Lunsford v. Western States Life Insurance

suspension was 1994. November respondent could The earliest date the have

been reinstated therefore November Extending respondent’s suspen-

1995. thirty days

sion additional means that

the earliest date that he reinstated

now 1995. December

Ill

Accordingly, hereby it is ordered that the

respondent may not be reinstated reinstatement, 1995. Prior

December reinstatement,

and as a condition of re-

spondent pay Rainey must restitution to Dr. $3,000 plus statutory the amount inter- 5,May

est from 1994. It is further ordered respondent pay the costs of this $386.94,

proceeding in the amount of within days

thirty after the of this announcement

opinion, Supreme Court Grievance

Committee, Street, 600 Seventeenth Suite

500-S, Plaza, Denver, Dominion Colorado

80202. LUNSFORD, Hustwaite,

Tammi Lori Ka- Webster,

thy Nelson, III, Edson

minor, Nelson, Erin Brooke a mi-

nor, by through legal guardian litem, Trujillo, Petitioners,

ad Ellen LIFE

WESTERN STATES INSURANCE Casualty North American Life &

Company, Respondents.

No. 93SC764. Colorado,

Supreme Court

En Banc.

Dec. 1995.

Rehearing Denied Jan. Foreman, P.C.,

Haddon, Harold Morgan & Beilis, Denver, Haddon, A. Haines A. Rachel Haines, Olsen, P.C., Spencer J. & Susan Denver, Crona, for Petitioners. Dunn, Dunn, Gary Phelps, Singer Alan & Riordan, Denver, Respondents. Joan M. Opinion Justice delivered the LOHR Court. scope protection

This case concerns the provided by “slayer Colorado’s statute” life insurance beneficiary who to a fieiary designated was later determined to have murdered the as Mr. Nelson’s es- insured, where the did insurers not receive tate. competing written notice claims Nelson, July On optome- Mr. beneficiaries disburse Trinidad, Colorado, trist traveled to ment. See update to optometry Denver his certificate. statute”). (“slayer plaintiff contingent disappeared, day He and next the en- judgment dam beneficiaries obtained a for forcement partially officers discovered his ages against the defendant insurers based on stripped empty and in vehicle the waters jury a determination insurers acted investigating Clear Creek. When officers re- negligently paying policy in the to vehicle, covered they the did not find Mr. primary beneficiary. The Colorado body. Nelson’s Without body a recovered Appeals Court of and reversed held that other conclusive evidence Mr. Nelson’s according where made death, petition Nelson, but upon by Sharon terms of an in and the ab 18,1984, February on Las Animas Coun- of contingent sence of written notice benefi ty District Court declaring issued an order claims, ciaries’ protects July that Mr. Nelson died on an disbursing policy from insurer Meanwhile, Mr. Nelson’s insurers re- proceeds to one who is later determined Services, Equifax tained (“Equifax”) Inc. guilty the insured. Lunds murdering investigation conduct an into the circum- Ins., v. Western States P.2d

ford Life surrounding disappear- stances Mr. Nelson’s granted (Colo.App.1993).1 We 12, 1984, August ance. On Mr. Nelson’s certiorari appeals’ to review the court of body on in was found a sandbar Clear Creek. resolution of this and now issue reverse and The sheriffs office the case closed after con- proceedings. remand to that court for further cluding report in a final the available evidence Nelson indicated Mr. died as

I. the result of a traffic accident. the course During the first half of Nelson investigation culminating extensive wife, Nelson, and purchased his Sharon sev- 600-page report, Equifax investigator de- $200,000 policies provided eral over veloped play centering foul concerns coverage life insurance to Mr. Nelson. Two Sharon Nelson but nonetheless determined policies were issued defendants suspi- he did not have the “well-founded Western Company States Life Insurance and necessary delay cion” in dis- warrant North Casualty Compa- American Life result, bursing As a ny.2 designated Mr. Nelson Sharon Nelson paid the insurers primary beneficiary as the North Sharon Nelson.3 Casualty American Life and Company policy, later, and the years Nelson’s minor children as the con- Several Sharon Nelson admit- tingent beneficiaries. The beneficia- Nelson’s murder complicity ted her Mr. ry in during the Western States Life investigation. Insurance On unrelated June designated Company policy as the “Nel- pled Sharon Nelson A,” Family son of which Sharon Nel- murder of Nelson and Mr. received sen- Trust — trustee, contingent 19,1989, son was the and the bene- imprisonment. July tence of life On first-designated plaintiff, 1. The name of the Tam- compet- 3.The insurers did not receive notice of "Lunsford,” incorrectly spelled mi "Lunds- contingent pri- claims beneficiaries caption reported ford” in the decision. insurers, however, or to did disbursement. The Ins., v. Western States P.2d Lundsford notify contingent Life beneficiaries of the exis- reason, (Colo.App.1993). For we designations policies tence of or of their " adopt “Western as our States short refer- Life contingent The evidence at trial beneficiaries. opinion. ence to the case in this was that un- beneficiaries were policies aware existence of the 2. A third was issued another insurance actively and that the were adult beneficiaries originally company that was named defen- as a misled that no Sharon Nelson to believe such dispute which settled dant but and was dis- policies existed. missed from case to trial. complaint mary judgment, granted trial court Mr. filed Nelson’s children complaint. District against Denver plaintiffs insurers leave amend their Court,4 claiming negligence and breach of complaint claims of bad The amended added complaint, In their initial the chil- contract. puni- faith breach of insurance contract alleged insurers life insur- dren damages. tive 15—11— contrary benefits to section ance responded filing a motion The insurers 803(3), generally provides that a bene- negligence, bad faith breach to dismiss prohibited ficiary who an insured is murders contract, damages punitive receiving an insured’s judge presided, A claims. different now predeceasing treated as insured. and is granted judge motion dismiss affirmative The insurers offered several de- only bad claim.5 The fenses, that as to the faith breach including section the contention 15-11-803(3) ruling inapplicable judge was the declined revisit the earlier 15-11-803(6) notice give failure written plaintiffs’ scope regarding the of section required by section competing claims as 15- resolving dismiss in motion to the both the 11-803(6). summary for The moved insurers jury settling claim in instruc- negligence and maintaining that section 15—11— judgment, Instead, judge also concluded tions. that 803(6) claims. plaintiffs’ barred the 15- requirements of that the notice section 11-803(6) not and that the “are absolute” summary judg- district court The denied 15-11-803(6) ment, judged on a rea- holding that actions should be does insurers’ negligently protect jury not an insurer that dis- found that standard.6 The sonableness primary benefi- burses disbursing negligently acted the insurers ciary suspicious the face of circumstances plaintiffs proceeds and the awarded surrounding the of an insured. death $200,000 plus interest.7 summary judgment denying the insurers’ reversed, Appeals Colorado Court of The motion, provi- the court that the notice ruled three-judge panel one member with 15-11-803(6) not an of section was “ab- sion dissenting. The court held notice defense,” “bottom line” solute that the was 15-11-803(6) precluded provision of section reasonably in a “acted whether insurers liability in manner,” Western States insurer this case. negligence prudent and that granted at certiora- ques- Life, 872 P.2d 1311. We required of factual issue determination denying holding,8 motion for sum- ri to and now reverse tions. After review following ques- granted plaintiffs three children of 8.We certiorari on the 4. The include Mr. tion, marriage from a and two children as reframed this court: Nelson former marriage Perry and Sharon from the Nelson. holding Appeals Court err in Did the slay- requirements of the state under the notice cross-appealed plaintiffs conditionally 5. The dis- statute, pro- petitioner children’s failure er missal of the bad faith breach of con- claim, prior time vide written notice of a appeals did not find claim. The it tract companies respondent issue, necessary it and is not to address the beneficiary of the life to the us on certiorari review. before contract, the insurance relieved liability. jury Specifically, judge presented with challenge appeal, On the insurers did instruction, both standard jury’s support sufficiency of the evidence to 15-11-803(6) outlining § instruction defense report Equifax negligence. The determination of a caveat that bar was not an with highly infor- extensive inconclusive contains but defense. absolute investigator’s supporting concern that mation its play foul the result of Nelson’s death was Equi- rejected damages jury punitive casting suspicion Nelson. claim. Sharon 7. The on damages regarding punitive Jeffer- jury fax did instruction not disclose this information Office, investigated finding by jury County required a definitive son Sheriff’s death, complained office injury was attended "willful Mr. Nelson’s the sheriff’s before any exemplary wanton before closed the case based the conclusion conduct” granted. jury deputy damages award was sheriff thir- could be death accidental. A years ty-two experience, homicide willful and wanton conduct had who headed found established, plaintiffs investigations the time and awarded the the sheriff's office been discovered, damages body testified that a result. Mr. Nelson’s punitive based on our determinations that the statute reliable culpability. evidence criminal inapplicable sup- and that regarding statute is silent beneficiary’s en- ports judgment of the district court. titlement to insurance in other situ-

