Source: https://virginia.lexroll.com/abbott-v-willey-253-va-88-1997/
Timestamp: 2019-04-21 20:26:22+00:00

Document:
JOSEPHINE A. ABBOTT, ET AL. v. KATHLEEN E. WILLEY, ET AL.
Record No. 960984Supreme Court of Virginia.
The trial court did not err in holding that 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, nor did it err in holding that the claim against the contingent beneficiaries for unjust enrichment was barred. The decision of the trial court is affirmed.
The plaintiff’s are the judgment creditors of the defendant widow, having obtained a judgment against her in 1995. Her deceased husband died in 1993 and she was entitled to receive more than a third of a million dollars plus interest from the time of his death. The widow disclaimed the benefits to which she was entitled and became insolvent. The plaintiffs alleged that the disclaimer constituted a fraudulent transfer or conveyance under Code § 55-80 and a void voluntary conveyance under Code § 55-81. They also allege that the children of the deceased received funds as a result of the disclaimer and were thereby unjustly enriched. The trial court granted the defendants demurrer and entered judgment in their favor. The plaintiffs appeal.
1. Code § 64.1-191 provides that the beneficiary under a nontestamentary instrument may disclaim succession to property and § 64.1-192 prescribes the method of filing a disclaimer.
2. Code § 64.1-193 provides that the disclaimer shall relate back for all purposes to the effective date of the instrument and a person 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.
3. Applying the plain language contained in Code § 64.1-193, once the widow disclaimed her interest in the insurance proceeds, those proceeds were required to be distributed to the children of the deceased as if their mother had died before the effective date of the life insurance policy.
4. The effective date of the insurance policy precedes the events that gave rise to the plaintiffs purported cause of action against the defendants.
5. 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.
6. The defendant widow 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.
7. There is no merit in the plaintiffs contention that the trial court erred by holding that their claim for unjust enrichment against the children of the deceased is barred because the assignee of an insurance policy shall be entitled to its proceeds against any claims of the creditors of the insured, except in cases of transfer with intent to defraud creditors.
8. Here the widows 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.
Appeal from a judgment of the Circuit Court of Chesterfield County. Hon. Timothy J. Hauler, judge presiding.
Joseph W. Kaestner (John B. Moriarty, Jr.; Kaestner Pitney, on briefs), for appellants.
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.
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 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.
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 Wiley 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.
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).
the events that gave rise to the plaintiffs purported cause of action against the defendants.
[5-6] 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.
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.
[*] This judgment was the subject of a prior appeal to this Court, Lanasa v. Willey, 251 Va. 231, 467 S.E.2d 786 (1996).

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