Mrs. B. B. Sapp

Director.andExecutive Secretary Teacher Retirement System of Texas Austin, Texas
Dear Mrs. Sappr Opinion Nmber O-5126 Re: Payment of contributionsof deoeassdmember where benefioiary designated inwill is different from benefiaiarydesignated on regularform. lYehave receivedyour letter of Harch 12, 1943, which we quote in part as follcws, "The Teacher Retirmnent System of Texas respectfullyrequests an opinion from ycur Department on the followingmatter: "If a member who has on regular form filed in this offiae designated a beneficiary to receive her aocmnulated contributionsin case of death and in a subsequentwill specifiesanother individual to receive the said ccntributions from the Teacher Retirement System,what would be the aorreot legal procedure for the Teacher Retirement System to fcllcw in disposing of the aocmulated contributionsof saidmember?” Subsection 5, Section 5 of the Teacher RetirementAct (ktiole 2922-1, Vernon's Annotated Civil Statute8) reads in part as follows: "Shoulda member cease to bs a teacher except by death or retirementunder the provisions of this Act, he shall be paid in full the amount of the PCcumulated contributionsstanding to the credit of his individual acaount in the Teacher Saving Fund. Should a memver die before retirement,the amount of h$.s accumulated contributions standingto ths credit of b.isindividualaccount shall be paid as provided by the laws of desoent and distribution of Texas unless he has direoted the account to be paid otherwise.
. . ."
You have suppliedus with additional informationas fcllcws: The original beneficiarynamed predeceased the member, end the member drew her will three days before she (themember) died. The will has been probated,and a aertified copy thereof has been furnishedyou. The original designationpias

made on a form adopted by the Retirement Systemwhich contains the following provisioner- .

Mrs. B. B. Sapp, Page 2 (O-5126)

"I hereby designate(First givenname) (Secondgiven name) (Last name) 

### (Aeel (Relationship) (Address)

as my beneficiary to receive my accumulated contributionsin the Teacher Saving Fund of the Teacher Retirement System in the event of my death before retirement. Should I, at scms future time, decide to have my accumulated contributions paid to scme one other than the party or person named above, I will make such change in writing upon a form prescribedby the System and file the samewith the System, and it ismy understandingthat unless such change of beneficiary is filed at the office of the Teacher Retirement System at Austin, Texas, duringmy lifetime, it shall be void and of no effect. Should the beneficiarynamed above die beforeme, and I fail to name another, it is understoodthat my accumulated contri?uticns shall bs paid as provided by the laws of descent and distributionof Texas. (BAVE TV?G

WITNESSES)
(Signatureof Rltness) (Member'sSignature)
(Signatureof Wtness) Signed the day cf

You wish to know (1)whether the contributionsshould be paid according to the laws of descent and distribution or to the person named in the will; 2nd (2)whether under the,quoted statuteand the form adopted by the Retirement System the ccntributionsof a deceassdmember should be paid to a beneficiary in a will in the evant that both such persons are still living. Ppehavs answered the first cluesticn in Opinion Rc. o-2907. In that Opinion two members of the Retirsment System, who were sisters,designated each other as beneficiary. One sister died, but before her ocntributicns aculd be paid to her sister,the second sister died. The seccnd sister in her mill had provided that all of her "earthly goods" should go to another person. In Opinion Eb. O-2907 it was held that the will constituteda sufficient designationunder the statuteand that the contributionsof both sisters shouldbe paid to the person designated in the will of the second sister.

In the situationunder ccsiderationthe designation in the will was evenmore specific in that it was expressly stated that the contributions shouldbe paid to the person named. In accordancewith opinion NC. O-2907 you are advised in answer to your first question that the contributionsof the deceasedmember should be paid tothe person named in the will.-

. -

Mrs. 2. B. Sapp, Page 3 (O-5126)

The second point in whioh you are interestedpresentsmars serious questions. In Opinion NC. O-2048 your departmentwas advised that the general clause, "all property of whatsoeverkind, real, personal ormixed of which Imay dies possessed" is bequeathed to a named person, did not change the banefioiarynamed in the form on file in the cffioe of the Retirement system. But we said in that opinion: difficult if the will/%!d% "The question hare would bsmuohmcre on executed subsequent to the original designation in the TeacherRetirement System had provided specificallythat the accumulated contributions shouldbe paid to someans other than the person designated in the form filed with the Teacher Retirement System."
Fe have been unable to find any decisionswhich have passed upon this question,and a resort to analogous oases relating tc the payment cf insuranoe prcoeedsproduces confusionrather than enlightenment.

