Court Opinion

ID: 9559274
Source: CourtListenerOpinion
Date Created: 2023-08-21 17:25:24.652476+00
Date Added: 2024-06-11T09:10:31.861209
License: Public Domain

Chief Justice VOLLACK
dissenting:
The majority holds that section 15-11-803, 6B C.R.S. (1987), does not apply to this case and instead applies common law principles to resolve the issue before us. The majority reverses the court of appeals, holding that the trial court properly relied on a negligence standard in assessing the legality of the respondents’ conduct in disbursing the subject insurance proceeds. I dissent because the majority relies on common law principles to resolve this case. Instead, I would hold that section 15-11-803 applies to the instant case and relieves the respondent insurance companies of any liability to the petitioners. I also dissent because I disagree with the majority affirming the trial court’s application of the negligence standard to the respondents’ conduct in this case.
I.
In 1983, Perry Nelson purchased term life insurance policies from respondents Western States Life Insurance (Western States) and North American Life & Casualty Company (North American Life) (hereinafter referred to jointly as “the insurance companies”). The Western States policy designated the Nelson Family Trust as the primary beneficiary and Perry Nelson’s estate as the contingent beneficiary. The North American policy designated Perry Nelson’s wife, Sharon Nelson, as the primary beneficiary and their two minor children, Perry E. Nelson and Brooke Erin Nelson, as the contingent beneficiaries. These two minor children, along with Perry Nelson’s three children from a previous marriage, are the petitioners.
Perry Nelson disappeared on July 23, 1983, while on a trip to the Denver area from his home near Trinidad, Colorado. His automobile was found in the river alongside the highway in Clear Creek Canyon. At that time, law enforcement officials were unable to find Perry Nelson’s body. Shortly thereafter, the insurance companies jointly engaged Equifax Services to investigate the insured’s disappearance. The investigation focused on a possible disappearance because Perry Nelson’s body was not found. Equifax performed an exhaustive investigation over a period of approximately ten months.
On February 18, 1984, upon petition by Sharon Nelson, the Las Animas District Court issued an order declaring that Perry Nelson died on July 23, 1983. The investigator for Equifax testified that he had doubts regarding Perry Nelson’s death, but these doubts did not rise to the level of what he called a “well-founded suspicion.” Additionally, several facts indicated that Sharon Nelson was not implicated in Perry Nelson’s death, so the insurance companies did not conclude that Sharon Nelson caused her husband’s death.
In August of 1984, approximately thirteen months after his disappearance, Perry Nelson’s body was found. The unanimous opinion of the investigators for the sheriffs department and the coroner’s office was that Perry Nelson had died as the result of an accidental drowning. The sheriffs final case report indicated that there was no suspicion of foul play or of criminal activity with regard to Perry Nelson’s death. The death certificate for Perry Nelson, dated Septem*91ber 18, 1984, also reflected the conclusion that his death was an accident.
Based upon these official records and findings, the insurance companies concluded that Perry Nelson died accidentally, and paid the proceeds of the subject life insurance policies to the designated beneficiary, Sharon Nelson. At no time prior to payment of the insurance proceeds did either North American or Western States receive notice of the petitioners’ competing claims to the insurance proceeds. At the time that the proceeds were paid by the insurers, there was no ongoing police investigation or pending prosecution, and Sharon Nelson had not confessed to or been charged with the murder of Perry Nelson.
Several years later, during an unrelated investigation, Sharon Nelson confessed that she had persuaded her friend to murder her former husband, Perry Nelson. On June 7, 1989, Sharon Nelson pleaded guilty to the murder of Perry Nelson. Sharon Nelson’s conviction occurred six years after the insured’s death and nearly five years after the insurance proceeds had been paid by the insurance companies.
Prior to the trial in this matter, the petitioners recovered a judgment against Sharon Nelson, in a separate proceeding, in the principal amount of $565,000. This judgment included the amount of insurance proceeds previously received by her from the insurance companies. Unfortunately for the petitioners, Sharon Nelson dissipated all of the proceeds prior to confessing to the murder.
The petitioners then brought an action against the respondents to recover the life insurance proceeds that had been paid to Sharon Nelson. The petitioners claimed that the life insurance companies were in breach of contract and were negligent in failing to give them, as contingent beneficiaries, prior notice that the insurance proceeds were to issue and in failing to institute interpleader proceedings. The life insurance companies argued that section 15-11-803(6), 6B C.R.S. (1987), relieves them of any liability to the petitioners because the petitioners failed to give written notice of a prospective claim to the proceeds prior to the time that the proceeds were distributed. The jury found that the life insurance companies were negligent and the trial court entered an award to the petitioners in the amount of $200,000 plus interest.
