United Farm Bureau Family Life Insurance v. Fultz

DISSENTING OPINION

Lowdermilk, J.

After carefully studying the majority opinion I find that it is necessary for me to dissent to that part of the majority opinion which precluded Chris’ recovery of punitive damages.

When an insured person dies, the insurance company has a duty to pay, within a reasonable time, the proceeds of the policy to the proper beneficiary or to seek interpleader where the proper beneficiary cannot be safely ascertained. In the case at bar Farm Bureau did neither. Farm Bureau, fully knowing that the money belonged to someone else, kept possession of the proceeds of the policy, an amount in excess of $20,000, and used that money for its own benefit until such was tendered to the clerk of the court in March, 1974. Farm Bureau knew that Chris’ murder trial would be a protracted affair and that it would probably take several months before judgment could be rendered. It also knew that even if Chris was convicted of wrongfully and intentionally killing Robert in a criminal trial, it still would have been possible for her to recover the proceeds in the event that the jury in a civil trial had found that she did not wrongfully and intentionally kill Robert.1 Farm Bureau also knew that Chris’ acquittal in the criminal trial was not determinative of her right to recover the proceeds of the policy.2

*236Therefore since Farm Bureau knew the outcome of Chris’ criminal trial would have had no determinative effect upon her right to recover the proceeds of the insurance policy, the jury could have reasonably inferred that Farm Bureau intended to keep the proceeds, which it knew belonged to someone else, for its own use until Chris or Robert’s estate sued Farm Bureau to obtain the proceeds. Although Farm Bureau assets that it had intended to file an interpleader action in early 1974, the jury could have reasonably inferred from Farm Bureau’s dilatory conduct that Farm Bureau did not intend to seek interpleader until after one of the claimants had brought suit against Farm Bureau.

In light of Farm Bureau’s long delay in seeking interpleader (July, 1973 to March, 1974), a delay which Farm Bureau obviously knew worked to its benefit and to the true beneficiary’s detriment, we cannot say that the trial court erred in allowing the jury to weigh the evidence and determine whether or not such evidence constituted fraudulent and oppressive conduct on the part of Farm Bureau. The jury was the trier of fact. Evidence, based upon the theory of punitive damages contained in Chris’ amended complaint, was presented to the jury. As the trier of fact the jury weighed the evidence, judged the credibility of the witnesses and concluded that Farm Bureau’s conduct was oppressive and not in good faith.

As an appellate court, we cannot weigh the evidence or judge the credibility of witnesses. See Monumental Life Insurance Company v. Hakey (1976), 171 Ind. App. 56, 354 N.E.2d 333. If there is any evidence from which an inference can reasonably be drawn to support the verdict, it is our duty to affirm. See Monumental Life Insurance Company v. Hakey, supra.

It can be observed that: Chris filed a complaint seeking to recover the proceeds of the policy, alleging bad faith and fraudulent and oppressive conduct on the part of Farm Bureau, and seeking punitive damages. The evidence at trial showed that Chris was tried and acquitted for the murder of Robert. Farm Bureau neither paid the life insurance proceeds to Chris, the primary beneficiary, nor sought interpleader when it was apparent that the deserving beneficiary could not be ascertained without litigation or agreement, but rather retained the amount of the proceeds for its own use for more than seven *237months after Robert’s death and sought interpleader only after Chris brought suit against Farm Bureau. Farm Bureau could easily have removed itself from future litigation in this matter by seeking interpleader as soon as it became apparent that competing claims for the proceeds were likely to arise. Farm Bureau’s delay in seeking interpleader was purposeless, except that it gave Farm Bureau extended use of the proceeds. With the evidence being in conflict it was a question of fact to be determined by the jury whether Farm Bureau’s dilatory conduct amounted to fraudulent, oppressive, or bad faith conduct. The jury, having been properly instructed on the issue of punitive damages, determined that Farm Bureau was guilty of fraudulent or oppressive conduct or bad faith and that under the facts of this case an assessment of punitive damages was proper.

In light of the evidence and reasonable inferences which can be drawn therefrom, it cannot be said, as a matter of law, that the evidence was insufficient to support the verdict concerning punitive damages or that the court erred in overruling Farm Bureau’s motion for judgment on the evidence.