ations. II. 15-11-803(6) Section protection offers Assembly The General has enacted pay insurers that beneficiaries accordance legislation embodying principle kill with the terms of policies and without reap profits ers should not perpe from the notice from who beneficiaries tration of pre homicides. Section 15-11-803 have become entitled to pro- the insurance specific vents such a result several con ceeds reason of other subsections of sec- (1987). texts. See tion 15-11-803. Section pro- Subsection of that statute relates to the pertinent part: vides of life insurance Any bank, company, or other present is relevant to the case: obligor making payment according to the bond, A named in- obligation terms is not surance or other contractual ar- liable reason this section unless rangement principal who kills obligee payment it has received at its home person upon or the whose life the principal office or address written notice and, thereof, issued as a result is convicted a claim under this section. of, to, pleads guilty plea or a enters of nolo contendere to the crime of murder 15-11-803(6), (1987) § 6B C.R.S. degree first or second manslaughter, or as added). protection by offered subsec- said crimes are defined in sections 18-3- (6) tion is limited to situations where the 18-3-104, C.R.S., 102 to is not entitled to company obligated would be under bond, any benefit under the or oth- 15-11-803(3) section make “as arrangement, er contractual and it be- though predeceased had killer the dece- payable comes though as the killer had situations, turn, dent.” Id. Those predeceased the decedent. restricted to ones which the killer has (1987). 15-11-803(3), § 6B C.R.S. of, pled guilty been convicted or has or nolo face, 15-11-803(3) to, manslaughter prevents

On contendere murder or Although helpful an individual from receiving a insured.10 there is no victim’s life legislative history, if that one can infer that individual is con- of, to, pleads guilty legislature victed plea reliably or enters a deemed established nolo specified any contendere to one homi- homicide would come to attention of circumstances, beneficiaries, cide In guilt offenses.9 such contingent who should then by by judgment established trial or giving en- bear the burden of written notice of tered on the plea, providing individual’s own claim to the insurers. Equifax viving information would have been spouse any vital to is not entitled to benefits article, investigation Equifax provided had that infor- under the will or under this and the spouse passes mation to sheriff's office: estate of the deceased you predeceased Q. Had killer known that the had the decedent. insurance com- 15-11-803(5), (1987). panies gathered § all 6B C.R.S. Since Shar- of that kind of informa- tion, complicity you your Nelson’s in the murder of her department do believe would pro- husband had not been established in civil investigation have closed this as an accidental ceedings at the time the insurers disbursed Mr. death? No, proceeds, inap- Nelson's insurance that statute is guarantee you A. sir. I can almost plicable present case. they would not have. noted, 9, previously supra As note the disen- 10. 15-11-803(5) provides: Section further perpetrators protec- titlement of and attendant dismissal, Notwithstanding acquittal or if a tion of insurers also extends to situations where competent jurisdiction [civil] finds surviving spouse civilly has been determined to preponderance of the evidence that a surviv- manslaughter be of murder or or her of his ing spouse 15-11-803(5), (1987). commits spouse. murder in the first or degree manslaughter second or ... presented by such sur- That situation is not this case.

§4 specification the absence of a notice of claim particular under set of condi- (6), protected See, subsection insurers are necessarily dis- tions e.g., excludes others. bursing payments according terms Reale v. Board Real Appraisers, Estate though (Colo.1994); even beneficiaries are disen- 880 P.2d Vela v. Dis- Court, (Colo.1983); titled such disbursements reason of trict 664 P.2d complicity Quintrall Goldsmith, 410, 411, the homicide of in- v. 134 Colo. plea. (1957); sured as established conviction or McNichols v. Po- Ass’n, legislative 45, 61, This scheme to contin- allocates lice 121 Colo. (1949).

