Opinion ID: 1750963
Heading Depth: 1
Heading Rank: 5

Heading: Metro Bank

Text: Pamela next argues that the trial court erred in entering a summary judgment in favor of Metro Bank as to the declaratory judgment. [3] A District Court of Appeals of Florida examined the question of when an assignee for value of a life insurance policy has an interest superior to an intended beneficiary's equitable interest in Wewahitchka State Bank v. Mixon, 504 So.2d 1328 (Fla.Dist.Ct.App.1987): When appellee and her former husband, Porter Mixon, were divorced in Alabama in 1978, the judgment of divorce expressly required Mr. Mixon to retain appellee as beneficiary of the two life insurance policies, of which he was the owner. No one notified Liberty National of the judgment's restrictive provisions in regard to the policies and appellee never obtained possession of the policies, leaving possession with Mr. Mixon. Some time later Mr. Mixon moved to Florida and in 1984 obtained a loan from appellant Bank, assigning to the Bank as collateral for the loan the life insurance policies. Prior to making the loan, the Bank contacted Liberty National and was advised that the policies were in force and effect and could be assigned for the indebtedness. Thereafter, the proper assignments were made by Mr. Mixon to the Bank in consideration for the loan. The assignments were acknowledged by Liberty National in December 1984. Since that time, the Bank has continued to hold in its possession the original insurance policies along with the assignments. In April 1985, Mr. Mixon died. He still was indebted to the Bank on the above-mentioned loan and therefore the Bank presented its claim on the life insurance policies to Liberty National. However, faced with a claim on the same policies by appellee, Liberty National brought an interpleader action and was permitted by the court to deposit the life insurance proceeds from the policies in question into the court registry. . . . The Bank contends that its interest in the proceeds, as a bona fide assignee, is superior to appellee's equitable interest created by the divorce decree, especially in light of the facts that appellee never perfected her interest by notifying Liberty National of her beneficiary status while the Bank did so notify Liberty National of its interest, and appellee never took possession of the policies. We agree. . . . In Couch On Insurance 2d (Rev. Ed.) Section 63A:293, the author provides the following insight into the issue involved here: `Although a policy of life insurance is not a negotiable instrument, there is authority that a bona fide assignee for value in a life policy who has no notice of latent equities in a third party takes the assignment free and clear of such equities. . . . ' . . . . The situation involved in this appeal is substantially different from that involved in many of the cases relied upon by appellee in which, despite the language of a divorce decree making the insured's ex-spouse the irrevocable beneficiary of a life insurance policy, the insured named, without consideration, a new donee beneficiary on the policy. In those cases, the former spouse has been found to be the superior beneficiary since the later named beneficiary was not a bona fide purchaser or assignee of the policy. The situation involved here is more akin to that in which the later named beneficiary in effect becomes a bona fide purchaser of the policy with rights superior to that of one with even a vested equitable interest. . . . . . . [I]n the instant situation, as the bona fide assignee for value of the life insurance policies in question, appellant Bank has an interest superior to appellee's equitable interest. The Bank's status as a bona fide assignee was made possible by appellee's total inaction in protecting her interest in the policies by either taking possession thereof or by at least timely notifying Liberty National of her claim. Therefore, the Bank is entitled to the proceeds of the two policies in question. 504 So.2d at 1328-30. Cf. Berryman v. Adams, 883 So.2d 214 (Ala.Civ.App.2003) (ruling in favor of the subsequently named beneficiary, who paid for the policy involved therein and who had no knowledge of her husband's obligation under an earlier divorce judgment to maintain life insurance for the benefit of his minor children from a previous marriage). We find the reasoning of Mixon, supra, persuasive, and we adopt that reasoning. A bona fide assignee is analogous to a bona fide purchaser, which this Court has defined as follows: `A bona fide purchaser is one who (1) purchases legal title, (2) in good faith, (3) for adequate consideration, (4) without notice of any claim of interest in the property by any other party. Notice sufficient to preclude