Graham v. Graham
Annotate this Case
September 1995 Term
___________
No. 22701
___________
BARBARA GRAHAM,
Plaintiff Below, Appellee,
v.
SIMON GRAHAM,,
Defendant Below, Appellant
_______________________________________________________
Appeal from the Circuit Court of Logan County
Honorable Eric O'Briant, Judge
Civil Action No. 93-C-931-O
AFFIRMED
_______________________________________________________
Submitted: September 13, 1995
Filed: November 17, 1995
James A. Walker
Logan, West Virginia
Attorney for the Appellee
Nelson R. Bickley
Bickley & Jacobs
Charleston, West Virginia
Attorney for the Appellant
RETIRED JUSTICE MILLER, sitting by temporary assignment, delivered the Opinion of
the Court.
SYLLABUS BY THE COURT
1. "'A circuit court's entry of summary judgment is reviewed
de novo.' Syl. pt. 1, Painter v. Peavy, 192 W.Va. 189, 451 S.E.2d 755 (1994)." Syllabus
point 1, Jones v. Wesbanco Bank Parkersburg, ___ W.Va. ___, 460 S.E.2d 627 (1995).
2. "'"'A motion for summary judgment should be granted only when it is clear
that there is no genuine issue of fact to be tried and inquiry concerning the facts is not
desirable to clarify the application of the law.' Syllabus Point 3, Aetna Casualty & Surety
Co. v. Federal Insurance Co. of New York, 148 W.Va. 160, 133 S.E.2d 770 (1963)."
Syllabus Point 1, Andrick v. Town of Buckhannon, 187 W.Va. 706, 421 S.E.2d 247 (1992).'
Syl. pt. 2, Painter v. Peavy, 192 W.Va. 189, 451 S.E.2d 755 (1994)." Syllabus point 2,
Jones v. Wesbanco Bank Parkersburg, ___ W.Va. ___, 460 S.E.2d 627 (1995).
3. "W.Va. Code, 48-2-1(e)(1) (1986), defining all property acquired during
the marriage as marital property except for certain limited categories of property which are
considered separate or nonmarital, expresses a marked preference for characterizing the
property of the parties to a divorce action as marital property." Syllabus point 3, Whiting v.
Whiting, 183 W.Va. 451, 396 S.E.2d 413 (1990).
4. A term life insurance policy obtained as an employment benefit during the
marriage is marital property under W.Va. Code, 48-2-1(e)(1). The owner of such policy is
foreclosed from transferring the spouse as named beneficiary on the policy once a divorce
proceeding is filed and a pendente lite order is entered precluding the disposition of marital
assets.
Miller, Justice:
The question in this case is whether a term life insurance policy, which has no
cash value, is property for marital distribution purposes and is subject to a nondisposal order
in a divorce proceeding. The Circuit Court of Logan County held that such an insurance
policy was marital property and ordered that the proceeds of a policy on the life of Lawrence
Graham be turned over to his estranged wife, the appellee, Barbara Graham. The appellant,
Simon Graham, who was Lawrence Graham's uncle, and who initially received the proceeds,
claims that the trial court erred in holding that the policy was marital property and in
directing him to turn over the proceeds. After reviewing the questions presented, this Court
agrees with the trial court's conclusions. The judgment of the Circuit Court of Logan County
is, therefore, affirmed.
I.
The appellee, Barbara Graham, and Lawrence Graham were married on May
3, 1962. Sometime after they were married, Lawrence Graham commenced working for
Buffalo Mining Company, and, as a part of his employment package, he received a term
insurance policy paid for by the company. Upon receiving the policy, Lawrence Graham
designated the appellee, Barbara Graham, his wife, as the beneficiary.