gent Here, beneficiaries the risk of loss of legislature plainly benefits restrict- primary beneficiary’s guilt where the has ed section to situations where a reliably of, been beneficiary established the insurer has pled guilty was convicted to, received written notice of claims nolo contendere the murder or man- contingent slaughter beneficiaries. Subsection also holder before receiv- point establishes which an insurer can beneficiary. as a pay policy proceeds beneficia- Our decision that section 15-11-803 ries without risk of to a apply does not supported this case is also suspected whom the insurer by analogous precedent. statute manslaughter the murder or of the insured construed, strictly must exceptions be guilt reliably but whose had not been estab- language the literal cannot superimposed. lished earlier. Greenburg, Smith 121 Colo. scheme is limited to disen- (1950) (“ P.2d 517-518 ‘[SJuch titlement of named beneficiaries who have strictly must be construed.... A statute perpetrators been specified established as disqualifying one who has been convicted of homicides the means set forth in section the murder deceased does not in the ” 11—803(3).11Likewise, protection for 15— absence (quoting such conviction.’ 26 15-11-803(6) insurers under section is limited 47, § Descent and C.J.S. Distribution primary beneficiary situations where the 1055) (emphasis opinion)); Strickland v. of, has pled guilty been convicted or has 221, 199, Wysowatcky, 128 Colo. 250 P.2d 201 to, nolo contendere such a homicide.12 (1952) (although convicted murderers cannot inherit from according their victims to stat However, section 15-11-803 does ute, narrowly that statute must be construed case, not address the issue this in which prevent and therefore does not those convict primary was made before the bene manslaughter ed of inheriting); from so Peo ficiary’s guilt by was plea. established trial or McCormick, (Colo. 808, ple v. 784 P.2d 810 15-11-803(3) Section is restricted to circum (convicted App.1989) in murderers cannot guilt beneficiary stances of a where the pursuant herit from their victims to section reliably pay to an insurer’s established 15-11-803(1), although the statute is limited policy proceeds, by ment of evidenced by prevent its terms and therefore cannot explicit statutory that in directive section 15- by complicitor inheritance who was never 11-803(3) situations “be grant immunity); convicted because of payable though comes as pre the killer had Eames, 775, see also Seidlitz v. 753 P.2d 776- 15-11-803(3), § deceased the decedent.” 6B (Colo.App.1987) (strictly construing 77 sec added). C.R.S. Where the 15-11-803(3) interpreting tion in life face, language of a statute is clear on its we policy). surance apply it E.g., must as written. Van Waters Keelan, 15-11-803(6) Rogers, Inc. v. & 1076 Neither section nor section (Colo.1992). Furthermore, 15-11-803(3) legisla when applies guilt where the exactitude, speaks with ture we must con beneficiary to one of the crimes the statute to specified strue mean the inclusion in section has not been supra 11. But see note 9. greater protection liability. afford insurers 15-11-803(8), (1995 § Supp.). See began, the time that 12. Since this case the Gen- Assembly eral amended section 15-11-803 to

85 formally by plea parties stipulated, as established conviction consistent judgment, envisioned that section. order to deter- trial court’s that the law was “fair the claims ly mine the merit of asserted beneficiary well settled where the beneficiaries, it therefore is neces- named in a life causes the sary identify the standards in- insured, which death of the named he is barred governed surer conduct Smith, when the circum- taking proceeds.” surrounding stances an insured’s cast death 420-21, 121 Colo. at 218 P.2d at 517. On suspicion primary beneficiary, on but review, quoted stipulation court where there has been conviction or formal “approved” part judgment. plea or nolo contendere Smith, 517; 121 Colo. at P.2d at beneficiary when the insurer life disburses Strickland, 223, 225-26, see also 128 Colo. at (distinguishing 250 P.2d at 200-01 eases in wrongdoer claiming beneficiary as III. Indeed, policy). early a life insurance as Supreme the United States Court Assembly provided guidance The General proclaimed reproach that “[i]t would abe legal in determining standards that jurisprudence country, of this if one could statutory to situations not covered money payable recover Code,13 on the scheme of the Colorado Probate party death of a feloniously whose life he had appears. which section 15-11-803 Section Armstrong, Mutual taken.” Ins. Co. v. provides 15-10-103 displaced “[u]nless Life 591, 600, 117 U.S. 6 S.Ct. 29 L.Ed. particular provisions [probate] of this accord, (1886); code, e.g., Continental Bank & supple- principles equity law and (10th Maag, Trust v. Co. F.2d provisions.” ment 6B Cir.1960) (murderer (1987). not recover In the applica- C.R.S. absence of an victim’s and the contin setting provision ble the standard gent should with which beneficiaries receive comply an insurer must before proceeds); Harper making payment Ins. Prudential Co. situations America, Kan. today, such as the one this confronts (1983) (where the court the “almost principles inapplicability Faced with the sec of cy feloniously who kills insured from tion this court must determine recovering policy under the whether convict legitimacy applica of the district court’s not”); or v. All ed Jones American Ins. Life negligence tion of a standard to the insurers’ Co., 582, 122, N.C.App. 125 68 316 S.E.2d support actions.14 We find for the district (1984) (common from law bars killers receiv court standard in two areas of common proceeds, ing policy their victims’ insurance law, specifically regarding the first killers’ convicted), regardless whether stands of the killer entitlements to their victims’ life insurance 725, 'd, 312 N.C. 325 S.E.2d 237 aff proceeds treating generally second (1985); Equitable Assurance v. Shrader Life governing the standards of in the conduct 1031, 41, Soc’y, 20 St.3d 485 N.E.2d Ohio disbursing pro policy surers (“the (1985) bars a 1034-35 common law ben ceeds. eficiary policy of receiv a First, recognized we have that in the policy of that when the statute, applicable absence of an can beneficiary intentionally feloniously a killer insured,” regardless receive the a victim’s life caused the death of the convicted); policy. Greenburg, In Smith v. the killer was whether pass 13. The Colorado Probate Code arti- applicability negligence consists of standard. of the 15, (1987 17 cles 10 to Supp.) of title 1995& adequately The record the insurers’ establishes objection applied by standard the trial court. We to address the therefore elect beyond parties’ 14. The briefs extend the narrow issue. granted issue on we certiorari to encom- 86 policy proceeds un- McClure, 649, insurer’s disbursement v. 184 W.Va.

