TAMMY MICHELE ADAMS
Plaintiff,
v
.
JEFFERSON-PILOT LIFE INSURANCE COMPANY, CHARLES ERIC ADAMS, APRIL
ADAMS GARDIN, and KELLY ADAMS HONEYCUTT
Defendants.
Adams, Hendon, Carson, Crow & Saenger, P.A. by George Ward
Hendon for plaintiff-appellee.
Morris, York, Williams, Surles & Barringer, L.L.P. by Gregory
C. York and Keith B. Nichols for Jefferson-Pilot Life
Insurance Company.
Floyd & Jacobs, L.L.P. by Robert V. Shaver, Jr. for defendant-
appellants Charles Eric Adams, April Adams Gardin, and Kelly
Adams Honeycutt.
BIGGS, Judge.
Charles Edward Adams (Adams) died on 25 November 1999, in
possession of a $300,000 life insurance policy. This appeal arises
from a dispute over who is the rightful beneficiary of this policy.
Adams's children, Charles Eric Adams, April Adams Gardin, and Kelly
Adams Honeycutt (defendants), appeal from a summary judgment order
entered in favor of Adams's second wife, Tammy Michele Adams
(plaintiff). We affirm the trial court.
The facts are as follows: In 1983, Adams purchased a $100,000
life insurance policy with Jefferson-Pilot Life Insurance Company(Jefferson-Pilot), naming Jacqueline Adams, to whom he was then
married, as the beneficiary. In 1988, he increased the policy's
value to $300,000. In 1997, following his divorce from Jacqueline,
Adams executed a change of beneficiary which designated defendants
as primary beneficiaries. In 1999, after marrying plaintiff, Adams
executed another change of beneficiary, and named plaintiff as the
primary beneficiary.
To accomplish the 1999 change of beneficiary, Adams contacted
Rebecca Lytle (Lytle), an agent of Jefferson-Pilot. Adams and
Lytle met at a local restaurant owned by plaintiff, where Lytle
provided Adams with a Jefferson-Pilot form for change of
beneficiary. Adams read the form, signed it in the presence of
Lytle and four restaurant employees, and then returned the form to
Lytle. Lytle later testified that this completed Adam's
responsibilities with regard to effecting a change of beneficiary.
Jefferson-Pilot's usual practice is for the insurance agent to
deliver the completed change of beneficiary form to the office
administrator of the local branch office. The administrator
forwards the form to the company's home office in Greensboro, where
it is endorsed and filed in the company's permanent records. In
this case, when Lytle submitted Adams's completed form to her
branch office, the office administrator pointed out that Lytle had
used a form which, in addition to changing the beneficiary, also
stated that the settlement would be paid in installments unless
otherwise indicated. This was an official Jefferson-Pilot form,
approved for use by the company; thus, it could have been filedimmediately with the home office. However, the office
administrator suggested that Lytle might call Adams, and confirm
that he had intended the default settlement payout option as
indicated on the change of beneficiary form. Lytle called Adams
several times during the following three weeks, but did not reach
him. Lytle and Adams had no further communication, and when Adams
died on 25 November 1999, Lytle still had not mailed the form to
the home office. The form was sent to the home office after
Adams's death.
On 26 January 2000, plaintiff filed a complaint against
Jefferson-Pilot and defendants, seeking to recover the proceeds of
the life insurance policy. On 3 April 2000, defendants filed an
answer, counterclaim, and cross claim, asserting that they were the
rightful beneficiaries of the life insurance policy. Plaintiff
amended her complaint on 2 May 2000, and added a claim of
negligence against Jefferson-Pilot. Both parties also filed
summary judgment motions, each claiming to be the rightful
beneficiary as a matter of law.
The trial court entered summary judgment in favor of plaintiff
on 19 September 2000. Its order stated that:
[T]his Judgment determines that the October
27, 1999, Change of Beneficiary was effective
to name Plaintiff as the beneficiary of the
insurance policy on the life of Charles Edward
Adams issued by Defendant Jefferson-Pilot Life
Insurance Company which is the subject of this
action[.]
Defendants appealed from this order on 10 October 2000. Defendant
Jefferson-Pilot did not appeal, and has filed a brief in support of
plaintiff's position.
