In re Marriage of Hall (Court of Appeals)

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IN THE SUPREME COURT OF THE STATE OF KANSAS

No. 101,834

In the Matter of the Marriage of MARC H. HALL,
Appellant,

and

SUSAN C. HALL,
Appellee.


SYLLABUS BY THE COURT


A court order requiring a child support obligor to cooperate with a child support
obligee's efforts to obtain insurance on the life of the obligor is against public policy, as
expressed by the Kansas Legislature in K.S.A. 40-453(a), if the obligor objects to the
order. Consequently, it is an abuse of discretion to issue such an order when the obligor
has stated an objection.

Review of the judgment of the Court of Appeals in 43 Kan. App. 2d 392, 225 P.3d 764 (2010).
Appeal from Johnson District Court; THOMAS E. FOSTER, judge. Opinion filed October 5, 2012.
Judgment of the Court of Appeals affirming the district court is reversed. Judgment of the district court is
reversed.

Ronald W. Nelson, of Ronald W. Nelson, PA, of Lenexa, argued the cause and was on the briefs
for appellant.

No appearance by appellee.

The opinion of the court was delivered by

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LUCKERT, J.: This appeal raises the issue of whether a district court can order a
child support obligor to cooperate with a child support obligee in the obligee's efforts to
obtain insurance on the obligor's life if the obligor objects to the issuance of the life
insurance policy. We hold that a district court cannot issue such an order because the
order would be contrary to public policy as expressed by the Kansas Legislature in
K.S.A. 40-453(a), which provides that an insurable interest does not exist if a person
whose life is insured makes a written request for the termination or nonrenewal of the
policy. Because our holding is contrary to the order of the district court and the Court of
Appeals in this case, we reverse those decisions.

FACTS AND PROCEDURAL BACKGROUND

At a hearing in the divorce proceeding between Marc and Susan Hall, Susan asked
the court to order Marc to "cooperate" with her to obtain insurance on Marc's life at
Susan's expense. Susan specified that she wanted the life insurance as security for the
payment of any maintenance or child support the court would order Marc to pay. Susan
clarified that she was not asking Marc to pay for the life insurance. Marc objected to
Susan's request, arguing the court lacked jurisdiction to enter the order.

In the decree of divorce, the court ordered Marc to pay maintenance and child
support. In addition, despite Marc's objection, the district court ordered Marc to
"cooperate" with Susan's attempts to obtain insurance on Marc's life at Susan's own
expense. The court ruled:

"K.S.A. 60-1610[(a)(1)] states that the court shall make provisions for the
support and education of the minor children. The Court finds that a major portion of the
current support and education of the minor child is coming from Mr. Hall. That if the
child were to lose that financial assistance, it would seriously affect his support and
education. Since mother is willing to pay for the cost of life insurance, Court will order
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that Mr. Hall cooperate in Mrs. Hall's purchase of the life insurance policy to ensure
support and education in case he were to pass away. I will grant that request."

Marc timely appealed to the Court of Appeals. The Court of Appeals affirmed the
district court's order. In re Marriage of Hall, 43 Kan. App. 2d 392, 396, 225 P.3d 764
(2010). Marc filed a petition for review which this court granted. Consequently, this court
has jurisdiction under K.S.A. 20-3018(b).

COURT OF APPEALS DECISION

The Court of Appeals first rejected Marc's argument that the district court
impermissibly created and divided a property interest under K.S.A. 60-1610(b)(1)
(division of property). The Court of Appeals determined the district court was merely
attempting to allow Susan the opportunity to secure the child support payments that it had
ordered Marc to pay. In addition, the panel concluded the district court had subject matter
jurisdiction to enter such an order under K.S.A. 60-1610(a)(1) (child support and
education of minor children). Marriage of Hall, 43 Kan. App. 2d at 394. Marc did not
challenge these holdings in his petition for review.

Instead, Marc focuses on another holding of the Court of Appeals, which was that
the district court's order did not violate public policy. In reaching this holding, the Court
of Appeals concluded the only requirement in Kansas is an "insurable interest" between
the party taking out the insurance policy and the party whose life is insured. The court
held that Susan clearly had an insurable interest in Marc's life as long as she was entitled
to receive maintenance and child support payments. Marriage of Hall, 43 Kan. App. 2d at
395. Before us, Marc contends the order clearly violates Kansas public policy. As we will
discuss, we agree with this argument and consequently reverse this holding of the Court
of Appeals.