McClure but where there suspicious circumstances 197, (describing der 200-01 403 S.E.2d “ nolo plea no conviction or holding that the is ‘[u]nlawful question that is fact-specific a an in is death of contendere causation intentional jury. province within the appropriately insur beneficiary named by the sured not, acknowledge this in their briefs is the The insurers felonious ance whether cannot disburse by admitting that insurers barring the ben common-law rule test of the ”) such as when proceeds “prematurely,” policy’ eficiary proceeds of the from the Hill, investigating prose- or a v. is still Metropolitan Ins. Co. enforcement (quoting Life (1934)); Harper, 662 P.2d pending. cution is See 177 189 115 W.Va. S.E. (“Reason that a Annotation, justice require By 1273-74 Killing Insured Beneficia company duty placed upon Pro the insurance Affecting Insurance or Its be ry As Life ceeds, 11(A)(3), at 802-07 time after the death 27 A.L.R.3d to wait reasonable Couch, (1969 George to allow the law enforcement Supp.); 4 J. the insured & 1994 complete investigation. agencies Law Cyclopedia Insurance Couch 1984). (2d actually com- Certainly prosecution if a is § 27:150 ed. rev. menced, delay company should the insurance Second, obligation insurers have an prosecution of the payment until the outcome to disburse Glass, known.”); 506 F.2d at 382- is see also proper recipient in a reasonable manner. extreme, Clearly, at one insurers have States, See, F.2d e.g., v. 506 Glass United to disburse insurance license (10th Cir.1974); Harper, 662 381-83 investigation immediately during ongoing an If an is on notice of P.2d at 1273-74. insurer prosecution and before bene- suggesting facts notify ficiary reasonably expected to can be policy is not entitled to disbursement of a claim. insurer duty proceeds, has a to make a the insurer inquiry to withhold reasonable However, obligation of an in Glass, dispelled. suspicion until its is 506 disbursing simply to refrain from surer is 382-83; Equitable v. As F.2d at Weed Life proceeds prematurely. Whether (5th U.S., Soc’y 288 F.2d 464 surance only one premature is disbursement denied, Cir.), 7 82 S.Ct. cert. U.S. In negligence inquiry. of a broader element (1961); v. Aetna L.Ed.2d McDuffie Life reasonably when obligated to act surers are (E.D.Mich.1957), Co., F.Supp. Ins. duty disbursing policy proceeds, and (6th Cir.1960); 'd, 273 F.2d 609 aff ques owed to beneficiaries cir Harper, P.2d at 1273-74. such Harper Prudential example, in v. tion. For cumstances, protect can itself insurer America, Supreme the Kansas Ins. Co. of policy proceeds. Over interpleading the company is to an “insurance Court noted Co., Kentucky Ins. Cent. street Life liability only if it relieved Cir.1991); Glass, (4th 506 F.2d F.2d 940 good in primary proceeds to the 382; McDuffie, F.Supp. at 544. 160 at knowledge which faith and without of facts beneficiary’s claim.” primary argue may that section the The insurers defeat (emphasis origin in at 1274 Harper, shield defin 662 P.2d is a broad al).15 of Similarly, in States Court ing duties situations the United their disbursement However, any inquiry Appeals concluded into an for the Tenth Circuit such as these. "good Although Harper a where insurers the court references faith” standard is violated standard, investigation pursue "reasonably prudent good notes an insurer’s fail to a faith it also policy pro- which would obligation [that] of would uncovered facts to withhold have beneficiary's ''knowledge the have defeated the claim" where insurer has ceeds of facts added)). beneficiary's qualifier may primary a restatement of the This latter defeat that, America, ably Harper negligence principles as Co. traditional v. Prudential Ins. claim." of (1983) (em- pointed by in Western States 662 P.2d 1274 out the trial court Kan. 233 Life, original); In re revolve at around the reasonableness phasis in see also Estate base disregarding suggest Ill.App.3d the wisdom Thompson, 99 55 Ill.Dec. facts that (1981) (court delaying policy payments. 3 notes that 426 N.E.2d

