Frisch, John B.

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Effect of Undue Influence by Beneficiary of Insurance Policy

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Marquette Law ReviewVolume 23Issue 2 February 1939 Article 6Effect of Undue Influence by Beneficiary ofInsurance PolicyJohn B. FrischFollow this and additional works at: http://scholarship.law.marquette.edu/mulrPart of the Law CommonsThis Article is brought to you for free and open access by the Journals at Marquette Law Scholarly Commons. It has been accepted for inclusion inMarquette Law Review by an authorized administrator of Marquette Law Scholarly Commons. For more information, please contactmegan.obrien@marquette.edu.Repository CitationJohn B. Frisch, Effect of Undue Influence by Beneficiary of Insurance Policy, 23 Marq. L. Rev. 84 (1939).Available at: http://scholarship.law.marquette.edu/mulr/vol23/iss2/6THE MARQUETTE LAW REVIEWEFFECT OF UNDUE INFLUENCE BY BENEFICIARYOF INSURANCE POLICYCourts have been reluctant to recognize the use of undue influence'in making a change of beneficiaries in insurance policies. There arecomparatively few cases where undue influence has been considered amaterial issue and in those cases the standard whereby undue influencewas found is not clearly determinable. Moreover, the type of the par-ticular policy in question affects the problem of undue influence usedto effect a change of beneficiaries.The subject of excessive importunities and changes of beneficiariesin insurance policies is best approached by considering the standardsestablished in similar cases involving wills and contracts, and by com-paring these with the standard established ift insurance cases. Whenundue influence is pleaded in will contests and contract actions, thecourts readily consider the effect of such influence upon the will orcontract in question.In Evenson v. Rust2 it was determined that the undue influence inchanging the beneficiary of a will had to amount to moral coercion,destruction of free will and of independent action, and a disposal ofproperty contrary to the will and wishes of the testator. In this case,as in all such cases, the mental condition of the parties in question wasseriously considered and an apparently severe standard was set up tosupport the finding that the testator was of strong mental condition.In Skinsrud v. Schwenn3 another will contest, the manner of provingthis destruction of free agency was reduced to a formula containingfour elements. There were: (1) opportunity to exercise undue influ-ence, (2) disposition to influence and motive therefor, (3) suscepti-bility of the subject to influence by the person having the opportunity,(4) a result indicating the exercise of undue influence by such person.The Will of Nachtsheim4 case enumerates the same elements and allthe latter cases are based on substantially the same standard. The Elliotv. Fisk5 case contains a modification of this rule. The important fact'Flone v. Fjone, 16 N.D. 100, 112 N.W. 70 (1907). "One party may occupya position or sustain such a relation to the other as to be able without anyactual force, physically, to so far control the will of the other as to reallyconstitute an overmastery of the mind and render. him unable to resist hisimportunities. The law recognizes that to a certain extent, in the relation ofhusband and wife, parent and child, attorney and client, nurse with the sickor one in charge of an imbecile, the former in each instance has a measurablepower over the mind of the latter, and it requires that no undue or excessiveimportunity shall be made the means of securing a beneficial contract or con-veyance and the excessive exercise of this natural control is called 'undueinfluence'."2152 Wis. 113, 139 N.W. 766 (1913).3 158 Wis. 142, 147 N.W. 370 (1914).4166 Wis. 556, 164 N.W. 994 (1918).5 162 Wis. 249, 155 N.W. 110 (1916).[Vol. 23NOTESof that case was that an aged father and other relatives were excludedfrom a will that gave all the property to an unrelated person. While adisposition on the part of the beneficiary to exercise undue influencewas not clearly proven, yet, the court held that the other three elementswere shown to exist and that only three of the four elements need beproven at any time.6Responsibility of proving undue influence in will contests fallsupon the one contesting the will 7 In Graham v. Courtwright,8 the pre-sumption of undue influence and fiduciary relations are discussed andthe court found that the existence of a fiduciary relationship does notchange the burden of proof. One, however, who draws up a will andwho is also a beneficiary of a considerable amount and not a bloodrelative is viewed with suspicionYThus, in will contests, the doctrine of what constitutes undue in-fluence and how it is to be proven is definite. Emphasis is always on thestate of mind of the testator, 0 but there must be accompanying proofof attendant circumstances, and this is done by proving the elementsof undue influence as found in the Skinsrud case31Contract cases on this subject differ from will contests only in thedegree of proof necessary. In will contests it is the interest of a thirdparty that is involved and in contract cases, it is the interest of a con-tracting party. The natural tendency