Other Matters

Life Insurance

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.