In the case of Grand Lodge, Knights and Daughters of Tabor,v. MannI 282 S.W. 266, plaintiffhad been named as beneficiary in a policy or oertificate of insurance,but at a later date the insuisd in a will had named other persons as beneficiaries. These other persons presented a certified copy of the will to defendant, snd it treated the instrumentas a changeof beneficiaries,and paid the amount of the oertifioateto suchpersons. The by-laws of the order providedthat no change in the designationof beneficiaries shouldbe effectiveuntil the old certificatehad been received and a new and issuedduring the lifetimeof the member, and until such time the criginal designation should remain in full force. Payment of a fee for such changewus also covered. The court in holding that a change of benoficiaries had been effectedmade the following statamentr
"Our Supreme Court, in the case of Splawnv. Chow, 60 Tsx. 532,which holding has been a number of times reaffirmed sincethat deoisicn, has directly hold that such a provision in the by-laws of an insurance company, or other ocrpcraticn, as the one hre involved, is for the benefit and protection of the oompany alone, can be waived by it as it sees fit, and cannotbe taken advantage of by others. In that case, as here, the change in beneficiarieswas effected by the will of the insured, sndit was held that those designatedtook the benefitsunder the certificatesrather than those designated as bsneficiarias in the certificateitself. "The trial court's judment ssems to rest upon the conclusionthat the change in beneficiarieshad not in fact been made during the lifetime of themember, tut this ~ecise question, too, had been decided the otherway by the Kansas Court of Appeals in Heydcrfv. Ccnrack, reported in 52 P. page 700, 7 Kan. App. 202, under facts not in legal effect different frcm those here obtaining; that is, a member of the order having, during his lifetime,made a request for a change in beneficiaries in substantialaoocrd with the contractbetween himself and the order in that respect, the designation somade of a nsw beneficiary was held not void by reason of the member's death prior to the granting of the same by the insurer. To the same effect appears to be the holding in Luhrs V~ Luhrs, 25 N. E. 366, 123 R. Y. 367, 9 L.R.A. 634, 20 Am. St. Rep. 754."es. B. B. Sapp, Page 4 (O-5126)

See also Richardsonv. Faithful, 289 S.W. 10543 MaNeill v. Chinn, 101 S.W. 46.5~BLllsv. Bills at al., 207 S.W. 614. Hcwsver, a rscent'decisicnof the Conrmissicn of Appeals and adopted by the Supreme Courtmight pcssibleybe consideredas in ocnfliotrdth the Vann case. In the case of Garabrantv. Burns, et al., 111 S.W. (2d) 1100, it was held that the beneficiarynamed in the policy has a right to requirethat a change of beneficiariesbe made substantiallyin aocordanw with the rsgulaticns or manner provided in the pclioy, that the changemay bemade in nc otherway, and that a substantial compliancetherewithwas necessary tc sffoot the change. While a distinction is attempted to bo drawn between the prinoipal oaso and the Vann case, such distinction is not very clear in respect to the question under ocnsideraticn.

See also: Wright v. Wright (W. E. Ref.), 44 S.W. (2d) 1019; Groat Southern Life Ins. Cc. v. &kill (Dism. Judgm. Car.), 151 S. Kelly v. McDonald, (W.E. Dims.), 83 S.W. (2d) 414; Adams V* ILzZd!W2’Dism ) 78 S.W. (2d) 6641 Beck v. Beck, 90,S.W. (2d) 284; Brown v. Union Life Ins. Ci.' et al., 72 S.W. (2d) 661; Korens Nat. Bank et al., v. Stockton, et alo, 40 S.W. (2d) 7.
Wore wo called on to decidewhether the Vann oass or the Burns case controlled the question under consideration,ww believs that ws would be inclined tcdeoide that theVann case is applicable. In the first place, the State Board of Trustees derives its duties and powers from the RetirementAct. The only provisionrelating to the designation of beneficiariesto whom the aoounulated contributionsof amsmber shallbe paid upon the death of suchmember is: ". . . unless ho has directed the account to be paid cthsrwiss." Canthe Board of Trustees impose duties mars onerous than the ones which the statute itself impcsesl The RetirementAct is for ths benefit of the teachers, as defined therein, and should be construed SC as to effect this purpose. The Retirement Board of Trustees is under no duty to beneficiariesexcept to see that the designationof the member, ifmade in accordancewith the terms of the RetirementA at, is carried cut. Of ocurss, the Board of Trusteesmay make reasonable requirements SC as to satisfy itself that the designation is genuine. Suchwould be necessarily implied. Inc. v. Sheppard, 83 S W. (2d) 660. See Fort Worth Cavalry Club, We also thing that the Boardmay take any reasonablemoans tc protect the System and its funds, and in cur opinion this is the object of ths beneficiary form adoptedby the Board. In other words, the Board does not want to pay aoomnulated contributionsto one person designated as beneficiaryand later find cut that there was a later dssignaticn naming scmocne else. But it may bs a different thing when the Board is satisfiedthat a subsequentdesignationhas beenmade, and is a genuine one, before themoney is paid cut. The RetirementAot set up forteachers in the City of Bsw York, ocnsideredbythe ocurt in the oassof Ward v. Teachsrs',RetiromentBoard, 241 N.Y. S. 535, rsv. 246 H.Y. S. 522, aff. 175NT.E. 347, required that a designation of beneficiariesbe acknowledged. In accordancewith the terms of1

. -

Mrs. B. B. Sapp, Page 5 (O-5126)

the Act, the mm-t held that a designation not acknowledgedwas ineffective
. Buttha aourt strongly intimPtsd that unless the Act itself required an acknowledgment,the designationwould have been given effect.
We are not definitely answeringyour second questionfor the reason that the matters inquiredabout are not before you at this time. We simply wanted to showyou that the question is certainlynot free from doubt. We suggest that a possiblemeplls of eliminating the ohanoe of such a situation confrontingyou is the addition of a provision to your adopted form to the effeot that these provisions relating to change of banefioiary are for the sole protectionand benefit of the Tsaoher Retirement System and the Board of Trustees, and upon proof of a subsequentdesignationmay be waived bythe Boardof Trustees in its discretion,and only by the Poard of Trustees. Very truly yours ATTOEREYG~ERAL OFTEXAS By /s/George W. Sparks

APPROVED MAR 24, 1943 /s/ GRWER SELLERS iflETASSISTANT ATTORNEY GElTERAL Gws-srsgw O.K. C.C.R. George W. Sparks Assistant

APPROVED opinion cxmlittee By B.W.B. Chairman