87 v. that an interpleader); Harper, Glass United States insurer (“By 662 P.2d at 1274 erroneously “negligently and interpleading the entire contingent beneficiary the so proceeds pri- [policy] prematurely” to might an opportunity protect he have to mary beneficiary in- and murderer rights, his protected Prudential could have 382-83; Weed, 506 F.2d sured. at see also ease, itself from a liability.”). double In this (payment by pri- F.2d at 288 464 insurer to the trial court noted that insurers could mary beneficiary knowledge “without of facts have interpleader availed themselves of to vitiating prevent claim will re- second liability. avoid denying dual the insurers’ claimant”); covery by McDuffie, another 160 summary motion judgment, the court (insurer F.Supp. at ample 544 “had notice stated, protected “[t]he carriers could have primary that there was a sufficient cloud” on possibility themselves of a double beneficiary’s justify interpleader claim to an payment by interpleading policy proceeds action). thereupon giving into court and notice to parties all letting interest and the court recognize duty We of an insurer proceeds.” decide who entitled to the to proceeds reasonably disburse ab out, As point the defendant insurers howev- explicit legislative sent direction to con er, company interpleads an insurance trary. We that: are mindful grounds funds without to there believe are derogation law [Statutes the common may subject rival claimants the funds be construed, strictly must be so beneficiaries, claims including legislature abrogate rights wishes to claims faith for bad breach of would otherwise available under the question contract. The whether inter- law, common it must manifest its intent plead is a business decision expressly implication. either clear po- must insurers make based 1076; Rogers, Waters 840 Van & P.2d at tential liabilities. Williams, Group, Farmers Inc. (Colo.1991). 419, 422-24 Section 15-11-803 IV. plea guilty, does without nolo however, contend, insurers contendere, conviction, or a and in ab- principles concerning payment common law law, preemptive statutory sence common of life one who negligence rights remain. preempted has murdered insured "Where the death of insured is criminal- slayer statute. disagree. We ly suspicious but has there been no formal conviction, plea interpleader preempt offers statute does not may protect means which an regarding disqualifi insurer itself either the Overstreet, liability. from double 950 F.2d at cation duty of insurance beneficiaries (“An potential insurer faced conflict- in a insurers disburse First, claims possible in- ju manner. the Colorado reasonable diciary consistently sured’s estate absolve itself of excess interpreted slay has liability by paying reg- into provisions. plain er statute as limited to its istry filing Strickland, 224-25, an action in Colo. at P.2d at interpleader recipi- 201; Smith, proper determine the Colo. P.2d at ent.”); Glass, 517-18; McCormick, at 382 (“Having opted F.2d at 810. Re thus, interplead effect, protect sort principles preempted to common law against any all itself regarding claimants under issues to which the court, jurisdiction umbrella of the the of expressly the applies or there are where other pertinent However, Government now the cannot be heard to statutory provisions. complain the beneficiaries the inapplicable statute is and no oth obligation objection exist, to voice their applicable rely er statutes we will [the made to its murderer of the the common law. 6B See (1987) (“Unless conviction.”); prior to McDuffie, by insured] her displaced par C.R.S. the (insurer F.Supp. easily at 544 provisions code, could have ticular principles the this against by protected conflicting itself of law equity provi claims supplement Strickland, receiving Smith, vic sions”)- barring from in rules killers courts statutory- proceeds. applied existing tims’ all life insurance and McCormick and distribution to devolu of descent rules of the Similarly, at the time Strickland killer- a victim’s estate where the tion of case, slayer statute was limited to dis the disqualified the beneficiary was not under from qualifying murderers inherit convicted Strickland, slayer statute. of the terms Strickland, 128 Colo. from their victims. Smith, 223, 200; 250 P.2d at Colo. at Strickland, 200. In a at 250 P.2d at McCormick, 519; P.2d at at Colo. wife, husband but was convicted killed his at 810. 784 P.2d only manslaughter. voluntary Id. at However, in both Smith and we Strickland sole assets of wife’s at 199. The distinguished of life between distribution of her life insurance proceeds estate were beneficiary proceeds to a who has insurance policy. question that this court Id. The insured, rights killers’ murdered husband reviewed was whether the could re from their victims’ estates. In Smith inherit a proceeds, insurance not as ceive the life a his wife and committed husband killed then inheriting beneficiary through but his Smith, at 121 Colo. 218 P.2d at suicide. wife’s at 250 P.2d at 200. estate. Id. was never his 517. The husband convicted of legislature had We made clear his because of suicide. Id. The wife’s death preempted regarding disposition the field at slayer statute in effect time was limit applicable property descending under stat murder ed the disentitlement convicted 224- utes of and distribution. Id. at descent ers, recognized that so we the husband could 25, 250 P.2d at 201. they property inherit the wife’s interest in However, equally in this court made clear common, pursuant in owned as tenants recovery of a vic- Strickland that killer’s Colorado’s laws of descent and distribution. was tim’s barred life 421-22, P.2d Id. at at 519. Similar principles. law Id. well-established common ly, joint concerning of the statutes reason 223, 225, 200-201. at 250 P.2d at We offered tenancy, husband succeeded his wife’s following explanation why property joint in held interest them as preempted might allow area of inheritance 421-22, Id. at tenants. at profit wrongs, killers from their even position that “our with re This held though law would bar killers the common spect properties joint to the held either in- directly receiving their victims’ life same, tenancy tenancy in common is the surance as beneficiaries: namely: legislature already pre has that, urged It inasmuch as the is also empted Id. at 218 P.2d at 519 the field.” consists of the estate in this case added). Nevertheless, in Smith policy, situation life very preemp this court reached different way same as if should treated regard with victim’s tion conclusion beneficiary of the life [the killer] were the In respect, this Whereas amount policy.... parties court noted that both “concede” payable upon the death of under disposition of the proper “a “ beneficiary pay- insured to a named policies” would follow a ‘well-set specified able in amount rule of common tled’” “where others, by any claims of in an undiminished in a named life insurance only proceeding estate the hem takes after insured, death of the causes the named he satisfied also sub- creditors have been taking any proceeds.” Id. barred ject sharing to a in the net amount (quoting 218 P.2d at 516 from the short, might other well be that It parties). heirs. stipulation size against various claims an estate although in Smith that de court determined substantially would re- property tenancy held in com instant case volution payable. only duce joint tenancy gov amount It is preemptively mon or the net happens laws sole [the killer] Colorado’s be the erned descent statute, joint tenancy and its heir and under the law of descent distribu- distribution tion, not slayer preempt did common law his statute due to the fact that wife left descendants, argument that deny representa lineal it to a murderer or his tive.”); barring Smith, 426-27, [to counsel the common law at Colo. cf. receiving killers their victims’ life P.2d at 519. policy proceeds] appears insurance even Furthermore, slayer statute does not plausible.... wholly preempt negligence traditional princi- ples, including duty of insurers to dis- ... is [the killer] the instance case policy proceeds reasonably. burse Insurers’ claiming not an under but part by duties limited in provi- are the notice as the sole of the estate of wife heir his 15-11-803(6), sion of section but provi- subject just expenses to all debts and provides sion on face protection only administration. making payments persons insurers dis- again, at at Id. 201. Once 15-11-803(3). qualified under section 15- this court drew a distinction between the (1987). 11-803, When section 15- preempted area of descent and distribution inapplicable, respect 11-803 is must insurers governed by and the area common law bar negligence principles. traditional To hold ring poli of victims’ disbursement shockingly inequi- otherwise would allow for cy proceeds in who kill the beneficiaries instance, For table results. an can- insurer distinction, sured. This however tenuous policy proceeds shortly not disburse follow- practice, is based on considerations con murder, ing a company where the insurance sistently respected preserved have been and primary beneficiary informed by legislature both judicia the Colorado and principal suspect was the and would be ry. Harper, See also prosecuted soon, charged but and where the (“ ‘That given property be one should primary beneficiary yet plead guilty the result of his is crime abhorrent.... contendere, convicted, or nolo let alone repulsion horror and an caused such and not had beneficiaries had time however, atrocity, do not warrant the court file a notice claim. The insurers con- reading plain provision into a Nevertheless, point cede this their briefs. exception way which the statute itself in no apparently justified such a is result one difference, suggests.... There is manifest (1) slayer believes either statute however, grants, private convey between applies retroactively to a disbursement pub ances contracts of individuals and a plea occurs to a conviction or lic act of legislature [regarding descent contendere, or nolo might person distribution]. It be that a preempts obligation statute insurer’s permitted would not be to avail himself policy disburse reasonable policy maturity of an benefits is stat- manner. It untenable that had been accelerated his feloni preempt only ute is so as to not broad Colo- Many ous act. equitable considerations of an rado’s laws descent and distribution but might operation nature affect enforce regarding also both dis- grant private of a or contract of a ment of life to bene- bursement person application which would have no obligation to ficiaries and insurers’ disburse bearing legisla on a enacted a reasonable manner. ”) Fair, (quoting ture.’ McAllister v. 72 Kan. (1906)); 84 P. 113-14 accord Conti (“An nental, 285 F.2d at 560 V. a commercial contract will not be this case to contrary public policy district submitted enforced theory. jury This rights, affected. on case state duties and obli arising present inquiry or in does not for our whether the gations under connection with governed negligent: defendant that is- an insurance laws insurers were contract, not jury laws of sue was wills or inheri determined presented appeal. tance. Enforcement contract is on have denied The insurers standpoint From the pub adequacy to a defrauder. attacked the of evidence in. case, morality greater choosing lic there is an even rely reason instead to the broad allegedly jointly companies”). found in 15- as “the insurance bar 11-803(6). policy designated The Western States Family Nelson Trust as the benefi- short, In find that 15—11— we sections ciary Perry and as con- Nelson’s estate 803(3) inapplicable and tingent beneficiary. The North American this case because Sharon Nelson had not wife, policy designated Perry Nelson’s Shar- contendere, pled or nolo or been con- Nelson, primary beneficiary on as the and Nelson, murdering victed of Mr. when the children, Perry E. their two minor Nelson were disbursed. The dis- Nelson, and Erin Brooke negligence trict court’s on a stan- reliance children, minor beneficiaries. These two assessing legality dard in insurers’ along Perry Nelson’s three children (1) appropriate conduct was view Colo- previous marriage, petition- from a are the rado common law that cannot killers receive ers. victims, life insurance from their long-recognized obligation and insurers’ Perry disappeared July Nelson on to disburse insurance in a trip while on a to the Denver area from reasonable manner. Trinidad, his home near Colorado. His auto- reasons, foregoing alongside For the mobile was found the river we reverse the judgment highway Canyon. Appeals of the Colorado Clear Creek At that Court time, officials remand that court for consideration of enforcement were unable Perry body. Shortly to find appeal cross-appeal Nelson’s there- issues raised after, previously companies jointly but not en- resolved. gaged Equifax investigate Services to VOLLACK, C.J., dissents, and disappearance. investigation insured’s KOURLIS, JJ., join ERICKSON possible disappearance on a focused dissent. Perry body Equifax Nelson’s found. performed investigation an exhaustive over a dissenting: Chief Justice VOLLACK period approximately ten months. majority holds that section 18, 1984, February upon petition by On (1987), does not to this case Nelson, Las Animas Sharon District applies principles and instead declaring Perry Court issued an order majority resolve the issue before us. The July investiga- Nelson died on 1983. The appeals, holding reverses the Equifax tor for that he had doubts testified properly negligence trial court on a relied death, regarding Perry Nelson’s but these assessing legality standard in the re- doubts did not rise to the level of what he spondents’ disbursing subject conduct in suspicion.” called a “well-founded Addition- I dissent because the ally, several facts indicated that Sharon Nel- principles on common law relies Perry implicated son was not Nelson’s Instead, I resolve this case. would hold that death, companies did not so the insurance applies to instant section 15-11-803 case Nelson caused her hus- conclude Sharon respondent and relieves the insurance com- band’s death. panies petitioners. I disagree also dissent because I with the ma- August approximately In thirteen jority affirming application trial court’s Perry disappearance, months after his Nel- respondents’ standard to body opin- son’s was found. The unanimous conduct in this case. investigators ion of the for the sheriffs de- partment and office was that the coroner’s I. Perry Nelson had died as the result of an 1983, Perry purchased Nelson term drowning. accidental final case The sheriffs policies respondents report suspicion Western indicated that there was (Western States) play Life Insurance activity States of foul or of criminal with re- Casualty Company gard Perry North American Life & The death Nelson’s death. (North Life) (hereinafter Nelson, American referred Septem- certificate for dated 18, 1984, ber also reflected the conclusion and the trial court entered an award to the his death accident. petitioners was $200,000 plus the amount of interest. upon Based official records these and find- ings, companies the insurance concluded The companies life insurance appeal- then Perry accidentally, paid Nelson died verdicts, jury again ed the asserting that the proceeds subject of policies life insurance petitioners’ noneompliance statutory with the designated to beneficiary, Sharon Nelson. requirements notice relieves the insurance prior At no time of to the insurance companies any liability of petitioners. to the proceeds did North American either or West- appeals agreed The of court with the insur- ern petitioners’ States notice of the receive companies, holding ance pro- that the notice competing proceeds. claims to the insurance 15-11-803(6) precludes vision of section proceeds

