Opinion ID: 1903543
Heading Depth: 3
Heading Rank: 2

Heading: Do the terms of the parties' property settlement agreement serve to limit Joan's interest in the life insurance proceeds?

Text: ¶ 24. The chancellor determined that Joan was entitled to the entire $200,000.00 life insurance proceeds and ordered that the $128,000.00 being held in escrow be released to Joan. The Estate argues that Joan was entitled to $164,000.00 in life insurance proceeds less the 23 monthly payments of $4,000.00 in alimony, totaling $92,000.00. Therefore, the Estate's position is that Joan is only entitled to receive $72,000.00 of the insurance proceeds in dispute. The chancellor stated that the contract with the life insurance company designating Joan as beneficiary of the funds was a separate contract with the insurance company. We, however, find that while the lower court is correct in its statement, the conclusion is incorrect. ¶ 25. Divorce alone does not divest one from receiving life insurance proceeds under the former spouse's policy. Davis v. Davis, 301 So.2d 154, 156 (Fla. Dist.Ct.App.1974). The fundamental consideration is the intention of the parties based upon a reasonable construction of the entire settlement agreement. Id. In interpreting the intention of the parties when examining the settlement agreement, this Court, in Newell v. Hinton, 556 So.2d 1037, 1042 (Miss.1990) (citing Roberts v. Roberts, 381 So.2d 1333, 1335 (Miss.1980)), stated: Intent of the parties is crucial in contract interpretation. Of course, it must be understood that the words employed in a contract are by far the best resource for ascertaining intent and assigning meaning with fairness and accuracy. See Holloman v. Holloman, 691 So.2d 897, 899 (Miss.1996). ¶ 26. Property settlement agreements are contractual obligations. Prine v. Prine, 723 So.2d 1236, 1238 (Miss. App.1998). In East, 493 So.2d at 937-32, this Court held that: A true and genuine property settlement agreement is not different from any other contract, and the mere fact that it is between a divorcing husband and wife, and incorporated in a divorce decree, does not change its character. The provisions contained within a property settlement agreement executed prior to a dissolution of marriage, purporting to resolve the parties' property rights, are interpreted by the courts as any other contract. Davis, 301 So.2d at 156. ¶ 27. Property settlement agreements are not only final and binding on the parties while they are alive, but they are also binding in the event of the death of one of the parties. Roberts, 381 So.2d at 1335. ¶ 28. This Court in Roberts, 381 So.2d at 1335, stated: The rules applicable to the construction of written contracts in general are to be applied in construing a postnuptial agreement. Such a contract must be considered as a whole, and from such examination the intent of the parties must be gathered. Such construction should be given the agreement, if possible, as will render all its clauses harmonious, so as to carry into effect the actual purpose and intent of the parties as derived therefrom. The Court has further held that as a general rule of law, contracts bind not only the parties thereto, but a contract also is binding upon their executors or administrators, even if they are not named in the contract. Cox v. Martin, 75 Miss. 229, 21 So. 611, 612 (1897). ¶ 29. In the case sub judice, Joan and Jeff entered into the agreement on June 24, 1997, subsequent to the judgment for divorce. Jeff died on May 18, 1999. The parties' agreement specifically addressed the issue of periodic alimony, which Jeff would pay Joan at the rate of $4,000.00 per month beginning July 1, 1997. The agreement also expressly made provision for the maintenance of life insurance by both parties. It further provided specifically the following condition: III. The first payment shall be due on the first day of July, 1997, and a like amount on the first day of each month thereafter until such time as Wife shall die, remarry or further other of this [C]ourt. ¶ 30. The agreement provided regarding the maintenance of the life insurance policy as follows: III. Husband shall maintain his current policy of life insurance with Wife listed as a named beneficiary thereon for a sum not more than $164,000.00. Provided however, Wife's interest in the life insurance policy shall decrease at the rate $4,000.00 per month beginning July 1, 1997 and a like amount each month thereafter so long as alimony is paid by Husband. Wife shall maintain a policy of life insurance in the sum of $125,000.00 with Husband the named beneficiary. At such time as Wife's prorated interest in Husband's $200,000.00 life insurance policy is reduced to the sum of $125,000.00, then Wife's policy shall likewise be reduced at the rate of $4,000.00 per month with the payment of each alimony payment. Between July 1, 1997, and his death, Jeff paid a total of 23 alimony payments each for $4,000.00, totaling $92,000.00, as required under the parties' agreement. ¶ 31. In reading the agreement as a whole and considering the intention of the parties, we find that Joan and Jeff clearly contracted for $164,000.00 of the life insurance proceeds to be maintained to guarantee a limited amount of alimony to be paid to Joan in the event of Jeff's death. The amount was to be reduced by each subsequent alimony payment made by Jeff. The instrument undisputably manifested the parties' intention to provide a minimum amount of alimony payments to Joan and established a death provision which was tied to the alimony obligation. Joan clearly agreed to these terms. The chancellor erred in allowing Joan to received a windfall. To find otherwise circumvents the express language of the agreement. The chancellor was correct in the determination that the insurance policy was a separate contract, but the lower court inadvertently overlooked the fact that Joan, as a party to the agreement, contracted away her claim to receive more than the remaining $72,000.00 owed to her under the terms of the agreement. [1]