Ruby Lеe Nelson DEVEROEX, Guardian of Edwin H. Nelson, a minor, Petitioner, v. Zan A. NELSON and the Estate of Cain H. Nelson, Jr., Deceased, Respondent.
No. B-5102.
Supreme Court of Texas.
Oct. 29, 1975.
Foster, Bratton & Golden, Thomas B. Foster, Jr. and B. Jeff Bratton, James P. Wallace, Bert E. Derden, Houston, for respondent.
SAM D. JOHNSON, Justice.
This is an heirship proceeding arising from an allegation of adoption by estoppel. At stake are the proceeds of four life insurance policies issued on the life of the father. The claimants of these proceeds are the guardian for the estate of the decedent‘s natural son, petitioner here, and the allegedly adoptive son, respondent. The trial court rendered judgment on a jury verdict that an adoption by estoppel had occurred and that the adoptive son would share the
In 1950 Cain H. Nelson, Jr., while serving in the United Statеs Navy, met Helen A. Whitehead. At that time, Helen already had a four-year-old son named Zan, who was born out of wedlock. Cain and Helen were married in 1952 while still in Virginia. After living in Virginia for approximately one year following the marriage, the family moved to Houston where a natural son, Edwin H. Nelson, was born in 1959.
Testimony at the trial and the jury‘s answers to special issues established that Helen agreed to marry Cain and move to Houston with him after his discharge from the Navy on the condition that he would adopt Zan. The jury found that Cain verbally agreed to adopt Zan. The jury also found that after the marriage Zan was treated as the adopted son of Cain, although formal adoption proceedings were never instituted.
In 1967 Helen Nelson murdered Cain who died intestate. Helen was convicted and sentenced to a term in the Texas Department of Corrections. She has disclаimed any interest in the subject matter of this case.
Cain Nelson was covered by four life insurance policies, all four designating Helen as the primary beneficiary. The first two policies, written by Prudential Insurance Company of America, were for the sum of $18,769.51 and named “Zan Nelson, stepson of the insured and all children born of the marriage of the insured and said wife” as contingent beneficiaries. The third policy, written by Metropolitan Life Insurance Company, was for $14,000 and provided that the child or children of the deceased were contingent or secondary benefiсiaries. The fourth policy, written by
After Cain‘s death an administration for his estate was filed in the probate court of Harris County. In that proceeding Zan filed an application for determination of heirship, claiming to be the adoptive son of Cain by estoppel. The probate court sustained Zan‘s claim. Ruby Lee Nelson Deveroex, guardian of the estate of the natural son, Edwin, appeаled that matter to the district court.
The three life insurance companies which had issued the policies on Cain‘s life filed interpleader suits in the district court which were subsequently consolidated with the matter being appealed from the probate court. After trial to a jury, the trial сourt entered judgment on the verdict that Zan Nelson was the adopted son of Cain Nelson; that Zan Nelson and Edwin H. Nelson were the only heirs of Cain Nelson; that all life insurance proceeds were to be divided equally between Zan and Edwin; and that all court costs, including an ad litem attornеy‘s fee for the unknown heirs of Cain Nelson, were to be taxed against the guardian of the estate of Edwin Nelson.
The guardian of the estate of the natural son appealed to the court of civil appeals. That court reformed the trial court judgment as it related to the insurance proceeds ($7,863.38) from the First Financial Life Insurance Company policy by awarding all of the proceeds from this policy to Zan and, as reformed, affirmed. In affirming, the court of civil appeals held that the evidence supported the jury finding that the requisites of an adoрtion by estoppel were present; that the doctrine of adoption by estoppel was applicable even though the agreement to adopt was entered in Virginia, a jurisdiction that does not recognize the doctrine; and that the assignment of error of the guardian regarding the taxing of costs was overly broad and thus ineffective to preserve the point for appeal. We agree with the holdings of the court of civil appeals on these aspects of the case.
This writ was granted to consider the effect of Texas Insurancе Code Annotated,
“The interest of a beneficiary in a life insurance policy or contract heretofore or hereafter issued shall be forfeited when the beneficiary is the principal or an accomplice in willfully bringing about the death of the insured. When such is the case, the nearest relative of the insured shall receive said insurance.”
