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
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.