The Honorable Leonard 

### Prewitt

F,xecutive secretary, Teacher Retirement System ofTexas 1001 Trinity Street Austin, Texas 78701 Opinion No, H- 721 Re: Responsibilities ofthe Teacher Retirement System when a member is murdered by his beneDear Mr. Prewitt: ficiary. You have requested our opinion regarding the responsibilities of the Teacher Retirement System when one of its members or retired members is murdered or alleged to have been murdered byhis designated beneficiary. Attorney General Opinion O.-Z590 (1940) resolved this question onthe basis of a 1918decision of the Beaumont Court of Civil Appeals, Murchison w 203 S.W. 423 (Tex. Civ.App. --Beaumont 1918, nowrit), which declared that itis against public policy topermit abeneficiary to recover the proceeds ofa life insurance policy if he feloniously kills the insured and that, in such cases, the proceeds are payable to the estate of the insured. Nevertheless, the court held that the bene’ficiary-Murderer, as the sole heir ofdecedent’s estate, was entitled to the proceeds. Following the court’s decision in Murchison, the Legislature enacted section 21.23 ofthe Insurance Code [formerly article 5047, V. T. C. S. ] which provides thatthe “interest of a beneficiary [is]

. . . forfeited , when the beneficiary is the principal or accomplice inwillfully bringing about the death of the insured.” In such cases, “the nearest relative of the insured shall receive said insurance.” Since survivors’ benefits under the Teacher Retirement System are notgoverned by the Insurance Code, however, it is necessary to look to the common law to determine the applicable principles. Since Attorney General Opinion O-2590 ( 1940 ), the ,Texas courts, as a means of carrying outthe public policy which prevents a person from profiting byhis own wrong. have imposed a constructive trust upon property passing toheirs whomurder their ancestors. Under this doctrine, legal title to decedent’s property passes to the murderer, butthe law imposes

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The Honorable Leonard Prewitt, page 2 (~-721)

a constructive trust thereon for the benefit of other heirs. Parks **V.** Dumas, 321 S.W. 2d 653 (Tex. Civ. App. --Ft. Worth 1959, nowrit); Pritchett v. Henry. 287 S.W. 2d 546 (Tex. Civ. App. --Beaumont 1955, writ dism’d. ). InPritchett, the court explained its rationale thus:

By imposing a constructive trust upon the murderer, the court is notmaking an exception to the provisions ofthe statutes, butis merely compelling a murderer to surrender theprofits of his crime andthus preventing his unjust enrichment. 287 S.W. 2d at 549. Quoting the Supreme Court’s decision in Pope V. Garrett, 211 S.W. 2d 559 (Tex.Sup. 1948). the court in Parks v. Dumas, sup, held thatthe constructive trust doctrine is a creature of equity. Its purpose is to prevent a situation inwhich “the statutes of descent and distribution may

. .~. be used as an instrument for perpetuating or protecting a fraud. ” 321 S.W. 2d at 655. Under the law ofmost jurisdictions, the disqualification ofa beneficiary bars the claim ofanyone who succeeds tohis rights, whether it be his assignee, his heirs, or the administrator ofhis estate.4 Couch on Insurance 2d. §27:161. at 709-10. Thus, a beneficiary cannot confer uponhis heirs or assigns the proceeds ofhis victims estate. Inaddition, section 3.07 of the Education Code provides that “any . . . right

. . . accruing to any person under theprovisions of this chapter

. . . shall be unassignable except as provided.

. . .I’ From the analogy of Pritchett and Parks, we may conclude that, in the event a member of the System is murdered by,his designated beneficiary, a constructive trust will be imposed upon such beneficiary, in favor of those persons inwhom benefits vest, according to statute, when the designation of the primary beneficiary fails. Section 3.33 ofthe Education Code provides, in pertinent part:

(b) Inthe event a member fails to designate a beneficiary, or the designated beneficiary predeceases the member and there is no designation effective at the date of death, the death benefits and election right to survivor benefits shall vest (inthe,order listed) with

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(1) the surviving widow or surviving dependent widower of the deceased; or (2) the children ofthe deceased in equal portions;. or (3) the dependent parent or parents of the deceased in equal portions. (c) Ifnone ofthe persons named in Subsection (b) (l), (Z), and (3) ofthis section survive; then, to themember’s estate, or to his heirs, in complete discharge ofall claims for death and survivor benefits under this chapter, there shall be paid

