Eschler v. Eschler

No. 91-483
IN THE SUPREME COURT OF THE STATE OF MONTMA

BURKE A. ESCHLER, LORI L. ESCHLER
and JAM1 G . ESCHLER, individually
and as Co-Personal Representatives
of the ESTATE OF JAMES P. ESCHLER,
Deceased,
and
SHARON L. ILLE,
Plaintiffs and Appellants,
-v-
JANET ETHEL ESCHLER and MUTUAL BENEFIT
LIFE INSURANCE COMPANY, a New Jersey
corporation,
Defendants and Respondents.

APPEAL FROM: District court of the Thirteenth Judicial District,
In and for the County of Yellowstone,
The Honorable G Todd Baugh and Maurice Colberg,
.
Judges presiding.

COUNSEL OF RECORD:
For Appellant:
Allen D. Gunderson, Todd D. Gunderson, Gunderson Law
Firm, Billings, Montana, for Sharon L Ille: Jerome
.
J. Cate, Cate Law Firm, Whitefish, Montana for Burke
A. Eschler, Lori L. Eschler and Jami G. Eschler
For Respondent:
Donald L. Harris, Steven R Milch, Crowley, Baughey,
.
Hanson, Toole & Dietrich, Billings, Montana, for
Janet E. Eschler

Submitted on Briefs: November 12, 1992
Decided: March 26, 1993
Filed:
 stice R. 6, McDonough delivered the Opinion of the Court.

This is an appeal from the Thirteenth Judicial District Court,
County of Yellowstone, of two orders
the Defendant. We affirm-
The sole issue on appeal is whether the District Courts erred
in granting s ry judgments in favor of the Defendant Janet
Eschler {Defendantj.
Janet and James Eschler (Eschler) were divorced in August of
1989 after approximately 16 years of marriage. Although there were
no children born of this marriage, James Eschler had three children
from a previous marriage. At the time of his death, October 2,
1383, James Eschler was engaged to be married to Sharon Ille
(Ille).
Defendant was the named beneficiary of three of Eschler's life
insurance policies at the time of his death. Two policies were
issued by Minnesota Mutual Life Insurance Company (Minnesota
Mutual), one dated January 1, 1980 for the amount of $50,000 and
one dated December 1, 1983 for the amount of $100,000. In 1986, he
purchased a $75,000 life insurance policy from Mutual Benefit Life
(Mutual Life).
Shortly before Eschler and Defendant's dissolution was final,
Eschler requested a change of beneficiary form for his two
Minnesota Hutual insurance policies and t n company forwarded the
ie
required forms. The forms were sent with specific instructions
which stated in part:
Here is the Change of BenefFeia which you recently
2
 requested for the above numbered policy. Please
complete, date, and sign this form and return all copies
in the envelope provided,,, en %he form is received in
our office, it will be endorsed and a copy will be
returned to you for attachment to the above numbered
policy,
Eschler filled out part of the Po B providing for change of
beneficiary. He wrote the names of his children as the new
beneficiary under the $50,000 policy and the name of his fiance&,
Sharon Ille, as the primary beneficiaryvand his three children as
contingent beneficiaries on the $100,000 olicy, However, Eschler
did not provide the required addresses and social security numbers
of the new beneficiaries nor did he sign or date the forms. They
were never mailed to Minnesota Mutual. These forms were found
among Eschlersspersonal effects after his death.
On August 7 , 1989, Eschler purchased a new life insurance
policy from Mutual Benefit for $100,000 naming Ille, his fiancee as
the primary beneficiary and his children as contingent
beneficiaries. On August 8, 1989, Eschler increased the amount of
the policy to $250,000 and this change became effective on
September 14, 1989. On September 21, 1989, he changed the
beneficiary designation. Ille was to receive forty percent of the
proceeds of the $250,000 and each of his children was to receive
twenty percent of the total proceeds.
Eschler made no changes on his other Mutual Benefit policy,
which named Janet Eschler the beneficiary of the policy for
$95,060. However, he did not make the premium pa ent due on this
policy on August of 1989.
Eschlergs death from suiefde on October 2, 1989 lef
3
payment on these four insurance policies somewhat open to
Mutual Benefit did not pay on the $250,000 policy because of a
suicide exclusion clause. Ille and the Eschler children dispute
the c l a i ~
that Janet s ~ h i e ris e baneficia the remainin
three insurance policies,
nk is proper i
the record discloses no genuine issues of material fact, and the
moving party is entitled to judgment as a natter of l w '
a.* Kaseta
v N. Western Agency of Gr. Falls (1992), 252 Mont. 135, 138, 827
.
P.2d 804, 806. "[Olur standard of review relating to conclusions
of law.. .is whether the tribunal's interpretation of the law is
correct." Steer Inc. v Dept. of Revenue (1990), 245 Mont. 470,
.

