RENDERED: NOVEMBER 5, 2021; 10:00 A.M.
TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2020-CA-0065-MR
JOHNNY MCCOY AND MICHELLE
MCCOY APPELLANTS
APPEAL FROM MARTIN CIRCUIT COURT
v. HONORABLE JOHN DAVID PRESTON, JUDGE
ACTION NO. 19-CI-00145
JENNIFER LYNN HORN,
EXECUTRIX OF THE ESTATE OF
JACKIE JORDAN APPELLEE
OPINION
AFFIRMING
** ** ** ** **
BEFORE: ACREE, McNEILL, AND L. THOMPSON, JUDGES.
McNEILL, JUDGE: Johnny and Michelle McCoy (“McCoys”) appeal from an
order of the Martin Circuit Court granting summary judgment in favor of Jackie
Jordan1 (“Jordan”), finding the McCoys, who held remainder interests in a home
1
Sadly, Jordan died on December 31, 2019. Jennifer Lynn Horn, Executrix of the Estate of
Jackie Jordan, was substituted as the party-appellee on August 31, 2020.
destroyed by fire, are not entitled to any of the insurance proceeds. Finding no
error, we affirm.
On January 25, 2017, Jordan conveyed a remainder interest in certain
real property, including a home, to the McCoys. However, Jordan retained a life
estate in the real property and continued to live in the home. He purchased an
insurance policy on the home and its contents, paid the premiums, and was the sole
insured. On October 28, 2018, the home was destroyed by fire.
Following the fire, Jordan filed a petition for declaration of rights2 in
Martin Circuit Court arguing he was the sole beneficiary of the insurance proceeds.
The McCoys answered the petition and filed a counterclaim, asserting that, as
remaindermen, they were entitled to a share of the proceeds. Subsequently, both
parties moved for summary judgment on the issue. On December 19, 2019, the
circuit court entered an order granting Jordan’s motion for summary judgment and
denying the McCoys’ motion. This appeal followed.
“The standard of review on appeal of a summary judgment is whether
the trial court correctly found that there were no genuine issues as to any material
fact and that the moving party was entitled to judgment as a matter of law.” Scifres
2
Jordan subsequently filed an amended petition for declaration of rights to correct an error in the
original petition’s caption.
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v. Kraft, 916 S.W.2d 779, 781 (Ky. App. 1996) (citing CR3 56.03). “The record
must be viewed in a light most favorable to the party opposing the motion for
summary judgment and all doubts are to be resolved in his favor.” Steelvest, Inc. v.
Scansteel Service Center, Inc., 807 S.W.2d 476, 480 (Ky. 1991). “Because
summary judgment involves only legal questions and the existence of any disputed
material issues of fact, an appellate court need not defer to the trial court’s decision
and will review the issue de novo.” Lewis v. B & R Corporation, 56 S.W.3d 432,
436 (Ky. App. 2001).
Kentucky follows the majority rule which holds that a “life tenant is
not bound to keep the premises insured for the benefit of the remainder-man. Each
can insure his own interest, but, in the absence of any stipulation or agreement,
neither has any claim upon the proceeds of the other’s policy . . . .” Spalding v.
Miller, 103 Ky. 405, 45 S.W. 462, 464 (1898).4 The reasoning behind this view is
that “[t]he contract of insurance is a personal contract, and inures to the benefit of
the party with whom it is made, and by whom the premiums are paid. It is a
contract of indemnity against loss. The sum paid is in no proper or just sense the
proceeds of the property.” Id. (internal quotation marks and citations omitted).
3
Kentucky Rules of Civil Procedure.
4
Although Spalding is not recent, it appears to still be the law in a majority of jurisdictions and
has not been overruled in Kentucky.
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In contrast, the minority rule holds that based upon the life tenant’s
relationship as an implied or quasi-trustee for the remainderman, “in case of the
total destruction of the insured property, the fund from the insurance policy thereon
is substituted for the property, and the life tenant will be entitled to the interest for
life, and the fund after life tenant’s death will be payable to the remainder-men[.]”
Green v. Green, 50 S.C. 514, 27 S.E. 952, 959 (1897).
For whatever reason, the McCoys’ appellate brief fails to cite the
relevant Kentucky precedent. Instead, they note that, like states holding the
minority view, Kentucky has recognized that a life tenant is a quasi-trustee for the
remainderman, citing Superior Oil Corporation v. Alcorn, 242 Ky. 814, 47 S.W.2d
973, 987 (1930), as modified on denial of reh’g (May 8, 1931) (citation omitted)
(“The vast majority of the courts hold that a life tenant is a trustee for the
remainderman . . . but we think it better to call him a quasi trustee.”).
