not bar recovery because the law requires an intentional killing.).

[34]          Moore, 878 S.W.2d at 948.

[35]          Francis v. Marshall, 841 S.W.2d 51, 54 (Tex. App. 1992).

[36]          662 A.2d 1362 (D.C. Ct. App. 1995).

[37]          District of Columbia, Cheatle v. Cheatle, 662 A.2d 1362, 1365 (D.C. Ct. App. 1995); Turner v. Travelers Ins. Co., 487 A.2d 614, 615 (D.C. Ct. App. 1985); Louisiana,  In re Hamilton, 446 So. 2d 463, 464 (La. Ct. App. 1984); North Carolina, Smith v. Independent Life Ins. Co., 258 S.E.2d 864, 869 (N.C. Ct. App. 1979).

[38]          In re Hamilton, 446 So. 2d at 465.

[39]          Cheatle, 662 A.2d at 1367.

[40]          Id. at 1364.  The District of Columbia statute [D.C. Code § 19-320 (1989)] limits the exclusion of benefits for a beneficiary guilty of involuntary manslaughter only to those situations where the beneficiary is actually convicted of this crime.  Absent a conviction, the party challenging the beneficiary’s right to the insurance proceeds must establish in a civil action that the beneficiary intentionally intended to kill the insured. Id. at 1367.

[41]          In re Vadlamundi Estate, 443 A.2d 1113, 1116-17 (N.J. Super. Ct. Law. Div. 1982).

[42]          Matter of Barrett, 637 N.Y.S.2d 751, 752 (App. Div. 1996); Huff v. Union Fidelity Life Ins. Co., 470 N.E.2d 236, 239 (Ohio Ct. App. 1984); Schifanelli v. Wallace, 315 A.2d 513, 519-20 (Md. 1974); Doe v. American Gen. Life Ins. Co. of N.Y., 526 N.Y.S. 2d 904, 905 (Sup. Ct. 1988).

[43]          Haung Tang v. Aetna Life Ins. Co., 523 F.2d 811, 812 (9th Cir. 1975) (Calif. law); California - Western States Life Ins. v. Sanford, 515 F. Supp. 524, 526 (E.D. La. 1981) (La. law); Ford v. Ford, 512 A.2d 389, 394 (Md. 1986); Turner v. Estate of Turner, 454 N.E.2d 1247, 1252 (Ind. Ct. App. 1983).  In a civil case, a person is presumed to be sane.  See In re Estate of Pinnock, 371 N.Y.S.2d 797, 802 (Surr. Ct. 1975).

[44]          Jones v. All Am. Life Ins. Co., 325 S.E.2d 237, 239 (N.C. 1985).  This could include co-conspirators, since the intent of the law is to prohibit someone from profiting from his or her own wrongful conduct.  Wilson v. Wilson, 461 S.E.2d 816, 817 (S.C. 1995), rev’g 439 S.E. 2d 323 (S.C. Ct. App. 1993).

[45]          443 F. Supp. 762 (D. Mass. 1978) (Mass. law).

[46]          591 F.2d 343 (5th Cir. 1979) (Tex. law).

[47]          However, if the contingent beneficiary is himself determined to have contributed to the insured’s death, he too will be disqualified.  See Prudential Ins. Co. of Am. v. Athmer, 178 F.3d 473, 476 (7th Cir. 1999).  In fact, the Seventh Circuit Court of Appeals questioned the Reynolds decision.  Id.

[48]          Life Ins. Co. of N. America v. Wollett, 766 P.2d 893, 895 (Nev. 1988); Quick v. United Benefit Life Ins. Co., 213 S.E.2d 563, 565 (N.C. 1975); Rose v. Rose, 444 P.2d 762, 764 (N.M. 1968).

[49]          Peoples Sec. Life Ins. Co. v. Currence, 420 S.E.2d 552, 556 (W.Va. 1992); McClure v. McClure, 403 S.E.2d 197, 201 (W. Va. 1991); Cheatle v. Cheatle, 662 A.2d 1362, 1366 (D.C. Ct. App. 1995); State Farm Life Ins. Co. v. Davidson, 495 N.E.2d 520, 522 (Ill. App. Ct. 1986).

[50]          Currence, 420 S.E.2d at 555; Wollett, 766 P.2d at 895.

