Court: Louisiana Court of Appeal; November 28, 1990; Louisiana; State Appellate Court
The case concerns the beneficiary designation of two life insurance policies, each valued at $500,000, issued to A.C. Suhren, Jr. The potential beneficiaries include three trusts established by Mr. Suhren. Mr. Suhren had two children from different marriages: Sandra Suhren Hamblin from his first marriage and Adolph Charles Suhren, III from his second marriage to Carol C. Suhren, who also had two daughters from a prior marriage. In 1983, Mr. Suhren created three inter vivos life insurance trusts, namely the A.C. Suhren, Jr. Trust No. 1, Trust No. 2, and Class Trust, funded by a $1.5 million policy with National Benefit Life Insurance Company, which initially designated these trusts as beneficiaries.
After separating from Carol in 1985, Mr. Suhren applied for two new $500,000 policies with Union Life Insurance Company, but failed to specify the beneficiaries on the application. Following his death on March 7, 1987, Sandra Suhren Hamblin petitioned to reform the policies to include the Class Trust as a beneficiary alongside Trust No. 2. Union Life sought a concursus to determine the rightful beneficiaries and included several parties in the litigation.
The trial court ruled that Trusts Nos. 1 and 2 were the designated beneficiaries based on information filled in by Union Life staff. However, it also ruled that Carol C. Suhren was disqualified from being a beneficiary of Trust No. 1 due to her separation from Mr. Suhren and the related legal proceedings.
The court identified Julie Ann Trinchard, Terie Jean Trinchard, and Joel Suhren Gibert as beneficiaries of the A.C. Suhren Trust No. 1. Sandra Suhren Hamblin appealed, claiming two errors: 1) the trial court failed to reform life insurance policies to reflect the insured’s intent to benefit the A.C. Suhren, Jr. Class Trust for his daughter and her children; and 2) the trial court concluded there was insufficient evidence to prove the insured intended to name the A.C. Suhren, Jr. Class Trust as a co-beneficiary. The appeal was affirmed.
Key issues included whether the beneficiary designation in the 'For Home Office Use Only' field represented the original designation, a change in beneficiaries, or was invalid. Under the policy terms, a change of beneficiary requires a written request by the insured. If the designation was the original, Hamblin needed to demonstrate that the insured had changed the beneficiaries via written request. If it represented a change, a written request was again necessary. If deemed invalid, the insured's intent would be inferred from surrounding facts.
Hamblin argued that the 'Home Office Use Only' designation was neither the original nor a valid change, asserting it was invalid due to noncompliance with the insured's intent. She claimed the insurance agents' actions led to this invalid designation, specifically that Union Life accepted the application without a beneficiary designation and received documents indicating the intended beneficiaries were the A.C. Suhren, Jr. Class Trust and the A.C. Suhren, Jr. Trust No. 2. Hamblin contended that Union Life should have acted on this information.
Additionally, she argued that beneficiary insertion by a low-level employee of Union Life was an unauthorized alteration under LSA-R.S. 22:617, which states that only the applicant or their consented alterations are valid. Thus, any unauthorized changes by Union Life's staff could not be attributed to the insured, weakening their defense based on such alterations.
Ms. Hamblin contends that Union Life failed to adhere to its procedures regarding the beneficiary designation for Mr. Suhren's policies, particularly by not preparing a request form to clarify the beneficiary designation. Union Life’s procedures stipulate that any ambiguity should be presented in narrative form to the Home Office for clarification. Hamblin argues that this oversight raises questions about the entire transaction. Additionally, Union Life’s policies require notifying the insured of any discrepancies between the application and the issued policy.
However, the trial court determined that the two policies were intended to fund the A.C. Suhren, Jr. Trust No. 1 and Trust No. 2 and found insufficient evidence to warrant a reformation of the policies. These conclusions were supported by the credible testimonies of Leon Charles Adams, Mr. Suhren’s insurance agent, and Ben Teekel, the Union Life agent involved in issuing the policies. Despite conflicting testimonies from Hamblin and Joel Gibert, the trial court favored Adams and Teekel’s accounts.
The court's findings on witness credibility are afforded significant deference under the 'manifest error-clearly wrong' standard. According to the precedent set in Rosell v. Esco, a factfinder's credibility determination is rarely overturned unless contradicted by compelling evidence. Both Adams and Teekel confirmed that in February 1985, Mr. Suhren expressed uncertainty about his beneficiary designations and instructed Adams to leave those sections blank. They also testified that Suhren later directed Adams to designate the A.C. Suhren, Jr. Class Trust and A.C. Suhren, Jr. Trust No. 2 as beneficiaries. This directive was corroborated by Teekel, who received a note from Adams and communicated with Union Life to relay the necessary trust information.
Adams and Teekel delivered two $500,000 insurance policies and the application to Suhren in April 1985, ensuring he understood the policies, verified his personal information, and reviewed the beneficiary designations for the A.C. Suhren Trusts Nos. 1 and 2. They were unaware of the trusts' beneficiaries, and Suhren later inquired about them in January 1987, receiving confirmation from Union Life that the trusts were the designated beneficiaries. Suhren expressed uncertainty regarding the beneficiary designations but did not indicate any changes. Testimonies from Sandra Hamblin and Joel Gibert confirmed Suhren’s intention for the insurance proceeds to support his children, with Gibert stating Adams assured their understanding of Suhren's wishes. Adams denied prior communication with Hamblin and Gibert before Suhren's death. Posthumously, Adams wrote a letter indicating Suhren's intent to fund trusts for his children but acknowledged he was not consulted on the beneficiary designations. Despite the lack of explicit change in Suhren's intent, Adams and Teekel confirmed that Suhren was aware of the designations in 1985. Hamblin referenced additional documents suggesting different intended beneficiaries, but these were created before Suhren approved the beneficiary designations. The insurance policies stipulate that changes must be made in writing and signed by an authorized officer, indicating that no other changes were valid.
The Beneficiary designation on the Policy Date is determined by the application, which may contain provisions affecting the Beneficiary. Proceeds are to be equally divided among all surviving Primary Beneficiaries, and if none survive, among all surviving contingent Beneficiaries. If no Beneficiary survives the Insured, the Proceeds will go to You or Your estate. You can change the Beneficiary unless an irrevocable Beneficiary is named, in which case their written consent is required. Changes take effect upon signing, even if the Insured dies before the change is received, though prior actions taken remain unaffected. Any assignment of the policy may relinquish the right to change the Beneficiary. The application states that acceptance of the policy ratifies any corrections made by the Company, subject to written ratification for certain changes as required by state law.
Suhren designated Trusts Nos. 1 and 2 as beneficiaries in 1985 and was reminded of this designation in 1987, without indicating any desire to change it. He acknowledged that any change would require a written request, which he did not submit. Thus, the trial court found sufficient evidence to support that the trusts were the designated beneficiaries, and there was no basis for reformation of the policies. The judgment of the trial court is upheld.