The life insurance companies then appealed the jury verdicts, again asserting that the petitioners’ noneompliance with the statutory notice requirements relieves the insurance companies of any liability to the petitioners. The court of appeals agreed with the insurance companies, holding that the notice provision of section 15-11-803(6) precludes the petitioners from asserting claims against the respondent insurance companies because the petitioners failed to provide written notice of their prospective claims prior to distribution of the insurance proceeds.
II.
A.
The majority reverses the court of appeals, holding that section 15-11-803, 6B C.R.S. (1987), the so-called “slayer statute,” does not apply to this ease. The majority states that this provision is inapplicable to the ease at bar because “[t]he statutory scheme is limited to disentitlement of named beneficiaries who have been established as perpetrators of specific homicides by the means set forth” in the statute. Maj. op. at 84. I dissent because I would hold that the court of appeals correctly held that section 15 — 11— 803 is applicable.
Section 15-11-803, as a whole, addresses the effect of homicide on intestate succession, wills, joint assets, life insurance, and beneficiary designations. The slayer statute is divided into subsections that specifically address each of the interests which may be affected in the event the beneficiary kills the decedent. In particular, section 15-11-803(3), 6B C.R.S. (1987), provides:
A named beneficiary of a bond, life insurance policy, or other contractual arrangement who kills the principal obligee or the person upon whose life the policy is issued and, as a result thereof, is convicted of, pleads guilty to, or enters a plea of nolo contendere to the crime of murder in the first or second degree ... is not entitled to any benefit under the bond, policy, or oth*92er contractual arrangement, and it becomes payable as though the killer had predeceased the decedent.
This statute is applicable to this case because Colorado precedent has held that the slayer statute preempts the field regarding the circumstances under which a slayer is disqualified from receiving all types of property. Strickland v. Wysowatcky, 128 Colo. 221, 250 P.2d 199 (1952); Smith v. Greenburg, 121 Colo. 417, 218 P.2d 514 (1950). Our courts have always looked to the slayer statute as the exclusive means of disqualifying a slayer from receiving the victim’s property and we have never fashioned a common law rule to void the slayer’s receipt of property from the victim on the grounds of public policy. See, e.g., id. When this court has held the slayer statute to be inapplicable because the particular circumstances of the case were not covered by the statute, we have simply allowed the slayer to receive property from the victim. Id.
For example, in Smith, the version of the slayer statute in force at that time provided that “any person convicted of murder in the first degree or second degree ... shall not take, either by descent, devise, inheritance, or any other manner, any of the estate, real or personal, of [the] deceased.” Smith, 121 Colo. at 422, 218 P.2d at 517 (emphasis added). The Smith court reversed the trial court because the trial court failed to base its ruling on the slayer statute and instead applied a common law rule that “no one shall be permitted to profit by his own wrong.” Id. In Smith, we held that the legislature had already fixed the standards and rules to be applied for disqualifying an heir who causes the death of the intestate, and such legislative standards must be applied. Id.
Contrary to the majority’s assertion, however, the Smith court’s holding was not limited to statutory rules of descent and distribution. Although the specific facts of the Smith ease involved issues of descent and distribution, this court held that the slayer statute, as a whole, fixed the legislative standards for disqualifying slayers from taking property of the deceased by descent, devise, inheritance, or any other manner. Id. at 422-23, 218 P.2d at 517. Our slayer statute now explicitly includes insurance proceeds as one of the means by which slayers are prohibited from taking property, thereby including insurance proceeds in the statute’s preemptive range.
The majority also states that the Smith court “distinguished between the distribution of life insurance proceeds to a beneficiary who has murdered the insured, and killers’ rights to inherit from their victim’s estates.” Maj. op. at 88. In Smith, however, the court simply accepted the parties’ stipulation that where the beneficiary named in a life insurance policy causes the death of the named insured, he is barred from taking any of the proceeds. Smith, 121 Colo. at 421, 218 P.2d at 517. The court then turned to the novel issue of whether a tenant in common who killed the decedent could inherit property held in common with his victim, and held that Colorado’s descent and distribution statutes allowed such a result because the slayer statute did not apply to the facts of this case. Id. at 422-23, 218 P.2d at 517. This does not change the Smith court’s general holding that the slayer statute, as a whole, preempts the field regarding disqualification of slayers from taking property from their victims by descent, devise, inheritance, or any other means.