At the time that the paid were petitioners asserting against claims insurers, police ongoing there respondent companies insurance because the investigation or pending prosecution, and petitioners provide failed to written notice Sharon Nelson had not confessed to or been their prospective prior to claims distribution charged Perry with the murder of Nelson. the insurance later, years during Several an unrelated investigation, Sharon Nelson confessed that II. persuaded she had her friend to murder her husband, Perry former Nelson. On June A. pleaded guilty Sharon Nelson majority The of appeals, reverses the court murder of Nelson. Sharon Nelson’s 15-11-803, holding that section 6B C.R.S. years conviction occurred six in- after the (1987), statute,” “slayer the so-called does years nearly sured’s death and five after the to this ease. The states proceeds paid by insurance had been provision inapplicable this is to ease companies. insurance at bar because “[t]he scheme is matter, Prior trial peti- limited to disentitlement named beneficia- judgment against tioners recovered Sharon ries who have perpetra- been established as Nelson, separate proceeding, in a prin- in the specific tors of homicides the means set cipal $565,000. amount of judgment This op. forth” Maj. in the statute. I included the amount of proceeds dissent I because would hold previously received her from insur- appeals correctly held that section 15—11— companies. Unfortunately ance peti- for the applicable. 803 is tioners, dissipated Sharon Nelson all of the proceeds prior confessing whole, to the murder. Section as a addresses succession, effect of homicide intestate petitioners brought The then an action assets, insurance, wills, joint life and benefi- against respondents to recover the life ciary designations. is di- statute proceeds that had been specifically vided ad- into subsections petitioners Nelson. The Sharon claimed that dress interests which each companies the life insurance were in breach beneficiary kills affected in the event negligent failing contract were particular, decedent. section 15-11- them, beneficiaries, give as (1987), 803(3), provides: notice that the insurance were to failing bond, interpleader issue and institute A in- named of a life proceedings. companies policy, ar- surance or other contractual 15-11-803(6), argued rangement that section 6B obligee C.R.S. principal who kills the (1987), any relieves them person is upon whose life the petitioners and, thereof, petitioners because the failed to issued as a is convicted result of, give prospective written pleads to, notice claim to plea nolo enters proceeds prior to pro- the time that the contendere to in the the crime murder jury distributed. ceeds were found first or second degree ... not entitled to negligent bond, the life were benefit oth- under the arrangement, er contractual and it be- explicitly now includes insurance as payable though comes the killer had slayers pro- one the means predeceased the decedent. taking property, hibited from thereby includ- in the statute’s applicable This this case because preemptive range. precedent slayer Colorado has held that the preempts regarding statute the field cir- the majority the Smith also states that slayer disquali- cumstances under which a is court “distinguished between the distribution receiving from types property. fied all beneficiary to a Wysowatcky, Strickland v. 128 Colo. 250 insured, who has murdered the and killers’ (1952); Greenburg, Smith v. P.2d 199 121 rights to inherit from their victim’s estates.” (1950). Colo. 218 P.2d 514 Our courts Smith, however, Maj. op. at 88. In the court always slayer have looked to the statute as simply accepted parties’ stipulation the disqualifying slayer the exclusive means of beneficiary where the named in a life insur receiving from property the victim’s and we ance causes the death the named have never fashioned a common law to rule insured, is taking any he barred from of the slayer’s void receipt property the from the Smith, 121 at Colo. 218 P.2d See, grounds public victim on policy. the at 517. The court then turned the novel e.g., id. When this court has held the slayer issue whether a tenant in common who inapplicable statute to partic- be because the killed property the decedent could inherit ular circumstances of the case were not cov- victim, in held common with his and held that statute, by simply ered we have allowed Colorado’s descent distribution statutes slayer property receive from the vic- allowed such a slayer result because the stat Id. tim. ute did not to the facts of this case. Smith, example, For the version of the 422-23, Id. at 218 P.2d at 517. This does slayer provided statute force at that time change Smith general court’s holding “any person convicted of murder statute, whole, slayer preempts as a degree degree first or second ... shall not regarding disqualification slayers field take, descent, devise, inheritance, either taking property from from their victims manner, any or other estate, any of the real descent, devise, inheritance, any other Smith, personal, of [the] deceased.” means. Colo. at 218 P.2d at 517 add ed). The Smith court reversed the trial Strickland, Similarly, in this court reiterat court because the trial court failed to base its legislature preempted ed that has ruling slayer ap statute and instead regarding disqualification field of beneficia plied a common law rule that “no one shall be displaced ries and has thus the common law. permitted profit by wrong.” his own Id. Strickland, at Colo. P.2d at 200- Smith, In legislature we held engraft exception upon We refused to already fixed the standards and rules slayer merely com statute because the applied disqualifying who heir causes person mon advantage law forbids a to take intestate, legisla the death of the and such wrong, public policy of his own or because Id. applied. tive standards must be person obtaining property by forbids a from assertion, Contrary majority’s how- his own crime. Id. We that a therefore held ever, the Smith court’s holding was not limit- statutory right by appli cannot be defeated toed Id.; rules of descent and distribu- cation of a see principle. common law Eames, Although specific tion. also Seidlitz v. facts of Smith ease involved Strickland, issues of (Colo.App.1987). descent where the distribution, slayer this court held precluded application circumstances statute, whole, legislative as a slayer statute, fixed the stan- again slayer we allowed the disqualifying slayers dards for taking gain from property from his victim than rather descent, devise, property of the deceased impose principles to resolve the Strickland, inheritance, other manner. Id. at case. Colo. slayer 218 P.2d at 517. Our at 200-01. ry’s majority guilt that Strickland draws Maj. op. states was established.” at 84. slayers attempt to majority statutory phrase