(1) the return ofthe accumulated contributions ofthe member; or (2) a $500 lump sum if death occurs after retirement. Thus, it is our opinion that, where a constructive trust is imposed, those persons listed in section 3.33 shall be entitled, in the order listed, to the available benefits, provided that such beneficiary is nothimself the murderer ofthe member. We note that, by the terms of section 3.34(t) of the Education Code, if the beneficiary is

other thana surviving widow, dependent widower, child, grandchild, brother, sister, or dependent parent ofthe deceased, or other persons ‘financially dependent onthe deceased, the death benefits payable to the beneficiary under the provisions of this chapter shall be limited tothe accumulated contributions in the member’s member savings account. You also ask whether the Teacher Retirement.System may rely upon a waiver executed by the alternative beneficiaries created by section 3. 33(b) in favor ofthe designated beneficiary-murderer, or may enter into a settlement agreement which results in an obligation onthe part ofthe System topay benefits to the murderer, Inour opinion, neither a waiver

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The Honorable Leonard Prewitt, page 4 (H-721)

nor a settlement agreement to such effect would be valid. AS the Supreme Court declared in Poue v. Garrett, supra. the doctrine of constructive trust is to be “imposed irrespective of and even contrary to the intention ofthe parties. ” 211 S.W. 2d at 561. Ifthe public policy which prevents a person from profiting byhis ownwrong is strong enough to require, in effect, ajudicially-created exception to the descent and distribution statutes, it certainly may notbe thwarted by any agreement between the murderer, the alternative beneficiaries, and the Teacher Retirement System. As to the procedure which the System should follow when it has information thatthemember was murdered by his designated beneficiary, we believe that the System, in order to protect itself from liability, should await ajudicial order imposing a constructive trust. It,is of **COU~RC** possible thatthe designated beneficiary will be determined nottohave caused the death of the member. The standard promulgated by article 21.23 of the Insurance Code, “w’illfully bringing about the death ofthe insured, ” has been construed by theSupreme Court to require something more than intent to cause death. But although the factor of illegality must also be present, “willfully” should notbe construed tomean “maliciously. ” Green v. Franklin Life Insurance Co., 221 S.W. 2d 857, 859 (Tex. Sup. 1959). This standard may reasonably be applied to situations involving the Teacher Retirement System. In most cases, either the designated beneficiary or the alternative beneficiaries uader section 3. 33will probably bring anaction against the System to require payment of benefits. If none of these parties do so within a reasonable time, the System should, in our opinion, file an interpleader action in the district court. Interpleader has been frequently upheld as a proper action in such cases. See Murray V. American National Insurance co.. 300 S.W. Zd 187 (Tex..Civ. AT. --Ft. Worth 1957, writ ref’d. ); Murray v. Bankers Life Co., 299 S.W. 2d 730 (Tex. Civ. App. --Ft. Worth 1957, writ ref’d); Cooley v. Coolev, 503 S.W. 2d 604 (Tex. Civ. App. --Eastland 1973, nowrit). As the court held in McCormick v. Southwestern Life Insurance Co., 35 S.W. Zd 502,503 (Tex. Civ. App. --Waco 1931, nowrit), the purpose ofinterpleader is to protect an innocent stakeholder. Itis proper **SO** long as the stakeholder is in some real doubt or hazard inpassing andacting upon conflicting claims. Until a court has imposed a constructive trust in favor of the alternative beneficiaries, the Teacher Retirement System

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The Honorable Leonard’Prewitt, page 5 (H-721)

may be said to be “in some real doubt or hazard” as to whom it should pay theavailable benefits. Ifandwhen a constructive trust is recognized, the System may pay theproceeds to the alternative beneficiaries in accordance with the terms of section 3.33 of the Education Code. SUMMARY

When a member ofthe Teacher Retirement System isjudicially determined tohave been murdered byhis designated beneficiary, the courts will impose a constructive trust upon such beneficiary in favor ofthose persons inwhom benefits vest under section 3.33 ofthe Education Code when the designated beneficiary is disqualified. The Teacher Retirement System should notpay any benefits in such situations, however, until a constructive trust has been imposed byjudicial order. If nointerested party files an action to require payment within a reasonable time, the System should bring an interpleader action for the purpose of determining towhom it should pay the proceeds. Very truly yours,

JOHN L. HILL Attorney General of Texas APPROVED:

7i.Lk.Tb DAVID M. KENDALL, First Assistant

ROBERT HEATH, Chairman Opinion Committee
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