No. 91-483 

IN THE SUPREME COURT OF THE STATE OF MONTMA 

BURKE A. ESCHLER, LORI L. ESCHLER 

and JAM1 G. ESCHLER, individually 

and as Co-Personal Representatives 

of the ESTATE OF JAMES P. ESCHLER, 

Deceased, 

and 

SHARON L. ILLE, 

Plaintiffs and Appellants, 

-vJANET ETHEL ESCHLER and MUTUAL BENEFIT 

LIFE INSURANCE COMPANY, a New Jersey 

corporation, 

Defendants and Respondents. 

APPEAL FROM: District court of the Thirteenth Judicial District, 

In and for the County of Yellowstone, 

The Honorable G. Todd Baugh and Maurice Colberg, 

Judges presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Allen D. Gunderson, Todd D. Gunderson, Gunderson Law 

Firm, Billings, Montana, for Sharon L. Ille: Jerome 

J. Cate, Cate Law Firm, Whitefish, Montana for Burke 

A. Eschler, Lori L. Eschler and Jami G. Eschler 

For Respondent: 

Donald L. Harris, Steven R. Milch, Crowley, Baughey, 

Hanson, Toole & Dietrich, Billings, Montana, for 

Janet E. Eschler 

Submitted on Briefs: November 12, 1992 

Filed: 

Decided: March 26, 1993 
stice R. 6, McDonough delivered the Opinion of the Court. 

This is an appeal from the Thirteenth Judicial District Court, 

County of Yellowstone, of two orders 

the Defendant. We affirmThe sole issue on appeal is whether the District Courts erred 

in granting s ry judgments in favor of the Defendant Janet 

Eschler {Defendantj. 

Janet and James Eschler (Eschler) were divorced in August of 

1989 after approximately 16 years of marriage. Although there were 

no children born of this marriage, James Eschler had three children 

from a previous marriage. At the time of his death, October 2, 

1383, James Eschler was engaged to be married to Sharon Ille 

(Ille) . 

Defendant was the named beneficiary of three of Eschler's life 

insurance policies at the time of his death. Two policies were 

issued by Minnesota Mutual Life Insurance Company (Minnesota 

Mutual), one dated January 1, 1980 for the amount of $50,000 and 

one dated December 1, 1983 for the amount of $100,000. In 1986, he 

purchased a $75,000 life insurance policy from Mutual Benefit Life 

(Mutual Life). 

Shortly before Eschler and Defendant's dissolution was final, 

Eschler requested a change of beneficiary form for his two 

Minnesota Hutual insurance policies and tine company forwarded the 

required forms. The forms were sent with specific instructions 

which stated in part: 

Here is the Change of BenefFeia which you recently 

2 
requested for the above numbered policy. Please 

complete, date, and sign this form and return all copies 

in the envelope provided,, , en %he form is received in 

our office, it will be endorsed and a copy will be 

returned to you for attachment to the above numbered 

policy, 

Eschler filled out part of the Po B providing for change of 

beneficiary. He wrote the names of his children as the new 

beneficiary under the $50,000 policy and the name of his fiance&, 

Sharon Ille, as the primary beneficiaryv and his three children as 

contingent beneficiaries on the $100,000 olicy, However, Eschler 

did not provide the required addresses and social security numbers 

of the new beneficiaries nor did he sign or date the forms. They 

were never mailed to Minnesota Mutual. These forms were found 

among Eschlerss personal effects after his death. 

On August 7, 1989, Eschler purchased a new life insurance 

policy from Mutual Benefit for $100,000 naming Ille, his fiancee as 

the primary beneficiary and his children as contingent 

beneficiaries. On August 8, 1989, Eschler increased the amount of 

the policy to $250,000 and this change became effective on 

September 14, 1989. On September 21, 1989, he changed the 

beneficiary designation. Ille was to receive forty percent of the 

proceeds of the $250,000 and each of his children was to receive 

twenty percent of the total proceeds. 

Eschler made no changes on his other Mutual Benefit policy, 

which named Janet Eschler the beneficiary of the policy for 

$95,060. However, he did not make the premium pa ent due on this 

policy on August of 1989. 