[51]          California - Western States Life Ins. v. Sanford, 515 F. Supp. 524, 528 (E.D. La. 1981) (La. law); Currence, 420 S.E.2d at 556; Quick, 213 S.E.2d at 569; Metropolitan Life Ins. Co. v. Fogle, 419 S.E.2d 825, 827-28 (S.C. Ct. App. 1992); Jones v. All Am. Life Ins. Co., 316 S.E.2d 122, 125 (N.C. Ct. App. 1984), aff’d, 325 S.E.2d 237 (N.C. 1985); Prudential Ins. Co. of Am. v. Baitinger, 452 So. 2d 140, 141 (Fla. Dist. Ct. App. 1984); Huff v. Union Fidelity Life Ins. Co., 470 N.E.2d 236, 239 (Ohio Ct. App. 1984).

[52]          Sanford, 515 F. Supp. at 528-29 (La. law); Quick, 213 S.E.2d at 569; Baitinger, 452 So. 2d at 143.  The law illustrates the legislature’s intent to make it more difficult for a killer to receive any beneficial interest as the result of wrongdoing. Id.; McClure, 403 S.E.2d at 201; Bernstein v. Rosenthal, 671 P.2d 979, 980 (Colo. Ct. App. 1983); State Farm Ins. Co. v. Smith, 363 N.E.2d 785, 787 (Ill. 1997).

[53]          621 N.E.2d 164 (Ill. App. Ct. 1993).

[54]          470 N.E.2d 236 (Ohio Ct. App. 1984).

[55]          Id. at 238.

[56]          Id.

[57]          Id. at 239.

[58]          John Hancock Mut. Life Ins. Co. v. Willis, 438 F.2d 1207, 1208 (6th Cir. 1971) (Mich. law); Moore v. Moore, 186 S.E.2d 531, 533 (Ga. 1971); Home Ins. Co. v. Butler, 922 S.W.2d 66, 68 (Mo. Ct. App. 1996); State Farm Life Ins. Co. v. Davidson, 495 N.E.2d 520, 521 (Ill. App. Ct. 1986); Wells v. Harris, 434 S.W.2d 783, 784 (Mo. Ct. App. 1968).

[59]          Zinger v. Terrell, 985 S.W.2d 737, 740 (Ark. 1999). “[T]he potential for an erroneous judgment in a criminal proceeding has been dramatically reduced by the full panoply of rights afforded criminal defendants.” Id. See also Angleton v. Estate of Angleton, 671 N.E.2d 921, 927 (Ind. Ct. App. 1996).

[60]          California - Western States Life Ins. v. Sanford, 515 F. Supp. 524, 528-29 (E.D. La. 1981) (La. law); see also Estate of Brown, 503 N.Y.S.2d 532 (Surr. Ct. 1986).

[61]          Haung Tang v. Aetna Life Ins. Co., 523 F.2d 811, 813 (9th Cir. 1975) (Calif. law); Connecticut Gen. Life Ins. Co. v. Cole, 821 F. Supp. 193, 200 (S.D.N.Y. 1993); Zinger v. Terrell, 985 S.W.2d 737, 741 (Ark. 1999).  But see Johnson v. Hobb, 729 F. Supp. 1524, 1526 (D. Md. 1990).

[62]          Haung Tang, 523 F.2d at 813 (Calif. law).  The law barring a beneficiary from recovering insurance proceeds for the unlawful killing of an insured was not intended to include criminal convictions from foreign countries where the substantive criminal law and procedure significantly differ from that of the United States. Id.  See also Cole, 821 F. Supp. at 200.

[63]          Ford v. Ford, 512 A.2d 389, 393 (Md. 1986).

[64]          Davis v. Aetna Life Ins. Co., 279 F.2d 304, 311 (9th Cir. 1960) (Calif. Law); Ford, 512 A.2d at 392-93.

[65]          Leavy v. Metropolitan Life Ins. Co., 581 P.2d 167, 169 (Wash. Ct. App. 1978).

[66]          Zinger, 985 S.W.2d at 741; In re Vadlamudi Estate, 443 A. 2d 1113, 1117 (N.J. Sup. Ct. Law Div. 1982).

[67]          Metropolitan Life Ins. Co. v. Kelley, 890 F. Supp. 746, 748 (N.D. Ill. 1995); In re Vadlamudi Estate, 443 A.2d at 1117.

[68]          Zinger, 985 S.W.2d at 740; In re Vadlamudi Estate, 443 A.2d at 1117-18.

[69]          696 P.2d 1027 (Okla. 1985).