a distinction between who relies on the property take victims via inheri- payable meaning “becomes ...” as tance, is preempted beneficiary’s guilt stat- must be established before ute, attempt proper- slayers who take order for the ty However, proceeds, apply. them victims via insurance phrase statute to supposedly preempted merely which is beneficiary’s means once the However, established, guilt statute. Strickland merely distinguished longer inheritance and pro- entitled to receive that, Thus, extent each ceeds. improperly adds a case, payable are qualification different amounts to the statute that the beneficia- beneficiary. at ry’s heir or Id. 250 P.2d at guilt adjudicated must be within a cer- equate However, 201. This distinction not does with tain precisely time frame. because slay- applications preemptive different of statute does dictate the time in which involving pro- primary beneficiary’s guilt er statute to cases must be es- Thus, tablished, involving and those ceeds inheritance. presume we must this with precedent, in accordance our we must preemptive applies statute whenever such statute, slayer construe Colorado’s current guilt is established. provision including pro- for legislature only restricted 15- section ceeds, statute, preemptive just as a as its 11-803(3) to situations where a

predecessor construed as such. of, pled guilty was convicted or nolo con- to, previous manslaughter tendere the murder of holdings Our that the enactment case, policy In slayer holder. this the beneficia- preempts of the statute field re plead ry did in of garding disqualification of fact murder beneficiaries has First, policyholder. significant consequences. insured The mere fact by defini tion, guilty plea did preemption judicial Sharon Nelson not enter her field from results companies until legislation after determination so com prehensive preclude application it to her does not legis that was intended Therefore, slayer of the statute to this case. subject regu lature to remove entire from majority improperly imposes governmental a limitation lation other branches. Ev Comm’rs, beneficiary’s on the in which a County ans v. time criminal Board 994 F.2d of (10th Cir.1993); Airlines, guilt apply must 760 be established order Frontier Lines, Inc., pre- 15-11-803. Inc. v. Air section view the clear F.Supp. United 758 (D.Colo.1989). holding slayer Second, cedent statute is the 1407 as a con sequence exclusive which beneficiaries are preemption means the doctrine of disqualified they the death separation powers, cause prohibited a court is insured, correctly appeals court of held interfering legislative from with the branch slayer applies to this case. government. statute Dep’t Colorado State (Colo. Geriatrics, P.2d Health v. 959 1985). B. Thus, prohibited a court is from add ing important qualification to a statute. case, In applying the statute to this Servs., Dodge Department Social respondent I would hold (Colo.App.1982); P.2d Estate of companies petitioners are not to the liable Burron, Colo.App. here insulated respondents are (1979). Questions public policy 15-11-803(6), from 6B liability section legislature, and when that (1987), provides: C.R.S. which declared, the declaration binds the courts. Any making pay- company ... Smith, 121 Colo. at 218 P.2d at 520. according ment of its the terms majority obligation states that section 15-11-803 of this is not reason liable prior does because the statute “does not has re- unless it case, pay- the issue this ... address ceived of a claim under written notice was made before the this ment beneficia- section. provision grants Maj. op. Assuming,

This able manner.” at 89. immunity company arguendo, and releases an insurance that common principles apply, pays according it when a claim I dissent I hold that further because would receiving erroneously to the terms of the the district relied on a competing of a notice claim. As the court of standard to determine whether appeals stated: properly the insurance acted disbursing the insurance to Sharon case,

Prior to appellate no Colorado Nelson. provision. court has addressed this notice

However, jurisdictions other which have requirement similar considered notice A. if, the one issue here held that have that, states “in the absence here, performed insurers have statute, applicable of an cannot killer re- according contracts to their terms and in proceeds ceive the victim’s life insurance provision accord the notice policy.” Maj. op. contrary, at 85. To our statute, they are “exonerated further precedents explicitly have held that benefi- liability thereon and [plaintiffs], hav- ciary disqualified is not pursuant who give timely failed to notice [their] express slayer terms of the statute is not [insurers], relegated claim[s] to must be to disqualified receiving from the his benefits remedy against [their] named benefi- the Seidlitz, 777; or her crime. 753 P.2d at ciary proceeds.” who received the McCormick, People v. 810 Ins., v. Western States 872 Lundsford Life (Colo.App.1989). 1308, 1311 (Colo.App.1993) (quoting P.2d Additionally, prior to the enactment Col Co., v. Miller Paul Revere Ins. 81 Life first in com orado’s the (1972)). Wash.2d 501 P.2d 1063 preclude did not mon law a murderer from petitioners provide Because the failed to Smith, receiving property. the victim’s 121 respondents prior written notice to the to Colo. at 218 P.2d at 517-18. This payment of proceeds the to insurance Sharon that, majority the followed view at the time Nelson, I appeals’ would affirm the court expressly absence of a the statute which holding that provision the notice of section slayer, disqualified the could in the 15-11-803(6) precludes petitioners’ the claim Smith, his or herit from her victim. against respondents. the In the absence of 514; Siek, Colo. Wadsworth required by the notice that is section 15—11— (1970); 23 Ohio Misc. 254 N.E.2d 738 In 803(6), respondents simply the cannot be Estates, Re Duncan’s Wash.2d petitioners to respon- held liable the after (1952). Thus, P.2d 445 if 15-11-803 section performed dents contracts ac- insurance case, majority not in this does as the cording to by paying their terms the insur- holds, the common not dis then law would proceeds primary beneficiary. ance to the qualify receiving Nelson from Sharon I ap- Because believe that section 15-11-803 victim, proceeds Perry insurance her case, plies to this I would affirm the court of Consequently, petitioners Nelson. would appeals compa- and hold that the insurance against respon have no claim of action liability petition- are relieved from nies companies dent insurance the facts of under ers. this case. III. B. majority

