240 Conn. 287 | Conn. | 1997
Opinion
The dispositive issue in this appeal is whether a change of beneficiary in a life insurance policy can be accomplished by substantial compliance with the policy requirements, as opposed to strict compliance, where the policy requires that the change of beneficiary be requested “on a form satisfactory to the
The undisputed facts found by the trial court are as follows. In 1961, the defendant issued a policy insuring the life of Ryder for $100,000. Her husband was listed as the owner and primary beneficiary of the policy, and her nephew, Philip G. Zink, was named as a contingent beneficiary. The policy provided, in pertinent part, as follows: “A new beneficiary may be designated from time to time by filing with the home office a written request therefor on a form satisfactory to the company and signed by the owner. ... No change of beneficiary shall take effect until such change shall have been recorded in writing by the company.” (Emphasis added.) The policy did not define or explain the terms “on a form satisfactory to the company” or “recorded in writing by the company.”
In January, 1979, Ryder sent a letter, prepared by the plaintiff, to the defendant purporting to change the beneficiary from Zink to the executor of her estate.
Ryder continued to pay the premiums on the policy until her death on July 2, 1990. When the plaintiff, as executor of Ryder’s estate, demanded payment of the policy proceeds from the defendant a few weeks after her death, an appropriate claim form was provided to him. The form was completed and returned to the defendant. The defendant, however, refused to pay the
The defendant took this position notwithstanding its admission that Ryder’s letter of January 8, 1979, fully complied with the formalities required by the defendant’s change of beneficiary form, in that it was a signed, dated and witnessed written request, and that it clearly indicated the new beneficiary. The defendant understood that Ryder’s letter expressed her intent to name her estate as the beneficiary on her policy, and it also conceded that Ryder’s intent never changed between the time of her 1979 letter to the defendant and the time of her death in 1990. The defendant, however, refused to commence an interpleader action, which had been proposed by the plaintiff, in order to obtain a judicial determination as to who was entitled to the insurance proceeds.
The plaintiff then brought the present action, alleging breach of the life insurance contract, and violations of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq., based upon unfair insurance practices as defined in the Connecticut Unfair
The trial court rendered judgment in favor of the defendant on all of the plaintiffs claims. The trial court found that the policy’s requirement that a written request for a change of beneficiary be on a “form satisfactory to the company” meant that the form had to be on a “company approved form.” Although the defendant represented to the plaintiff, in its June, 1992 letter denying the plaintiffs claim for the insurance proceeds, that a “form satisfactory to the company” meant on a “company provided form,” the trial court found that in practice the defendant had approved several different forms for use in making beneficiary changes. The trial court also found that although Ryder’s intent was clear regarding the change of beneficiary, she never requested the change of beneficiary on a “company approved form” as required by the terms of the policy. Consequently, the trial court held that Ryder had failed to do all in her power to comply with the change of beneficiary provision in the policy, and that her failure to do so was not due to circumstances beyond her control. The plaintiff argues on appeal that the trial court applied the wrong legal standard and improperly concluded that Ryder had not legally changed the beneficiary. We agree with the plaintiff.
Although “the general rule [is] that a change of beneficiary of an insurance policy can be effected by following the procedure prescribed in the policy”; Bigley v. Pacific Standard Life Ins. Co., 229 Conn. 459, 464, 642 A.2d 4 (1994); the plaintiff in this case relies on the “substantial compliance doctrine,” an exception to the general rule.
The substantial compliance doctrine has its genesis in Connecticut as a narrow exception to the requirement that the owner of an insurance policy could change the beneficiary only by strictly complying with the terms of the policy. In Bachrach v. Herrup, 128 Conn. 74, 76, 20 A.2d 395 (1941), this court stated that “[t]he general rule is that a change of beneficiary can only be effected by following the mode prescribed by the policy, however clear the intention to make the change may be. Insurance companies usually require
Subsequent to Bachrach and O’Connell, this court stated, by way of dicta
We believe that this case presents the opportunity to embrace and apply the substantial compliance doctrine as set forth in Aetna Life Ins. Co. We conclude that the doctrine applies regardless of whether the issue of a purported change of beneficiary is raised in an equitable or legal action.