At issue are the proceeds from the First Financial Life Insurance Company policy which named Zan, whose relationship on the application was said to be “son,” as the sole contingent beneficiary. The trial court awarded the proceeds of such policy to Zan and Edwin to be shared equally, apparеntly construing
Petitioner, the guardian of Edwin‘s estate, contends that the court of civil appeals erred in holding that the proceeds of the First Financial policy should be distributed to Zan as the sоle contingent beneficiary rather than to Cain‘s nearest relative pursuant to
Petitioner relies on Drane v. Jefferson Standard Life Ins. Co., 139 Tex. 101, 161 S.W.2d 1057 (1942), for the proposition that the contingent beneficiary possesses no rights in the insurance proceeds while the primary beneficiary is living. Thus, petitioner argues that Zan obtained no rights in the First Financial policy proceeds because Helen wаs alive. Petitioner‘s reliance on Drane is misplaced. In Drane the primary beneficiary was alive and eligible to receive a monthly payment from the insurance proceeds. The contingent beneficiary sought an adjudication that he would receive the monthly payment, if any were left, after the рrimary beneficiary‘s death. The court held that such a judgment would be premature because the primary beneficiary was still alive and because the contingency might never arise. Unlike the Drane case, the instant case concerns a primary beneficiary who is ineligible to recеive the insurance proceeds and the question presented is to whom should such proceeds be distributed. An adjudication of the contingent beneficiary‘s rights in the instant case is not premature.
Petitioner also argues that Zan has no right to the insurance proceeds under a strict rеading of the policy terms. The First Financial policy provides that the proceeds should be paid to the primary beneficiary, “if living,” otherwise to the contingent beneficiary.1 Petitioner concludes that Zan‘s right to the proceeds did not vest because Helen, the primary beneficiary, was still alive. A similar question was considered in Williams v. Williams, 262 S.W.2d 111 (Tex.Civ.App.--Galveston 1953, no writ). In that case the insurance policy provided that the contingent beneficiary (the insured‘s son) would receive the proceeds if the primary beneficiary (the insured‘s wife) was not living. The insured and his wife were thereafter divorced. The insurеd‘s ex-wife, the primary beneficiary, was held to be disqualified to receive the insurance proceeds because she lacked the required insurable interest. Since the insured‘s ex-wife was still alive, the question arose whether the proceeds should pass to the insured‘s son, who was the contingent beneficiary, or to the estate of the insured. The court, looking to the intent of the insured, held that the proceeds should pass to the insured‘s son. We prefer the rationale of the Williams decision which effectuates the intent of the insured.
The application of
Accordingly, we would distribute the insurance proceeds to the nearest relative of the insured under
DANIEL, J., dissents in an оpinion in which DENTON, J., joins.
DANIEL, Justice (dissenting).
I disagree with that part of the Court‘s opinion which permits Zan Nelson, the adopted son of the insured, to recover all of the proceeds of the First Financial policy as a secondary beneficiary instead of sharing the proceeds equally with Edwin Nelson, thе insured‘s natural son, as nearest relatives of the insured in accordance with
The holding is contrary to the plain words of both the insurance policy and the statute. The insurance contract provides that the secondary beneficiary shall receive the proceeds only if the primary beneficiary (Helen Nelson) is not living. However, Helen Nelson is still living. The policy is silent as to who shall take thereunder if the primary beneficiary is living but disqualified because she willfully killed her insured husband.
The interest of a beneficiary in a life insurance policy or contract heretofore or hereafter issued shall be forfeited when the beneficiary is the principal or an accomplice in willfully bringing about the death of the insured. When such is the case, the nearest relative of the insured shall receive said insurance.
The above article is as much a part of the insurance contract as if it had been incorporated in the policy. Camden Fire Ins. Ass‘n v. Harold E. Clayton & Co., 117 Tex. 414, 6 S.W.2d 1029 (1928). The rights of parties to contract with respect to insurancе are limited by state laws which are a part of every contract. Scanlan v. Home Ins. Co., 79 S.W.2d 186 (Tex.Civ.App., 1935, writ ref.); Hamaker v. American States Ins. Co. of Texas, 493 S.W.2d 893 (Tex.Civ.App., 1973, writ ref. n. r. e.).
In the absence of a statute to the contrary, one Texas decision cited by the majority1 and several from other states have permitted recovery by a secondary beneficiary while a disqualified primary beneficiary was still living. 27 A.L.R.3d 794, 835-837. None of these cases involved a statute such as
Two Texas cases have dealt with
In Farmers & Merchants State Bank v. Helton, 278 S.W.2d 352 (Tex.Civ.App., 1954, writ ref. n. r. e.), the policy provided that if the beneficiary was not living the proceeds would vest in the insured‘s estate. The beneficiary having willfully killed the insured, the Court applied
The Supreme Court of Wyoming considered a statute similar to
The Helton and Dowdell decisions are not mentioned in the majority opinion or the opinion of the Court of Civil Appeals. I think they are well reasoned and should be followed here insteаd of attempting to find what the intent of the insured would have been if he had known his wife was going to kill him.
DENTON, J., joins in this dissent.