Torrez v. Winn-Dixie Stores, Inc., 118 S.W. 3d 817 (Tex. App.—Fort Worth 2003, pet. dism'd).
Employer purchased a life insurance policy on Employee naming itself
as the beneficiary. When Employee died in 1996, Employer collected the
proceeds of the policy. Executor of Employee’s estate gained knowledge
of this policy in December 2001 and filed suit approximately three
months later claiming that Employer did not have an insurable interest
in Employee’s life and thus requested that the court impose a
constructive trust on the proceeds. Employer argued that Executor’s
claim was barred by limitations and the trial court agreed.
The appellate court reversed and remanded for a trial on the merits. The
court agreed with Executor’s assertion that the statute of limitations
was tolled until Executor discovered the existence of the policy because
the policy was inherently undiscoverable. The court rejected Employer’s
claim that Executor had a duty to ask Employer whether it had purchased
a life insurance policy on Employee’s life. Accordingly, the trial
court’s granting of a summary judgment was improper because Executor
filed suit within a few months of the policy’s discovery.
Moral: Many employers purchase life insurance policies on employees.
Unless the employee qualifies as a key employee whose death would cause
a financial hardship to the employer, the employer lacks an insurable
interest and thus the employee’s estate would have a claim to the
proceeds. Thus, a personal representative should check with the
deceased’s employers, both present and past, to ascertain the existence
of such a policy.