Diep v. Rivas

RODOWSKY, Judge. This interpleader action involves $150,000 in life insurance benefits payable as a result of the murder of a wife by her husband who then committed suicide. At issue is the ultimate recipient of the proceeds. After interpreting the insurance contract to provide for payment to relatives of the husband as contingent beneficiaries, the Court of Special Appeals, in Diep v. Rivas, 126 Md.App. 133 , 727 A.2d 448 (1999), then applied ⁶⁷⁰ the slayer’s rule to disqualify the contingent beneficiaries from receiving payment and awarded the proceeds to the wife’s father.

For the reasons set forth below, we reverse. The murder and suicide took place during an argument at the marital home in Howard County on April 2, 1996. There were no children of the marriage. The murder victim, Maria Rivas, is survived by her father, the respondent, Dr. Hector Rivas, and the murderer/ suicide, Xuang Ky Tran (Tran), is survived by his brother and sister, the petitioners, An Diep and Vanessa Diep. 1 Tran was employed by IIT Research Institute (IIT) which was the holder of a group accidental death and dismemberment benefit policy (the Policy) issued by Continental Casualty Company (CNA) and effective January 1, 1990.

Insofar as relevant to the instant matter, the Policy is comprised of the application for the master policy and the master policy. The record also contains the form certificate issued to IIT employees who were covered by the Policy. By its terms the certificate is not the Policy but “is merely evidence of insurance provided under the [PJolicy.” Following the death of Maria Rivas, CNA was confronted with conflicting claims for the benefits payable upon her death. 2 The petitioners and the respondent sought payment based on their respective interpretations of the “Payment of Claim” provision applicable, where, as here, no beneficiaries had been specially designated. That policy provision reads in relevant part: “Benefits for loss of life of the Insured will be payable in accordance with the beneficiary designation in effect at the ⁶⁷¹ time of payment.

If no such designation is in effect at that time, the benefits shall be paid to the surviving person or persons in the first of the following classes of successive preference beneficiaries of which a member survives the Insured: “The Insured’s (a) spouse; (b) children, including legally adopted children; (c) parents; (d) brothers and sister[s]; or (e) estate.... If two or more persons become entitled to benefits as preference beneficiaries, they shall share equally- “Benefits for loss of life of any insured family member will [be] payable to the Insured, if living, otherwise in the same manner as above.” The respondent contends that the applicable classes of successive preference beneficiaries are the relatives of Maria Rivas, while the petitioners contend that the applicable classes of successive preference beneficiaries are the relatives of Tran. The respondent further contends that, if the applicable classes of successive preference beneficiaries are the relatives of Tran, then they are disqualified by the slayer’s rule from taking the insurance benefits. CNA responded to the conflicting claims by interpleading the claimants in the Circuit Court for Montgomery County.

There were cross-motions for summary judgment. The circuit court agreed with the respondent’s construction of the Policy and, in dicta, commented that the slayer’s rule did not apply. The Court of Special Appeals agreed with the petitioners’ construction of the Policy, but held that the slayer’s rule did apply. Diep, 126 Md.App. at 141 , 727 A.2d at 452 .

This Court issued the writ of certiorari. Diep v. Rivas, 355 Md. 610, 735 A.2d 1105 (1999). I The essence of the circuit court’s interpretation is the following part of that court’s opinion from the bench. ⁶⁷² “There are definitions within the policy. For example, the definitions say ‘insured’ means eligible person.

Under ‘eligible person’ the family members are included. “The policy states under the caption of eligible persons, all persons described in Statement 2 are eligible for insurance under this policy. Included in Statement 2 are an insured employee, an insured spouse, and insured dependent children.” This interpretation fails to distinguish between the “Insured” and an insured under the Policy. To demonstrate our conclusion requires a dissection of the Policy. In the master policy persons who are “eligible for insurance” under the Policy are defined as “eligible persons,” and they are “[a]ll persons described in ... the Application.” The “Application” states that all “[a]ctive, full-time employees” of IIT were eligible for the insurance program.