The majority opinion stands for the proposition that where the primary beneficiary of an insurance policy is charged with causing the wrongful and intentional death of the insured, and the proper beneficiary cannot be immediately ascertained, then the insurance company need not file interpleader and tender the proceeds into court, but may retain the proceeds indefinitely, or at least until one of the beneficiaries sues the insurance company for the proceeds. Then after having had the use of that money for several months longer than if interpleader had been filed when it first became unclear as to whom the proceeds properly belonged, the insurance company need only wait until it is sued by one of the beneficiaries, file interpleader and escape further responsibility. The inequities inherent in such a procedure are obvious. Such procedure encourages dilatory conduct on the part of insurance companies which works to the advantage of the insurer and to the disadvantage of the beneficiary.

The majority opinion states that Farm Bureau’s delay in filing interpleader must be calculated from the date of Chris’ acquittal (November 22,1973) until Chris filed suit against Farm Bureau (January *23828, 1974). Such statement is without legal foundation. The outcome of Chris’ criminal trial had no determinative effect upon her right to receive the proceeds to Robert’s life insurance policy. See Beene, supra, and National City Bank of Evansville, supra. It would have been as economically unsound for Farm Bureau to have paid Chris the proceeds after her acquittal as it was before. Nothing was accomplished by waiting until after Chris’ trial. The proper time for Farm Bureau to have filed its interpleader would have been when Chris was first charged with murdering Robert (July 1973). That is when it became doubtful as to who the proper beneficiary was. Therefore, Farm Bureau could properly have been charged with delay in filing interpleader from July 1973 until interpleader was actually filed in March 1974.

The majority opinion states:

“The imposition of punitive damages would in effect require the insurer to immediately file an interpleader when learning that the decedent was murdered. That would no doubt have been followed by a continuance until the criminal proceedings ended. At that time the civil action could continue.”

This is not correct. The imposition of punitive damages in the case at bar would not require an insurer to file an interpleader upon learning that the insured was murdered, but rather it would require an insurer to file an interpleader within a reasonable time after the primary beneficiary became a suspect in causing the wrongful and intentional death of the insured. Any civil litigation which followed the filing of an interpleader would exist totally apart from any criminal litigation which might transpire. No continuance would be necessary, and all litigation would terminate at an earlier date.

The majority is correct in stating that, where punitive damages based on a contract are in issue, it is not necessary to establish all the elements of an independent tort, but rather it is necessary to show that elements of fraud, malice, gross negligence, or oppression mingle in the controvery and that the public interest must be served by the deterrent effect of the punitive damages. See Vernon Fire & Casualty Insurance Co. v. Sharp (1976), 264 Ind. 599, 349 N.E.2d 173 and Hibschman Pontiac, Inc. v. Batchelor (1977), 266 Ind. 310, 362 N.E.2d 845.

*239In the case at bar the evidence reveals that Farm Bureau retained and used several thousand dollars of someone else’s money for more than seven months. Farm Bureau knew that Chris’ criminal trial would have had no effect upon her right to receive the proceeds. It knew that litigation was inevitable. Without utilizing the procedural vehicle which has been provided to stakeholders so that they can tender the money and withdraw from any future litigation, Farm Bureau, for some unexplained reason, retained the proceeds for its own use until suit was brought against it to recover such proceeds.

Such behavior, though arguably not sufficient to establish the existence of an independent tort, evinces substantial elements of fraudulent, malicious, grossly negligent, oppressive, and bad faith conduct. Such elements mingle in the controversy, and it should be up to the jury to determine whether such elements are present in such force so as to require the assessment of punitive damages. Certainly it would be in the public interest to deter an insurance company from using money which rightfully belonged to another to promote its own well being.

In the case at bar the jury determined from the conflicting evidence that Farm Bureau’s conduct was sufficiently heinous to warrant an assessment of punitive damages. To say, as the majority opinion does, that the evidence is insufficient, as a matter of law, to support an award of punitive damages is to ignore certain evidence which was presented at trial. It is my opinion, therefore, that Farm Bureau’s motion for judgment on the evidence was properly denied and that the jury’s award of punitive damages should be affirmed.

NOTE —Reported at 375 N.E.2d 601.

. See Beene v. Gibraltar Industrial Life Ins. Co. (1945), 116 Ind. App. 290, 63 N.E.2d 299.

. See National City Bank of Evansville v. Bledsoe (1957), 237 Ind. 130, 144 N.E.2d 710.