Action by widow to have court void action taken by deceased-insured, removing widow as beneficiary of life policy and substituting his housekeeper and his son by former marriage as beneficiaries. The Court of Chancery, New Castle County, Seitz, Chancellor, held, inter alia, that evidence was insufficient to establish that housekeeper had exercised undue influence over insured in connection with change of beneficiaries.
In action by widow to have court void action taken by deceased-insured, removing widow as beneficiary of life policy and substituting deceased's housekeeper and deceased's son by former marriage as beneficiaries, where there was evidence that housekeeper did not know of change of beneficiaries prior to insured's death, evidence was insufficient to establish that housekeeper had exercised undue influence over insured in connection with change of beneficiaries.
[34 Del.Ch. 209] Joseph Donald Craven, and J. D. Winslow, Wilmington, for plaintiff.
James L. Latchum (of Berl, Potter & Anderson), Wilmington, for defendant Prudential Ins. Co.
Thomas Herlihy, Jr., and Morris Cohen, Wilmington, for defendant Sara Ann Bell.
Robert B. Walls, Jr., Wilmington, for defendant William M. Tracy, Jr.
By this action plaintiff, the insured's widow, seeks to have this court void action taken by the deceased-insured, William M. Tracy, Sr. (sometimes called the ‘ insured’ or the ‘ deceased’ ), removing plaintiff as the beneficiary of his life insurance policy and substituting the defendants, Sara Ann Bell and William M. Tracy, Jr. (sometimes called ‘ William, Jr.’ ). Plaintiff claims that at the time the insured applied for the change of beneficiaries he was either:
1. Of unsound mind generally.
2. Suffering from an insane delusion which caused him to make the change in the policy.
3. Subject to the undue influence of the defendant, Sara A. Bell, who persuaded him to change the beneficiaries.
[34 Del.Ch. 210] Defendants deny plaintiff's contentions and also claim that the plaintiff is guilty of unclean hands.
The deceased had been married twice prior to his marriage to the plaintiff. The minor defendant, William Tracy, Jr., was his child by his second wife and was born in 1942 or 1943. The deceased married plaintiff on June 25, 1946. On November 17, 1947 he became the insured on a policy of insurance issued by the defendant, The Prudential Insurance Company of America. The plaintiff, Helen Tracy, the insured's wife, was the primary beneficiary. The secondary beneficiary was the minor defendant, William M. Tracy, Jr.
In 1949 they moved to a farm near Earleville, Maryland. In April 1950 a child named John Barnes Tracy was born to plaintiff and the insured. On February 3, 1952 the deceased and his wife separated. On February 4, 1952 the deceased executed a will in the office of Charles M. Huester, an attorney in Elkton, Maryland. By this will he left one half of his estate to plaintiff with the statement ‘ knowing that she will provide for my son, John Barnes Tracy’ . In the event she predeceased him it was to go to John. He purported to appoint his friends (Leroy and Elizabeth Downes) as guardians for his son William, Jr. The other half of his estate went to the Downes and his son, William, in equal shares. On February 13, 1952 a separation agreement prepared by Mr. Huester was signed by the parties.
Some time in November 1951 the deceased had become acquainted with the defendant, Sara Ann Bell, through a mutual acquaintance. In March of 1952, at the request of the deceased, Mrs. Bell went to the Tracy farm near Earleville, Maryland, as housekeeper. In April of 1952 the deceased applied for reinstatement of his policy which had lapsed on March 19, 1952 for nonpayment of premiums. He also, by a form dated April 21, 1952, changed the beneficiary
from Helen Tracy to William M. Tracy, Jr., and Sara Ann Bell.
In October of 1952 the deceased, while on his way to Lewes to see his father who was seriously ill, was killed in an automobile accident. He was about 35 years of age at the time.
[34 Del.Ch. 211] The insurance policy with a base amount of $10,000 contained a double indemnity clause for accidental death. Thus the beneficiaries became entitled to $20,000. With certain proper adjustments, the money was deposited with the court by Prudential and is now subject to this court's decision.
It appears that John Barnes Tracy today is receiving $48.70 per month from the Railroad Retirement Board.
At the outset, certain principles of law must be stated as the standard by which the evidence is to be evaluated. First, it appears that the change of beneficiary transaction took place in Maryland while the deceased resided there. However, no attempt was made to prove the Maryland law and I will therefore assume that it would be the same as the Delaware law. The parties have apparently adopted this approach.
The courts generally conclude that the law governing the mental capacity sufficient to execute a will applies to insurance cases. In 2 Appleman, Insurance Law and Practice § 1024 it is said:
‘ Mental capacity. It requires the same degree of mental capacity to make a valid change of beneficiary as it takes to make a will, and any derangement of mind ...