[70]          Id. at 1031.

[71]          Id. at 1033.

[72]          Id.

[73]          Johnson v. Hobb, 729 F. Supp. 1524, 1526 (D. Md. 1990).  However, an admission made by the defendant in a criminal proceeding may be admitted in a subsequent civil trial to determine whether the beneficiary killed the insured feloniously and intentionally.  Id. at 1527.

[74]          Metropolitan Life Ins. Co. v. Wattley, 109 F. Supp.2d 1017, 1020 (N.D. Ind. 2000); Franklin Life Ins. Co. v. Strickland, 376 F. Supp. 280, 283 (N.D. Miss. 1974); Nunez v. Gonzalez, 456 So. 2d 1336, 1338 (Fla. Dist. Ct. App. 1984); Leavy v. Metropolitan Life Ins. Co., 581 P.2d 167, 169 (Wash. Ct. App. 1978).

[75]          John Hancock Mut. Life Ins. Co. v. Willis, 438 F.2d 1207, 1208 (6th Cir. 1971) (Mich. law); Zinger v. Terrell, 985 S.W.2d 737, 740 (Ark. 1999) (majority rule citing numerous cases); Doe v. American Gen. Life Ins. Co., 526 N.Y.S.2d 904, 905 (Sup. Ct. 1988).

[76]          State Farm Life Ins. Co. v. Howell, 76 F.3d 216, 217 (8th Cir. 1996) (Mo. law).

[77]          Prudential Ins. Co. of Am. v. Tull, 524 F. Supp. 166, 169 (E.D.Va. 1981).

[78]          Estate of Brown, 503 N.Y.S.2d 532, 533 (Surr. Ct. 1986).

[79]          Home Ins. Co. v. Butler, 922 S.W.2d 66, 68 (Mo. Ct. App. 1996); Prudential Ins. Co. of Am. v. Baitinger, 452 So. 2d 140, 143 (Fla. Dist. Ct. App. 1984).

[80]          Quick v. United Benefit Life Ins. Co., 213 S.E.2d 563, 565 (N.C. 1975) (Slayer Statute not penal in nature); Leavy v. Metropolitan Life Ins. Co., 581 P.2d 167, 171 (Wash. Ct. App. 1978).

[81]          Butler, 922 S.W.2d at 68; State Farm Life Ins. Co. v. Davidson, 495 N.E.2d 520, 522 (Ill. App. Ct. 1986).

[82]          Connecticut Gen. Life Ins. Co. v. Cole, 821 F. Supp. 193, 201 (S.D.N.Y. 1993).

[83]          Johnson v. Hobb, 729 F. Supp. 1524, 1526 (D. Md. 1990); Ford v. Ford, 512 A.2d 389, 393 (Md. 1986).

[84]          Ford, 512 A.2d at 396; State Mut. Life Assurance Co. of Am. v. Hampton, 696 P.2d 1027, 1034 (Okla. 1985); Eskridge v. Farmers New World Life Ins. Co., 621 N.E.2d 164, 168-69 (Ill. App. Ct. 1993).

[85]          Ford, 512 A.2d at 396; Matter of McCarty, 762 S.W.2d 458, 461 (Mo. Ct. App. 1988).

[86]          Ford, 512 A.2d at 396; Hampton, 696 P.2d at 1034; Eskridge, 621 N.E.2d at 169.

[87]          Rumbaut v. Labagnara, 791 S.W.2d 195, 199 (Tex. Ct. App. 1990).

[88]          Dill v. Souther Farm Bureau Life Ins. Co., 2001 WL 59564 (Miss. Jan. 25, 2001) (en banc)(and cases cited therein): "There is a strong public policy against allowing someone to procure the death of another and then profit from the illegal act. Public policy weighs heavily against requiring a heightened quantum of proof than that normally required in a civil suit, preponderance of the evidence." Id. at *8; McClure v. McClure, 403 S.E.2d 197, 201 (W.Va. 1991) (see cases listed therein); Ford, 512 A.2d at 396; Hampton, 696 P.2d at 1034; Jones v. All Am. Life Ins. Co., 325 S.E.2d 237, 241 (N.C. 1985); Matter of McCarty, 762 S.W.2d at 461; Leavy v. Metropolitan Life Ins. Co., 581 P.2d. 167, 169 (Wash. Ct. App. 1978).