Eschlergs death from suiefde on October 2, 1989 lef 

3 
payment on these four insurance policies somewhat open to 

Mutual Benefit did not pay on the $250,000 policy because of a 

suicide exclusion clause. Ille and the Eschler children dispute 

the clai~ that Janet s~hier is e baneficia the remainin 

three insurance policies, 

nk is proper i 

the record discloses no genuine issues of material fact, and the 

moving party is entitled to judgment as a natter of law.'* Kaseta 

v. N. Western Agency of Gr. Falls (1992), 252 Mont. 135, 138, 827 

P.2d 804, 806. "[Olur standard of review relating to conclusions 

of law.. .is whether the tribunal's interpretation of the law is 

correct." Steer Inc. v. Dept. of Revenue (1990), 245 Mont. 470, 

Ille and the Eschler children make three arguments as to why 

they are the beneficiaries of the insurance policies which remain 

valid. First, they assert the property settlement agreement, 

incorporated into the decree at the dissolution sf Defendant and 

Eschlerls marriage, terminated Defendant's rights as the 

beneficiary of the life insurance policies. Second, they argue 

that the fact that Eschler filled in the names of the new 

beneficiaries on the change of beneficiary forms, evidenced an 

intent by Eschler sufficient to change the beneficiary of the two 

liiinnesota Hutual insurance policies. Third, 111e and the Esrshler 

children argue that when Eschler purchased the $75,000 Mutual Life 

insurance policy, he actually designated himself, the owner as the 

beneficiary, and not Defendant. If he was the designated 
beneficiary, the proceeds sf the policy would pass through his 

estate to llle and the Eschler children. 

Plaintiffs contend that the trial courts were premature in 

granting au at in favor ef endant bec 

proparty settlement agreement gives rise to a question of material 

fact on the issue of who is the rightful beneficiary. They claim 

that Soha u. West (1981), 196 Plent. 95, 637 P.2d 1185, establishes 

the rule of law that a general property settlement agreement gives 

rise to this question of material fact. 

In , Frederick Soha and Cynthia West were married and 

lived together as husband and wife for 79 days. They separated 

shortly thereafter and executed a property settlement and 

separation agreement which was later incorporated into their decree 

of dissolution. The agreement contained a mutual release that 

stated: 

In consideration of the execution of this agreement, and 

the terms and conditions thereof, each party hereto 

releases and forever discharges the other party, his or 

her personal representative, and assigns from any and all 

right, claims, demands and obligations except as herein 

specifically provided and each party is forever barred 

from having or asserting any such right, chiat, demana 

or obligation at any time hereafter for any purpose... 

r Soha 637 P.2d at 1189. The settlement agreement contains a full 

disclosure provision which states: 

Each of the parties hereto represents and warrants 

to the other as an integral part of this agreement that 

there has been a full disclosure of assets between 

parties. 

-I Soha 637 P.2d at 1187. Frederick Soha never told his wife about 

the life insurance policy nor did he tell her that she was the 
primary beneficiary, 

Several months later, Frederick Soha die in an accident, 

leaving behind the life insurance policy naming Cynthia West as the 

arents as conti 

beneficiaries, This Court, in reversing the trial court" grant of 

ent for Cynthia West, dete ined that the "intent s 

the decedent as to the effect sf t e policy benef icia designation 

in the light of the property settlement agreementa is a question of 

fact. w, 637 P.2d at 1187. The Court also stated that 

Frederick's failure to reveal the presence of the insurance policy 

may have been a breach of the full disclosure provision. 

Therefore, the Court concluded that the trial court needed to 

conduct further proceedings to determine the nature and extent of 

the parties* consents to the property settlement agreement. 

The present case differs from w in three minor respects. 

First, the Sohas lived together as husband and wife for only 79 

days whereas the Eschlers were married for 16 m. Second, 

Cynthia West was unaware of an insurance policy naming her as the 

beneficiary but Janet Eschler was fully aware of the three 

insurance policies naming her as primary beneficiary. 

The third difference is the mutual release clauses in the two 

settlement agreements. The Sohas had a very general property 

settlement agreement with a general mutual release clause. The 

only specific asset listed was the house Frederick Soha purchased 

before he married Cynthia. 

Janet and James Eschler had a very detailed property 
settlement agreement, plus the general release clauses. The 

agreement contains an itemized division of real property, 

automobiles, retirement accounts, debt liability and articles of 

The following are the eneral release clauses: 

5. Waiver of Pr hts. Af l 

money received by the es pursuant he 

the separate property of the respective parties, free and 

clear of any right, interest, or elaila of the other 

party, and each party shall have the right to deal with, 

and dispose of, his or her separate property, both real 

and personal, as fully and effectively as if the parties 

had never been married. 

