Court Opinion

ID: 9553242
Source: CourtListenerOpinion
Date Created: 2023-08-07 19:26:21.041427+00
Date Added: 2024-06-11T15:30:31.034311
License: Public Domain

JUDGE JONES
dissenting.
The purpose of the Colorado “slayer” statute is plainly to deny to one who kills an insured the benefits which accrue from an insurance policy on the decedent’s life. Section 15-11-803(1), C.R.S. (1987 Repl.Vol. 6B). For the statute to be applicable, the policy beneficiary must plead guilty or be convicted of the killing in a criminal case or must be shown to be the killer by a preponderance of the evidence in a civil case. See § 15 — 11— 803(5), C.R.S. (1987 Repl.Vol. 6B); Smith v. Greenburg, 121 Colo. 417, 218 P.2d 514 (1950) (construing predecessor statute as inapplicable in the absence of murder conviction).
The statute lends itself to easy applicability in the general case in which the principal beneficiary of an insurance policy has obviously killed the insured, and this fact is known prior to payment of the policy proceeds. It is with this kind of assured ease that the majority resolves this case.
However, this case is not the general one. For here, in spite of a ten-month investigation during which nearly 600 pages of interviews and reports were amassed, documenting numerous contradictions in Sharon Nelson’s version of events surrounding the disappearance of the insured, and in spite of the investigator’s suspicions that the insured was murdered, Sharon Nelson, who later confessed to the killing, was neither charged with or convicted of the murder when she was paid the proceeds from the insurance policy.
*1312Under these unique circumstances, I conclude that neither the notice nor general provisions of the statute are applicable and that the trial court rulings are consistent with pertinent common law principles. Hence, I would affirm the judgment.
I.
I disagree with defendants’ contention that the trial court erred in declining to rule that plaintiffs’ claims to the insurance proceeds are barred by operation of the slayer statute notice provision which absolves an insurer of liability for paying insurance proceeds to the killer of its insured unless it receives notice of a competing claim.
Typically, the payment of insurance proceeds is governed by the insurance contract. However, when a designated beneficiary has killed the insured, the Colorado Probate Code, § 15-11-803, C.R.S. (1987 Repl.Vol. 6B), referred to as the “slayer statute,” governs the distribution of insurance proceeds. Under the statute, a designated beneficiary of an insurance contract who is convicted of, pleads guilty to, enters a plea of nolo conten-dere to, or is found by a preponderance of the evidence in a civil action as having committed first or second degree murder or manslaughter, is barred from collecting any of the proceeds resulting from the victim’s death, including insurance proceeds. Sections 15-11-803(1) and (5), C.R.S. (1987 Repl. Vol. 6B); Bernstein v. Rosenthal, 671 P.2d 979 (Colo.App.1983). See Smith v. Greenburg, supra (applying the similar predecessor statute).
The slayer statute also includes a notice provision which provides, in relevant part, as follows:
Any insurance company, bank, or other obligor 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 at its home office or principal address written notice of a claim under this section.
Section 15-11-803(6), C.R.S. (1987 Repl.Vol. 6B) (emphasis added).
Defendants argue that the notice provision was triggered when they made payment to Sharon Nelson according to the terms of their insurance policies and that, pursuant to this provision, plaintiffs’ failure to provide notice of their “competing” claims prior to payment precludes their further liability for payment. This is a correct interpretation of the notice provision whenever the general provisions of the slayer statute have been triggered, but it does not apply to the circumstances here.
It is presumed that an entire statute is meant to be effective, § 2-4-201(l)(b), C.R.S. (1980 Repl.Vol. IB), and, as previously observed, the general provisions of the statute are not triggered until the designated beneficiary has either been convicted of, pleads guilty to, enters a plea of nolo contendere, or is found by a preponderance of the evidence in a civil action as having committed first or second degree murder or manslaughter. See Strickland v. Wysowatcky, 128 Colo. 221, 250 P.2d 199 (1952); Smith v. Greenburg, supra; Bernstein v. Rosenthal, supra. Thus, absent one of these specified findings in a judicial proceeding, the provisions of the slayer statute are not triggered and the notice provision cannot be operative.
