ATTORNEY FOR APPELLANT ATTORNEY FOR APPELLEE
Ray L. Szarmach Michael W. Bosch
Szarmach & Fernandez Bosch & Banasiak
Merrillville, IN Hammond, IN
INDIANA SUPREME COURT
CAROLYN BOWERS, )
Third Party Defendant-Appellant, )
v. ) 45S04-0111-CV-00591
ROBERT KUSHNICK, et al., )
Third Party Plaintiff-Appellee. )
APPEAL FROM THE LAKE SUPERIOR COURT
The Honorable William E. Davis, Judge
Cause No. 45D02-9702-CP-175
On Petition To Transfer
September 11, 2002
In this case involving a change of life insurance beneficiary executed but not
delivered to the insurance company before the insured's death, the trial court granted
summary judgment in favor of the prior beneficiary, and the Court of Appeals
affirmed. Bowers v. Kushnick, 743 N.E.2d 787 (Ind. Ct. App. 2001).
We granted transfer, Bowers v. Fortis Benefits Ins. Co., 761 N.E.2d 423 (Ind.
2001), and now reverse.
The facts are not in dispute. Katherine Kushnick was the owner and
named insured of a $40,000 term life insurance policy issued by Fortis Benefits
Insurance Company in which she had named her husband, Robert Kushnick, as the
sole beneficiary. Afflicted with terminal cancer, Katherine obtained and gave her sister,
Jane Amrai, a blank Fortis change of beneficiary form and requested that Jane
type in the names of Carolyn Bowers (Jane's daughter and Katherine's niece) and
Renee Krick as replacement co-beneficiaries.
See footnote Katherine then signed the completed change of
beneficiary form, placed it into a sealed envelope, and told Jane that "if
something happens," she was to deliver it to Barbara Gilbertson, who was Human
Resource Assistant for the Visiting Nurses Association of Porter County, Indiana, Katherine's former
employer, through whom the Fortis life insurance policy had been obtained. Katherine
died five weeks later. In the course of Katherine's funeral proceedings, Jane
gave the envelope containing the signed Fortis change of beneficiary form to Gilbertson,
who transmitted it to Fortis. Robert submitted his claim for the insurance
benefits twelve days after Katherine's death. One day later, Fortis received Katherine's
signed change of beneficiary form. Renee Krick subsequently disclaimed her interest in
the policy benefits. After Carolyn filed this action, Fortis interpleaded Robert, deposited
the proceeds with the Clerk, and was dismissed from the case. Both
Carolyn and Robert filed motions for summary judgment. The trial court granted
Robert's motion, finding that Katherine did not substantially comply with the policy's change
of beneficiary requirements. In her appeal, Carolyn contends that the trial court
erred in granting Robert's motion for summary judgment and that it should have
granted her motion.
In reviewing a summary judgment ruling, an appellate court applies the same standards
used by the trial court.
Trotter v. Nelson, 684 N.E.2d 1150, 1152
(Ind. 1997). Summary judgment is appropriate if the designated evidentiary matter establishes
that there is no genuine issue of material fact as to a determinative
issue and that a moving party is entitled to a judgment as a
matter of law. Ind. Trial Rule 56(C); Progressive Ins. Co. v. General
Motors Corp., 749 N.E.2d 484, 486-87 (Ind. 2001). All facts and reasonable
inferences drawn from those facts are construed in favor of the party opposing
summary judgment. Colonial Penn Ins. Co. v. Guzorek, 690 N.E.2d 664, 667
Robert contends that his interest in the life insurance proceeds vested upon Katherine's
death and that the change in beneficiary form subsequently received by Fortis had
no effect. He acknowledges, however, that his entitlement to the proceeds is
subject to defeat by a change of beneficiary that was made according to
the terms of the insurance contract. He argues that Katherine's attempt to
change the beneficiary was insufficient under the doctrine of substantial compliance because she
did not do all that was in her power to effect the change
of beneficiaries. Carolyn contends that Katherine's compliance with the change of beneficiary
terms of the Fortis policy was not only substantial but complete.
The interest of an insurance policy beneficiary vests at the time of the
insured's death. Metropolitan Life Ins. Co. v. Tallent, 445 N.E.2d 990, 992
(Ind. 1983); Quinn v. Quinn, 498 N.E.2d 1312, 1313 (Ind. Ct. App. 1986);
Wolf v. Wolf, 147 Ind. App. 240, 243-44, 259 N.E.2d 93, 95 (1970).
A change in beneficiary that has been executed in accordance with the
terms of the insurance contract, however, defeats this interest. Holland v. Taylor, 111
Ind. 121, 127-29, 12 N.E. 116, 119-21 (1887); Quinn, 498 N.E.2d at 1313;
Cook v. Equitable Life Assurance Soc'y of U.S., 428 N.E.2d 110, 114-15 (Ind.
Ct. App. 1981). When the terms of the policy have not been
met, substantial compliance is an equitable doctrine employed "to aid in completing an
incomplete change of beneficiary in an insurance policy." Elliott v. Metropolitan Life
Ins. Co., 116 Ind. App. 404, 421, 64 N.E.2d 911, 917 (1946); see
also Quinn, 498 N.E.2d at 1313; Borgman v. Borgman, 420 N.E.2d 1261, 1265
(Ind. Ct. App. 1981). For substantial compliance to apply, an insured must
have "done everything within his power to effect such a change." Quinn,
487 N.E.2d at 1313.
Contracts of insurance are governed by the same rules of construction as other
contracts. Bosecker v. Westfield Ins. Co., 724 N.E.2d 241, 243 (Ind. 2000).