Tran was an “eligible person” who became a participant in the program. Under the definitions in the Policy he thereby became an “Insured” (“ ‘Insured’ means the eligible person whose insurance is in force under the terms of this policy.”). Under the definitions of the form certificate, Tran thereby became a “You” (“ ‘You’, ‘Your’ and “Yours’ mean the person to whom this certificate is issued and whose insurance is in force under the terms of the policy.”). The master policy further provided that “[t]he eligible persons becoming insured under this policy may also insure their eligible family members.” “Eligible family members” were described in the “Application.” The “Application” specified such persons to be “[t]he spouse, age 18 through age 70[,] of [an] insured employee” and certain unmarried dependant children of an “Insured (or spouse of the Insured).” Under the master policy Maria Rivas became an “Insured Person.” The master policy defines “ ‘Insured Person’ [to] mean[ ] the Insured and the insured family members of the Insured.” In the certificate “ ‘Insured Person’ means You and any of Your ⁶⁷³ eligible family members who are covered under the policy.” 3 Under the “Payment of Claim” provision of the master policy, set forth above, “[b]enefits for loss of life of any insured family member will [be] payable to the Insured, if living, otherwise in the same manner as above.” For purposes of this case the parties have asked that we accept as fact that Maria Rivas predeceased Tran.

Applying the Policy’s definitions to the facts of this case, the “insured family member” was Maria Rivas, and the “Insured” was Tran. But Tran was the slayer of Maria Rivas and disqualified. Consequently, under the Policy, the benefits for the loss of life of Maria Rivas were payable “in the same manner as above.” The “manner as above” deals with the “[b]enefits for loss of life of the Insured.” Those benefits are payable to “the surviving person or persons in the first of the following classes of successive preference beneficiaries of which a member survives the Insured,” namely, “[t]he Insured’s (a) spouse; (b) children ...; (c) parents; (d) brothers and sisters; or (e) estate.” Maria Rivas did not survive the “Insured.” Accordingly, the Policy proceeds are not payable to her estate. There were no children of the “Insured” and no surviving parents of the “Insured.” Consequently, the petitioners, Tran’s brother and sister, who comprise the first class of successive preference beneficiaries surviving the “Insured” receive the benefits pursuant to the Policy, if the terms of the Policy control. ⁶⁷⁴ Respondent finds support for his construction of the policy in St. Paul Fire & Marine Insurance Co. v. Molloy, 291 Md. 139 , 433 A.2d 1135 (1981).

Molloy had cited with approval the following language set forth in Howell v. Ohio Casualty Insurance Co., 130 N.J.Super. 350 , 327 A.2d 240, 243 (App.Div.1974): “ ‘[T]here is much to commend the view that, unless the terms [of an insurance policy] are plainly to the contrary ... the obligation of the carrier should be considered several as to each person insured, and the fraud or misconduct of one insured should not bar recovery by the innocent co-insureds to the extent of their respective interests in the property involved.’ ” Molloy, 291 Md. at 153 , 433 A.2d at 1142 (second alteration in original). Respondent also relies on Rent-A-Car Co. v. Globe & Rutgers Fire Insurance Co., 158 Md. 169 , 148 A. 252 (1930), for the proposition that Maryland courts have construed insurance contracts as providing coverage to insured interests separately. In both of these property insurance cases there were co-insureds to whom the policies had been issued. In Molloy a homeowners’ policy designated “ ‘Charles J. Molloy and Diane M. Molloy,’ ” a husband and wife, as the “ ‘named insured.’ ” 291 Md. at 152 , 433 A.2d at 1142 .

Likewise, in Rent-A-Car Co. a fire policy covering a fleet of rental automobiles that were security for a purchase money loan specifically listed both the owner-debtor and the secured party as the assured. 158 Md. at 173 , 148 A. at 254 . The Molloy and Rent-A-Car Co. cases would have some relevance if the Policy in the instant matter provided, for example, that on the death of an insured person the death benefit would be paid one-half to Tran and one-half to some other beneficiary. If the other beneficiary were innocent, Tran’s crime would not disqualify that person. Molloy and Rent-A-Car Co., however, are not authority for altering the precise definitions in the Policy to convert the single “Insured,” Tran, into two “Insureds,” or to alter “Insured” into the separately defined term, “Insured Person.” ⁶⁷⁵ II By following the definitional trail that we have set forth above, the Court of Special Appeals also concluded that the Policy directed payment to classes of contingent beneficiaries that were relatives of Tran.

That court next addressed the petitioners’ contention that the circuit court had erred in failing to grant summary judgment in favor of the petitioners. There was no error, the appellate court held, because the petitioners were barred by the slayer’s rule. We do not agree. In Maryland, the slayer’s rule exists as a matter of public policy embodied in the common law.

