Title: Ex parte Kimberly Estelle. PETITION FOR WRIT OF CERTIORARI TO THE COURT OF CIVIL APPEALS (In re: Kimberly Estell v. Ruthie Cunningham)
Citation: N/A
Docket Number: 1051720
State: Alabama
Issuer: Alabama Supreme Court
Date: July 13, 2007

REL: 7/13/07
Notice: This opinion is subject to formal revision before publication in the advance
sheets of Southern Reporter.  Readers are requested to notify the Reporter of Decisions,
Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334)
229-0649), of any typographical or other errors, in order that corrections may be made
before the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
SPECIAL TERM, 2007
_________________________
1051720
_________________________
Ex parte Kimberly Estelle
PETITION FOR WRIT OF CERTIORARI
TO THE COURT OF CIVIL APPEALS
(In re:  Kimberly Estelle
v.
Ruthie Lee Cunningham)
(Talladega Circuit Court, CV-04-51;
Court of Civil Appeals, 2050217)
1051720
2
SEE, Justice.
Kimberly Estelle, the daughter of John Estelle, deceased,
sued John's landlord, Ruthie Lee Cunningham, alleging fraud
and undue influence, claiming that Ruthie had induced John to
change the beneficiary on his life-insurance policies from
Kimberly to Ruthie.  The trial court entered a summary
judgment in favor of Ruthie on the ground that a former
beneficiary has no standing to sue the new beneficiary based
on an allegation of undue influence.  We reverse.
Facts and Procedural History
For the last 17 years of his life, John lived in a
boarding house owned and operated by Ruthie.  In addition to
being John's landlord, Ruthie assisted John with his personal
needs, including his banking.  
John had three life-insurance policies with Mutual
Savings Life Insurance Company ("MSLI"), the first issued in
December 1991, the second in June 1996, and the third in March
2001.  John initially named his daughter, Kimberly, as the
beneficiary on the first two policies, and he named Ruthie as
the beneficiary on the third policy.  In February 2001,
however, John changed the designation of the beneficiary on
1051720
3
the first two policies from Kimberly to Ruthie.  Kimberly
alleges that Ruthie induced John to change the designation of
beneficiary on the policies through fraud and undue influence.
Kimberly 
sued 
both 
MSLI 
and 
Ruthie; 
after 
MSLI
interpleaded the proceeds of the policies into the court, the
trial court dismissed it as a party.  Ruthie denied the
allegations of fraud and undue influence and moved for a
summary judgment.  The trial court granted Ruthie's motion,
finding that Ruthie was the lawful beneficiary of the policies
and that she was entitled to a judgment as a matter of law. 
Kimberly appealed the trial court's judgment to the Court
of Civil Appeals, arguing that the record contains evidence
indicating that Ruthie's alleged undue influence over John
caused him to change the beneficiary of his life-insurance
policies sufficient to survive a summary judgment.  The Court
of Civil Appeals affirmed the trial court's judgment, stating:
"In Alabama, '[a] beneficiary cannot attack a
change of beneficiary designation on the ground of
undue influence ... because [s]he has an interest
which is a mere expectancy, which cannot become
vested until the death of the insured.'  Owens v.
Coleman, 520 So. 2d 514, 516 (Ala. 1987).  'Under
the uniform decisions of this court, the right to
change 
the 
beneficiary 
being 
reserved, 
the
beneficiary ha[s] no vested right, but only an
expectancy. 
...[T]he 
right 
to 
change 
being
1051720
The complete sentence in Taylor reads: "And we have held
1
(illustrative of the expectant character of such an interest)
that fraud or undue influence inducing the insured to change
the beneficiary, the right to change being reserved, does not
give the first beneficiary any right to claim the proceeds of
the policy."
4
reserved[] does not give the first beneficiary any
right to claim the proceeds of the policy.'[1]
Taylor v. Southern Bank & Trust Co., 227 Ala. 565,
568, 151 So. 357, 360 (1933).  See also Barnett v.
Boyd, 224 Ala. 309, 312, 140 So. 375, 377 (1932)
('[T]he beneficiary cannot attack a change of
beneficiary by the insured on the grounds of fraud
or undue influence, ... [because] such beneficiary
has an interest that is a mere expectancy which
cannot become vested until fixed by death of the
insured.')."