Similarly, in Strickland, this court reiterated that the legislature has preempted the field regarding disqualification of beneficiaries and has thus displaced the common law. Strickland, 128 Colo. at 224, 250 P.2d at 200-01. We refused to engraft an exception upon the slayer statute merely because the common law forbids a person to take advantage of his own wrong, or because public policy forbids a person from obtaining property by his own crime. Id. We therefore held that a statutory right cannot be defeated by application of a common law principle. Id.; see also Seidlitz v. Eames, 753 P.2d 775, 777 (Colo.App.1987). In Strickland, where the circumstances precluded application of the slayer statute, we again allowed the slayer to gain property from his victim rather than impose common law principles to resolve the case. Strickland, 128 Colo. at 224, 250 P.2d at 200-01.
*93The majority states that Strickland draws a distinction between slayers who attempt to take property from their victims via inheritance, which is preempted by the slayer statute, and slayers who attempt to take property from them victims via insurance proceeds, which is supposedly not preempted by the slayer statute. However, the Strickland court merely distinguished inheritance and insurance proceeds to the extent that, in each case, different amounts are payable to the heir or beneficiary. Id. at 225, 250 P.2d at 201. This distinction does not equate with different applications of the preemptive slayer statute to cases involving insurance proceeds and those involving inheritance. Thus, in accordance with our precedent, we must construe Colorado’s current slayer statute, including its provision for insurance proceeds, as a preemptive statute, just as its predecessor was construed as such.
Our previous holdings that the enactment of the slayer statute preempts the field regarding disqualification of beneficiaries has significant consequences. First, by definition, field preemption results from a judicial determination that the legislation is so comprehensive that it was intended by the legislature to remove an entire subject from regulation by other governmental branches. Evans v. Board of County Comm’rs, 994 F.2d 755, 760 (10th Cir.1993); Frontier Airlines, Inc. v. United Air Lines, Inc., 758 F.Supp. 1399, 1407 (D.Colo.1989). Second, as a consequence of preemption and the doctrine of separation of powers, a court is prohibited from interfering with the legislative branch of government. Colorado State Dep’t of Health v. Geriatrics, 699 P.2d 952, 959 (Colo.1985). Thus, a court is prohibited from adding an important qualification to a statute. Dodge v. Department of Social Servs., 657 P.2d 969, 975 (Colo.App.1982); Estate of Burron, 42 Colo.App. 141, 594 P.2d 1064, 1065 (1979). Questions of public policy are for the legislature, and when that policy is declared, the declaration binds the courts. Smith, 121 Colo. at 427-28, 218 P.2d at 520.
The majority states that section 15-11-803 does not apply because the statute “does not address the issue in this case, in which payment was made before the primary beneficiary’s guilt was established.” Maj. op. at 84. The majority relies on the statutory phrase “becomes payable ...” as meaning that the beneficiary’s guilt must be established before insurance proceeds are paid in order for the statute to apply. However, this phrase merely means that once the beneficiary’s guilt is established, the beneficiary is no longer entitled to receive the insurance proceeds. Thus, the majority improperly adds a qualification to the statute that the beneficiary’s guilt must be adjudicated within a certain time frame. However, precisely because the statute does not dictate the time in which the primary beneficiary’s guilt must be established, we must presume that this preemptive statute applies whenever such guilt is established.
The legislature only restricted section 15-11-803(3) to situations where a beneficiary was convicted of, or pled guilty or nolo con-tendere to, the murder or manslaughter of the policy holder. In this case, the beneficiary did in fact plead guilty to murder of the insured policyholder. The mere fact that Sharon Nelson did not enter her guilty plea until after the insurance companies paid the proceeds to her does not preclude application of the slayer statute to this case. Therefore, the majority improperly imposes a limitation on the time in which a beneficiary’s criminal guilt must be established in order to apply section 15-11-803. In view of the clear precedent holding that the slayer statute is the exclusive means by which beneficiaries are disqualified if they cause the death of the insured, the court of appeals correctly held that the slayer statute applies to this case.
B.
In applying the slayer statute to this case, I would hold that the respondent insurance companies are not liable to the petitioners here because the respondents are insulated from liability by section 15-11-803(6), 6B C.R.S. (1987), which provides:
Any insurance company ... making payment according to the terms of its policy or obligation is not liable by reason of this section unless prior to payment it has received ... written notice of a claim under this section.