Ille and the Eschler children make three arguments as to why
they are the beneficiaries of the insurance policies which remain
valid. First, they assert the property settlement agreement,
incorporated into the decree at the dissolution sf Defendant and
Eschlerls marriage, terminated Defendant's rights as the
beneficiary of the life insurance policies. Second, they argue
that the fact that Eschler filled in the names of the new
beneficiaries on the change of beneficiary forms, evidenced an
intent by Eschler sufficient to change the beneficiary of the two
liiinnesota Hutual insurance policies. Third, 111e and the Esrshler
children argue that when Eschler purchased the $75,000 Mutual Life
insurance policy, he actually designated himself, the owner as the
beneficiary, and not Defendant. If he was the designated
beneficiary, the proceeds sf the policy would pass through his
estate to llle and the Eschler children.
Plaintiffs contend that the trial courts were premature in
g r a n t i n g au at in favor e f endant bec

proparty settlement agreement gives rise to a question of material
fact on the issue of who is the rightful beneficiary. They claim
that Soha u. West (1981), 196 Plent. 95, 637 P.2d 1185, establishes
the rule of law that a general property settlement agreement gives
rise to this question of material fact.
In , Frederick Soha and Cynthia West were married and
lived together as husband and wife for 79 days. They separated
shortly thereafter and executed a property settlement and
separation agreement which was later incorporated into their decree
of dissolution. The agreement contained a mutual release that
stated:
In consideration of the execution of this agreement, and
the terms and conditions thereof, each party hereto
releases and forever discharges the other party, his or
her personal representative, and assigns from any and all
right, claims, demands and obligations except as herein
specifically provided and each party is forever barred
from having or asserting any such right, chiat, demana
or obligation at any time hereafter for any purpose...
Soha
r 637 P.2d at 1189. The settlement agreement contains a full
disclosure provision which states:
Each of the parties hereto represents and warrants
to the other as an integral part of this agreement that
there has been a full disclosure of assets between
parties.
Soha
-I 637 P.2d at 1187. Frederick Soha never told his wife about
the life insurance policy nor did he tell her that she was the
primary beneficiary,
Several months later, Frederick Soha die in an accident,
leaving behind the life insurance policy naming Cynthia West as the
arents as conti
beneficiaries, This Court, in reversing the trial court" grant of
ent for Cynthia West, dete ined that the "intent s

the decedent as to the effect sf t e policy beneficia designation
in the light of the property settlement agreementa is a question of
fact. w, 637 P.2d at 1187. The Court also stated that
Frederick's failure to reveal the presence of the insurance policy
may have been a breach of the full disclosure provision.
Therefore, the Court concluded that the trial court needed to
conduct further proceedings to determine the nature and extent of
the parties* consents to the property settlement agreement.
The present case differs from w in three minor respects.
First, the Sohas lived together as husband and wife for only 79
days whereas the Eschlers were married for 16 m. Second,
Cynthia West was unaware of an insurance policy naming her as the
beneficiary but Janet Eschler was fully aware of the three
insurance policies naming her as primary beneficiary.
The third difference is the mutual release clauses in the two
settlement agreements. The Sohas had a very general property
settlement agreement with a general mutual release clause. The
only specific asset listed was the house Frederick Soha purchased
before he married Cynthia.
Janet and James Eschler had a very detailed property
settlement agreement, plus the general release clauses. The
agreement contains an itemized division of real property,
automobiles, retirement accounts, debt liability and articles of