[89]          Me. Rev. Stat. Ann. Tit. 18-A § 2-803(e) (West 2000).

[90]          Ford, 512 A.2d at 396; Eskridge, 621 N.E.2d at 169-70.

[91]          Metropolitan Life Ins. Co. v. Wenckus, 244 A.2d 424, 425 (Me. 1968).

[92]          Diep v. Rivas, 745 A.2d 1098, 1104-05 (Md. 2000).

[93]          Spencer v. Floyd, 785 S.W.2d 60, 62-63 (Ark. Ct. App. 1990).

[94]          Crawford v. Coleman, 726 S.W.2d 9, 11 (Tex. 1987).

[95]          Prudential Ins. Co. of Am. v. Athmer, 178 F.3d 473, 476 (7th Cir. 1999); Davis v. Aetna Life Ins. Co., 279 F.2d 304, 309 (9th Cir. 1960) (Calif. law); Salak v. Protective Life Ins. Co., 19 F. Supp.2d 953, 957 (S.D. Iowa. 1998) (the preferred rule); Wilson v. Wilson, 461 S.E.2d 816 (S.C. 1995), rev’g 439 S.E.2d 323 (S.C. Ct. App. 1993); Estate of Covert, 717 N.Y.S.2d 392, 394 (App. Div. 2000) (courts create a legal fiction); Estate of Grieco v. Bankers Am. Life Assurance Co., 674 N.Y.S.2d 408, 409 (App. Div. 1998); United Presidential Life Ins. Co. v. Moss, 838 P.2d 1011, 1014 (Okla. Ct. App. 1992).

[96]          Wenckus, 244 A.2d at 426 (Me. 1968); Diep, 745 A.2d at 1104 (cases cited therein); Spencer, 785 S.W.2d at 62.  In absence of a contingent beneficiary, the policy proceeds pass to the estate of the insured.  See Higgins v. McElwee, 680 S.W.2d 335, 342 (Mo. Ct. App. 1984).

[97]          Salak, 19 F. Supp.2d at 956-58; Moss, 838 P.2d at 1014; Chatman v. Currie, 606 So. 2d 454, 456 (Fla. Dist. Ct. App. 1992).

[98]          Athmer, 178 F.3d at 476.  In Primerica Life Ins. Co. v. Suter, 945 S.W.2d 554 (Mo. Ct. App. 1997), the beneficiary’s father was listed as the contingent beneficiary.  The wife was convicted of the insured’s first degree murder and the estate challenged her father’s right to receive the life insurance proceeds. The court rejected this challenge and allowed the father to receive the benefits.

[99]          Cockrell v. Life Ins. Co. of Georgia, 692 F.2d. 1164, 1170 (8th Cir. 1982) (Ark. law).When the beneficiary of an insurance policy is disqualified by reason of having intentionally killed the insured, the proceeds become an asset of the insured’s estate.  Id.

[100]        Strickland v. Wysowatcky, 250 P.2d 199, 201 (Colo. 1952) (en banc).

[101]        Couch on Insurance 3d § 62:16, at 24 (1996); see also Estate of Covert, 717 N.Y.S.2d 392, 394 (App. Div. 2000).

[102]        Bennett v. Allstate Ins. Co., 722 A.2d 115, 117 (N.J. Super. Ct. App. Div. 1998); Athmer, 178 F.3d at 476.

[103]        Rottmund v. Continental Assurance Co., 761 F. Supp. 1203, 1209 (E.D. Pa. 1990); Rowland v. Faulkenbury, 883 S.W.2d 848, 851 (Ark. Ct. App. 1994).

[104]        Heinzman v. Mason, 694 N.E.2d 1164, 1167 (Ind. Ct. App. 1998).

[105]        19 F. Supp.2d 953 (S.D. Iowa 1998).

[106]        Id. at 956-57.

[107]        Id. at 957.

[108]        790 S.W.2d 462 (Mo. 1990) ( en banc).

[109]        Id. at 463.

[110]        Cerro Gordo Charity v. Fireman’s Fund Am. Life. Ins., 819 F.2d 1471, 1486 (8th Cir. 1987) (Minn. law); New England Mut. Life Ins. Co. v. Null, 605 F.2d 421, 424 (8th Cir. 1979); Federal Kemper Life Assurance Co. v. Eichwedel, 639 N.E.2d 246, 250 (Ill. App. Ct. 1994); Woodmen of the World Life Ins. Soc'y v. Kinnaird, 874 S.W.2d  47, 49 (Tenn. Ct. App. 1993).