*94This provision of the slayer statute grants immunity and releases an insurance company from liability when it pays a claim according to the terms of the policy prior to receiving notice of a competing claim. As the court of appeals stated:
Prior to this case, no Colorado appellate court has addressed this notice provision. However, other jurisdictions which have considered a notice requirement similar to the one at issue here have held that if, as here, the insurers have performed their contracts according to their terms and in accord with the notice provision of the statute, they are “exonerated from further liability thereon and that [plaintiffs], having failed to give timely notice of [their] claim[s] to [insurers], must be relegated to [their] remedy against the named beneficiary who received the proceeds.”
Lundsford v. Western States Life Ins., 872 P.2d 1308, 1311 (Colo.App.1993) (quoting Miller v. Paul Revere Life Ins. Co., 81 Wash.2d 302, 501 P.2d 1063 (1972)).
Because the petitioners failed to provide written notice to the respondents prior to payment of the insurance proceeds to Sharon Nelson, I would affirm the court of appeals’ holding that the notice provision of section 15-11-803(6) precludes the petitioners’ claim against the respondents. In the absence of the notice that is required by section 15 — 11— 803(6), the respondents simply cannot be held liable to the petitioners after the respondents performed the insurance contracts according to their terms by paying the insurance proceeds to the primary beneficiary. Because I believe that section 15-11-803 applies to this case, I would affirm the court of appeals and hold that the insurance companies are relieved from liability to the petitioners.
III.
The majority also holds that “[t]he district court’s reliance on a negligence standard in assessing the legality of the insurers’ conduct was appropriate in view of (1) Colorado common law that killers cannot receive life insurance proceeds from their victims, and (2) insurers’ long-recognized obligation to disburse insurance policy proceeds in a reasonable manner.” Maj. op. at 89. Assuming, arguendo, that common law principles apply, I further dissent because I would hold that the district court erroneously relied on a negligence standard to determine whether the insurance companies acted properly in disbursing the insurance proceeds to Sharon Nelson.
A.
The majority states that, “in the absence of an applicable statute, a killer cannot receive the proceeds of a victim’s life insurance policy.” Maj. op. at 85. To the contrary, our precedents have explicitly held that a beneficiary who is not disqualified pursuant to the express terms of the slayer statute is not disqualified from receiving the benefits of his or her crime. Seidlitz, 753 P.2d at 777; People v. McCormick, 784 P.2d 808, 810 (Colo.App.1989).
Additionally, prior to the enactment of Colorado’s first slayer statute in 1923, the common law did not preclude a murderer from receiving the victim’s property. Smith, 121 Colo. at 422-23, 218 P.2d at 517-18. This followed the majority view at the time that, in the absence of a statute which expressly disqualified the slayer, the slayer could inherit from his or her victim. Smith, 121 Colo. 417, 218 P.2d 514; Wadsworth v. Siek, 23 Ohio Misc. 112, 254 N.E.2d 738 (1970); In Re Duncan’s Estates, 40 Wash.2d 850, 246 P.2d 445 (1952). Thus, if section 15-11-803 does not apply in this case, as the majority holds, then the common law would not disqualify Sharon Nelson from receiving the insurance proceeds from her victim, Perry Nelson. Consequently, the petitioners would have no claim of action against the respondent insurance companies under the facts of this case.
B.
The majority also holds that the respondent insurance companies cannot rely on the immunity and release of liability conferred on them by section 15-11-803(6) because the insurers failed to satisfy certain common law duties. The majority states that, “[i]f an insurer is on notice of facts suggesting that *95the primary beneficiary is not entitled to a disbursement of policy proceeds, the insurer has a duty to make a reasonable inquiry and to withhold payment until its suspicion is dispelled.” Maj. op. at 86.
The majority cites Harper v. Prudential Insurance Co. of America, 233 Kan. 358, 662 P.2d 1264 (1983), for the proposition that “an insurance company is to be relieved from liability only if it paid the proceeds to the primary beneficiary in good faith and without knowledge of facts which may defeat the primary beneficiary’s claim.” Id. at 1274 (emphasis omitted). The Harper court held that the test of good faith required the insurance company to (1) conduct a reasonable prepayment investigation, and (2) not pay the insurance proceeds prematurely, before law enforcement agencies conclude their investigation. Id. at 1273. Our case is distinguishable from Harper because, in Harper, the insurance company’s investigator advised the insurer, with ninety-nine percent certainty, that the beneficiary had killed the insured. Id. at 1274. Moreover, in Harper, law enforcement agencies had not yet completed their investigation of the insured’s death. Id.