6. Waiver of Support Rights. Except as expressly 

provided in Paragraph 3 of this Agreement, each party 

shall be fully released by the other from any obligation 

for alimony, support, maintenance, attorney's fees, or 

court costs, and each party accepts the provisions herein 

in full satisfaction sf all property rights and all 

obligations for support or otherwise arising out of the 

marital relationship of the parties. Each party, except 

with respect to payments accruing hereunder, hereby 

releases the other party and his or her respective legal 

representatives, successors, and assigns, from any claim 

of any kind, and specifically relinquishes any right, 

title, or interest in or to any earnings, accumulations, 

future investments, money, or property of the other 

party. 

7. Waiver of Rights to Estate, Etc. Except as set 

forth herein, @ach of the parties waives all rights of 

inheritance in the estate of the other, any right to 

elect to take against the Will of the other, and the 

right to act as executor or administrator of the Will or 

estate of the other party. The Wife expressly waives the 

right to claim or receive family allowance from the 

estate of the Husband. Each of the parties waives any 

additional rights which such party has, or may have, by 

reason of their marriage, including rights of dower or 

curtesy, except the rights saved or created by the terms 

of this Agreement. . , * 

9. Hutual Release and Division of Debts. In 

consiaeration of the execution of this Agreement ancl 

other terms and conditions thereof, each of the parties 

hereto releases and forever discharges the other party, 

his or her personal repre ves and assigns, from any 

and all rights, claims, , and obligations, except 
as herein specifically provided; and each party is 

forever barred from having or asserting any such rights, 

s, or obliga any time for any 

purpose, It is hereby agreed that the personal 

obligations hereinabove set forth and the personal 

obligations hereinafter incurred by the parties shall. be 

and remain their respective obligations, 

shall pay and hold the other free and ha 

obligations or bills for merchandise or se 

sequent to date of Decree. . . . 15. Entire Agreement. The parties hereto 

understand and agree that this written ligre 

represents the entire agreement between the Wife and 

Husband; and further, that there are no promises, 

agreements, understandings, or representations of any 

kind other than those contained herein. 

Although there were conflicting affidavits from both parties 

concerning Eschler's intent in signing the property settlement, 

there is no mention anywhere in the settlement agreement about any 

insurance or any of the insurance policies, even though both 

parties knew the policies to be assets BE the marriage. In bath 

this case and m, there is no mention of insurance assets. 

The parties have also put forward positions relative to the 

effect of a property settlement agreement on a beneficiary 

designation as discussed in Sowell v, Teachers' Retirement System 

(19841, 214 Hont. 290, 693 P.2d 1222, although the action ~0nCerned 

teacher retirement benefits. The decedent's widow brought an 

action to declare her rights under retirement and death benefits 

for an account initiated by the decedent when he was married to his 

first wife. The Court concluded that the decedent's ex-wife should 

receive his retirement benefits because she was nominated by a 

written designation filed with the retirement board. This 

conclusion was reached even though she and the decedent executed a 
property settlement agreement. 

The Court noted tha the general release la age in the 

agreement did not l'specifically cover Carolyn's inchoate right to 

re event, " Sowell, 

693 P.2& st 1224- The Court distinguished because, although 

the release language was similar in both property settlement 

agreements, the teacher retirement benefits were to be pai 

according to a specific statute, which provided that the benefits 

be paid to the estate or the beneficiary designated by the 

retirement and death benefit application. The Court also noted 

that Mr. Sowell had done nothing to indicate an intent to change 

the beneficiary designation. 

The present issue is whether Defendant contracted away her 

interest as beneficiary om Eschler's life insurance poiicies when 

she entered into the property settlement agreement. Girard v. 

Pardun (S.D. 1982), 318 N.W.2d 137. Girard cites the general rule 

in such cases: 

In conseqblence of the fact that ordinarily divorce 

does not affect the right of the named beneficiary, it 

follows that where the husbanc? does not change the 

beneficiary of his policy after having been divorced, the 

divorced wife is entitled to the proceeds of the policy 

upon the death of the insured. 

The divorced wife may, however, have surrendered her 

right as beneficiary by a property settlement agreement, 

which may or may not have been incorporated into the 

decree of divorce. For example, a divorce decree 

the husband all insurance policies 

on his life divested the wife of any interest she might 

have as a beneficiary under a policy conceded to be 

cornunity property. Likewise, where the property 

settlement agreement contemplated a disposition of all 

property rights and other matters and soecifically 

described a life policy in which the wife was beneficiary 

and stated that the husband was to receive the policies 
free and clear of any claims of the wife thereto, the 

wife waived and relinquished all right to the insurance 

proceeds of the policy in which she was beneficiary and 

that divestment was complete when the agreement was 

executed and incorporated into the divorce decree, 

notwithstanding that at the time of the insured's death 

as still the '.. 