Here, the finding of guilt, conviction, or commission of murder necessary to trigger the slayer statute was not, and could not have been, present when defendants paid the designated beneficiary of the insurance policy. Thus, I would conclude that neither the general provisions of the slayer statute nor the notice provision was operative, and defendants are not relieved of liability for payment by operation of § 15-11-803(6). See Shrader v. Equitable Life Assurance Society, 20 Ohio St.3d 41, 485 N.E.2d 1031 (Ohio 1985).
Accordingly, I disagree with the majority that the trial court erred in declining to rule that plaintiffs claims to the insurance proceeds are barred pursuant to the notice provisions of the slayer statute.
II.
I further disagree with defendants’ assertion that the trial court erred in allowing the jury to determine whether they had acted negligently in paying the designated benefi*1313ciary according to the terms of their insurance policies.
A number of jurisdictions that have enacted “slayer” statutes similar to Colorado’s have interpreted them as extensions of the common law rule that no person should benefit from his or her own wrongful conduct. Hence, it has been held that judicial application of this common law rule may be appropriate when the statutory provisions have not been triggered. See Harper v. Prudential Insurance Co., 233 Kan. 358, 662 P.2d 1264 (1983); Shrader v. Equitable Life Assurance Society, supra; State Mutual Life Assurance Co. v. Hampton, 696 P.2d 1027 (Okl.1985). This common law principle has been recognized in Colorado. See In re Estate of Walker, 847 P.2d 162 (Colo.App.1992); Bernstein v. Rosenthal, supra (one who has brought about the death of another may not benefit from that conduct).
I would adopt this view, and, applying this principle here, when the provisions of the slayer statute had not yet been triggered, I conclude that defendants’ actions are governed by common law principles that would have been supplanted by the statute had it been triggered. See § 15-10-103, C.R.S. (1987 Repl.Vol. 6B) (unless displaced by the particular provisions of the Colorado Probate Code, the principles of law and equity supplement its provisions).
Specifically, the question here is whether, given their knowledge of facts that could foreseeably result in the policy beneficiary benefiting from her own wrongful conduct, defendants had an independent common law duty to act in good faith in paying their beneficiary’s claim, rather than merely inter-pleading the policy proceeds.
Here, in ruling that it was a question of fact as to whether defendants acted negligently in paying the proceeds of their policies to the designated beneficiary under the facts and circumstances known to them, the trial court relied upon the common law principles set forth in the aforementioned eases. I conclude that the trial court acted properly in doing so. Accordingly, I would hold that it did not err in allowing the jury to determine whether defendants had acted negligently in reliance upon these principles.
III.
' Defendants further contend that the trial court erred in ruling that their knowledge of the suspicious circumstances surrounding the death of their insured and the policies’ beneficiary gave rise to a duty to interplead the policy proceeds into the court in order to afford them protection from liability for double payment. I perceive no error by the trial court in this regard.
In my view, when, as here, a slayer statute has not yet been triggered by the guilt or conviction of a designated beneficiary, common law principles of negligence may supplant the statutory provisions. See § 15-10-103, C.R.S. (1987 Repl.Vol. 6B); Harper v. Prudential Insurance Co., supra. Hence, the notice provision of the slayer statute would not affect an insurer’s institution of an interpleader action.
An independent duty to act in good faith in paying a beneficiary’s claim was recognized in Weed v. Equitable Life Assurance Society, 288 F.2d 463 (5th Cir.1961), cert. denied, 368 U.S. 821, 82 S.Ct. 40, 7 L.Ed.2d 27 (1961), wherein the liability of an insurance company for payment to a contingent beneficiary was held to be governed by the rule that payment in good faith to a beneficiary of record by an insurance company without knowledge of facts vitiating the claim will prevent a second recovery by another claimant.