The following are the eneral release clauses:
5 . Waiver of Pr hts. A f l
money received by the es pursuant he
the separate property of the respective parties, free and
clear of any right, interest, or elaila of the other
party, and each party shall have the right to deal with,
and dispose of, his or her separate property, both real
and personal, as fully and effectively as if the parties
had never been married.
6 . Waiver of Support Rights. Except as expressly
provided in Paragraph 3 of this Agreement, each party
shall be fully released by the other from any obligation
for alimony, support, maintenance, attorney's fees, or
court costs, and each party accepts the provisions herein
in full satisfaction sf all property rights and all
obligations for support or otherwise arising out of the
marital relationship of the parties. Each party, except
with respect to payments accruing hereunder, hereby
releases the other party and his or her respective legal
representatives, successors, and assigns, from any claim
of any kind, and specifically relinquishes any right,
title, or interest in or to any earnings, accumulations,
future investments, money, or property of the other
party.
7. Waiver of Rights to Estate, Etc. Except as set
forth herein, @ach of the parties waives all rights of
inheritance in the estate of the other, any right to
elect to take against the Will of the other, and the
right to act as executor or administrator of the Will or
estate of the other party. The Wife expressly waives the
right to claim or receive family allowance from the
estate of the Husband. Each of the parties waives any
additional rights which such party has, or may have, by
reason of their marriage, including rights of dower or
curtesy, except the rights saved or created by the terms
of this Agreement.
. , *
9. Hutual Release and Division of Debts. In
consiaeration of the execution of this Agreement ancl
other terms and conditions thereof, each of the parties
hereto releases and forever discharges the other party,
his or her personal repre ves and assigns, from any
and all rights, claims, , and obligations, except
 as herein specifically provided; and each party is
forever barred from having or asserting any such rights,
s, or obliga any time for any
purpose, It is hereby agreed that the personal
obligations hereinabove set forth and the personal
obligations hereinafter incurred by the parties shall. be
and remain their respective obligations,
shall pay and hold the other free and ha
obligations or bills for merchandise or se
sequent to date of Decree.
...
15. Entire Agreement. The parties hereto
understand and agree that this written ligre
represents the entire agreement between the Wife and
Husband; and further, that there are no promises,
agreements, understandings, or representations of any
kind other than those contained herein.
Although there were conflicting affidavits from both parties
concerning Eschler's intent in signing the property settlement,
there is no mention anywhere in the settlement agreement about any
insurance or any of the insurance policies, even though both
parties knew the policies to be assets BE the marriage. In bath
this case and m, there is no mention of insurance assets.
The parties have also put forward positions relative to the
effect of a property settlement agreement on a beneficiary
designation as discussed in Sowell v, Teachers' Retirement System
(19841, 214 Hont. 290, 693 P.2d 1222, although the action ~0nCerned

teacher retirement benefits. The decedent's widow brought an
action to declare her rights under retirement and death benefits
for an account initiated by the decedent when he was married to his
first wife. The Court concluded that the decedent's ex-wife should
receive his retirement benefits because she was nominated by a
written designation filed with the retirement board. This
conclusion was reached even though she and the decedent executed a
property settlement agreement.
The Court noted tha the general release la age in the
agreement did not l'specifically cover Carolyn's inchoate right to
re event," Sowell,
693 P.2& st 1224- The Court distinguished because, although
the release language was similar in both property settlement
agreements, the teacher retirement benefits were to be pai
according to a specific statute, which provided that the benefits
be paid to the estate or the beneficiary designated by the
retirement and death benefit application. The Court also noted
that Mr. Sowell had done nothing to indicate an intent to change
the beneficiary designation.
The present issue is whether Defendant contracted away her
interest as beneficiary om Eschler's life insurance poiicies when
she entered into the property settlement agreement. Girard v.
Pardun (S.D. 1982), 318 N.W.2d 137. Girard cites the general rule
in such cases:
In conseqblence of the fact that ordinarily divorce
does not affect the right of the named beneficiary, it
follows that where the husbanc? does not change the
beneficiary of his policy after having been divorced, the
divorced wife is entitled to the proceeds of the policy
upon the death of the insured.
The divorced wife may, however, have surrendered her
right as beneficiary by a property settlement agreement,
which may or may not have been incorporated into the
decree of divorce. For example, a divorce decree
the husband all insurance policies
on his life divested the wife of any interest she might
have as a beneficiary under a policy conceded to be
cornunity property. Likewise, where the property
settlement agreement contemplated a disposition of all
property rights and other matters and soecifically
described a life policy in which the wife was beneficiary
and stated that the husband was to receive the policies
 free and clear of any claims of the wife thereto, the
wife waived and relinquished all right to the insurance
proceeds of the policy in which she was beneficiary and
that divestment was complete when the agreement was
executed and incorporated into the divorce decree,
notwithstanding that at the time of the insured's death
as still the
'..
Moreover, while a settlfment agreement may require the
beneficiary wife to surrender or 'turn over' the policy
to the insured, that fact alone does not destroy her
right as beneficiary where the insured thereafter did not
change her designation as beneficiary.
Whether a property settlement agreement should be
deemed to bar the divorced wife is a question of the
construction of the acgreeinent itself. Where there is no
provision that the effecting of the settlement agreement
should deprive her of her rights as named beneficiary and
she in fact remains named as beneficiary, the settlement
agreement will not be siven a broader scope than its
express terms specify and she will not be barred from her
right as the named beneficiary.
Girard, 318 N.W.2d at 138-139. (Emphasis in original.) (Citation
oroitted.) The Girard Court continued,