Moreover, while a settlfment agreement may require the 

beneficiary wife to surrender or 'turn over' the policy 

to the insured, that fact alone does not destroy her 

right as beneficiary where the insured thereafter did not 

change her designation as beneficiary. 

Whether a property settlement agreement should be 

deemed to bar the divorced wife is a question of the 

construction of the acgreeinent itself. Where there is no 

provision that the effecting of the settlement agreement 

should deprive her of her rights as named beneficiary and 

she in fact remains named as beneficiary, the settlement 

agreement will not be siven a broader scope than its 

express terms specify and she will not be barred from her 

right as the named beneficiary. 

Girard, 318 N.W.2d at 138-139. (Emphasis in original.) (Citation 

oroitted.) The Girard Court continued, 

The agreement does not contain a renunciation of her 

expectancy in the policy and, absent such a specific 

disclaimer, we will not construe the agreement so as to 

include a renunciation of her right to take as 

beneficiary under the policy. It is not the duty of the 

court to make new contracts for the parties, but merely 

to interpret the one as written, The agreement has no 

application to the policy itself. 

Girard, 318 N.W.2d at 139. (Emphasis in original.) (Citation 

omitted. ) 

Defendant here claims that the property settlement agreement 

did not divest her of her right to the proceeds of the policies. 

We agree with the Defendant. As the District Court stated: @&No 

specific mention is made in the settlement agreement of any life 

insurance of either of the parties or beneficiary designations 

related to life insurance policies." We agree with the logic in 
Girard and conclude that a mutual release, which does not mention 

insurance, in a property settlement agreement, does not divest a 

former spouse of the right to the proceeds of insurance policies 

policy. As in Sowell, the Defendant did not relinquish her 

*fiinchoate right to acquire property upon the happening of a future 

A cogent statement of the policy reasons for this conclusion 

is contained in Nunn v. Equitable Life Assur. Society, Etc. (N.D. 

1979), 272 N.W.2d 780, which states: 

The plaintiff ia in this case arguing that in effect 

the person entitled to the proceeds of the policy is 

whoever the decedent intended it to be, even if not the 

named beneficiary. It requires little imagination to 

envision the mischief that would be caused by the 

adoption of such a rule. Disputes among friends, 

relatives, and heirs of the decedent would be a regular 

occurrence. Insurance companies presumably invariably 

deposit the proceeds in court because they could not rely 

on their records. The adoption of such a rule, in the 

long run, would be detrimental to the administration of 

justice, just as it would be if permitted in the case of 

wills or land transfers. 

It should also be observed that we are not dealing 

here with a situation in which the decedent did anything 

within his power to effectuate his intention. The 

proble~ was caused by the decedent * s ow. carelessness. 

It would have been a simple matter for him to determine 

who was, in fact, the beneficiary of the policy. The 

result may be unfortunate, but that condition alone no 

more furnishes justification for the Court to intervene 

than it would in the case of errors of judgment or 

frustrated expectations in the case of contracts 

generally. 

m, 272 N.W.2d at 781-782. ( hasis in original. f We find 

these reasons apply to the present action as well. 

&&,g is expressly overruled on this point. See also; 

Prudential Ins. Co. v. Weatherford (Or. l98O), 621 P.2d 83; Nichols 
v, Nichols (Texas 1987): 727 S,W,Z& 303, 

Plaintiffs8 second contention is that the fact that Eschler 

filled in the names of the new beneficiaries on the change of 

s for the Piinnesots; Nutua 

intent sufficient to change the beneficiaries on the two policies, 

The view taken by the majority of courts is that a 

change of beneficiary can be effected without complete 

compliance with the provisions of the policy regarding 

notice and endorsement. The courts upholding this view 

accept substantial compliance as a sufficient standard 

for detemining whe er a valid change sf beilefieia~y has 

been effected....The test to establish whether 

substantial compliance has been satisfied has two prongs: 

There must be evidence that (1) the insured had 

determined to change the beneficiary, and (2) that the 

insured had done everything to the best of his ability to 

effect the change. 

IDS Life Ins. Co. v. Estate of Groshsng (Idaho IN$?), 736 P.2d 

1301, 1303 (citations omitted). See also Bell v. Criviansky 

(1934), 98 Mont. 109, 37 P.2d 673. 

