Barden v. Metro. Life Ins. Co.

254 S.E.2d 271 (1979)

41 N.C. App. 135

Juanita P. BARDEN v. METROPOLITAN LIFE INSURANCE COMPANY, and Mary Duncan Maultsby Barden.

No. 7810SC647.

Court of Appeals of North Carolina.

May 1, 1979.

Certiorari Denied July 12, 1979.

*272 Boyce, Mitchell, Burns & Smith, by G. Eugene Boyce and Robert E. Smith, Raleigh, for plaintiff appellee.

Lester G. Carter, Jr., and Williford, Person & Canady, by N. H. Person, Fayetteville, for defendant appellant.

Certiorari Denied by Supreme Court July 12, 1979.

HEDRICK, Judge.

Since there exists no genuine issue as to any material fact, the one question presented by this appeal is whether the plaintiff was entitled to a summary judgment as a matter of law. Defendant argues that she is entitled to the insurance proceeds as a matter of law by virtue of 5 U.S.C. § 8705(a), which, in pertinent part, provides:

The amount of group life insurance and group accidental death insurance in force on an employee at the date of his death shall be paid, on the establishment of a *273 valid claim, to the person or persons surviving at the date of his death, in the following order of precedence: First, to the beneficiary or beneficiaries designated by the employee in a signed and witnessed writing received before death in the employing office . . . For this purpose, a designation, change, or cancellation of beneficiary in a will or other document not so executed and filed has no force or effect.

We think that this statute does not entitle the defendant to the insurance proceeds. The cited statute establishes a priority scheme for payment and provides that "a designation, change, or cancellation of beneficiary" to be effective as such, must be made "in a signed and witnessed writing received before death in the employing office." This portion of the statute provides the method by which a beneficiary may be properly designated; it does not establish the right to designate a beneficiary, which right is contained in the insurance policy. More importantly, compliance with the procedure set out in 5 U.S.C. § 8705(a) does not as a matter of law automatically entitle the person so designated to the proceeds.

In the present case, the insured contracted away his right to designate the beneficiary to the insurance proceeds when he entered into the separation agreement with his first wife. Thus, the insured, after 1 August 1970, no longer had the right to designate the beneficiary on the policy, and his "signed and witnessed writing" purporting to designate the defendant as beneficiary of the group policy was a nullity.

The defendant argues that the provision in the 1 August 1970 separation agreement stating that the insured "agrees that he will continue to designate the party of the second part [Juanita Barden] as beneficiary of the Group Life Insurance Policy" is "a designation, change, or cancellation of beneficiary in a will or other document not so executed and filed," and thus by the terms of 5 U.S.C. § 8705(a), it "has no force or effect." Defendant cites Williams v. Williams, 255 N.C. 315, 121 S.E.2d 536 (1961), in support of her argument. The provision in question in the separation agreement was not "a designation, change, or cancellation of beneficiary," but rather was a promise by the insured that he would not change the existing valid designation. The actual designation of beneficiary occurred on 23 September 1968 when the insured filed the proper form listing the plaintiff as beneficiary.

Williams v. Williams, supra, involved a National Service Life Insurance policy issued by the United States Government and serviced by the Veteran's Administration. The applicable statute in force at that time, 38 U.S.C. § 749, provided that "the insured shall at all times have the right to change the beneficiary or beneficiaries of a United States Government life insurance policy." The insured entered into a separation agreement containing a provision that he would not change the beneficiary on the policy, but he later filed a form naming his second wife as beneficiary. After the proceeds had been paid to the second wife by the Veteran's Administration, plaintiff, the insured's first wife, did not pursue her statutory remedy to institute suit under 38 U.S.C. § 784, but rather sought to have the State courts impose a constructive trust on the proceeds in the hands of the second wife for her benefit. The trial court ruled that there could not be an irrevocable beneficiary and thus the statute, and not the separation agreement, controlled the disposition of the proceeds. It further refused to impose a constructive trust. On appeal, the North Carolina Supreme Court affirmed, holding that because the plaintiff failed to pursue her exclusive statutory remedy, the decision of the Veteran's Administration as to payment of the proceeds was final. Furthermore, a constructive trust was not available because of 38 U.S.C. § 3101(a), which provided: "Payments of benefits due or to become due under any law administered by the Veterans' Administration shall not be assignable . . . and such payments made to . . . a beneficiary. . . shall not be liable to attachment, levy, or seizure by or under any legal or equitable process whatever . . ."

*274 In the present case, the life insurance policy was issued by a private insurer rather than the federal government, and the right to name the beneficiary was established by the contract between the insured and the company, rather than by federal statute. Counsel has pointed to no statute, and we have found none, that makes the right to designate the beneficiary a non-assignable right with regard to the policy in the present case. We note, furthermore, that a constructive trust on the proceeds from a policy like the one in the present case has been upheld by the courts of at least one jurisdiction. Roberts v. Roberts, 560 S.W.2d 438 (Tex.Civ.App. 1977). We are, therefore, of the opinion that the insured in the present case could, and did, contract away his right to designate the beneficiary, and thus his attempt thereafter to change the beneficiary was of no force and effect.

For the reasons stated above, the summary judgment for plaintiff is affirmed.

Affirmed.

PARKER and CARLTON, JJ., concur.