No. 85CA1596Colorado Court of Appeals.
Decided August 20, 1987. Rehearing Denied September 24, 1987. Certiorari Granted Napper February 1, 1988 (87SC390).
Appeal from the District Court of Weld County Honorable Hugh H. Arnold, Judge
Dinner, Hellerich and Lazar, Thomas E. Hellerich, Charles J. Connell, for Defendant-Appellant.
Shade, Doyle, Klein, Otis Frey, Roger A. Klein, for Defendant-Appellee.
Division III.
Opinion by JUDGE TURSI.
[1] In this interpleader action, defendant Betty Jo Schmeh seeks reversal of the trial court’s judgment determining that defendant Gloria Napper is entitled to the proceeds of the life insurance policy Robert S. Napper (insured) held with plaintiff, National Western Life Insurance Company (National Western). Schmeh asserts the trial court erred by ruling that the insured effectuated a change of the beneficiary of his life insurance policy and that the separation agreement terminated her interest in the policy. We agree and therefore reverse. [2] The insured purchased life insurance from Hamilton Life Insurance Company (Hamilton National) and named as beneficiary Betty Jo Napper, his then wife, now known as Betty Jo Schmeh. TheirPage 975
marriage was dissolved in September of 1973. Incorporated into the decree of dissolution was their separation agreement which provided that each party would be the owner of the life insurance policies in his or her own name, and provided that each could change beneficiaries on the respective policies.
[3] The insured wrote a letter to Hamilton National dated October 15, 1973 stating he was assigning the policy to First National Bank of Greeley to secure a loan and that he wanted to change the beneficiary of the policy to his mother. In response, the insurance company sent a letter dated October 23, 1973, to the insured stating as follows: [4] “In order that we may make the change of beneficiary you requested, please complete the enclosed Change of Beneficiary form and return it to us along with the contract itself. Your policy will be returned to you after the change has been recorded. . . .” [5] The records of the insurance company include no completed change of beneficiary form and show that there was no endorsed change of beneficiary. The insured’s mother died in May of 1977. [6] In August of 1983, the insured married Gloria Napper. A few months later he died intestate leaving her as his sole surviving heir. Intrawest Bank of Greeley, N.A. (Bank) was appointed as personal representative of his estate. [7] Both Schmeh and the Bank made claims against National Western, successor in interest to Hamilton National, for the proceeds of the policy. Schmeh claimed as the named beneficiary on the policy. The Bank claimed that the insured’s mother was the beneficiary of the policy, and since she had predeceased him, the proceeds were part of his estate. National Western filed this interpleader action to determine to whom the proceeds of the policy should be paid. Gloria Napper was irrevocably assigned all right, title, and interest to the claim by the Bank and was substituted as a party to the action. [8] The parties stipulated to the value of the policy and trial was held to the court. By construing the separation agreement together with the letter the insured wrote to the insurance company, the trial court determined that he had taken steps to effect a change in beneficiary to his mother and that the intent under the separation agreement was to terminate Schmeh’s interest in the policy. Therefore, it ordered the proceeds of the policy be paid to Gloria Napper. I
[9] Schmeh asserts the trial court erred by ruling the insured had complied with the requirements of his life insurance policy to effectuate a change of beneficiary. We agree.
Page 976
[15] Gloria Napper cites ITT Life Insurance Co. v. Damm, supra and contends written notice by letter rather than by the company’s form was compliance. However, ITT Life Insurance Co. is distinguishable from the situation here in that the policy at issue there contained no requirement that the written request for change be on “forms” that were satisfactory to the company. [16] Gloria Napper also contends the insured substantially complied with the terms of the policy even though he did not submit it for endorsement at the company’s home office since the policy was held as collateral for a loan by First National Bank of Greeley until December of 1976. However, since he failed to submit the policy for endorsement during the following years until his death in 1984, we conclude he did not do all that was within his power to effectuate the change as is necessary to make an equitable substitution of beneficiary. Fox v. Hawkins, supra; Finnerty v. Cook, supra. II
[17] Schmeh also asserts the trial court erred by determining the separation agreement terminated her interest as the named beneficiary of the policy. We agree.