The also “[t]he holds that district reliance on a court’s standard in majority respon- The also that the holds assessing legality conduct companies rely the insurers’ dent on insurance cannot (1) appropriate in view of Colorado com- immunity and on liability release of conferred law killers cannot mon receive life insur- them victims, (2) proceeds from their satisfy ance insurers failed to certain common long-recognized obligation that, to majority insurers’ dis- an “[i]f duties. states policy proceeds in insurance a reason- suggesting burse insurer is notice of facts primary beneficiary is not to a of cause of entitled determination death. Nel- policy proceeds, disbursement of son’s insurer death was not identified aas murder duty inquiry years has a to make a respondents reasonable until several after the paid payment suspicion until primary withhold insurance bene- dispelled.” op. Maj. ficiary at 86. in accordance with their contract. Thus, companies the insurance did not violate Harper cites v. Prudential the common law duties delineated America, Insurance Co. 233 Kan. Harper court. (1983), proposition P.2d for that “an company Additionally, is to be relieved both the Colorado Probate liability it only regu- the Code and the scheme which beneficiary good companies promote faith without lates insurance seek to knowledge of facts which prompt payment defeat of insurance primary beneficiary’s (1987); § claim.” Id. at 1274 10-3- omitted). (1994). 1104(h), Harper 4A particular, held C.R.S. sec- 10-3-1104(h) good required faith provides test the insur tion it is unfair (1) ance company practice company conduct a claim reasonable prepayment investigation, pay attempt faith good effectuate proceeds prematurely, prompt before law settlement claims which Here, agencies reasonably enforcement conclude their investi has become clear. the re- gation. distinguish Id. at 1273. Our spondent case is properly ful- because, Harper Harper, able from duty premature pay- filled their not make company’s investigator advised the ment of insurance and still make insurer, ninety-nine percent certainty, prompt proceeds. Merely those on hindsight, impose high- killed insured. based we cannot Moreover, Id. at 1274. in Harper, duty respondent law compa- en er on the insurance agencies yet completed forcement had not investigate Perry nies to further Nelson’s investigation of they the insured’s death. until death could discover that Sharon Id. Perry Nelson had death and caused Nelson’s pro- was thus to disentitled his insurance case, In the instant compa- the insurance ceeds. paid proceeds nies to Sharon Nelson in good knowledge faith and without of majority suggests facts The also that if insurers suspect have defeated to her claim the is not companies The insurance policy proceeds, conduct- entitled to can the insurers investigation they ed a protect pro- ten-month interpleading before themselves Perry Nelson’s to insurance benefits Sharon cites v. ceeds. The Glass United States, (10th Cir.1974), Although Nelson. companies the 506 F.2d 379 Co., Perry had suspicion regarding some Nelson’s v. Aetna Insurance McDuffie Life death, (E.D.Mich.1957), they knowledge proposi- F.Supp. had that Sharon for the Furthermore, company Nelson his death.1 has caused tion that when an insurance circumstances, pro- suspicious pay knowledge did not of it agencies proceeds policy. until law interplead ceeds enforcement should of the investigation Perry imposes finished their Nelson’s com- Neither Glass nor McDuffie interpleader death and concluded that he as a result mon action. duty died to file Rather, drowning. respondents of an accidental The the courts Glass McDuffie pay recognized interpleader based their decision to to is a device protect company Sharon Nelson on official from double the insurance majority acknowledges Equifax investigat- 1. The "the this information was learned from the ing (i.e., report highly agencies contains extensive but inconclusive the Las Animas themselves casting suspicion County Department, information” on Sharon Nel- State Sheriff's Colorado Patrol, Perry Maj. op. County Depart- son for the death Nelson. at 82 and the Jefferson Sheriff's added). ment). respondents agencies’ Despite n. 8 did not law enforcement information, agencies knowledge suspicious inform law enforcement of this informa- such agencies play tion because the information in the was not sole that there foul concluded was no fact, possession respondents. accidentally. of the much and that Nelson died liability any statutory pro- the absence Glass, 382;

tection. F.2d at McDuffie, of the PEOPLE State 160 F.Supp. at 544. Colorado, Complainant, However, interpleader action is not nec- essary protect company pay- an insurance statutory grant immunity, under a Lyle ROBERTSON, Attorney- Otis such as that found in subsection Respondent. slayer Colorado Metropolitan statute. See Prater, Ins. Co. v. 508 F.Supp. 667

Life 94SA197, Nos. 95SA128 and 95SA236. (E.D.Ky.1981). The Glass and McDuffie cases did not involve statutes and Colorado, Supreme Court of therefore did not consider whether inter- En Banc. pleader required light of a notice 15-11-803(6). requirement similar to section Dec. provides Colorado that an subject company fur- pays

ther if it the insurance

“according policy,” the terms such as

by paying designated beneficiary, prior receipt competing written notice of a

claim. An interpleader action would be indi- only

cated if written competing actually

notice of a claim were payment. interpleader

received An

proceeding inappropriate thus would be

the instant case. Even the common law here, applicable

were I would affirm the appeals

court of insurance com-

panies duty pay fulfilled the common law primaiy beneficia-

ry in good faith knowledge and without

facts which defeated her claim to have

IV.

I I dissent believe the

erroneously principles relies on common law presented

to resolve the issues before us.

Instead, I would that section hold 15-11-803

applies respon- to this case relieves the

dent petitioners. I also I dissent because

disagree majority affirming with the the trial application

court’s standard respondent’s conduct in I this case. appeals.

would therefore affirm the court of say

I am authorized to that Justice ER- join

ICKSON and Justice KOURLIS in this

dissent. we look to of common notes equity universally followed” rule that guidance. “beneficiary poli bars the life insurance

Case Details

Case Name: Lunsford v. Western States Life Insurance

Court Name: Supreme Court of Colorado

Date Published: Dec 4, 1995

Citation: 908 P.2d 79

Docket Number: 93SC764

Court Abbreviation: Colo.