Subsequently, on January 16, 1992, Lawrence Graham sued Barbara Graham
for divorce in the Circuit Court of Logan County. The circuit court entered a pendente lite
order which provided, among other things, that "both parties are hereby enjoined and
restrained from disposing of any marital assets until further Order of this Court." Subsequent
to entry of the pendente lite order, Lawrence Graham, on November 18, 1992, changed the
beneficiary designation on the term life insurance policy from his wife, Barbara Graham, to
his uncle, Simon Graham. Approximately six months later, on May 30, 1993, Lawrence
Graham was murdered by a person other than his wife. As a consequence of his death, the
proceeds of the term life insurance policy, which amounted to $70,000.00, were paid to
Simon Graham, as the designated beneficiary at the time of death.
After Simon Graham collected the insurance proceeds, Barbara Graham
instituted the present action in the Circuit Court of Logan County. In her complaint, she
alleged that the term life insurance policy was marital property and that the beneficiary
change on the policy was in violation of the pendente lite provision enjoining the dispersion of marital assets. The trial court agreed with her claims and entered summary judgment on
her behalf.
II.
We review a circuit court's granting of summary judgment under a de novo
standard, as we explained in syllabus point 1 of Jones v. Wesbanco Bank Parkersburg, ___
W.Va. ___, 460 S.E.2d 627 (1995). Also, there must be no genuine issue of material fact
nor a need for further factual inquiry to clarify the applicable law, as stated in syllabus point
2 of Jones:
1. "A circuit court's entry of summary judgment is
reviewed de novo." Syl. pt. 1, Painter v. Peavy, 192 W.Va. 189,
451 S.E.2d 755 (1994).
2. "'"A motion for summary judgment should be granted
only when it is clear that there is no genuine issue of fact to be
tried and inquiry concerning the facts is not desirable to clarify
the application of the law." Syllabus Point 3, Aetna Casualty &
Surety Co. v. Federal Insurance Co. of New York, 148 W.Va.
160, 133 S.E.2d 770 (1963).' Syllabus Point 1, Andrick v. Town
of Buckhannon, 187 W.Va. 706, 421 S.E.2d 247 (1992)." Syl.
pt. 2, Painter v. Peavy, 192 W.Va. 189, 451 S.E.2d 755 (1994).
We find that there is no genuine issue of fact raised by the appellee, and the
issue is essentially one of law involving an interpretation of our marital property statute.
There is little question that the statutory definition of marital property
contained in W.Va. Code, 48-2-1(e), is quite broad, as illustrated by this language in
subsection (e)(1):
(1) All property and earnings acquired by either spouse
during a marriage, including every valuable right and interest,
corporeal or incorporeal, tangible or intangible, real or personal,
regardless of the form of ownership, whether legal or beneficial,
whether individually held, held in trust by a third party . . . .
We have not had occasion to address the precise question of whether a term
life insurance policy is "marital property" for marital distribution purposes. However, we
have recognized that the Legislature has expressed a marked preference for characterizing
property as "marital property" for marital distribution purposes. As stated in syllabus point
3 of Whiting v. Whiting, 183 W.Va. 451, 396 S.E.2d 413 (1990):
W.Va. Code, 48-2-1(e)(1) (1986), defining all property
acquired during the marriage as marital property except for
certain limited categories of property which are considered
separate or nonmarital, expresses a marked preference for
characterizing the property of the parties to a divorce action as
marital property.
See also, Hampstead v. Hampstead, 184 W.Va. 272, 400 S.E.2d 280 (1990); Kapfer v.
Kapfer, 187 W.Va. 396, 419 S.E.2d 464 (1992).
Moreover, in a number of cases we have indicated that the existence of an
ascertainable present value is not the key determinant of whether the interest should be considered marital property. Instead, we have stated that, given the broad legislative
definition of marital property, several types of expectancies, or near expectancies, with little
or no present value, are marital property for equitable distribution purposes. For example,
a contingent fee contract entered into by an attorney during marriage was held to be marital
property under W.Va. Code, 48-2-1(e)(1). Metzner v. Metzner, 191 W.Va. 378, 446 S.E.2d 165 (1994). Somewhat similarly, in Hardy v. Hardy, 186 W.Va. 496, 413 S.E.2d 151
(1991), we held that the economic losses attributable to a personal injury claim during
marriage were "property" for marital distribution purposes. Lastly, and more significantly,
in Smith v. Smith, 190 W.Va. 402, 438 S.E.2d 582 (1993), and a number of prior cases, we
have held that pension benefits were "property" for marital distribution purposes. See also,
Langdon v. Langdon, 182 W.Va. 714, 391 S.E.2d 627 (1990); and Cross v. Cross, 178
W.Va. 563, 363 S.E.2d 449 (1987).
