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New York Life Insurance Co. v. Estate of Dean Charles Hunt

Decided: April 28, 1977.


Bischoff, Morgan and King. The opinion of the court was delivered by King, J.s.c., Temporarily Assigned.


Defendant Karen Zielinski (Snidenbach), the named beneficiary in a policy of life insurance issued by plaintiff New York Life Insurance Company, the "stakeholder" in this interpleader action, appeals from a judgment of the Chancery Division which imposed a constructive trust on the proceeds of the policy in favor of the deceased insured's estate. We reverse and hold the named beneficiary absolutely entitled to the proceeds.

The following facts are undisputed. Decedent Dean Charles Hunt and defendant, the former Karen Zielinski, became engaged to be married in November 1971. In September 1972 Hunt and his fiancee applied for life insurance policies in the amount of $25,000, naming each other as beneficiary for the respective policies. Each policy contained a clause providing for double indemnity in the event of accidental death.

In December 1972 Karen Zielinski broke her engagement to Hunt and on February 9, 1973 married John Snidenbach. Hunt, aware of the marriage, continued to pay the premiums on his life insurance policy but made no change in the designated beneficiary. Karen Zielinski allowed her policy to lapse. The designation of beneficiary on Hunt's policy read "Karen Zielinski, intended wife of insured." No provision was made by Hunt for a contingent beneficiary. Hunt was made aware of his opportunity to change the beneficiary following the marriage, not only

by the insurance agent but also by his mother and his brother, but never did so.

On September 2, 1973 Hunt was accidentally shot to death. Both Karen Zielinski (Snidenbach) and the estate of Dean Charles Hunt claimed the proceeds of the policy. At the conclusion of the trial judgment was entered in favor of the estate of Hunt. The trial judge determined that Karen Zielinski's right to the proceeds was conditioned upon her being the "intended wife" of the insured. He determined that a "contract of engagement" was the basis of the beneficiary designation. Having broken her contract of engagement with Hunt, the trial judge reasoned that Karen Zielinski's status as his intended wife terminated and she was no longer entitled to the proceeds of the policy. The judge entered judgment holding that "Karen Zielinski Snidenbach held the proceeds of the life insurance policy on the life of Dean Hunt constructively for the benefit of the Hunt estate."

Karen Zielinski (Snidenbach) contends that the trial judge erred as a matter of law in determining that she was not entitled to the proceeds of this life insurance policy. She argues that under the law of this State she has a vested right to those proceeds, and her subsequent marriage could not divest her of that right. She also claims error in the imposition of a constructive trust upon the proceeds, contending that there was no proof of fraud or wrongdoing on her part. We are persuaded that these arguments have merit.

Although not precisely in point, there does exist in New Jersey an unbroken line of cases holding that the interest of a designated beneficiary of a life insurance policy is a vested property right payable in the event the beneficiary outlives the insured, subject to divestment only by the insured making a change in the beneficiary in the manner provided by the policy contract. Prudential Ins. Co. of America v. Swanson , 111 N.J. Eq. 477, 482-483 (E. & A. 1932); Prudential Ins. Co. v. Mantz , 128 N.J. Eq. 480 (Ch. 1941), aff'd, 130 N.J. Eq. 385 (E. & A.

1941); Kaplan v. Metropolitan Life Ins. Co. , 20 N.J. Misc. 430, 29 A.2d 143 (Sup. Ct. 1942); John Hancock Mut. Life Ins. Co. v. Heidrick , 135 N.J. Eq. 326 (Ch. 1944); Metropolitan Life Ins. Co. v. Woolf , 138 N.J. Eq. 450 (E. & A. 1946); Strohsahl v. Equitable Life Assur. Soc. of U.S. , 71 N.J. Super. 300 (Ch. Div. 1962); Hutchinson v. Goceliak , 73 N.J. Super. 550 (Ch. Div. 1962); Gerhard v. Travelers Ins. Co. , 107 N.J. Super. 414 (Ch. Div. 1969). A demonstrated intention to change beneficiaries is insufficient if not executed in the manner prescribed in the policy for effecting such a change. Prudential Ins. Co. of America v. Mantz, Kaplan v. Metropolitan Life Ins. Co., Strohsahl v. Equitable Life Assur. Soc. of U.S. , and Gerhard v. Travelers Ins. Co. , all supra. Hence in Strohsahl the insured's attempt to change beneficiaries by a provision in his will was held ineffective to accomplish that result despite the clear evidence of the insured's intentions to make such a change. Even fully executed beneficiary change forms which were not endorsed on the policy as required were held ineffective to change beneficiaries. Kaplan v. Metropolitan Life Ins. Co., supra.

Change in the marital relationship between insured and beneficiary has been held insufficient even when accompanied by a separation agreement executed by the first wife and named beneficiary in which she purported to release her husband, the insured, from any claim against him or his estate. John Hancock Mutual Life Ins. Co. v. Heidrick, supra. The court there noted that the claim in question was on the policy and not against the estate, and that divestiture of the vested interest of a named beneficiary could only be accomplished in the manner prescribed by the policy under which the claim was being made.

The law as expressed in the cases referred to supra is entirely consistent with the substantial weight of authority elsewhere. See Scherer v. Wahlstrom , 318 S.W. 2d 456 (Tex. Civ. App. 1958); Service Life Ins. Co. v. Davis , 466 ...

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