This principle was applied in Harper v. Prudential Insurance Co., supra, wherein the court recognized an insurer’s duty of good faith to conduct a pre-payment investigation when the insurer was aware of suspicious circumstances involving the designated beneficiary and the death of the insured. The court held that an insurer may be held liable for payments to a beneficiary when it had notice and knowledge of-facts which might have defeated the beneficiary’s claim and it nevertheless made such payments without bringing an interpleader action so as to afford the contingent beneficiary or the insured’s estate an opportunity to protect its interest.
In reaching its holding, the Harper court relied upon Glass v. United States, 506 F.2d *1314379 (10th Cir.1974). In Glass, the U.S. Court of Appeals for the Tenth Circuit concluded that a government insurer had “negligently and erroneously paid the entire proceeds” of a life insurance policy to a beneficiary whom it knew had been indicted for the murder of its insured. Glass v. United States, supra, at 382. In so holding, the court relied on the fact that the insurer could have filed an interpleader action, “which is specifically designed for these cases,” and which would have afforded the contingent beneficiaries an opportunity to voice their objection to payment of the primary beneficiary. Glass v. United States, supra, at 383. See also McDuffie v. Aetna Life Insurance Co., 160 F.Supp. 541 (E.D.Mich.1957) (insurer had notice that there was sufficient cloud on beneficiary’s right to policy proceeds to give rise to claim of contingent beneficiary, and insurer could have protected itself by statutory inter-pleader proceeding).
Additionally, several jurisdictions have recognized the duty to act in good faith in paying a beneficiary’s claim as, in some circumstances, including an obligation to inter-plead insurance policy proceeds even absent an indictment or conviction of the primary beneficiary because it may still be established, in a civil proceeding, that the beneficiary has feloniously caused the death of the insured, thereby barring the beneficiary from collecting the insurance proceeds. See McDuffie v. Aetna Life Insurance Co., supra; Shrader v. Equitable Life Assurance Society, supra; Harper v. Prudential Insurance Co., supra; United Farm Bureau Family Life Insurance Co. v. Fultz, 176 Ind.App. 217, 375 N.E.2d 601 (1978).
Whether an insurer has breached its duty to act in good faith in paying the proceeds of an insurance policy without conducting a prepayment investigation when the insurer was aware of suspicious circumstances concerning the beneficiary and the death of the insured is a question of fact. In re Estate of Thompson, 99 Ill.App.3d 303, 55 Ill.Dec. 217, 426 N.E.2d 1 (1981). Likewise, I would conclude that whether an insurer has breached its duty to act in good faith in paying the proceeds of an insurance policy without instituting an interpleader action is a question for the jury.
Accordingly, I would hold that the trial court did not err in ruling that defendants’ knowledge of the suspicious circumstances surrounding the death of their policies’ beneficiary gave rise to a duty to interplead the policy proceeds into the court to afford them protection from double liability for payment of the proceeds.
IV.
Defendants raise certain procedural issues on appeal which I would also resolve in favor of plaintiffs.
A.
As to defendants’ contention that the trial court erred in instructing the jury as to the notice requirements of the slayer statute, while I do not agree with plaintiffs assertion that the instruction was a correct statement of the law, I perceive no reversible error.
The trial court’s instruction to the jurors regarding the slayer statute sets forth the language of § 15-11-803(6) and provides, in relevant part, as follows:
The notice requirements of this statute are not absolute. An insurance company under this statute cannot avoid liability simply because a beneficiary failed to provide written notice, if, under all circumstances, the beneficiaries were reasonable in failing to give notice.
Because the notice provision of the slayer statute was not triggered here, the trial court properly should have instructed the jurors as to the parties’ obligations under the common law. However, in instructing the jurors that the notice provisions are not absolute, the trial court essentially allowed the jurors to disregard the notice provision, thereby allowing them appropriately to consider the common law negligence principles operational here and as to which the jurors were instructed.