a bona fide purchaser may be actual or constructive or may consist of knowledge of facts which would cause a reasonable person to make an inquiry which would reveal the interest of a third party. ' Manning v. Wingo, 577 So.2d 865, 868 (Ala.1991) (emphasis added) (quoting Rolling R Constr., Inc. v. Dodd, 477 So.2d 330, 331-32 (Ala.1985)). As noted, in March 1999, shortly before he purchased the Protective Life policy, Bret told Teresa Carden, a Metro Bank employee who sold insurance for Protective Life, that he needed to purchase a life insurance policy naming Stephen as the beneficiary in order to comply with the terms of the divorce judgment. Carden testified in her deposition that Bret stated that he needed to purchase the life insurance policy to comply with the terms of the divorce judgment, although she contends that Bret did not elaborate on what those terms were. In June 1999, Bret asked Carden to obtain a letter for him from Protective Life showing that Stephen had been designated as a beneficiary on the policy. According to Carden, Bret stated that he needed the letter for the courts. On June 16, 1999, Carden wrote a letter on Metro Bank letterhead regarding Policy PL0640906, requesting the information that Bret had asked her to obtain. The letter is apparently directed to Protective Life, although it does not bear Protective Life's name or address. The letter stated: Please send a statement regarding the $75,000.00 beneficiary designation to Stephen D. Hanner, son.  DO NOT include the $25,000.00 beneficiary designation to wife. This must be furnished to the courts per divorce decree, and other information regarding this policy should not be disclosed. Thank you for your help. Please send to my office and I will deliver. Teresa Carden, Agent On August 30, 1999, Protective Life sent a letter regarding policy no. PL0640906 addressed to Bret Hanner; that letter stated: This letter is in answer to the request made by your agent Teresa Carden. As of this date, if the death benefit became payable, Stephen D. Hanner would be entitled to $75,000.00. Please call if I can be of any further service. The letter is signed by Grace B. Davis, policy service representative, policyholder services, and a copy is shown to Teresa F. Carden. Whether the issue of notice presents a jury question has been considered in the analogous context of determining the time of commencement of the limitations period in a fraud action. That the determination is made on a case-by-case basis is evident from the following quote from McLaughlin v. Pannell Kerr Forster, 504 So.2d 264, 265 (Ala.1987): In State Security Life Insurance Co. v. Henson, 288 Ala. 497, 504, 262 So.2d 745, 751 (1972), this Court wrote: ` Whether, within one year prior to filing suit, plaintiff had knowledge of such facts, or knowledge of facts which would lead a reasonable man to make diligent inquiry which would have enabled plaintiff to discover the fraud alleged . . . was a question for determination by the jury. ' (Emphasis added.) This Court has decided that under certain circumstances the time of the discovery of the fraud or the time the fraud should have been discovered can be determined as a matter of law. In so determining, this Court does not make delphic pronouncements, but has before it either uncontroverted evidence that plaintiffs had such notice[,] Davis v. Davis, 494 So.2d 393 (Ala.1986); Kelly v. Smith, 454 So.2d 1315 (Ala.1984); Retail, Wholesale, & Department Store Employees Union, Local 453 v. McGriff, 398 So.2d 249 (Ala.1981); Moulder v. Chambers, 390 So.2d 1044 (Ala.1980); Seybold v. Magnolia Land Co., 376 So.2d 1083 (Ala.1979), or uncontroverted evidence that a plaintiff, with the ability to read, had in his/her possession a document from which the fraud could have been ascertained by a simple investigation, Colafrancesco v. Crown Pontiac-GMC, Inc., 485 So.2d 1131 (Ala.1986); Cooper Chevrolet, Inc. v. Parker, 494 So.2d 386 (Ala.1985); Gonzales v. U-J Chevrolet Co., [451 So.2d 244 (Ala. 1984)]; Sexton v. Liberty National Life Ins. Co., 405 So.2d 18 (Ala.1981). Although it is undisputed that Metro Bank did not have a copy of the divorce judgment at the time it took from Bret the assignment of the Protective Life policy, Metro Bank, through Carden, had notice that Bret had a son who was a beneficiary under the policy Bret had assigned as collateral for his loan with Metro Bank and that Bret had requested verification of the son's beneficiary status for the courts. Therefore, we deem the question whether Metro Bank had a duty to inquire further into the possibility of another's interest in the policy to be a question of fact for the jury, and we reverse the summary judgment for Metro Bank in the declaratory-judgment action.