Defendants argue that the trial court erred by granting
summary judgment in favor of plaintiff. Summary judgment is
appropriate if "the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any
material fact and that any party is entitled to a judgment as a
matter of law." N.C.G.S. § 1A-1, Rule 56(c) (1999). “An issue is
material if the facts alleged would constitute a legal defense, or
would affect the result of the action, or if its resolution would
prevent the party against whom it is resolved from prevailing in
the action." Koontz v. City of Winston-Salem, 280 N.C. 513, 518,
186 S.E.2d 897, 901 (1972). “[T]he party moving for summary
judgment has the burden of establishing the lack of any triable
issue of fact." Pembee Mfg. Corp. v. Cape Fear Constr. Co., 313
N.C. 488, 491, 329 S.E.2d 350, 353 (1985). Furthermore, “the
evidence presented by the parties must be viewed in the light most
favorable to the non-movant." Bruce-Terminix Co. v. Zurich Ins.
Co., 130 N.C. App. 729, 733, 504 S.E.2d 574, 577 (1998).
Therefore, on appeal:
[i]t is well established that the standard of
review of the grant of a motion for summary
judgment requires a two-part analysis of
whether, '(1) the pleadings, depositions,
answers to interrogatories, and admissions on
file, together with the affidavits, show thatthere is no genuine issue as to any material
fact; and (2) the moving party is entitled to
judgment as a matter of law.'
Von Viczay v. Thoms, 140 N.C. App. 737, 738, 538 S.E.2d 629, 630
(2000), aff'd, 353 N.C. 445, 545 S.E.2d 210 (2001) (citations
omitted).
We first examine whether the record presents genuine issues of
material fact. Both parties moved for summary judgment on the
issue of their respective claims to the proceeds of Adams's life
insurance policy. Each party based its claim upon the same
sequence of events: Adams's 1997 designation of defendants as
beneficiaries; Adams's 1999 execution of a change of beneficiary
form naming plaintiff; and Lytle's failure to send the form to
Jefferson Pilot's home office before Adams's death. Neither party
has challenged the accuracy or authenticity of the documents
establishing the occurrence of these events. Although the parties
disagree on the legal significance of the established facts, the
facts themselves are not in dispute. Consequently, we conclude
that “there is no genuine issue as to any material fact”
surrounding the trial court's summary judgment order.
We next consider whether the trial court correctly determined
that plaintiff “is entitled to a judgment as a matter of law." In
the instant case, defendants do not dispute that Adams desired to
change beneficiaries, nor that he signed a Jefferson-Pilot form
intended to memorialize this change. However, defendants contend
that they are the rightful beneficiaries of Adams's life insurance
policy because, although Adams executed a change of beneficiaryform, it was not received by Jefferson-Pilot's home office prior to
Adams's death. We disagree with this contention.
A beneficiary's interest vests upon the death of the insured.
Fertilizer Co. v. Godley, 204 N.C. 243, 167 S.E. 816 (1933); Smith
v. Principal Mut. Life Ins. Co., 131 N.C. App. 138, 505 S.E.2d 586
(1998), cert. denied, 350 N.C. 99, 533 S.E.2d 470 (1999).
Defendants argue that their interest in the policy vested when
Adams died, notwithstanding Adams's attempted change of
beneficiary. In support of their position, defendants cite
language in the policy stating that “t]he Beneficiary may be
changed by written request satisfactory to the Company filed at its
home office. Any change will take effect on the date of the
written request if the Insured is alive at that time.”
Defendants first contend that the phrase “alive at that time”
can only refer to the date on which the home office endorses the
request for change of beneficiary, and that because Adams was not
alive on the date that Jefferson Pilot endorsed and filed the form,
the change of beneficiary did not take effect on the date of
Adams's written request. Defendants argue that “any Insured is
always alive at the time of signing such a form.” However, this
argument assumes that the insured is also the policy's owner, which
is not always the case. See Fidelity Bankers Life Ins. Co. v.
Dortch, 318 N.C. 378, 348 S.E.2d 794 (1986) (insured lacked
authority to designate change of beneficiary where policy was owned
by bank, not by insured). Defendant cites no authority for thisCourt to alter the plain meaning of the disputed language and we
find no such authority. Thus we conclude that the change of
beneficiary is given effect on the date that the policy owner
completes and signs a Jefferson Pilot change of beneficiary form,
provided that the insured is alive on the date of the written
request. In this case, Adams was both the owner and the insured,
and clearly was alive at the time he executed the change of
beneficiary form. Therefore, this policy language supports giving
effect to the change of beneficiary as of the date he signed the
Jefferson Pilot form provided by Lytle.
