Caseflicks

Supreme Court of Alabama • 1989

West v. Founders Life Assur. Co. of Florida

547 So. 2d 870 | 1989 Ala. LEXIS 446 | 1989 WL 99060

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Takeaway

In short, this case holds that an alleged life-insurance assignment cannot defeat a beneficiary payment where the policy requires a written assignment filed with the insurer and the claimants offer no substantial evidence that this requirement was met.

Background

In 1969, Founders Life, through its agent James Hudson, issued a life-insurance policy on Terriel West's life. The policy named Terriel's brother, Joe West, as primary beneficiary and his sister, Susan West, as contingent beneficiary. The policy stated that a beneficiary change would take effect only when endorsed on the policy by the company. It also provided that an assignment would not bind Founders Life unless the original or a duplicate assignment was filed at the company's home office.

After Terriel reported that the original policy had been lost, Hudson gave him forms to change the primary beneficiary. In 1980, Terriel again sought to change beneficiaries and used forms supplied by Hudson to designate his wife, Mary Emma West, as primary beneficiary and his estate as contingent beneficiary. Following Terriel's death, Founders Life paid the policy proceeds to Mary Emma.

Joe West and Susan West sued Founders Life and Hudson. They contended that Terriel had assigned the policy to them for valuable consideration and that the later beneficiary changes were ineffective because they had not been completed in accordance with the policy. After Susan died while the action was pending, Elender Sanders, as administratrix of Susan's estate, continued her interest. The trial court entered summary judgment for Founders Life and Hudson, and the plaintiffs appealed.

Issues

Issue #1

Whether Hudson could be liable to Joe West and Susan West for breach of an insurance contract.

Holding

No. Summary judgment for Hudson was proper because the record showed no contract between Hudson and either plaintiff.

Reasoning

The plaintiffs' claim was framed as a breach of the insurance contract, but the record contained no evidence that Hudson personally entered into a contract with Joe or Susan West. Hudson acted as Founders Life's agent in issuing the policy and supplying beneficiary-change forms; those facts did not establish a contractual relationship between him and the plaintiffs. Without evidence of such a contract, no contract claim against Hudson could proceed.

Issue #2

Whether Joe West's affidavit created a genuine issue of material fact that Terriel West made an assignment binding on Founders Life.

Holding

No. The affidavit did not supply substantial evidence of an assignment that complied with the policy's filing requirement and was binding on Founders Life.

Reasoning

Although Joe stated by affidavit that Hudson knew Terriel had delivered the original policy to Joe in exchange for valuable consideration, the policy expressly made beneficiary changes subject to the rights of an assignee of record with the company. It also stated that no assignment would bind Founders Life until the original or a duplicate assignment had been filed at the company's home office.

Alabama law requires proof that an alleged assignor intended to assign rights and performed an act manifesting that transfer. Under this policy, the required manifestation for an assignment to bind Founders Life was written notice of the assignment filed with the company. Nothing in the record showed that Terriel or anyone else filed such notice.

Because the action began after June 11, 1987, Alabama's substantial-evidence standard governed summary judgment. Substantial evidence must be weighty enough that fair-minded persons exercising impartial judgment could reasonably infer the fact asserted. On this record, fair-minded persons could reach only the conclusion that no assignment binding on Founders Life had been established; therefore, the later payment to Mary Emma West did not create liability to the plaintiffs.