J.C. Penney Life Ins. Co. v. Heinrich, 32 S.W.3d 280 (Tex. App.—San Antonio 2000, pet. denied).
Insured named his “spouse” as the beneficiary of his life insurance
policy. When Insured died, Insurer paid the proceeds to Cohabitant who
brought forth evidence of a common law marriage. Later, however, Common
Law Wife (CLW) demanded the proceeds. The trial court found ample
evidence to support the claim of common law marriage, including the fact
that a divorce action was pending in which both Insured and CLW admit to
being married to each other. Accordingly, the court awarded the proceeds
to CLW along with statutory damages, prejudgment interest, attorney’s
fees, and court costs.
The appellate court affirmed after deleting prejudgment interest on the
statutory damages and modifying the award of appellate attorney’s fees.
Insurer did not contest the trial court’s finding that Insured and CLW
were married. Instead, Insurer advanced a variety of arguments. First,
Insurer claimed that paying the proceeds to Cohabitant acted as a
discharge under Texas Insurance Code art. 3.48 because the payment was
in good faith. The court rejected this argument because the named
beneficiary, that is, Insured’s “spouse,” was not paid. The good faith
defense only operates when the named beneficiary actually receives the
proceeds.
Second, the court rejected Insurer’s assertion that CLW was estopped to
claim the proceeds because she knew Cohabitant was claiming to be
Insured’s spouse prior to the time Insured paid Cohabitant. CLW did not
know, however, about the insurance policy and thus estoppel could not
apply.
Third, the court held that Texas Family Code § 1.91, which requires a
common law marriage to be proved no later than one year after the
relationship ends, did not bar CLW’s claim. CLW filed her divorce
petition within one year of when CLW and Insured stopped living
together. An attempt to establish a common law marriage is implicit in
filing a divorce action from the alleged common law spouse.
Moral: An insured should designate a spouse by name, rather than a
generic reference, unless the insured actually intends the proceeds to
pass to whomever happens to be insured’s spouse at the time of insured’s
death.