The agreement does not contain a renunciation of her
expectancy in the policy and, absent such a specific
disclaimer, we will not construe the agreement so as to
include a renunciation of her right to take as
beneficiary under the policy. It is not the duty of the
court to make new contracts for the parties, but merely
to interpret the one as written, The agreement has no
application to the policy itself.
Girard, 318 N.W.2d at 139. (Emphasis in original.) (Citation
omitted. )
Defendant here claims that the property settlement agreement
did not divest her of her right to the proceeds of the policies.
We agree with the Defendant. As the District Court stated: @&No
specific mention is made in the settlement agreement of any life
insurance of either of the parties or beneficiary designations
related to life insurance policies." We agree with the logic in
Girard and conclude that a mutual release, which does not mention
insurance, in a property settlement agreement, does not divest a
former spouse of the right to the proceeds of insurance policies

policy. As in Sowell, the Defendant did not relinquish her
*fiinchoate
right to acquire property upon the happening of a future

A cogent statement of the policy reasons for this conclusion
is contained in Nunn v. Equitable Life Assur. Society, Etc. (N.D.
1979), 272 N.W.2d 780, which states:
The plaintiff ia in this case arguing that in effect
the person entitled to the proceeds of the policy is
whoever the decedent intended it to be, even if not the
named beneficiary. It requires little imagination to
envision the mischief that would be caused by the
adoption of such a rule. Disputes among friends,
relatives, and heirs of the decedent would be a regular
occurrence. Insurance companies presumably invariably
deposit the proceeds in court because they could not rely
on their records. The adoption of such a rule, in the
long run, would be detrimental to the administration of
justice, just as it would be if permitted in the case of
wills or land transfers.
It should also be observed that we are not dealing
here with a situation in which the decedent did anything
within his power to effectuate his intention. The
proble~was caused by the decedent* s ow. carelessness.
It would have been a simple matter for him to determine
who was, in fact, the beneficiary of the policy. The
result may be unfortunate, but that condition alone no
more furnishes justification for the Court to intervene
than it would in the case of errors of judgment or
frustrated expectations in the case of contracts
generally.
m, 272 N.W.2d at 781-782. ( hasis in original.f We find
these reasons apply to the present action as well.
& ,
&g is expressly overruled on this point. See also;
Prudential Ins. Co. v. Weatherford (Or. l98O), 621 P.2d 83; Nichols
v, Nichols (Texas 1987): 727 S,W,Z& 3 0 3 ,
Plaintiffs8 second contention is that the fact that Eschler
filled in the names of the new beneficiaries on the change of
s for the Piinnesots; Nutua
intent sufficient to change the beneficiaries on the two policies,
The view taken by the majority of courts is that a
change of beneficiary can be effected without complete
compliance with the provisions of the policy regarding
notice and endorsement. The courts upholding this view
accept substantial compliance as a sufficient standard
for detemining whe er a valid change sf beilefieia~y has
been effected....The test to establish whether
substantial compliance has been satisfied has two prongs:
There must be evidence that (1) the insured had
determined to change the beneficiary, and (2) that the
insured had done everything to the best of his ability to
effect the change.
IDS Life Ins. Co. v. Estate of Groshsng (Idaho IN$?), 736 P.2d
1301, 1303 (citations omitted). See also Bell v. Criviansky
(1934), 98 Mont. 109, 37 P.2d 673.