"If the policy language is clear and unambiguous, it should be given
its plain and ordinary meaning." Eli Lilly and Co. v. Home Ins.
Co., 482 N.E.2d 467, 470 (Ind. 1985). "Public policy requires that the
insurer, insured, and beneficiary alike should be able to rely on the certainty
that policy provisions pertaining to the naming and changing of beneficiaries will control
except in extreme situations." Cook, 428 N.E.2d at 116.
The Fortis insurance policy provided:
Beneficiary. You may change the beneficiary at any time. Any request
to name or change the beneficiary must be in writing on a form
acceptable to us and signed by you. After we receive the request
at our home office, the change will take effect on the date you
signed it. A beneficiary change will be without prejudice to us for
any payment we made before we receive notice in our home office.
Record at 63 (emphasis added). The italicized language has the effect of
authorizing a change in beneficiary request to be received after the death of
the insured, and provides that the beneficiary change will take effect on the
date it was signed. If Fortis had intended that beneficiary change requests
must be received before the death of an insured, there would be no
reason to provide for an effective date retroactive to the date of signature.
To hold that the death of the insured forecloses the right of
the insured to change the beneficiary in accordance with the terms of this
provision would ignore and defeat the policy provision. The clear and unambiguous
language of the policy directs that a beneficiary change will be effective on
the date the beneficiary change request is signed, even if it is received
by Fortis after the death of the insured. The policy thus expressly
provides for an exception to the general rule that interests in life insurance
proceeds fully vest upon the insured's death. The issue here is whether
Katherine's change of beneficiary request complied with the terms of the insurance contract.
There is no dispute that Katherine signed a written request for a change
in beneficiary using forms acceptable to Fortis, and that the request was received
in the home office of Fortis. This constituted full and complete compliance
with the insurance policy's provision regarding change in beneficiary, which also states that
the requested change would be effective on the date signed.
See footnote For these
reasons, Robert's entitlement to the proceeds was defeated by Katherine's change of beneficiary
made in accordance with the terms of the insurance contract.
498 N.E.2d at 1313. The issue of substantial compliance is not relevant.
The doctrine is not applicable when the change of beneficiary was exercised
in full and complete accord with the policy terms, as it was here.
For these reasons, the trial court erred in granting Robert's motion for summary
judgment. While we conclude that there is no genuine issue of material
fact as to the validity and effectiveness of Katherine's change of beneficiary request,
we do not address Carolyn's summary judgment contention that Renee Krick's disclaimer makes
Carolyn the sole beneficiary. This issue was not addressed by the trial
court because it granted Robert's motion for summary judgment.
The judgment of the trial court is reversed, and this cause is remanded
for further proceedings consistent with this opinion.
SHEPARD, C.J., and BOEHM and RUCKER, JJ., concur. SULLIVAN, J., dissents with
SULLIVAN, J., dissenting.
I agree with the majority that the doctrine of "substantial compliance" is not
relevant here and that the trial court erred in granting Robert's motion for
summary judgment. However, I believe that a genuine issue of material fact
as to the validity and effectiveness of Katherine's change of beneficiary request remains.
As both the majority and Court of Appeals point out, the interest of
an insurance policy beneficiary at the time of the insured's death is defeated
by a change of beneficiary form executed in accordance with the terms of
the policy. I agree with the majority that the change of beneficiary
form at issue here meets the requirements of the policy but the policy
requires that the insured change the beneficiary. I think a question of
fact remains as to whether the insured did so.
At the time the insured executed the change form, she did not direct
that it be submitted to the insurer. Rather, she gave it to
a caretaker with instructions to deliver it to the insurer in the event
that "something happened." This instruction is, I think, subject to conflicting interpretations.
If the "something" the insured referred to was her death, then I
think she change[d] the beneficiary and Robert's claim is defeated. On the
other hand, the insured might only have been asking the caregiver to hold
the change form pending "something happen[ing]" prior to her death that would cause
her to go ahead and direct that the form be delivered to the
insurer. Under this interpretation, I do not think she has change[d] the
I do not think that summary judgment in favor of either party is
appropriate because I think a genuine issue of material fact remains as to
whether the insured "change[d] the beneficiary."
Jane notes evidence that Katherine had misgivings about the Kushnicks' recent adoption
of a teen-aged girl, Rebecca. Jane contends that Katherine was changing beneficiaries
because she was concerned that if something later happened to her husband, then
Rebecca, or Rebecca's mother, could benefit from the insurance. Robert contends that
Katherine was attempting to control who would get the life insurance proceeds if
Robert predeceased her.
Footnote: We agree with Judge Robb's conclusion that when a policy allows a
change of beneficiary form to be received after death, equity requires that the
request be received in a reasonable time.
Bowers, 743 N.E.2d at 792
(Robb, J., dissenting). In this case, the limits of reasonable time are
not tested as the request was received by Fortis only thirteen days after
Katherine's death, and Robert makes no claim to the contrary.