Estelle v. Cunningham [Ms. 2050217, Aug. 18, 2006], ___ So. 2d
___, ___ (Ala. Civ. App. 2006) (footnote omitted).  The Court
of Civil Appeals held, as required by this Court's precedent,
that, because Kimberly's interest as an original beneficiary
under the policies was a mere expectancy, Kimberly lacked
standing to assert the claims of fraud and undue influence
against Ruthie. 
Issue
The issue is whether a prior beneficiary of an insurance
policy is precluded from suing the subsequent beneficiary,
asserting fraud or undue influence on the deceased insured,
when the insured had the right to change the beneficiary. 
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5
Standard of Review
"Where the facts are not in dispute and we are presented
with a pure question of law, as here, this Court's review is
de novo." Christian v. Murray, 915 So. 2d 23, 25 (Ala. 2005)
Analysis
In Owens v. Coleman, 520 So. 2d 514, (Ala. 1987), Jimmie
Coleman changed the beneficiary designations on his credit-
union account and life-insurance policy several times shortly
before his death, variously naming his children and his sister
as the beneficiaries.  The trial court found several of those
beneficiary designations to be void, at first on grounds of
undue influence and later because it found Coleman to be
mentally incompetent.  This Court held that the trial court
properly found that the beneficiary designations were void
based on the showing of Coleman's mental incompetence, but it
further noted, in dicta, that "[a] beneficiary cannot attack
a change of beneficiary designation on the ground of undue
influence alone ...." 520 So. 2d at 516.
As its rationale for treating a change in beneficiary
resulting from the mental incompetence of the policyholder
differently from a change in beneficiary resulting from undue
1051720
6
influence on the insured by the new beneficiary, this Court
noted two things.  First, it noted that when a mentally
incompetent policyholder changes the beneficiary on his or her
life-insurance policy, the "beneficiary designations ... can
properly be declared void by the trial court," implying that
the same is not true when a policyholder changes the
beneficiary as a result of undue influence.  520 So. 2d at
516.  For the proposition that a change in beneficiary
designation by a mentally incompetent insured can be declared
void, the Court in Coleman cited Williamson v. Matthews, 379
So. 2d 1245, 1247 (Ala. 1980), which notes that "the contracts
of an insane person are absolutely void."  Thus, we applied in
Coleman "the generally accepted rule that if at the time he
attempted to change the beneficiary, the insured was mentally
incompetent, such an attempted change is ineffective ... and
the original beneficiary has such a substantial interest as
would justify an action to prevent or annul such a change."
McRee v. Russell, 239 Ala. 343, 345, 194 So. 827, 828 (1940).
Because an insurance policy that has been changed while the
policyholder was mentally incompetent is void, the original
beneficiary is entitled to sue. 
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However, this analysis can be applied with equal force to
an insurance policy in which the beneficiary has been changed
as a result of undue influence upon the policyholder.  "The
essence of undue influence is that the will of the influencing
party so overpowered the will of the other party that the
other party's act essentially became the act of the
influencing party."  Fortis Benefits Ins. Co. v. Pinkley, 926
So. 2d 981, 988 (Ala. 2005).  Thus, an insurance policy that
has been changed as a result of undue influence is void for
the same reason that an insurance policy that has been changed
while the policyholder was mentally incompetent is void: the
act of changing the beneficiary was not meaningfully the act
of the policyholder.  See McAlister v. Deatherage, 523 So. 2d
387, 388 (Ala. 1988) ("'A party cannot avoid a cont[r]act,
free from fraud or undue influence, on the ground of mental
incapacity, unless it be shown that his insanity ... was of
such character that he had no reasonable perception or
understanding of the nature and terms of the contract.'"
(quoting Weaver v. Carothers, 153 So. 201, 202 (Ala. 1934)));
Pinkley, 926 So. 2d at 988 ("Legally, therefore a change of
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beneficiary procured by undue influence is -– like a forgery
–- not the act of the policy owner.").  
Second, this Court in Coleman noted that when a
policyholder changes the beneficiary as the result of the
exertion of undue influence over him by another, the interest
of the former beneficiary "is a mere expectancy, which cannot
become vested until the death of the insured." 520 So. 2d at
516.  This Court implied that the same is not true of a change
in beneficiary made while the policyholder was mentally
incompetent. 520 So. 2d at 516.   To support this proposition,
the Court in Coleman cited Barnett v. Boyd, 224 Ala. 309, 312,
140 So. 375, 377 (1932), which states that "this court is
committed to the view that the beneficiary in cases of this
character cannot attack a change of beneficiary by the insured
on the ground of fraud or undue influence, upon the theory
that such beneficiary has an interest that is a mere
expectancy which cannot become vested until fixed by death of
the insured."       