We conclude that, under the substantial compliance doctrine, which we affirm as the law of this state, the owner of a life insurance policy will have effectively changed the beneficiary if the following is proven: (1) the owner clearly intended to change the beneficiary and to designate the new beneficiary; and (2) the owner has taken substantial affirmative action to effectuate the change in the beneficiary.
The trial court in this case narrowly formulated the substantial compliance doctrine by limiting it to the contours of Bachrach, and rejecting the dicta in Aetna Life Ins. Co. Indeed, the trial court held that “[u]nder all the facts and circumstances of the case, the court finds that the insured, [Ryder], failed to do all in her power to comply with the procedures set [out] in the policy and that this failure was not occasioned by circumstances beyond her control.” The trial court based its decision on the failure of Ryder to change the beneficiary on a “company approved form.”
The plaintiff also argues that the trial court improperly concluded that the defendant had not violated CUTPA, based upon unfair insurance practices as defined in CUIPA, and, accordingly, must be reversed. We agree. The plaintiff alleged unfair insurance practices, as defined in CUIPA, as the basis of violations of CUTPA. See Mead v. Burns, 199 Conn. 651, 663, 509 A.2d 11 (1986) (holding “that it is possible to state a cause of action under CUTPA for a violation of
The judgment is reversed and the case is remanded with direction to render judgment for the plaintiff on the breach of contract claim, for further proceedings as to the plaintiffs CUTPA claims, and for a determination of any interest that may be due.
In this opinion the other justices concurred.
This case had previously been before the Appellate Court. See Engelman v. Connecticut General Life Ins. Co., 88 Conn. App. 134, 135-36, 658 A.2d 983 (1995). The Appellate Court reversed the judgment of the trial court, DeMayo, J., in favor of the defendant and remanded the case for further proceedings after concluding that the trial court lacked subject matter jurisdiction because the plaintiff had sought a declaratory judgment and all the necessary parties were not made parties to the action or given reasonable notice of the action. Id., 137-38. On remand, the plaintiff amended his complaint to delete the claim for a declaratory judgment. See Mannweiler v. LaFlamme, 232 Conn. 27, 36 n.11, 653 A.2d 168 (1995). The trial court on remand, Booth, J., thereafter, pursuant to the agreement of the parties, decided the merits of the case relying on the transcripts and exhibits from the first trial and judgment was again rendered for the defendant. See id.
The plaintiff appealed from the judgment of the trial court to the Appellate Court, and we transferred the appeal to this court pursuant to Practice Book § 4023 and General Statutes § 51-199 (c).
This attempt to change beneficiaries was unsuccessful because Ryder had not provided the defendant with a policy number and, therefore, the defendant was unable to locate the policy in its files. The record does indicate that the defendant advised the plaintiff of this problem by letter and requested the necessary information. The record is silent as to whether the plaintiff ever responded to this request.
The letter provided as follows:
“1377 Boston Post Road
Milford, Connecticut 06460
January 8, 1979
Connecticut General Life Insurance Co.
950 Cottage Grove Road
Bloomfield, Connecticut 06002
Re: Policy No. 1021625
Mrs. Ella B. Ryder
Gentlemen:
I hereby revoke all previous beneficiary designations with respect to the death proceeds on the above policy on my life, and I direct that the death*291 proceeds shall be paid in one sum to the Executor of my estate.
I retain all rights of ownership on the policy and all right[s] to make a future change of beneficiary.
My intention is that this change of beneficiary become effective immediately; however, if you wish confirmation of this beneficiary change on your own form, please supply the form to my attorney, Robert J. Engelman, Esq., Schwartz & Knight, P.O. Box 679, New Haven, Connecticut, 06503.
Very truly yours,
Witnessed:
/s/ Robert Engelman /s/ Ella B. Ryder’
The June, 1992 letter provided in pertinent part as follows: “The policy records contain a letter signed by the Insured, Ella B. Ryder, dated January [8], 1979, revoking all previous beneficiaries and directing that the death proceeds be payable to the Executor of her estate. ... It is Company practice to require that a Change of Beneficiary be submitted on a company provided form [in order] to constitute a ‘form satisfactory to the Company’ [as required by the terms and conditions of the policy]. This condition was not satisfied by the Insured. The Company was under no legal obligation to change the beneficiary pursuant to the letter request and did not, in fact, record a Change of Beneficiary on its records.”