Defendants also point to language in the change of beneficiary
form stating that a change is “effected by recordation by the
Company in its Home Office.” They contend that Lytle's failure to
send the completed form to the home office prevented the company
from executing the filing and recordation procedures for a change
of beneficiary before Adams's death. They argue that the company's
delay in completing the administrative procedures associated with
such a change defeated Adams's efforts to change the beneficiary.
The resolution of this issue requires our consideration of the
equitable doctrine of “substantial compliance.” This doctrine has
evolved over time to address situations such as the present one, in
which an insured completes a change of beneficiary form, only to
die before recordation and filing of the document is completed.
The doctrine of substantial compliance has been expressed thusly:
It is now considered that an insurance company
may make reasonable rules and regulations by
which the insured may change the beneficiary
named in the policy. . . . [I]f the insuredhas done substantially what is required of
him, or what he is able to do, to effect a
change of beneficiary, and all that remains to
be done are ministerial acts of the
association, the change will take effect,
though the formal details are not completed
before the death of the insured. It must be
understood, however, that some affirmative act
on the part of the insured to change the
beneficiary is required, as his mere
unexecuted intention will not suffice to work
such a change.
Teague v. Insurance Co., 200 N.C. 450, 455-456, 157 S.E. 421, 424
(1931) (quoting Wooten v. Odd Fellows, 176 N.C. 52, 96 S.E. 654
(1918)).
Several criteria must be met before the doctrine of
substantial compliance is applicable. First, only the owner of a
life insurance policy may change the beneficiary. See Fidelity
Bankers Life Ins. Co. v. Dortch, 318 N.C. 378, 348 S.E.2d 794
(1986) (insured lacked authority to designate change of beneficiary
where policy was owned by bank). Secondly, the insured must
himself take affirmative steps to effect a change of beneficiary,
and may not rely solely on the efforts of others. Suarez v. Food
Lion, Inc., 100 N.C. App. 700, 398 S.E.2d 60 (1990) (change of
beneficiary not accomplished where insured's wife signs form,
rather than the insured).
Additionally, the attempt to change beneficiary must comply in
significant measure with the company's procedures. This may be
accomplished by an insured who has “expressed a clear, unequivocal
intent to change the beneficiary” and “performed every act in hispower to perform.” Sudan Temple v. Umphlett, 246 N.C. 555, 558, 99
S.E.2d 791, 793 (1957) (where insured has done all he can do,
attempted change is given effect despite insurer's failure to
follow their own rules regarding change of beneficiary). See also
Wooten v. Order of Odd Fellows, 176 N.C. 52, 96 S.E. 654 (1918)
(insured has substantially complied with change of beneficiary
requirements where he submits form to insurer, who then discovers
that policy has been lost but does not issue duplicate policy until
after insured's death); English v. English, 34 N.C. App. 193, 237
S.E.2d 555, disc. review denied, 293 N.C. 740, 241 S.E.2d 513
(1977) (where group life insurance policy requires “written notice”
for change of beneficiary, insured sufficiently complies by
indicating in writing his desire to effect a change, although he
died before completing an official change of beneficiary form).
The insured has substantially complied with change of
beneficiary requirements if “all that remains to be done are
ministerial acts[.]” Teague v. Insurance Co., 200 N.C. 450, 456,
157 S.E. 421, 424 (1931). “Where the law prescribes and defines a
duty with such certainty as to leave nothing to the exercise of
judgment or discretion the act is ministerial[.]” Midgette v.
Pate, 94 N.C. App. 498, 503, 380 S.E.2d 572, 576 (1989) See also
Black's Law Dictionary 996 (6th ed. 1990) (defining a 'ministerial
act' as “[t]hat which involves obedience to instructions, but
demands no special discretion, judgment, or skill”). In theinstant case, after Adams returned the completed change of
beneficiary form to Lytle, it only remained for office
administrators to complete the filing and endorsement of the change
of beneficiary form. There is no evidence that any discretionary
decisions were involved in these administrative procedures. We
conclude that only ministerial acts remained in order to finalize
Adams's change of beneficiary.