[111]        Bradley v. Farmers New World Life Ins. Co., 679 N.E.2d 1178, 1185 (Ohio Ct. App. 1996).

[112]        Kinnaird, 874 S.W.2d at 50.

[113]        Estate of Grieco v. Bankers Am. Life Assurance Co., 674 N.Y.S.2d 408, 409 (App. Div. 1998); see also Cerro Gordo Charity, 819 F.2d at 1476 (Minn. law); People v. Hardy, 825 P.2d 781, 809 (Cal. 1992) (cases cited therein). For reasons of public policy, courts have distinguished between cases involving fraud in obtaining a life insurance policy and cases where the beneficiary decides to murder the insured after purchasing the insurance. See Hardy, 825 P.2d at 809.

[114]        Estate of Grieco, 674 N.Y.S.2d at 409.

[115]        Eichwedel, 639 N.E.2d at 251.

[116]        The requirements for the defense of misrepresentation, and the resulting rescission of coverage, vary from state to state, but most states require a combination of some or all of the following elements: (1) falsity, either through a misstatement or a concealment of facts, and in some states, an actual intent of the applicant to deceive the insurer; (2) materiality to the acceptance of the risk or to the hazard assumed by the insurer; and (3) reliance by the insurer on the misstatement or concealment of facts.  Meyer, supra note 1, at 295 (Supp. 1999).

[117]        Eichwedel, 639 N.E.2d at 251.

[118]        679 N.E.2d 1178 (Ohio Ct. App. 1996).  In fact, proof of an insured’s death from injuries received by him raises a presumption of accidental death.  This presumption will continue until overcome by affirmative proof to the contrary on the part of the insurer. See Cockrell v. Life Ins. Co. of Georgia, 692 F.2d 1164, 1167 (8th Cir. 1982) (Ark. law).

[119]        Eichwedel, 639 N.E.2d at 1187.

[120]        Id.

[121]        Id.

[122]        Id.

[123]        New York Life Ins. Co. v. Henriksen, 415 N.E.2d 146, 148 (Ind. Ct. App. 1981).

[124]        Wilkins v. Fireman’s Fund Am. Life. Ins. Co., 695 P.2d 391, 392 (Idaho 1985); Henriksen, 415 N.E.2d at 148.

[125]        Wilkins, 695 P.2d at 392.

[126]        New England Mut. Life Ins. Co. v. Null, 605 F.2d 421, 422 (8th Cir. 1979).   The court in Henderson v. Life Ins. Co. of Virginia, 179 S.E. 680 (S.C. 1935) said:  “[I]t is contrary to a sound public policy to speculate upon that other’s life -- and it should be added that to permit the same might tend to incite the crime of murder . . . and that the rule is enforced, and the defense permitted, not in the interest of the defendant insurer, but solely for the sake of the law, and in the interest of sound public policy . . . .”  Id. at 692.

[127]        Oversteet v. Kentucky Cent. Life Ins. Co., 950 F.2d 931, 936 (4th Cir. 1991) (Va. law).

[128]        Liberty Nat’l Life Ins. Co. v. Weldon, 100 So. 2d 696 (Ala. 1957).  The court permitted a wrongful death action against three insurance companies that issued life insurance policies to the insured’s aunt, who had no insurable interest in the child’s life and murdered the child.  See also Williams v. John Hancock Mut. Life Ins. Co., 718 S.W.2d 611, 613 (Mo. Ct. App. 1986).

[129]        Ramey v. Carolina Life Ins. Co., 135 S.E.2d 362 (S.C. 1964).  The court allowed a lawsuit against an insurance company by the insured who was severely injured by his wife, the owner-beneficiary, who attempted to murder him. The insurer sold the policy without obtaining the consent of the insured and with knowledge that his wife had forged his signature on the application.

[130]        See supra notes 124-26.

[131]        Id.  For a more detailed discussion of this topic see Ben Kingree & Louise Tanner, Life Insurance as a Motive for Murder, 24 Tort & Ins. L.J. 761 (1994).

[132]        Life Ins. Co. of Georgia v. Lopez, 443 So. 2d 947, 949 (Fla. 1983).

[133]        499 N.E.2d 602 (Ill. App. Ct. 1986).

[134]        Id. at 604.

