Life Insurance lawyers will run into situations where a life insurance company knows they owe the life insurance proceeds but they are unsure who is entitled to the money. There are many ways this can arise such as a beneficiary isn’t named or the person named as a beneficiary has died, or many other ways. The bottom line is, what is the insurance company supposed to do when they are unsure who is entitled to the life insurance monies.
In 1950 respondent issued a policy of insurance on the life of John V. McFarland, who was about nine years of age at the time. The policy was taken out by his parents, Bernard and Gwendolyn McFarland, the latter of whom is petitioner here. Bernard was named in the policy as primary beneficiary, and petitioner was designated as contingent beneficiary. John married in 1962 and died the following year. His father predeceased him; he was survived by his widow and petitioner. Petitioner brought this suit against respondent to recover the amount due on the policy plus the statutory penalty and attorney’s fees. Respondent interpleaded Mrs. John V. McFarland, admitted liability for the proceeds of the policy, and paid the funds into court. The trial court, sitting without a jury, awarded petitioner the money so deposited but allowed no penalty or attorney’s fee, and the Court of Appeals affirmed. The only question is whether petitioner is entitled to recover such penalty, attorney’s fee and court costs.