In m, the Court concluded that the insured had 

substantially complied with the provisions of the policy to change 

the beneficiary designation on his insurance policy when he had 

requested the forms from the insurance company but fell seriously 

ill and died of a brain tumor before he could complete and return 

the change of beneficiary form. In concluding that he had changed 

the beneficiary designation, the Court stated: 

We think the true rule is that, if the insured has 

pursued the course pointed out by the laws of the 

association and has done all in his power, under the 

facts and circumstances of the case, to change the 

beneficiary, but before the new certificate is actually 

issued or the change of beneficiary is indorsed on the 

old, he dies, a court of equity will decree that to be 

done which ought to be done, and act as though the 

certificate had been issued or the indorsement made. 
m, 37 P,261 at 678, See also: Prudential. Ins, 60, of 

Cooper (D, Idaho 1987), 666 F, upp, 190, 192; Bergen v. Travelers 

Ins. Co. of Illinois (Utah App. 1989), 776 P.2d 659, 663; IDS Life 

Ins, 60, v, Estate sf Gros ?), 736 E"2d 1301, 13 

Manhattan Life Insurance Company v, Barnes (9th Cir. 1972), 452 

Eschlarns actions do not evidence a sufficient deta 

to change the beneficiary designation, or that he substantially 

complied with the requirements to change the designation. 

Eschler had the change of beneficiary forms in his possession 

for approximately 6 months. There was no evidence that he was 

unable to complete the forms and return them to the company unlike 

the insured in u. We conclude that Eschler did not do 

everything he could have done to change the beneficiaries. 

Plaintiffs1 final argument concerns the $75,000 policy for 

which plaintiffs believe the estate is the beneficiary. Section 8 

of the application form requests a beneficiary designation. The 

potential insured may choose the owner of the policy as beneficiary 

or my fill in the blank immediately below ta name the beneficiary. 

Also, the applicant may mark an "XI1 in the box next to choice 1, 

the owner, or the second choice, the blank space filled in by the 

applicant. In Eschler's case, he filled in the following in the 

blank space: "Janet Eschler, wife, if living, if not surviving 

children share alike." (This was handwritten by insurance agent 

Mr. Solie as he recorded Eschlerls answers at the time of the 

application.) 
However, there is an nXpg in box 1 next to the designation, 

e ownerBB, but no 19X58 next to Eschiargs handwri ten designation 

of Defendant as the primary beneficiary. Defendant provided the 

affidavit of Robert Solie, t frm 1Piutual Benefit who 

sold the policy to Eschler i ain the presence sf the 

igPX9n box 1. He states that Eschler wished to name his wife Janet 

Eschler, as the primary beneficiary, and his children as contingent 

beneficiaries. In addition, the K marked in box 1 of the 

beneficiary designation (for "the ownerm) is a clerical error made 

by Mr. Solie. Eschler did not ask that he be made the beneficiary 

of the policy nor were the proceeds to go to his estate. 

In motions for summary judgment, if the moving party shows the 

absence of genuine factual issues, the nran-moving party must set 

forth facts dewonstratilng tnat a genuine issue exists. Grenz v. 

Medical Management Northwest (1991), 250 Mont. 58, 62, 817 P.2d 

1151, 1154. Defendant brought forth evidence in the form of Mr. 

Solie's affidavit, to prove that Defendant was the intended 

beneficiary of the $75,000 lvIutual Benefit policy. The burden then 

shifted to the plaintiffs to demonstrate that a genuine issue 

existed concerning the beneficiary of the policy. However, the 

plaintiffs brought forth no evidence to counter Defendant's 

contention and summary judgment was appropriately granted on this 

issue, 

The District Court orders granting Janet Eschlerls motions for 

summary judgment are affirmed. AFFI 

March 26, 1993 

CERTIFICATE OF SERVICE 

I hereby certify that the following order was sent by United States mail, prepaid, to the 

following named: 

Jerome J. Cate 

Cate Law Firm 

P.O. Box 3274 

Billings, h4T 59103-3274 

AUen D. Gunderson 

Gunderson Law Firm 

P. 0. Box 926 

Billings, MT 59103 

Brent R. Cromley 

Moulton, Bellingham, Longo & Mather 

1900 Sheraton Plaza, P.O. Box 2559 

Billings, MT 59103-2559 

Donald L. Hams and Steven R. Milch 

Crowley, Haughey, Hanson, Toole & Dietrich 

P.O. Box 2529 

Billings, h5T 53103-2523 

Don M. Hayes 

Hemdon, Hartman, Sweeney & Halverson 

P.O. Box 80270 

Billings, MT 59108-0270 

ED SMITH 

CLERK OF THE SUPREE,ME COLJT 

STAq OF MONTANA I