[135]        Glass v. United States, 506 F.2d 379, 381-83 (10th Cir. 1974); Harper v. Prudential Ins. Co. of Am., 662 P.2d 1264, 1274 (Kan. 1983).

[136]        Alfa Life Ins. Co. v. Culverhouse, 729 So. 2d 325, 327 (Ala. 1999); In re Estate of Thompson, 426 N.E.2d 1, 2 (Ill. App. Ct. 1981).

[137]        Culverhouse, 729 So. 2d at 327.

[138]        Doe v. American Gen. Life Ins. Co., 526 N.Y.S.2d 904, 905 (Sup. Ct. 1988).

[139]        See supra notes 55-66 and 71-73.

[140]        Harper, 662 P.2d at 1274 (an insurer must withhold payment where it has knowledge of facts that may defeat the primary beneficiary’s claim).

[141]        Weed v. Equitable Life Assurance Soc. of the U.S., 288 F.2d 463, 464 (5th Cir. 1961);

[142]        In re Estate of Thompson, 426 N.E.2d at 3.

[143]        Doe, 526 N.Y.S.2d at 905.

[144]        Harper, 662 P.2d at 1273-74.  However, police suspicion is not, by itself, sufficient to defeat a beneficiary’s claim.  In re Estate of Thompson, 426 N.E.2d at 2-3.

[145]        Harper, 662 P.2d at 1273-74.

[146]        526 N.Y.S.2d 904 (Sup. Ct. 1988).

[147]        Id. at 904.

[148]        Id. at 905

[149]        In re Estate of Thompson, 426 N.E.2d at 3.

[150]        Oversteet v. Kentucky Cent. Life Ins. Co., 950 F.2d 931, 940 (4th Cir. 1991); State Mut. Life Assurance Co. of Am. v. Hampton, 696 P.2d 1027, 1030 (Okla. 1985).  “By initiating an interpleader action, the stakeholder is admitting that it holds funds that are not its own, but says that it owes those funds to an undetermined party.”  See Gilbert v. Congress Life Ins. Co., 646 So. 2d 592, 594 (Ala. 1994).

[151]        28 U.S.C. § 1335.  Gibbs v Gibbs, 210 F.3d 491, 496 (5th Cir. 2000); Maddox v. Philadelphia Life Ins. Co., 77 F. Supp.2d 1123, 1129 (S.D. Cal. 1999).  “The federal interpleader statute is specifically designed to aid stakeholders such as [the insurer] to protect themselves against problems posed by multiple claimants to a single fund.”  Maddox, 77 F. Supp.2d at 1129.  In order to file a federal interpleader lawsuit, the insurer must establish only that the amount in controversy exceeds $500; the presence of two or more adverse claimants of diverse citizenship, as defined by 28 U.S.C. § 1332, who claim or may claim to be entitled to such money or property; and the deposit by the plaintiff of such money into the registry of the court. See  28 U.S.C. § 1335 (a).

There is also Rule 22 of the Federal Rules of Civil Procedure, which provides that persons having claims against the plaintiff may be required to interplead their claims when their claims may subject the plaintiff to multiple liability. See  Fed. R. Civ. P.  22 (1).  Unlike the interpleader statute (28 U.S.C. § 1335), which grants district courts original jurisdiction, the interpleader rule is merely a procedural device and does not grant a federal court subject matter jurisdiction. See Bell & Beckwith v. United States, I.R.S., 766 F.2d 910, 914 (6th Cir. 1985).  In an action brought pursuant to Rule 22, either federal question jurisdiction or diversity jurisdiction must be established.  Id.  See also 28 U.S.C. § 1331.

[152]        Life Ins. Co. of N. Am. v. Wollett, 766 P.2d 893 (Nev. 1988); Hampton, 696 P.2d 1027.

[153]        Overstreet, 950 F.2d at 940.

[154]        Hampton, 696 P.2d at 1030.

[155]        New York Life Ins. Co. v. Connecticut Dev. Auth., 700 F.2d 91, 96 (2d Cir. 1983); Citizens & Southern Trust Co. v. Trust Co. Bank, 417 S.E.2d 148, 149 (Ga. 1992).

[156]        908 P.2d 79 (Colo. 1995).

[157]        See Colo. Stat. Ann. § 15-11-803(3) (1999).

[158]        Lunsford, 908 P.2d at 82.

[159]        Id. at 83.

[160]        Id.

 

(Author's bio) [Use same bio that appeared with his article in Fall 1999 issue p.30].