is to give a contracting party moreconsideration, and, consequently, the amount of proof necessary willnot be as great in contract cases as in will contests.Nevertheless, the influence to be undue must result in the destruc-tion of free agency of the person acted upon and in the substitution of6 In the Skinsrud case, the son of the testator got one half of the estate andthree daughters received nothing. But, the court held there was no disposi-tion to exercise undue influence nor was there a causal connection betweenthe result and the influence. Stress was laid on the mental condition of thetestator. In Ball v. Boston, 153 Wis. 27, 141 N.W. 8 (1913), a husband andwife relationship was not enough to constitute an opportunity to exercise aninfluence that would be undue.7 Ball v. Boston, 153 Wis. 27, 141 N.W. 8 (1913). Relationship resulting froma child's lifelong faithfulness and kindness to a parent does not cast upon thechild, as a beneficiary in the parent's will the burden of proving that the willwas without influence. In re Boyle's Will, 186 Iowa 216, 172 N.W. 280 (1919).6 180 Iowa 394, 161 N.W. 774 (1917). "The doctrine that undue influence is tobe presumed as between parties inter vivos, dealing with each other whenfiduciary relations exist between them, has no application to testamentarygifts." Pirkle v. Ellenberger, 179 Iowa 1122, 162 N.W. 791 (1917).9 Hughes v. Meredith, 24 Ga. 325, 71 Am. Dec. 127 (1858).'DIn Davidson v. Davidson, 2 Neb. (Unof.) 90, 96 N.W. 409 (1901) where thetestator excluded his children of the first marriage, "to keep peace in thefamily, although the children were all alike to him." This statement was ad-missible, but there had to be other proof of coercion. In re Allen's Estate, 230Mich. 584, 203 N.W. 479 (1925); In re Kirschbaum's Estate, 242 Mich. 291,218 N.W. 660 (1928).1 Supra note 6.THE MARQUETTE LAW REVIEWthe will of another person for his own.12 In Holmes v. Hill,13 the courtlooked for evidence of fraud, unfairness, or design on the part of theone accused of exercising undue influence, and for evidence of surprise,imbecility or weakness on the part of the contractor, holding that thesewere the characteristics of cases in equity where courts felt warrantedin interposing between the strong and weak. Fjone v. Fjone14 containsthe same idea of protection against the weak and further indicates thetendency of the courts to watch closely for undue influence in contracts.This is evident from the fact that the doctrine of fiduciary relationshipis readily applied when one is in the position of advantage as a resultof a relationship of confidence or trust. Then, proof that no undueinfluence existed rests on the one holding the position of trust. Ofcourse, the existence of such relationship must be first established.'5In the Graham case:1 it was shown that this doctrine is not applicableto cases of testamentary gifts.Thus we find a similarity in the concept of undue influence asapplied in will and contract cases and a common emphasis on the men-tal condtion of the one allegedly influenced, although, in contract cases,the opportunity to exercise influence receives more stress than in willcases. The authority of many cases involving undue influence in themaking of contracts, includes many citations of will cases as in Hult v.Home Life Ins. Co. of New York' which is evidence of a tendency tolook to the doctrine in the will contests as a possible standard.The problem of undue influence occurs in insurance cases onlywhere there has been a change of beneficiary. Not even in all cases ofchanges can the problem arise, because only the original beneficiary isrecognized in cases of life insurance policies, unless there is a reserva-12 Hult v. Home Life Ins. Co. of New York, 213 Iowa 573, 240 N.W. 218 (1932) ;Drinkwine v. Gruelle, 120 Wis. 628, 98 N.W. 534 (1904) modifies the standardby saying there must be at least an impairment of free agency, but showingthe existence of ill feeling is not enough.1322 Neb. 425, 35 N.W. 206 (1887). Hill who had befriended Holmes, yearslater aided Holmes in getting his mother's estate by paying transportation costsand giving Holmes the use of his residence. A contract, permitting Hill touse $25,000 of the money was not considered the result of undue influencefrom the circumstances.14 16 N.D. 100, 112 N.W. 70 (1907). "Courts of equity will carefully scrutinizetransactions . . . and will not hesitate to reach out their strong arm in pro-tection of the weaker against the stronger mind, where an inequitable or un-conscionable bargain has been obtained through improper or undue influence."35Utterback v. Hollingsworth, 208 Iowa 300, 225 N.W. 419 (1929). "It mustappear expressly or by implication that trust or confidence was reposed. Thesupposed trustee must be shown to have been in a position of advantage orsuperiority such as to imply a dominating influence." In O'Neil v. Morrison,211 Iowa 416, 233 N.W. 708 (1930) it was held that a situation wherein adaughter aided her father by caring for him in her home after an accidentdoes not constitute a fiduciary relationship.26 Supra note 8.v 213 Iowa 573, 240 N.W. 218 (1932).