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Finally, the Court of Appeals rejected Marc's argument that the district court's
order amounted to a continuation of child support beyond the age of majority and of
maintenance beyond the ordered period. The Court of Appeals determined the district
court did not err because once Marc's child support and maintenance obligations end,
Susan will no longer have an insurable interest in Marc's life. Marriage of Hall, 43 Kan.
App. 2d at 395-96. Marc renews this argument in his petition for review, but we do not
reach the question because we reverse the Court of Appeals on its public policy holding.

ANALYSIS

The specific public policy issue that we address is whether the district court's order
violates Kansas public policy because it is contrary to K.S.A. 40-453(a), which provides
that an insurable interest ceases when an insured under a life insurance policy requests
the insurer to terminate or nonrenew the policy applicable to such person's life. Marc
contends that this statute provides him an "absolute statutory right to terminate any
insurance policy on his life." An order depriving him of the ability to exercise his
statutory right is against public policy, he argues.

This issue requires us to interpret K.S.A. 40-453(a). Interpretation of a statute is a
question of law subject to unlimited review. Board of Miami County Comm'rs v. Kanza
Rail-Trails Conservancy, Inc., 292 Kan. 285, 320, 255 P.3d 1186 (2011).

K.S.A. 40-453 provides:

"(a) Determination of the existence and extent of the insurable interest under any
life insurance policy shall be made at the time the contract of insurance becomes effective
but need not exist at the time the loss occurs. In the case of life insurance policies issued
or renewed for a specific term, an insurable interest shall not exist for any policy term
with respect to any person previously insured by the policy who has, in writing, requested
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the insurer to terminate or nonrenew the insurance applicable to such person's life."
(Emphasis added.)

Under the plain language of the statute, if Susan obtained a life insurance policy
on Marc's life and Marc then requested, in writing, that the insurer terminate or nonrenew
the insurance, Susan would not have an insurable interest. That is not exactly the situation
presented. Rather, the district court ordered Marc to cooperate in obtaining the insurance.
But Marc argues this order would be futile if he can terminate the insurable interest and
that the legislature's grant of a right of termination expresses a public policy that his life
cannot be insured over his objection.

The ultimate reason for Marc to raise this issue is that an insurance contract is not
enforceable in Kansas if it conflicts with public policy. National Bank of Andover v.
Kansas Bankers Surety Co., 290 Kan. 247, 258, 225 P.3d 707 (2010). Yet, as the Court of
Appeals noted in this case, prior decisions of this court have not focused on consent as a
basis for a public policy violation and instead have focused on whether the person taking
out the life insurance policy has an insurable interest in the life that is insured. Often
these holdings have been in the context of a question regarding whether an insurance
policy is, in essence, a wager on the life of the insured or whether the possibility of
insurance proceeds encourages one to take another's life. Both situations are contrary to
this state's public policy. E.g., Insurance Co. v. Elison, 72 Kan. 199, 203-04, 83 P. 410
(1905). Because of these public policy concerns, "this court has repeatedly held that a
person who has no insurable interest in another's life cannot take out insurance thereon.
[Citations omitted.]" Geisler v. Mutual Benefit H.&A. Ass'n, 163 Kan. 518, 522, 183 P.2d
853 (1947); see Tromp v. National Reserve Life, 143 Kan. 98, 102-03, 53 P.2d 831
(1936) (insurable interest created by alimony obligation); Colver v. Central States Fire
Ins. Co., 130 Kan. 556, 562, 287 P. 266 (1930) ("Furthermore, a salutary public policy
will not give judicial recognition to a contract of insurance on the life or property of
another person issued in behalf of one who has no insurable interest therein."). These
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cases support the Court of Appeals' conclusion that the public policy focus is on whether
there is an insurable interest.

Nevertheless, since Elison and Geisler, the Kansas Legislature has provided
guidance on the public policy in this area through the development of statutory law,
namely with the enactment in the 1990's of several statutes, including K.S.A. 40-450,
which requires an insurable interest in the life of another in order to obtain life insurance
on another's life; K.S.A. 40-452, which allows an employer to insure an employee's life if
the employee consents; and the statute on which Marc focuses, K.S.A. 40-453, which
indicates an insurable interest in the life of insured terminates if the insured objects to the
policy. After these statutes were adopted, only one appellate court case has discussed the
public policy implications of K.S.A. 40-453—In re Marriage of Day, 31 Kan. App. 2d
746, 74 P.3d 46 (2003).

Marriage of Day involved a divorce action in which the district court ordered the
husband to continue ordinary and term life insurance policies on his mother's life and
upon her death to pay part of the proceeds to his ex-wife. The ex-wife maintained that she
should be entitled to proceeds from the policies because she considered the insurance to
be a form of the parties' retirement. Marriage of Day, 31 Kan. App. 2d at 748.