The proposed interpleader action would have been governed by General Statutes § 52-484, which provides: “Action in nature of interpleader. Whenever any person has, or is alleged to have, any money or other property in his possession which is claimed by two or more persons, either he, or any of the persons claiming the same, may bring a complaint in equity, in the nature of a bill of interpleader, to any court which by-law has equitable
In O’Connell v. Brady, 136 Conn. 475, 481, 72 A.2d 493 (1950), this court stated that ‘'[o]rdinarily, the requirements in an insurance policy as to the steps to be taken to make a change of beneficiary are for the protection of the insurer and, unless rights have become vested, the insurer may waive them and change the beneficiary although they have not been complied with. . . If the insurer does not change the beneficiary but pays the proceeds into court in an interpleader action, it thereby waives any right it had to insist that the requirements of the policy be complied with; but this does not work a change in the beneficiary, and it is for the court to determine who has the better right to the proceeds.” (Citations omitted; emphasis added.) Furthermore, policy formalities are intended to protect not only the insurance company from rival claims, but also the owner’s choice of beneficiary and the interests of the beneficiaries. See Bigley v. Pacific Standard Life Ins. Co., 229 Conn. 459, 464, 642 A.2d 4 (1994) (holding that insurance company bears loss for payment to person fraudulently substituted for beneficiary where policy provided that only owner could change beneficiary); R. Keeton, Insurance Law (1971) § 4.11 (e), pp. 254-55 (stating that change of beneficiary clauses are for protection of insurer, owner and third party beneficiaries).
The plaintiff argues that, because he demanded that the defendant institute an interpleader action pursuant to § 52-484, the trial court should have applied the reasoning of O’Connell by holding that the defendant waived any right it had to insist on the policy formalities. Although the defendant could have brought an interpleader action, it did not do so. We agree with the trial court that the defendant was under no obligation to bring an interpleader action. Nevertheless, as the defendant conceded before the trial court, having paid Zink rather than follow the interpleader procedure, the defendant did so at its own peril.
The defendant claims, as an alternate ground on which to affirm the judgment of the trial court, that the plaintiffs breach of contract claim is barred by the six year statute of limitations contained in General Statutes § 52-576 (a), which provides in pertinent part that “[n]o action ... on any contract in writing shall be brought but within six years after the right of action accrues . . . .” The defendant claims that the breach of contract occurred in 1979 when it did not change the beneficiary. We disagree. This claim is simply without merit. “While the statute of limitations normally begins to run immediately upon the accrual of the cause of action, some difficulty may arise in determining when the cause or right of action is considered as having accrued. The true test is to establish the time when the plaintiff first could have successfully maintained an action.” (Internal quotation marks omitted.) Wynn v. Metropolitan Property & Casualty Ins. Co., 30 Conn. App. 803, 807-808, 623 A.2d 66 (1993), aff'd, 228 Conn. 436,
A policy is “beyond the control” of the owner when, for example, the named beneficiary refuses to surrender the policy to the owner so that a change of beneficiary can be endorsed on the policy. See Bachrach v. Herrup, supra, 128 Conn. 76.
Because Aetna Life Ins. Co. was decided on the basis that the owner of the policy had abandoned her plan to change the beneficiaries on her policy, there existed no intent under the first prong of the exception to the general rule expressed in Bachrach. Furthermore, we recognize that Aetna Life Ins. Co. must be viewed in the context of an interpleader action brought by the insurer. See O’Connell v. Brady, supra, 136 Conn. 481; see also footnote 6.
See footnote 6.
We also point out that if the owner of the policy has done all in his or her power to comply with the change of beneficiary provision in the policy, but has failed because of some circumstance beyond his or her control, that owner has satisfied the second prong of the rule. See Aetna Life Ins. Co. v. Hartford National Bank & Trust Co., supra, 146 Conn. 541; see also Bachrach v. Herrup, supra, 128 Conn. 76. The owner, under these circumstances, will be deemed to have taken substantial affirmative action to effectuate a change in beneficiary.
See footnote 4.
At oral argument, the defendant’s counsel could not point to any material difference between the information Ryder provided in her letter and the information requested by the defendant’s form.