Defendants have argued that the extent of Adams's knowledge
regarding the procedures for a change of beneficiary form to be
recorded in the home office creates a material issue of fact
regarding Adams's substantial compliance with the requirements for
a change of beneficiary. We find no merit in this contention, as
Adams' knowledge of company procedures has no bearing on the
question of whether he has complied with his own responsibilities
in the matter.
Additional criteria are: (1) that the insured must communicate
his wish to change beneficiaries to the insurance company; and (2)
that he must do so prior to his death. The required communication
with the insurance company may be accomplished by the insured's
communication with an agent for the company. Norburn v. Mackie,
262 N.C. 16, 24, 136 S.E.2d 279, 285 (1964) (“principal is
chargeable with, and bound by, the knowledge of or notice to his
agent received while the agent is acting as such within the scope
of his authority”); Jay Group Ltd. v. Glasgow, 139 N.C. App. 595,
534 S.E.2d 233, disc. review denied, 353 N.C. 265, 546 S.E.2d 100 (2000) (knowledge of agent or president of corporation imputed to
corporation itself). In addition, the insured's communication with
the insurance company or with its agent regarding his intent to
change beneficiaries must occur prior to his death. Daughtry v.
McLamb, 132 N.C. App. 380, 383, 512 S.E.2d 91, 92 (1999) (“When no
attempt is made during the decedent's lifetime to change the
beneficiary, the named beneficiary has acquired vested rights to
the policy benefits”).
Defendants cite Smith v. Principal Mut. Life Ins. Co., 131
N.C. App. 138, 505 S.E.2d 586 (1998), in support of their claim to
the proceeds of Adams's life insurance policy, arguing that the
trial court's summary judgment order “directly contravenes the
controlling authority of [Smith.]” We disagree. Defendants
correctly cite Smith for the proposition that “substantial
compliance can only be applied to those changes attempted during
the insured's lifetime, before the original beneficiary's interest
vests.” Smith at 140, 505 S.E.2d at 588. However, a key factual
difference distinguishes the present case from Smith. In Smith the
insured never submitted a change of beneficiary form to the insurer
during his lifetime. Instead, after his death, his mother
“submitted to [insurer] a change of beneficiary form purportedly
executed by the decedent prior to his death.” Id. at 139, 505
S.E.2d at 586. In contrast, Adams completed, signed, and delivered
to the company's agent a change of beneficiary form while alive.
Thus, his change of beneficiary was “attempted during the insured'slifetime.” Therefore, we conclude that Smith supports plaintiff's
position, rather than that of defendants, and thus that defendants'
reliance is misplaced.
Teague v. Insurance Co., 200 N.C. 450, 157 S.E. 421 (1931), on
the other hand, presents a fact situation analogous to the instant
case. In Teague, the insured held a life insurance policy whose
terms provided that the insured could change the designated
beneficiary by submission of notice in writing to the company, with
the change to be effective “only when endorsed hereon by the
company.” The insured submitted written documents changing the
beneficiary of his life insurance policy, and these documents were
forwarded from the local agency to the home office. However, they
were neither received by the home office, nor endorsed by the
company, before the insured's death. The North Carolina Supreme
Court held that there had been substantial compliance by the
insured, and that the change of beneficiary would be given effect.
To summarize, before the doctrine of substantial compliance
may be applied, the policy owner must himself take affirmative
steps to change the beneficiary, must substantially fulfill the
actions required on his part to accomplish the change, must
communicate these efforts to an agent of the insurer, and must do
so in his lifetime.
We conclude that Adams, the policy owner, delivered a
completed and signed change of beneficiary form to an insurance
agent during his lifetime. We further conclude that there wasnothing further that Adams might do to accomplish a change of
beneficiary, and that the acts remaining to finalize the change
were ministerial. Accordingly, we hold that Adams substantially
complied with the procedural requirements for change of
beneficiary, and that Adams's change of beneficiary should be given
effect.
For the reasons discussed above, we hold that the trial court
did not err in its grant of summary judgment in favor of the
plaintiff, and, accordingly, we affirm the trial court's order
awarding summary judgment in her favor.
Affirmed.
Judges MCGEE and TIMMONS-GOODSON concur.
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