[Vol. 23tion in the policy allowing a change.'8 This immediate vesting of inter-est in life insurance policies applies also to endowment, accumulation,and tontine policies."9 In Foster v. Gile Administrator,2 0 there is a sub-stantial modification in the Wisconsin law which allows a change ofbeneficiaries of a life insurance policy by the insured if he pays thepremiums.The interest of a beneficiary of a fraternal benefit certificate is verycontingent, since a change can be made at any time by the insured aslong as there is a compliance with any regulations or provisions madeby the insurance company.2 ' Therefore, the problem of undue influencein insurance cases can arise in cases of fraternal benefit certificates andgenerally in life insurance policies where a provision reserving the rightto make a change of beneficiary is made.In New York Life Ins. Co. v. Andrews, 2 the court states that theinfluence to be undue in making a change of beneficiary must approachthe point of depriving the insured of his or her free agency and suchfraud must be directed toward the end of affecting a transfer. Theproof should be reasonably clear and convincing. Here, again, thedestruction of free agency is the prime element. Further, the undueinfluence must be directed, and intentional-which brings in the ele-ment of intent to influence unduly. This is a considerably strongerelement than the "disposition" to influence unduly necessary in willcases, but it is similar to the "design" looked for in the Holmes v. HillPcontract case. In some cases where opportunity apparently existed thecourts held that the situation did not constitute an exercise of undue18 In Central Nat. Bank of Washington City v. Hume, 128 U.S. 195, 9 Sup. Ct41, 32 L.ed. 370 (1888) it was held that a policy and the money to becomedue under it belong at the moment it is issued, to the person or persons namedin it as the beneficiary or beneficiaries; and there is no power to transfer byact or deed. North American Life Ins. Co. v. Wilson, 111 Mass. 542 (1873).19 Condon v. New York Life Ins. Co., 183 Iowa 658, 166 N.W. 452, 19 A.L.R.649 (1918). Endowntent-Lambert v. Penn. Mut. Life Ins. Co., 50 La. Ann.1027, 24 So. 16 (1898). Tontine-New York Life Ins. Co. v. Ireland (Texas1891) 17 S.W. 617, 14 L.R.A. 278; Smith v. Metro. Life Ins. Co., 222 Penn.226, 20 L.R.A. (N.s.) 928, 128 Am. St. Rep. 799 (1908).- 50 Wis. 603, 7 N.W. 555 (1880).21 Malancy v. Malancy, 165 Wis. 642, 163 N.W. 186 (1917) ; Estate of Breiting,78 Wis. 33, 47 N.W. 17 (1890). "Benefit certificates give no vested interestbefore death. Payment of premiums by beneficiary is immaterial." Preusserv. The Supreme Hive of the Ladies of the Maccabees of the World, 123 Wis.164, 101 N.W. 358 (1904).22 167 Ill. App. 182 (1912). The fact that the father of the new beneficiary hadseduced the insured when she was only eighteen years of age and had car-ried on illicit relations until death of insured did not amount to undue influ-ence. It is interesting to note that all the decisions referred to as authorityin this case are will contests-which is an indication as in the contract casesthat the courts look to the standard set up in will contests involving undueinfluence.23 22 Neb. 425, 35 N.W. 206 (1887).1939] NOTESTHE MARQUETTE LAW REVIEWinfluence such as a continuation of illicit relations.2 ' But in Savage v.McCauley the court found undue influence where the landlady of thedeceased insured cared for him in his weakened condition and becamethe new beneficiary. Emphasis was placed on the weakened mentalcondition in that case and also in Burke v. Bay28 where a practitionerof Christian Science affiliations was constantly present at the side ofthe dying insured and allegedly aided the new beneficiary in prevailingupon the insured to change the beneficiary in the policy.Insurance policies are considered contracts and undue influencevitiates them.2 But they also have most of the characteristics of a willas far as third party interests are concerned, so that it is natural ininsurance cases involving undue influence to find a combination ofstandards of proof as found in contract and will cases. First, the resultmust be the destruction of free agency and substitution of a will forthat of the insured. Then, as in contract cases, there must be shown adesign, that is, an intention to influence unduly for purpose of affectinga particular change of beneficiaries, and, finally a fact situation thatpresents ample opportunity to influence. The burden of proof remainson the contestant, since insurance cases are similar to cases involvingtestamentary gifts. And, at all times, the mental condition of theinsured and his susceptibility to influence are considered of primaryimportance.JOHN B. FRiscH.24 Gerst v. Western & Southern Life Ins. Co., 11 Ohio App. 382 (1917). Freeagency would not be substantially impaired in a case such as this.25 (Mass. 1938) 16 N.E. (2d) 639.26164 Minn. 331, 205 N.W. 219 (1925). It is to be noted that the burden of proofin case of allegations of undue influence is upon the plaintiff alleging it.Wherry v. Latimer, 103 Miss. 524, 60 So. 642 (1913) ; Eyestone v. Eyestone,103 Akla. 301, 299 Pac. 518 (1924).27 Cason v. Owens, 100 Ga. 142, 28 S.E. 75 (1897).

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Effect of Undue Influence by Beneficiary of Insurance Policy

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