They point to an exception to the majority rule that a remainderman is
not entitled to the insurance proceeds of a life tenant’s policy, when there is a
fiduciary relationship between the life tenant and the remainderman, and argue this
case falls within the exception because Kentucky courts have recognized that a life
tenant is a quasi-trustee for the remainderman.
The McCoys cite two cases from other jurisdictions, Opha L. Keith
Estate ex rel. Buckland v. Keith, 647 S.E.2d 731 (W. Va. 2007) and Ellerbusch v.
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Myers, 683 N.E.2d 1352 (Ind. Ct. App. 1997), setting forth three recognized
exceptions to the majority rule that a remainderman does not have an interest in
insurance proceeds from the destruction of a life estate: (1) when the instrument
creating the estate expressly provides that the life tenant will insure the property
for the benefit of the remainderman; (2) when the life tenant and the remainderman
agree to this requirement; or (3) if a fiduciary relationship exists between the life
tenant and the remainderman. Buckland, 647 S.E.2d at 735; Ellerbusch, 683
N.E.2d at 1354.
As an initial matter, it does not appear Kentucky has recognized this
exception to the majority rule.5 However, assuming its recognition, the standard
fiduciary relationship that exists between a life estate and a remainderman is not
the type contemplated by the exception. This is clear from the language of the
exception itself: “A life tenant must provide insurance for the benefit of the
remainderman . . . if a fiduciary relationship exists between the life tenant and the
remainderman apart from the incidents of the tenancy.” Ellerbusch, 683 N.E.2d at
1354 (emphasis added). Ellerbusch cited Clark v. Leverett, 159 Ga. 487, 126 S.E.
258, 259 (1924), for this proposition, a case where the life tenant had an express
5
Our highest court recognized the first two above exceptions in Spalding, 45 S.W. at 464 (“In
the absence of anything that requires it in the instrument creating the estate, or of any agreement
to that effect on the part of the life tenant, we think that the life tenant is not bound to keep the
premises insured for the benefit of the remainder-man.”).
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fiduciary obligation as the remainderman’s guardian. Thus, the exception is
premised on a fiduciary obligation beyond that generally associated with being a
life tenant.
The Missouri Supreme Court recognized this distinction in Farmers’
Mutual Fire and Lightning Insurance Company v. Crowley, 354 Mo. 649, 190
S.W.2d 250 (1945), where it found inapplicable the exceptions to the general rule
that a remainderman is not entitled to the insurance proceeds from a policy taken
out by the life tenant for his own benefit. Under similar circumstances to ours, the
Missouri court has said:
In the case at bar, the will of Mary H. Crowley did
not provide that respondent, the life tenant, should insure
the property for the benefit of appellants, the
remaindermen; no agreement by respondent to insure the
property for appellants’ benefit was shown in evidence;
respondent did not stand in any fiduciary relationship to
the remaindermen other than the quasi trustee
relationship of a life tenant; the respondent procured the
contract of insurance in his own name as insured, and
paid the assessments thereafter payable; and appellants
were in no way parties to the contract of insurance.
Id. at 253 (emphasis added).
Like Mary Crowley in Missouri, who owed no independent duties to
her remainderman, Jordan owed no express fiduciary obligation to the McCoys
beyond the quasi-trustee relationship of a life tenant. As such, even if Kentucky
recognized an exception to the majority rule where a fiduciary relationship exists
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between the life tenant and the remainderman apart from the incidents of the
tenancy, it would not be applicable in this case.
Lastly, the McCoys argue that the majority rule is unfair and
“discriminates against the remaindermen who, after a loss, are left with nothing but
a smoldering heap of rubble to clean up.” However, as recognized in Ellerbusch,
683 N.E.2d at 1355, “[d]espite the apparent inequity of the rule, a remainderman
may protect his interest through an agreement with the life tenant that the latter
carry insurance for the remainderman’s benefit” and each party “can insure for
himself.” See also Saunders v. Armstrong, 22 Ky. L. Rptr. 1789, 61 S.W. 700, 700
(1901) (“The owner of the remainder or other interest may also have an insurance
on the same property to protect himself from loss.”).
The McCoys could have entered into an agreement with Jordan to
insure the property for their benefit or obtained insurance on the property
themselves. While they contend they did “everything in their power to obtain
insurance” but were told by Farm Bureau, the company Jordan insured the property
through, that Farm Bureau could not double insure any structure, there is no
evidence the McCoys attempted to insure the property through any other company.
Wherefore, the order of the Martin Circuit Court granting summary
judgment in favor of Jordan is affirmed.
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ALL CONCUR.
BRIEF FOR APPELLANT: BRIEF FOR APPELLEE:
Jaryd H. Crum Eldred E. Adams, Jr.
Paintsville, Kentucky Louisa, Kentucky
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