This Court first applied the doctrine in Price v. Hitaffer, 164 Md. 505 , 165 A. 470 (1933), a case in which a husband murdered his wife and almost immediately thereafter committed suicide. The wife died intestate, and an orphans’ court excluded the heirs and personal representatives of the murderer from the distribution of the victim’s estate. The Court stated the issue to be: “Can a murderer, or his heirs and representatives through him, be enriched by taking any portion of the estate of the one murdered?” Id. at 506 , 165 A. at 470 . Price held that the statutes of descent and distribution must be construed in light of the strong public policy represented by “[o]ne line of decisions [that] apply the common-law principle of equity that no one shall be permitted to profit by his own fraud, to take advantage of his own wrong, to found any claim upon his own iniquity, or to acquire property by his own crime, and hold that provisions of a will and the statutes of descent and distribution should be interpreted in the light of those universally recognized principles of justice and morality; that such interpretation is justified and compelled by the public policy embraced in those principles or maxims, which must control the interpretation of law, statutes, and contracts.” Id.

The slayer’s rule was applied in Chase v. Jenifer, 219 Md. 564 , 150 A.2d 251 (1959), to disqualify a wife who was the ⁶⁷⁶ named beneficiary of insurance on her husband’s life from receiving the death benefits where the wife had killed the husband under circumstances constituting voluntary manslaughter, because “the killing [was] both felonious and intentional.” Id. at 570 , 150 A.2d at 255 . There appears not to have been any contingent beneficiary named in the policy involved in Chase . The contest was between the victim’s personal representative and the slayer, and the proceeds were paid to the victim’s estate. Whether the slayer’s rule applies to homicides under circumstances constituting involuntary manslaughter was answered in the negative in Schifanelli v. Wallace, 271 Md. 177 , 815 A.2d 518 (1974).

We explained that “[t]he rule which prevents a beneficiary who has intentionally killed the insured from recovering on an insurance policy is grounded on the public policy against permitting a wilful and felonious killer to profit by his felony. Thus, it has no application where even though the acts of the beneficiary cause death, they are without the intent to do so; where the death is the result of accident, or even when caused by such gross negligence on the part of the beneficiary that he is guilty of involuntary manslaughter, the beneficiary may still recover.... ” Id. at 188, 315 A.2d at 519 (citation omitted). More recently, in Ford v. Ford, 307 Md. 105, 122 , 512 A.2d 389, 398 (1986), we held that the slayer’s rule does not apply to a person who was not criminally responsible within the meaning of Maryland Code (1982, 1985 Cum.Supp.), § 12-108(a) of the Health-General Article. In Ford a daughter had murdered her mother who left a will under which the daughter was the sole beneficiary.

Id. at 107 , 512 A.2d at 390 . The contest was between the slayer and her brother who was a contingent beneficiary under the will Id. Inasmuch as the holding in Ford permitted the daughter to inherit under the will, the alternate disposition to the brother did not come into effect. Id. at 125 , 512 A.2d at 399 . ⁶⁷⁷ In the instant matter the Court of Special Appeals extended the slayer’s rule to the petitioners for two reasons, the first of which is as follows: “The Dieps also state, and we agree, that they are not guilty of any wrongdoing.

That fact, however, has no bearing on eligibility. If the law provided that innocent secondary beneficiaries were not excluded by the Slayer’s Rule, the public policy reason for the rule would be eroded significantly and, arguably, the murder/suicide statistics would increase dramatically.” Diep, 126 Md.App. at 143 , 727 A.2d at 453 . This rationale conflicts with the principle underlying the slayer’s rule. The rule is designed to prevent one from taking “advantage of his own wrong” or acquiring “property by his own crime.” Price, 164 Md. at 506 , 165 A. at 472 .

Inasmuch as the not criminally responsible murderer, see Ford, supra, and the person who kills another unintentionally, but through gross negligence, see Schifanelli, supra, may acquire property as a result of homicides committed by them, the petitioners, who are completely blameless in the murder of Maria Rivas, are not precluded from taking the Policy proceeds resulting from her death. Indeed, to visit the consequences of Tran’s crime on his brother and sister conjures up the ghosts of corruption of the blood which is prohibited by Article 27 of the Maryland Declaration of Rights. 4 The Court of Special Appeals also based its extension of the slayer’s rule to the petitioners on an erroneous interpretation and application of a statement by this Court in Ford . In an introductory section of the Ford opinion, we summarized the Maryland law on the slayer’s rule into two principles, and then stated that “[t]hese principles apply not only to the killer but ⁶⁷⁸ to those claiming through or under him.” 307 Md. at 112 , 512 A.2d at 392 . 5 From the preceding sentence the Court of Special Appeals concluded: “Tran never having acquired any right to the proceeds, the secondary beneficiaries have no interest to assert because their claim is through Tran as surviving brother and sister. “The holding in Ford states expressly that the Slayer’s Rule is applicable to those claiming ‘through or under’ the slayer. Tran’s