In the instant case, the insurance companies paid the proceeds to Sharon Nelson in good faith and without knowledge of facts which may have defeated her claim to the proceeds. The insurance companies conducted a ten-month investigation before they paid Perry Nelson’s insurance benefits to Sharon Nelson. Although the insurance companies had some suspicion regarding Perry Nelson’s death, they had no knowledge that Sharon Nelson caused his death.1 Furthermore, the insurance companies did not pay the proceeds until law enforcement agencies had finished their investigation of Perry Nelson’s death and concluded that he died as a result of an accidental drowning. The respondents based their decision to pay the insurance proceeds to Sharon Nelson on the official determination of cause of death. Perry Nelson’s death was not identified as a murder until several years after the respondents paid the insurance proceeds to the primary beneficiary in accordance with their contract. Thus, the insurance companies did not violate the common law duties delineated by the Harper court.
Additionally, both the Colorado Probate Code and the statutory scheme which regulates insurance companies seek to promote the prompt payment of insurance proceeds. § 15-10-102, 6B C.R.S. (1987); § 10-3-1104(h), 4A C.R.S. (1994). In particular, section 10-3-1104(h) provides that it is an unfair claim practice for an insurance company to not attempt in good faith to effectuate a prompt settlement of claims in which liability has become reasonably clear. Here, the respondent insurance companies properly fulfilled their duty not to make premature payment of insurance proceeds and still make prompt payment of those proceeds. Merely based on hindsight, we cannot impose a higher duty on the respondent insurance companies to further investigate Perry Nelson’s death until they could discover that Sharon Nelson had caused Perry Nelson’s death and was thus disentitled to his insurance proceeds.
The majority also suggests that if insurers suspect that the primary beneficiary is not entitled to policy proceeds, the insurers can protect themselves by interpleading the proceeds. The majority cites Glass v. United States, 506 F.2d 379 (10th Cir.1974), and McDuffie v. Aetna Life Insurance Co., 160 F.Supp. 541 (E.D.Mich.1957), for the proposition that when an insurance company has knowledge of suspicious circumstances, it should interplead the proceeds of the policy. Neither Glass nor McDuffie imposes a common law duty to file an interpleader action. Rather, the courts in Glass and McDuffie recognized that interpleader is a device to protect the insurance company from double *96liability in the absence of any statutory protection. Glass, 506 F.2d at 382; McDuffie, 160 F.Supp. at 544.
However, an interpleader action is not necessary to protect an insurance company paying under a statutory grant of immunity, such as that found in subsection (6) of the Colorado slayer statute. See Metropolitan Life Ins. Co. v. Prater, 508 F.Supp. 667 (E.D.Ky.1981). The Glass and McDuffie cases did not involve slayer statutes and therefore did not consider whether inter-pleader was required in light of a notice requirement similar to section 15-11-803(6). The Colorado slayer statute provides that an insurance company is not subject to any further liability if it pays the insurance proceeds “according to the terms of its policy,” such as by paying the designated beneficiary, prior to receipt of written notice of a competing claim. An interpleader action would be indicated by section 15-11-803(6) only if written notice of a competing claim were actually received prior to payment. An interpleader proceeding thus would be inappropriate for the instant case. Even if the common law were applicable here, I would affirm the court of appeals because the insurance companies fulfilled the common law duty to pay insurance proceeds to the primaiy beneficiary in good faith and without knowledge of facts which may have defeated her claim to the proceeds.
IV.
I dissent because I believe the majority erroneously relies on common law principles to resolve the issues presented before us. Instead, I would hold that section 15-11-803 applies to this case and relieves the respondent insurance companies of any liability to the petitioners. I also dissent because I disagree with the majority affirming the trial court’s application of the negligence standard to the respondent’s conduct in this case. I would therefore affirm the court of appeals.
I am authorized to say that Justice ERICKSON and Justice KOURLIS join in this dissent.

. The majority acknowledges that "the Equifax report contains extensive but highly inconclusive information” casting suspicion on Sharon Nelson for the death of Perry Nelson. Maj. op. at 82 n. 8 (emphasis added). The respondents did not inform law enforcement agencies of this information because the information was not in the sole possession of the respondents. In fact, much of this information was learned from the investigating agencies themselves (i.e., the Las Animas County Sheriff's Department, the Colorado State Patrol, and the Jefferson County Sheriff's Department). Despite the law enforcement agencies’ knowledge of such suspicious information, the agencies concluded that there was no foul play and that Perry Nelson died accidentally.