Weedoll GIVENS, Appellant, v. GIRARD LIFE INSURANCE COMPANY OF AMERICA, and Edna P. Morris, Appellees.
No. 17819.
Court of Civil Appeals of Texas, Dallas.
April 6, 1972.
Rehearing Denied May 4, 1972. Second Rehearing Denied May 25, 1972.
GUITTARD, Justice.
The conclusion that an inverse condemnation suit can be brought under the constitutional eminent domain clause even in the absence of the State‘s waiver of immunity insures the effectiveness of just compensation constitutional provisions. A landowner‘s constitutional right to compensation, a right which is expressly and unconditionally granted, cannot be held to be exercisable only at the discretion of the legislature.
Charles A. Girand, James H. Walker, Dallas, for appellees.
GUITTARD, Justice.
Girard Life Insurance Company filed this interpleader action to determine ownership of insurance proceeds on the life of Walter Morris, deceased. The petition names as defendants Weedoll Givens, the designated beneficiary, and Edna Morris, widow of the insured. The principal question is whether designation by the husband of an unrelated person as beneficiary of life insurance purchased with community funds is constructive fraud on the wife.
The case was tried on an agreed statement of facts, which includes the following information. Walter and Edna Morris were married in 1928, and had several children, some of whom survive, but when he died on June 22, 1970, he had not lived with Edna for more than ten years. He held a certificate of insurance under a group life insurance policy obtained from Girard Life by his employer, who paid all the premiums and made no deductions from his pay for that purpose. On June 27, 1967, Morris changed the beneficiary to Weedoll Givens, who was not related to him by blood or marriage and was described in the designation as a friend. She had been acquainted with him since 1963, and their friendship continued until his death.
The policy provided a death benefit of $4,000, which the insurance company paid into court. Other assets are described as follows:
“The only known asset of the community estate of Walter Morris and Edna P. Morris, other than personal items, is approximately one acre of land near Fayetteville, Texas (and insurance policies, if same arе considered assets of the community estate).”
No will was found. Community indebtedness consisted of $350 on a television and stereo purchased by Edna Morris, taxes due on the acre of land near Fayetteville, and unpaid funeral expenses of $215.
The trial court held that the insurance proceeds were community property and that the change of beneficiary from his wife Edna Morris to the unrelated friend “was an act of constructive fraud upon the rights of Edna P. Morris as to her half of the proceeds.” Accordingly, the judgment awarded one-half of the proceeds to the widow and the other half to the beneficiary, who appeals, contending that the stipulated facts fail to show any ground to defeat the prima facie case established by her designation as beneficiary. We hold that the facts support the judgment.
We agree with appellant that the rights of the insured husband under this contract were subject to his statutory power of management and disposition. Life insurance is defined as property by
Our review of the authorities reveals that the husband‘s power to make gifts of community property has always been limited, though the limits have never been clearly defined. Early Spanish authorities expressed various opinions.3 Probably the prevailing Spanish view was stated by the commentator Escriche, as follows:
“* * * the husband can, without the consent of the wife, make inter vivos conveyances [of their community property] and even moderate donations for just causes; but excessive or capricious gifts will be null, and alienations made with intent to defraud the wife, who will have action in all these cases against the properties of the husband and against the possessor of the things conveyed.”4
In Stramler v. Coe, 15 Tex. 211 at 216 (1855), Chief Justice Hemphill, citing Escriche and other Spanish authorities, declares:
“The husband has the active control and administration of the ganancial property during the matrimony. No consent of the wife is necessary to a valid alienation of such property by the husband. But excessive or capricious donations and sales, made with the intent to defraud the wife, would be void; and she would be entitled to her action against the property of the husband and against third possessors.”