Accordingly, I would conclude that the trial court’s error in instructing the jurors in this regard did not affect a substantial right of defendants and does not, therefore, rise to *1315the level of reversible error. See C.R.C.P. 61.
B.
Defendants also contend that the trial court erred in refusing to instruct the jury as to the definition of a term employed in a statute submitted for the jurors’ consideration. Plaintiffs respond that defendants’ tendered instruction was an incorrect statement of the law and that the trial court, therefore, did not err in rejecting the tendered instruction. I agree with plaintiffs.
The trial court instructed the jury regarding the duty to report a crime pursuant to § 18-8-115, C.R.S. (1986 Repl.Vol. 8B) by reproducing the statute for the jurors’ consideration. Defendants tendered an instruction for the purpose of defining “reasonable grounds,” as incorporated in the statute, as follows:
It is the duty of every corporation or person who has reasonable grounds to believe that a crime has been committed to report promptly the suspected crime to law enforcement authorities, (emphasis added)
Defendants’ tendered instruction equated the legal definition of “reasonable grounds” with the definition of probable cause to arrest, as defined in People v. Nanes, 174 Colo. 294, 483 P.2d 958 (1971). “Probable cause” is not the legal equivalent of “reasonable grounds.” See, e.g., People v. Rahming, 795 P.2d 1338 (Colo.1990) (reasonable suspicion to conduct investigative stop lesser standard than probable cause to arrest).
Thus, because defendant’s tendered instruction contained an incorrect statement of law, the trial court did not err in refusing to present it to the jury.
C.
Finally, I perceive no reversible error as to defendants’ contention that the trial court erred in denying their motion for a new trial because of statements made by plaintiffs’ counsel regarding defendants’ assets.
During cross-examination, plaintiffs’ counsel asked the witness whether one of the defendants had “approximately a billion dollars of assets in 1984.” Defense counsel immediately objected and moved for a mistrial on the grounds that § 13-21-102(6), C.R.S. (1987 Repl.Vol. 6A) precludes the introduction of evidence of a defendant’s financial status in any civil action in which exemplary damages may be awarded.
Recognizing the potential of the question “for significant prejudicial effect,” the trial court, nevertheless, denied the motion for mistrial, but ruled that it would instruct the jury that it is not permitted to reach a verdict based on sympathy or prejudice. Also, upon the jurors’ return to the courtroom, the trial court instructed them to disregard both the question and answer and that evidence of income or net worth of a party are not to be considered in determining the appropriateness or amount of damages.
In ruling on a motion for mistrial engendered by counsel’s improper statement, a court has discretion to consider the context in which the statement was made and whether it involved an appeal to passion or prejudice. Celebrities Bowling, Inc. v. Shattuck, 160 Colo. 102, 414 P.2d 657 (1966). Hence, this court may consider whether the statement was made more than once and whether the trial court issued an immediate curative .instruction which ameliorated the statement’s damage. See Vigil v. Industrial Claim Appeals Office, 841 P.2d 335 (Colo.App.1992).
Here, the objectionable language was part of a leading question during cross-examination. The witness did not respond, and the trial court immediately instructed the jury to disregard the statement and also later explained why the statement should be disregarded. Moreover, the statement was not made in the course of an inflammatory argument such as would adduce passion or prejudice, see National Surety Co. v. Morlan, 91 Colo. 164, 13 P.2d 260 (1932), and the jury did not award any exemplary damages. See § 13-21-102(6), C.R.S. (1987 Repl.Vol. 6A). Thus, I would conclude that the defendants were not prejudiced by the language of the leading question.
Given these circumstances, and the context in which the language by counsel was used, I would conclude that the trial court did not *1316abuse its discretion in not declaring a mistrial.
Accordingly, I would affirm the judgment of the trial court. Such affirmance would render plaintiffs’ cross-appeal moot.