On appeal, the Marriage of Day court determined there was clearly an insurable
interest in the mother's life at the time the policy was taken out, which the court
determined was the pertinent time. Marriage of Day, 31 Kan. App. 2d at 752-53. Yet, the
court found "there are several basic problems with the trial court's rulings." Marriage of
Day, 31 Kan. App. 2d at 756.

Specifically, the Marriage of Day court identified at least three problems with the
trial court's order. First, the Marriage of Day court noted that "recent legislative action
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shows a public policy contrary to [the ex-wife's] arguments." Marriage of Day, 31 Kan.
App. 2d at 756. The court discussed the legislative history of K.S.A. 40-453(a), noting:

"[T]he provisions resulted from H.B. 2083 which was originally intended to allow
employers to have insurable interests in employees. Minutes of Senate Committee on
Financial Institutions and Insurance, March 12, 1993. The House act was amended in
conference committee, and the broad language of K.S.A. 40-453(a) resulted. This
wording, while upholding [the ex-wife's] arguments as to the initial existence of an
insurable interest continuing until the time the loss occurs, makes the insurable interest
not exist when the insured asks, in writing, for the insurer to terminate or nonrenew the
coverage." Marriage of Day, 31 Kan. App. 2d at 756.

Second, the Marriage of Day court concluded K.S.A. 40-453(a) "also shows the futility
of the trial court's ruling, as [the mother] has an absolute right to require the policy be
terminated or nonrenewed." Marriage of Day, 31 Kan. App. 2d at 756. Third, the
Marriage of Day court determined that the district court was, in effect, requiring a
continuance of a gambling contract on the mother's life as she would have to "die short of
reaching her normal life expectancy in order to benefit both husband and wife." Marriage
of Day, 31 Kan. App. 2d at 757. Under this scenario and in light of Kansas' long-standing
public policy against insurance in favor of one who is more interested in the insured's
death than continued life, the Marriage of Day court, citing Elison, held that "[t]o require
the coverage to be continued against [the mother's] wishes is against public policy."
Marriage of Day, 31 Kan. App. 2d at 757.

In the present case, the Court of Appeals found Marriage of Day factually
distinguishable and did not consider the case any further. Marriage of Hall, 43 Kan. App.
2d at 395. Further, the Court of Appeals did not expressly consider Marc's arguments
based on K.S.A. 40-453.

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While we agree that Marriage of Day is factually distinguishable, we find the
decision's analysis of K.S.A. 40-453(a) persuasive and applicable to this case. The order
at issue in this case suffers from the first two problems identified by the Marriage of Day
court. Primarily, as Marc argues, K.S.A. 40-453(a) grants him a statutory right to request
that a policy insuring his life be terminated or nonrenewed. In granting this right, the
Kansas Legislature expressed a public policy that a life insurance policy cannot continue
without the insured's consent. Second, while life insurance could possibly be obtained,
the order to "cooperate" would be futile because of Marc's statutory right.

Although the Court of Appeals did not specifically discuss K.S.A. 40-453(a) or the
portion of the Marriage of Day decision discussing the implications of the statute, it did
generally consider Marc's argument that the district court's order was against public
policy because consent of an insured is required in order to obtain insurance on that
person's life, stating: "[O]ur research has found no case law or statute in Kansas that
specifically requires the insured to consent to having a life insurance policy on his or her
life." Marriage of Hall, 43 Kan. App. 2d at 395. Based on this conclusion, the Court of
Appeals also distinguished cases from other jurisdictions. The court noted that most other
states requiring consent do so based on a specific state statute that requires the consent of
the insured in order to obtain life insurance. Because Kansas has no similar provision, the
Court of Appeals in this case dismissed the persuasive authority of these cases. Marriage
of Hall, 43 Kan. App. 2d at 395.

We agree that in a situation other than where an employer insures the life of an
employee, there does not appear to be a statute that requires consent of the person whose
life is insured in order for a life insurance policy to be issued. Nevertheless, as Marc
argues, K.S.A. 40-453(a) allows the person whose life is insured to object to the
continuance of the policy, and when such an objection is stated, the insurable interest
ends. By giving Marc or others the right to cancel a policy, the legislature, in essence, has
required ongoing consent. From a public policy standpoint, there is little or no difference
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between K.S.A. 40-453(a) and K.S.A. 40-452(a)—both, in essence, require the insured's
consent in order for the life insurance policy to remain effective. There is, of course, a
practical difference between the consent being required before the policy is obtained and
allowing the insured to give written notice that a policy should be terminated or
nonrenewed. After an examination of the legislative history, we can discern no reason for
the legislature to adopt a prospective approach in one statute and a retrospective approach
in another. Although this difference has multiple implications and creates potential legal
distinctions, the public policy implications of both statutes overlap; the Kansas
Legislature has expressed its intent that a life insurance policy cannot be obtained or
maintained if the insured objects. See Phillips v. St. Paul Fire & Marine Ins. Co., 289
Kan. 521, 525-26, 213 P.3d 1066 (2009) (court must ascertain legislature's intent through
statutory language unless statute's language is unclear or ambiguous).