We are persuaded that the widow should not have the burden of establishing fraudulent intent in order to protect her interest in the community property from abuse of her husband‘s managerial powers. This view is sustained by Texas authority. In appropriate cases our courts have dispensed with proof of fraudulent intent on the theory of сonstructive fraud, a judicial convention employed to achieve a just result in cases where the wrong to the wife is so clear that intent is immaterial. Thus an “excessive or capricious donation” was held to be “presumptively fraudulent” in Hartman v. Crain, 398 S.W.2d 387 (Tex.Civ.App., Houston 1966, no writ). Also in Martin v. Moran, 11 Tex.Civ.App. 509, 32 S.W. 904 (Fort Worth 1895, no writ), the insured‘s designation of his own estate as beneficiary was held to be a fraud on the wife because he had no power to give her interest in the community property to himself. The constructive fraud concept has been applied in cases in which the beneficiary has been changed from the wife to a relative of the insured, and the community estate remaining was insolvent or its assets so meager that the value of the property left in the hands of the surviving spouse was less than the proceeds of the policy. Davis v. Prudential Ins. Co. of America, 331 F.2d 346 (5th Cir. 1964);
All the cases above cited involved donees and beneficiaries related to the decedent. In such cases, as learned commentators have noted, the courts have considered objective factors in determining whether the situation was one in which the decedent might properly have made a gift of community funds, such as the relationship of the parties, whether special circumstаnces tended to justify the gift, and whether the community funds used for such purpose were reasonably in proportion to the community assets remaining.9 Prof. Huie suggests that where life insurance is used as a means for distributing property at death to nondependent relatives, the principles of testamentary disposition of community property should apply, so that the beneficiary designation should be upheld only when reimbursement can be had from the husband‘s part of the community estate, and that gifts to the wife should also be considered оn the question of constructive fraud.10
Although we have found no direct precedent dealing with application of the constructive fraud concept to an unrelated donee or beneficiary, the reasons for protecting the widow‘s interest against appropriation of community funds for relatives of the husband, such as a mother, sister or child of an earlier marriage, have even greater force when the beneficiary is entirely unrelated.11 Persons outside the family do not ordinarily receive substantial gifts from donors in the modest circumstances of the deceased husband here. Neither are unrelated friends normally named as beneficiaries in life insurance contracts, which are designed primarily for protection of dependents on death of the insured by payment of debts and expenses and compensation for loss of support. Warthan v. Haynes, 155 Tex. 413, 288 S.W.2d 481 (1956). In our view, a husband‘s use of jointly owned funds to provide life insurance benefits to someone outside the family is so extraordinary as to raise a strong inference of misappropriation оf the wife‘s interest in the community property. Consequently, we hold that purchase of life insurance with community funds for benefit of an unrelated person is constructively fraudulent in the absence of special justifying circumstances.
Under this holding the widow establishes constructive fraud prima facie by proof that life insurance was purchased with community funds for the benefit of an unrelated person, and the beneficiary then has the burden to justify such use of community funds. What special circumstances would justify designation of an unrelated beneficiary cannot properly be determined in this case. All we know from the agreed statement about the relationship of the
We do not reach the question of whether the insurance company would have been protectеd against liability to Edna Morris if it had paid the entire proceeds under the terms of the policy to Givens as beneficiary. In the trial court Edna made her claim against Givens rather than against the insurance company, and we hold that the facts recited in the agreed statement support that claim.
Appellant Givens complains that the trial court erred in making findings of fact when the parties had stipulated that all the facts upon which the case was to be decided were contained in the agreed statement. Since her brief fails to specify the particular findings alleged to be inconsistent with the agreed statement, we are not required to consider this point. Our judgment is not based on any facts other than those contained in the agreed statement. We regard the recitation of “constructive fraud” in the judgment as a conclusion of law, in which we concur for the reasons stated.
Appellant Givens also complains of the trial court‘s rulings denying her claim for the statutory penalty and attorney‘s fee and granting the insurance company rеlief on its bill of interpleader. These points are overruled, because the insurance company never denied its liability for the proceeds and we find that it had reasonable ground for a good faith belief that it might be exposed to double liability.
In this connection the sequence of events is material. On June 22 Walter Morris died. On June 30 counsel for appellee Edna Morris wrote the company a letter claiming the entire policy proceeds. On July 20 her counsel submitted proof of death on the forms provided аnd advised that she contended that although the designated beneficiary was a “friend,” the premiums paid for the policy were community property and she was entitled to the proceeds because use of the community funds to pay the premiums was in fraud of her rights. On July 30 counsel for appellant Givens wrote to the company‘s attorney enclosing another proof of death and claiming the entire proceeds for Givens as beneficiary. On September 9 the insurance company filed the petition for interplеader and paid the proceeds into court. The petition acknowledges that death benefits in the amount of $4,000 were payable, and nothing in the stipulation indicates that it ever denied liability for this amount.
