Life Insurance Company Unsure Who To Pay

Weatherford life insurance attorneys need to know what an insurance company will do when they are unsure who is entitled to life insurance benefits. The answer is that they will file an “interpleader” and notify all people who might have a claim. This was the procedure followed in a 1957 case from the Fort Worth Court of Appeals. The style of the case is Murray v. American National Insurance Company.
American issued a policy on the life of Otis Carl Murray in which his wife, Sarah Lou Murray, was named beneficiary. Otis died on July 24, 1955. Sarah was indicted by the grand jury of Runnels County on August 24, 1955, for the death of her husband.
Sarah, on September 1, 1955, made demand on American for payment of the proceeds of the policy. Proof of death submitted did not reveal the cause of death of the insured. Less than thirty days after demand for payment, American advised Sarah’s attorney it was prepared to pay the amount due under the policy, subject to a valid and satisfactory release of liability, but called attention to the fact it had been put on notice that Sarah was under indictment for the death of her husband, and that if suit were filed American would pay the money into court and resist payment of costs, penalties and attorney’s fees on the ground it had not denied liability. Through the month of September American corresponded with Sarah’s attorney requesting completion of proofs of death.
On October 6, 1955, American wrote Sarah’s attorney, calling attention to Article 21.23 of the Insurance Code, V.A.T.S., (today the statute is found in Texas Insurance Code, Section 1103.151) providing for forfeiture of beneficiary’s interest when the beneficiary is the principal or accomplice in wilfully bringing about the death of the insured. In the same letter, American offered to pay the proceeds jointly to Sarah and the deceased’s nearest relatives.
Sarah’s attorney wrote American on October 10, ‘Without committing myself or my client, * * * I wish to take the liberty of stating that the pending indictment and Article 21.23 of the insurance code, fairly well justifies your position concerning the matter of ultimate tendering of money in Court.’
Sarah filed suit on October 11, 1955, and American, without service, on November 14, filed its answer with a tender of the proceeds due under the policy, and inter-pleaded the next of kin of the insured. The interpleaded parties were served with process but did not answer.
American’s pleadings did not allege that Sarah wilfully or otherwise had any connection with the death of the insured, and on trial of the case no proof was offered that she brought about his death.
After making the above findings, and others not necessary to mention, the court concluded that in view of the indictment against Sarah, American could not, in view of Article 21.23 of the Insurance Code, pay the proceeds of the policy to Sarah without risk of double payment; that American made known its position to Sarah promptly and within thirty days from the date of demand, and Sarah’s attorney acquiesced therein; American never denied liability under its policy but was ready, able and willing at all times to pay the proceeds thereof when it should be determined to whom they should be paid; withholding payment under the circumstances was in good faith, and therefore American was not entitled to recover statutory penalties, interest or attorney’s fees.
Sarah, on six points of error, appealed from that portion of the judgment which denied her statutory penalties and attorney’s fees, taxed her with costs, and allowed attorney’s fees for the interpleader.
The same contentions were made by Sarah in Murray v. Bankers Life Company, and were by this Court overruled. In that case the court held, ‘* * * where the insurer admits liability, but has reasonable grounds for anticipating rival claims, and in good faith declines to pay the named beneficiary, and deposits the money in court to be paid to the rightful person as determined by the court, it is not liable for more than the face amount of the policy.
Since American was in doubt as to whom the proceeds should be paid, in view of the indictment and the provisions of Article 21.23 of the Insurance Code, and promptly made known its position to Sarah, and in good faith interpleaded the next of kin of the insured, it was not liable for statutory penalties and attorney’s fees.