Title: Abbott v. Willey

State: virginia

Issuer: Virginia Supreme Court

Document:

Present:  All the Justices 
 
JOSEPHINE A. ABBOTT, ET AL. 
 
OPINION BY JUSTICE LEROY R. HASSELL, SR. 
v.   Record No. 960984         January 10, 1997 
 
KATHLEEN E. WILLEY, ET AL. 
 
 
FROM THE CIRCUIT COURT OF CHESTERFIELD COUNTY 
 
Timothy J. Hauler, Judge 
 
 
The primary issue that we consider in this appeal is 
whether Code § 64.1-193 permits a person to disclaim an 
interest in the proceeds of a life insurance policy to the 
detriment of her creditors.   
 
Anthony V. Lanasa and Josephine A. Abbott filed their 
bill of complaint against Kathleen E. Willey, J. Patrick 
Willey, and Shannon J. Willey.  The plaintiffs alleged the 
following.  Patrick Willey and Shannon Willey are the 
children of Kathleen Willey and her deceased husband, Edward 
E. Willey, Jr.  Plaintiffs recovered a judgment in the sum 
of $274,495.22 plus interest and costs against Kathleen 
Willey based upon a note she had executed with her husband. 
 Edward Willey, Jr. died shortly after the note was executed 
in November 1993.
*  
 
A life insurance company had issued a life insurance 
policy on the life of Edward E. Willey, Jr., and Kathleen 
Willey was entitled to receive $350,845.92 plus interest 
from the date of his death.  Patrick and Shannon Willey were 
entitled to receive an equal sum from the life insurance 
                     
     
*This judgment was the subject of a prior appeal to 
this Court, Lanasa v. Willey, 251 Va. 231, 467 S.E.2d 786 
(1996). 
policy.   
 
According to the plaintiffs' allegations, Kathleen 
Willey, "without consideration, fraudulently and 
voluntarily, with intent to hinder, delay, and defraud the 
[p]laintiffs, disclaimed the benefits due to her under the 
life insurance policy.  Upon disclaiming her death benefit 
proceeds, the [d]efendant Kathleen Willey became insolvent." 
 Kathleen Willey's children received the death benefits and 
used those funds to support their mother.   
 
The plaintiffs asserted that Kathleen Willey's 
disclaimer constituted a fraudulent transfer or conveyance 
under Code § 55-80 and a void voluntary conveyance under 
Code § 55-81.  The plaintiffs also contended that Patrick 
and Shannon Willey, with fraudulent intent, received funds 
in the amount of $274,495.22 as a result of Kathleen 
Willey's disclaimer, and that they have been unjustly 
enriched and, therefore, hold these funds constructively for 
the benefit of the plaintiffs.   
 
The defendants filed a demurrer, asserting, inter alia, 
that Kathleen Willey had an absolute right to disclaim the 
proceeds of the life insurance policy.  The defendants also 
asserted that the plaintiffs' unjust enrichment claim is 
barred by Code § 38.2-3122.  The trial court sustained the 
defendants' demurrer and entered judgment in their favor.  
We awarded the plaintiffs an appeal. 
 
Code § 64.1-191 states in relevant part that a 
"beneficiary under a nontestamentary instrument . . . may 
disclaim in whole or in part the succession to any property, 
real or personal, or interest therein."  Code § 64.1-192 
prescribes the method of delivering or filing a disclaimer 
under a nontestamentary instrument.  Code § 64.1-193, which 
governs our resolution of this appeal, states: 
 
 
"Unless otherwise provided in the 
nontestamentary instrument, the property or part 
thereof or interest therein disclaimed and any 
future interest which is to take effect in 
possession or enjoyment at or after the 
termination of the interest disclaimed shall be 
distributed as if the disclaimant had died before 
the effective date of the nontestamentary 
instrument.  The disclaimer shall relate back for 
all purposes to the effective date of the 
instrument.  A person who has a present and a 
future interest in property and disclaims his 
present interest in whole or in part, shall be 
deemed to have disclaimed his future interest to 
the same extent if such disclaimer of a present 
interest would cause the future interest to become 
a present interest." 
 
 
The plaintiffs contend that Kathleen Willey had no 
absolute right to disclaim the insurance policy proceeds and 
that such disclaimer was void because she made a voluntary 
or fraudulent conveyance.  The defendants respond that Code 
§ 64.1-193 confers upon Kathleen Willey an absolute right to 
disclaim any interest she might have in a nontestamentary 
instrument.  The defendants also assert that Kathleen 
Willey's disclaimer relates back to the effective date of 
the insurance policy and, therefore, she had no vested 
interest in the life insurance proceeds at the time she 
exercised her right to disclaim them and, thus, she was 
incapable of making a fraudulent or involuntary transfer of 
property. 
 
We have repeatedly articulated principles of statutory 
construction that we must apply when a statute, such as Code 
§ 64.1-193, is clear and unambiguous: 
 
 
"While in the construction of statutes the 
constant endeavor of the courts is to ascertain 
and give effect to the intention of the 
legislature, that intention must be gathered from 
the words used, unless a literal construction 
would involve a manifest absurdity.  Where the 
legislature has used words of a plain and definite 
import, the courts cannot put upon them a 
construction which amounts to holding the 
legislature did not mean what it has actually 
expressed." 
 
Barr v. Town & Country Properties, 240 Va. 292, 295, 396 
S.E.2d 672, 674 (1990) (quoting Watkins v. Hall, 161 Va. 
924, 930, 172 S.E. 445, 447 (1934)).  Accord Conner v. Rose, 
252 Va. 57, 58, 471 S.E.2d 478, 479 (1996).   
 
Applying the plain language contained in Code § 64.1-
193, we conclude that once Kathleen Willey disclaimed her 
interest in the insurance proceeds, those proceeds were 
required to be distributed to Patrick and Shannon Willey as 
if Kathleen Willey had died before the effective date of the 
insurance policy.  Code § 64.1-193 makes it perfectly clear 
that the disclaimer relates back "for all purposes" to the 
effective date of the life insurance policy.  The plaintiffs 
and defendants agree that the effective date of the 
insurance policy precedes the events that gave rise to the 
plaintiffs' purported cause of action against the 
defendants.   
 
Code § 64.1-193 does not contain an exception which 
permits creditors to contest a disclaimer on the basis of a 
fraudulent or voluntary conveyance, and we decline the 
plaintiffs' invitation to add such an exception to the 
statute.  Therefore, we hold that Kathleen Willey had an 
absolute right under Code § 64.1-191 to disclaim any 
interest she may have had in the insurance policy, and as a 
result of such disclaimer, she acquired no interest in the 
insurance proceeds because the disclaimer related back to 
the effective date of the insurance policy.   
 
We find no merit in the plaintiffs' contention that the 
trial court erred by holding that their claim for unjust 
enrichment against Patrick and Shannon Willey is barred.  
Code § 38.2-3122 states in relevant part: 
 
 
"The assignee or lawful beneficiary of an 
insurance policy shall be entitled to its proceeds 
against any claims of the creditors or 
representatives of the insured or the person 
effecting the policy, except in cases of transfer 
with intent to defraud creditors. . . ." 
 
Here, Kathleen Willey's disclaimer related back "for all 
purposes" to the effective date of the insurance policy and, 
thus, she acquired no property interest which could be 
transferred.   
 
In view of our holdings, we need not consider the 
plaintiffs' remaining arguments.  Accordingly, we will 
affirm the judgment of the trial court. 
 
Affirmed.