Opinion ID: 1724862
Heading Depth: 1
Heading Rank: 2

Heading: Effect of divorce.

Text: Trial court's reliance on the divorce of Pauline V. and James Lynch as a basis for its ruling involved two concepts: 1) she ceased to be a dependent and therefore was excluded by the language of § 411.2, supra, and 2) she no longer had an insurable interest in Lynch's life as required by § 411.6(9) (shall be paid    to his estate or to such person having an insurable interest in his life as he shall have nominated by written designation   .) Referring now to the first concept, supra, trial court in its conclusions adopted the administrator's interpretation of § 411.2, The Code. In division I, above, we have already stated our reasons for not accepting that interpretation. What we there said controls disposition of this subsumed issue. Nowhere in chapter 411 is the word dependent defined. Finding as we do the statute does not require persons who may receive accumulated contributions to be dependents, we do not reach the question whether a person receiving alimony is a dependent of a person paying alimony. See, however, Trammel v. Brotherhood of Locomotive Firemen, 126 Mont. 400, 403, 253 P.2d 329, 331 (1953); Rose v. Brotherhood of Locomotive Firemen & Enginemen, 80 Colo. 344, 352, 251 P. 537, 540 (1926). In the case before us the surviving spouse and children are receiving the pension provided by § 411.6(9)(b). Had the legislature intended the § 411.6(9)(a) accumulated contributions would in every event pass to the same beneficiaries it surely would have employed the same precise language. We next consider the second concept underlying trial court's rationale the divorce precludes Pauline from receiving the benefit: the legal termination of the marriage in some way terminated her status as a person having an insurable interest in his life. The words insurable interest are undefined in chapter 411. Obviously the reference to insurance compels us to turn to insurance law for precedent. One need not be a dependent to have an insurable interest in the life of another; a pecuniary interest is sufficient. If one has a reasonable expectation of advantage in the continuation of another's life, an insurable interest exists. Conn. Mutual Life Ins. Co. v. Schaefer, 94 U.S. 457, 24 L.Ed. 251 (1877), 2 Appleman, Insurance Law and Practice § 762, p. 119 (1966) [hereinafter cited as Appleman]; 44 C.J.S., Insurance § 203a, p. 904. It follows a creditor has an insurable interest in the life of his debtor. Reilly v. Penn. Mut. Life Ins. Co. of Philadelphia, 201 Iowa 555, 558-559, 207 N.W. 583, 584 (1926). Under these rules, it is plain a divorced wife receiving alimony, as a creditor and as one having an advantage in the continued life of her former husband, has an insurable interest in his life. Even where alimony is not involved, the life insurance rule in most jurisdictions, including Iowa, holds a spouse named beneficiary, and designated as such in a policy when issued, will be deemed the beneficiary of the policy even though subsequently divorced from the insured. See Davis v. Travelers Insurance Company, 196 N.W.2d 526 (Iowa 1972); Edgington v. Equitable Life Assur. Soc., 236 Iowa 903, 907, 20 N.W.2d 411, 413 (1945); Schmidt v. Hauer, 139 Iowa 531, 533, 111 N.W. 966, 967 (1907); White v. Brotherhood of American Yeomen, 124 Iowa 293, 295, 99 N.W. 1071, 1072 (1904); Appleman, supra, § 804, pp. 250-269; 44 Am.Jur.2d, Insurance § 1740, pp. 650-653; 46 C.J.S., Insurance § 1160, pp. 43-46. We have carefully examined the authorities collected and cited by the administrator. A few turn on court-made rules which stand in stark contrast to the great weight of authority. See Williams v. Williams, 262 S.W.2d 111, 112 (Tex.Civ.App.1953), articulating a principle applied mainly in Texas. Still others proceed on statute or policy provisions specifying the relationship required in order to receive payment of death benefits. See United Mut. Life Ins. Co. v. Ward, 201 Minn. 70, 73, 275 N.W. 422, 423 (1937); Smith v. Travelers' Protective Ass'n, 319 Mo. 1120, 1124, 6 S.W.2d 870, 871 (1928). In Kentucky a peculiar divorce restoration-of-property statute permits the result contended for by this administrator. Warren v. Spurlock's Adm'r., 292 Ky. 668, 669, 167 S.W.2d 858, 859 (1943). And in Michigan a specific statute provides unless the rights of the wife to the insurance proceeds are determined in the divorce decree the policy shall thereupon become and be payable to the estate of the husband or to such named beneficiary as he shall affirmatively designate   . See Minnesota Mut. Life Ins. Co. v. Hendrick, 316 Mich. 253, 256, 25 N.W.2d 189, 191 (1946). None of these decisions is persuasive here. Finally, we have examined the provisions of the divorce decree to determine if it controlled the rights of Pauline V. Lynch in the accumulated contributions. Specific provisions governed disposition of the real estate, household furniture and fixtures. The final sentence provided That each of the parties hereto shall have the title to and possession of their own personal belongings. There is no mention of retirement or death benefits or any language of relinquishment or waiver of statutory right, or rights as designated beneficiary, in any death benefits. Lynch unquestionably had a property interest in his accumulated contributions, including the right to change designated beneficiary. Pauline V. Lynch at time of the divorce maintained an insurable interest in Lynch's life and a contingent interest in his accumulated contributions as his then designated beneficiary. Construing the above quoted language of the divorce decree to its greatest permissible reach, it only insured the remaining personal property interests of the respective parties would continue unchanged. See Simmons v. Simmons, 272 S.W.2d 913, 916 (Tex.Civ.App.1954).