In m, the Court concluded that the insured had
substantially complied with the provisions of the policy to change
the beneficiary designation on his insurance policy when he had
requested the forms from the insurance company but fell seriously
ill and died of a brain tumor before he could complete and return
the change of beneficiary form. In concluding that he had changed
the beneficiary designation, the Court stated:
We think the true rule is that, if the insured has
pursued the course pointed out by the laws of the
association and has done all in his power, under the
facts and circumstances of the case, to change the
beneficiary, but before the new certificate is actually
issued or the change of beneficiary is indorsed on the
old, he dies, a court of equity will decree that to be
done which ought to be done, and act as though the
certificate had been issued or the indorsement made.
m, 37 P,261 at 678, See also: Prudential. Ins, 60, of
Cooper (D, Idaho 1987), 666 F , upp, 190, 192; Bergen v. Travelers
Ins. Co. of Illinois (Utah App. 1989), 776 P.2d 659, 663; IDS Life
I n s , 60, v, Estate s f Gros ?), 736 E"2d 1301, 13

Manhattan Life Insurance Company v, Barnes (9th Cir. 1972), 452

Eschlarnsactions do not evidence a sufficient deta
to change the beneficiary designation, or that he substantially
complied with the requirements to change the designation.
Eschler had the change of beneficiary forms in his possession
for approximately 6 months. There was no evidence that he was
unable to complete the forms and return them to the company unlike
the insured in u We
. conclude that Eschler did not do
everything he could have done to change the beneficiaries.
Plaintiffs1 final argument concerns the $75,000 policy for
which plaintiffs believe the estate is the beneficiary. Section 8
of the application form requests a beneficiary designation. The
potential insured may choose the owner of the policy as beneficiary
or m y fill in the blank immediately below ta name the beneficiary.
Also, the applicant may mark an "XI1 in the box next to choice 1,
the owner, or the second choice, the blank space filled in by the
applicant. In Eschler's case, he filled in the following in the
blank space: "Janet Eschler, wife, if living, if not surviving
children share alike." (This was handwritten by insurance agent
Mr. Solie as he recorded Eschlerls answers at the time of the
application.)
 However, there is an nXpg in box 1 next to the designation,
e ownerBB,
but no 19X58 next to Eschiargshandwri ten designation
of Defendant as the primary beneficiary. Defendant provided the
affidavit of Robert Solie, t f r m 1 i t a Benefit who
Puul
sold the policy to Eschler i ain the presence sf the
igPX9n
box 1. He states that Eschler wished to name his wife Janet
Eschler, as the primary beneficiary, and his children as contingent
beneficiaries. In addition, the K marked in box 1 of the
beneficiary designation (for "the ownerm) is a clerical error made
by Mr. Solie. Eschler did not ask that he be made the beneficiary
of the policy nor were the proceeds to go to his estate.
In motions for summary judgment, if the moving party shows the
absence of genuine factual issues, the nran-moving party must set
forth facts dewonstratilng tnat a genuine issue exists. Grenz v.
Medical Management Northwest (1991), 250 Mont. 58, 62, 817 P.2d
1151, 1154. Defendant brought forth evidence in the form of Mr.
Solie's affidavit, to prove that Defendant was the intended
beneficiary of the $75,000 l I t a Benefit policy.
vuul The burden then
shifted to the plaintiffs to demonstrate that a genuine issue
existed concerning the beneficiary of the policy. However, the
plaintiffs brought forth no evidence to counter Defendant's
contention and summary judgment was appropriately granted on this
issue,
The District Court orders granting Janet Eschlerlsmotions for
summary judgment are affirmed. AFFI
 March 26, 1993

CERTIFICATE OF SERVICE

I hereby certify that the following order was sent by United States mail, prepaid, to the
following named:

Jerome J. Cate
Cate Law Firm
P.O. Box 3274
Billings, h4T 59103-3274

AUen D. Gunderson
Gunderson Law Firm
P. 0. Box 926
Billings, MT 59103

Brent R. Cromley
Moulton, Bellingham, Longo & Mather
1900 Sheraton Plaza, P.O. Box 2559
Billings, MT 59103-2559

Donald L. Hams and Steven R. Milch
Crowley, Haughey, Hanson, Toole & Dietrich
P.O. Box 2529
Billings, h5T 53103-2523

Don M. Hayes
Hemdon, Hartman, Sweeney & Halverson
P.O. Box 80270
Billings, MT 59108-0270

ED SMITH
CLERK OF THE SUPREE,ME
COLJT
S T A q OF MONTANA
I