Appellant bases her claim for penalty and attorney‘s fee on the statute authoriz-
The same principles which determine whether an insurance company is excused from payment of the statutory penalty and attorney‘s fee also determine whether it is entitled to interplead and recover its own attorney‘s fee. Interpleader is authorized by Texas Rules of Civil Procedure, rule 43 when rival claims against plaintiff “are such that the plaintiff is or may be exposed to double or multiple liability.” The test of the right of the stakeholder to recover its attorney‘s fee from the fund is whether its failure to pay one claimant or the other is in good faith, basеd on a reasonable doubt either of fact or of law as to which is entitled to the fund. Drane v. Jefferson Standard Life Ins. Co., 139 Tex. 101, 161 S.W.2d 1057 (1942); Employers’ Casualty Co. v. Rockwall County, 120 Tex. 441, 35 S.W.2d 690, 693 (1931); Wilke v. Finn, 39 S.W.2d 836 (Tex.Com.App.1931).
Appellant contends that the insurance company could not have been exposed to double liability because Edna Morris had no claim against it even on establishing her claim of constructive fraud. Appellant argues that under the
We cannot say that this statutory presumption so clearly protected the insurance company against any claim by Mrs. Morris that the interpleader was filed in bad faith. The company had reason for doubt on that point. After two letters from her counsel claiming all the proceeds, several questions may have оccurred to the company, such as whether the company was entitled to rely on the statutory presumption after death of the insured and notice of the widow‘s adverse claim. We need not now determine how those questions should be decided. Even if we should conclude that the statute would have provided a good defense if the company had paid the beneficiary, and the widow had established her claim of constructive fraud in a suit against the company, our hindsight ought not to deprive the company of its right to interplead. The remedy of interpleader would be of little value if it were unavailable to a stakeholder who is later found not to be liable to one of the claimants, since the existence of that liability is the very matter which the interpleader action is brought to determine. Under the stipulated facts we hold that the company was a stakeholder and was properly allowed its attorney‘s fee on depositing the funds in court. Hartman v. Crain, 398 S.W.2d 387 (Tex.Civ.App., Houston 1966, no writ).
Appellant Givens contends further that she should be awardеd the penalty and attorney‘s fee and that the company‘s claim for interpleader relief should be denied because it refused to accept the offer in her demand letter of July 30, 1970 “to indemnify Girard Life Insurance Company of America, by adequate indemnity bond or otherwise, against liability to Edna P. Morris by reason of the claim of Edna P. Morris in connection with the above Group Policy and Certificate, with such indemnity agreement to be accepted and consummated by and simultaneously with your delivery to me of the claimеd proceeds.” This contention has some support in the opinion of this court in Rio Grande Nat. Life Ins. Co. v. Schmidt, 292 S.W.2d 864 (Tex.Civ.App., Dallas 1956, no writ). In that case, as an alternative ground of affirming the trial court‘s judgment denying interpleader relief, the court said that testimony of nonacceptance of an offer of indemnity had a bearing on the insurer‘s good faith in seeking interpleader relief. We do not think the Schmidt opinion should control here. Indemnity in this situation is a matter of contract, and in our view no one should be deprived of legal remеdies because he is unwilling to make such a contract. Although the holder of a fund subject to competing claims may, if he chooses, protect himself by accepting an offer of indemnity by one of the claimants against liability to the other, or may himself offer to accept such an indemnity instead of interpleading, we hold that his failure to accept such an offer does not affect his right to interplead, and anything to the contrary in Schmidt is overruled.
Finally, we consider appellant‘s contention that the trial court erred in taxing costs against her, including the attorney‘s fee allowed to the insurance company for its interpleader.
Affirmed.
ON MOTION FOR REHEARING
On motion for rehearing appellant Givens contends that the attorney‘s fee allowed the insurance сompany for its interpleader should be taken out of the fund and not taxed against her as costs. We overrule this contention on authority of decisions holding that although the interpleading party is entitled to have his attor-
Overruled.