Other jurisdictions have addressed the question of whether a life insurance
policy is marital property and have recognized that term life coverage can be marital or
community property. See, e.g., Lock v. Lock, 8 Ariz.App. 138, 444 P.2d 163 (1968); Guy
v. Guy, 98 Idaho 205, 560 P.2d 876 (1977); Sherman v. Roe, 153 Tex. 1, 262 S.W.2d 393
(1953); and Aetna Life Insurance Company v. Bunt, 110 Wash. 2d 368, 754 P.2d 993 (1988).
The best explanation for so holding is given in B. Turner, Equitable Distribution of Property
§ 6.26 (2d ed. 1994), which states:
An existing life insurance policy is property acquired in
exchange for other property -- the funds used to make the
premium payments. Thus, to the extent the premiums were paid
with marital funds, the policy is marital property. Conversely,
to the extent the premiums were paid with separate funds, the
policy is separate property.
In determining the character of funds used to pay the
premiums, it may be important to determine exactly which
premiums are consideration for the policy involved. Some
policies are set up as a single contract which lasts for many
years; others are set up as a series of renewable one-year
contracts. If the case involves the latter type of policy, only the
last year of premiums would be relevant. (Footnotes omitted.)
In Aetna Life Insurance Company v. Bunt, supra, the Supreme Court of
Washington, in treating a situation close to that in the present case, also recognized that the
character of a premium determines whether a term life insurance policy is marital or non-
marital property:
The ownership character of a term life insurance policy
depends upon the character of the funds used to pay the
premium for the most recent term . . . Where the last insurance
premium payment was paid as a fringe benefit of employment
to a married employee, the premiums presumptively constitute
community earnings . . . This follows from the strong
presumption that assets acquired during marriage are community
property . . . .
110 Wash. 2d at 371-72, 74 P.2d at 995. In Guy v. Guy, supra, the Idaho court reached a
similar conclusion.
A further relevant situation is presented in Willoughby v. Willoughby, 758 F. Supp. 646 (D.Kan. 1990), where the court held that a life insurance policy acquired as a
part of an employee benefits plan was property subject to a pendente lite restraining order
in a divorce. The court, construing Kansas divorce law, stated "each spouse obtains a vested,
if undetermined, interest in all property . . . and courts are obligated to divide that property
in a just and equitable manner." 758 F. Supp. at 649. The court went on to state "courts . .
. have recognized, however, that equities may limit the right of a policy owner to change
beneficiaries . . . ." 758 F. Supp. at 650. It cited, among other cases, Standard Insurance Co.
v. Schwalbe, 110 Wash. 2d 520, 755 P.2d 802 (1988), where the court voided a change in
beneficiary made after an injunction against disposing of property had been issued; and
Pierce v. Pierce, 12 Kan.App.2d 810, 758 P.2d 252 (1988), aff'd 244 Kan. 246, 767 P.2d 292
(1989), where a husband under a divorce decree was required to maintain life insurance with
his minor children as beneficiaries. He was held to be precluded from changing
beneficiaries.
Under the foregoing law, we conclude that a term life insurance policy
obtained as an employment benefit during the marriage is marital property under W.Va.
Code, 48-2-1(e)(1). The owner of such policy is foreclosed from transferring the spouse as
named beneficiary on the policy once a divorce proceeding is filed and a pendente lite order
is entered precluding the disposition of marital assets.
For the reasons stated, the judgment of the circuit court is affirmed.
Affirmed.
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