As we note above, however, a change in beneficiary
resulting from undue influence is void; thus, the original
policy would remain in effect, and the original beneficiary's
1051720
Even in those situations where the original beneficiary
2
is ultimately unable to prove that the policyholder was unduly
influenced, the idea that a former beneficiary holds a "mere"
expectancy and thus lacks standing to sue fails to take into
account the interest the original beneficiary does hold in the
policy: Professor Williston writes, "Where the policy reserves
to the insured a power to change the beneficiary, the
beneficiary possesses a defeasible vested interest."  This is
a stronger interest than a mere expectancy.  13 Richard A.
Lord, Williston on Contracts § 37:29 (4th ed. 2002).  "It is
generally said that the beneficiary has no more than a mere
'expectancy,' in case the insured has reserved the power to
change; but, even so, an assignment by the beneficiary should
be held to be effective if the power to change is not
exercised.  The ideas behind such terms as 'expectancy' and
'vested rights' are altogether too variable and uncertain to
justify their use as a basis for decision."  9 Corbin on
Contracts § 887 (Interim ed. 2002).  Thus, the fact that a
former beneficiary holds a "mere" expectancy does not mean
that she holds no interest.  
9
interest would vest upon the policyholder's death.  See
Coleman, supra, (distributing funds in accordance with the
original life-insurance policy upon a showing that the change
in beneficiary was void).  In the present case, if John
changed the beneficiary on his life-insurance policies as a
result of Ruthie's undue influence over him, then the change
in beneficiary would be void, and the original policy would
remain in effect.  Because John has died, Kimberly would hold
not a mere expectancy, but a vested right in the original
insurance policy, entitling her to bring the action.2
1051720
In the omitted footnote, the Texas Court of Appeals
3
identifies 14 other states that "have affirmed the right of a
prior beneficiary to pursue such a suit," 8 that have not
questioned the standing of the prior beneficiary, and 6,
including Alabama, that have concluded that the prior
beneficiary lacks standing to sue.  954 S.W.2d at 167 n.2. 
10
Thus, the rationale upon which we distinguished undue
influence from mental incompetence in Coleman is flawed.
Further, holding that a former beneficiary lacks standing to
challenge a change of beneficiary brought about by a third
party's exertion of undue influence would effectively insulate
a wrongdoer's bad act.   See § 13, Ala. Const. 1901 ("every
person, for any injury done him ... shall have a remedy by due
process of law ....").   
We also note that "a substantial majority of the other
states which have addressed this issue have affirmed the right
of a former beneficiary to attack a change of beneficiary on
the basis of undue influence."  Cobb v. Justice, 954 S.W.2d
162, 167 (Tex. App. 1997) (footnote omitted).   "'By the
3
majority rule, where a change of beneficiary has been
accomplished by ... undue influence practiced by the
substitute beneficiary, the rights of the original beneficiary
are not cut off by the attempted substitution.  Equity may
entertain jurisdiction of a suit by an original beneficiary to
1051720
11
set aside a change to a substituted beneficiary on the ground
of ... undue influence and to enjoin the payment of the
polic[y] to the latter.'"  954 S.W.2d at 167-68 (quoting 4 Lee
R. Russ and Thomas F. Segalla, Couch on Insurance § 60:72, at
60-132 to 60-134 (3d ed. 1996)).  
We will no longer apply a rule that lacks an adequate
foundation and rationale.  To the extent that Coleman, Taylor
v. Southern Bank & Trust Co., 227 Ala. 565, 151 So. 357
(1933), Barnett, and other Alabama cases hold that a former
beneficiary is precluded from challenging, on the basis of
undue influence, a change by the deceased insured of the
beneficiary 
of 
an 
insurance 
policy, 
they are 
hereby overruled.
Conclusion
We reverse the trial court's summary judgment in favor of
Ruthie Cunningham, and we remand the case for further
proceedings consistent with this opinion.
REVERSED AND REMANDED.
Cobb, C.J., and Lyons, Woodall, Stuart, Smith, Bolin, and
Parker, JJ., concur.
Murdock, J., recuses himself.*
_________________________
*Note from the reporter of decisions:  When the opinion
in this case was released on July 13, 2007, Justice Murdock
was inadvertently shown as voting to concur.  He actually had
recused himself from the case.