In light of that legislative expression of public policy, we find the decisions from
other states persuasive. Generally, courts in other jurisdictions have held that a court
cannot issue an order requiring insurance to secure payment of child support if the person
whose life is insured does not consent.

For example, in Davis v. Davis, 275 Neb. 944, 750 N.W.2d 696 (2008), appellant
filed a postdissolution motion requesting an order directing her ex-husband to submit to a
physical examination so that she could obtain, at her own expense, a policy on his life,
naming her as beneficiary, as security for his alimony and child support obligations. The
Nebraska Supreme Court assumed that appellant had an insurable interest. But because
Neb. Rev. Stat. § 44-704 (2004) specifically requires an adult insured to consent to an
insurance policy on his or her life unless the individual or the individual's spouse is the
owner of the policy, the Nebraska Supreme Court ruled that, regardless of an insurable
interest, the appellant did not have a right to "own" a policy on her ex-husband's life
without his consent. Davis, 275 Neb. at 948.

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Similarly, in Hopkins v. Hopkins, 328 Md. 263, 614 A.2d 96 (1992), after the
appellant was granted a divorce and awarded alimony payments, she filed in the district
court a motion to compel her ex-husband to cooperate with her request for insurance on
his life. The appellant maintained that she would pay the premiums and all other costs of
the policy; all that was required of the ex-husband was a physical examination. Hopkins,
328 Md. at 267. The court ruled that the appellant had an insurable interest in her ex-
husband's life as long as he owed her alimony. Hopkins, 328 Md. at 269. Even so,
because Md. Insurance Code, Art. 48A, § 371 (1991) required written consent of the
insured, the Maryland court ruled that "[a] court order requiring the proposed insured to
cooperate with the efforts of a party with an insurable interest to obtain a policy of
insurance on his life can not effect the consent contemplated by § 371." Hopkins, 328
Md. at 275. The court looked to other jurisdictions with similar statutes and noted that the
cases in those jurisdictions make it clear that it is against the public policy of the state to
permit an individual to insure the life of another without that person's knowledge or
consent. Hopkins, 328 Md. at 271; see PHL Variable Ins. Co. v. Price Dawe 2006 Ins.
Trust, 28 A.3d 1059, 1076 (Del. 2011) (Delaware statute prohibits policies issued without
the consent of the insured except in narrow situations); Lowe v. Rennert, 869 S.W.2d 199,
203 (Mo. App. 1993) (Missouri statute expressly requires consent except as to children);
Meerwarth v. Meerwarth, 128 N.J. Super. 285, 289, 319 A.2d 779 (1974) (denying, as a
violation of his right to privacy, ex-wife's motion for ex-husband to submit to physical
examination so she could secure life insurance on husband's life as security for alimony);
cf. Cook v. Bankers Life and Cas. Co., 329 N.C. 488, 493, 406 S.E.2d 848 (1991)
(Although generally the consent of the insured is required even if a person has an
insurable interest, the North Carolina statute "allows a married person to insure the life of
his or her spouse and it does not provide that such a person must have the consent of the
spouse to do so. We do not believe we should add this requirement to the statute.").

Likewise, in Kansas, it would be against the public policy expressed in K.S.A. 40-
453(a) to prohibit an insured from expressing his or her objection to a life insurance
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policy on the insured's life. In light of this expression of intent by the legislature, courts
"are not free to act on . . . [their own] view of wise public policy" in matters governed by
legislation. Higgins v. Abilene Machine, Inc., 288 Kan. 359, 364, 204 P.3d 1156 (2009).
Courts should instead "leave the guidance of public policy through statutes to the
legislature." Higgins, 288 Kan. at 364; see also O'Bryan v. Columbia Ins. Group, 274
Kan. 572, Syl. ¶ 2, 56 P.3d 789 (2002) ("Courts should avoid making public policy where
the statutory law has developed.").

Hence, we hold a court order requiring a child support obligor to cooperate with a
child support obligee's efforts to obtain insurance on the life of an obligor is against
public policy, as expressed by the Kansas Legislature in K.S.A. 40-453(a), if the obligor
objects to the order. Because Marc objected to the order, the district court's order in this
case was contrary to this public policy. As a result, we conclude the court abused its
discretion in issuing the order. See State v. Ward, 292 Kan. 541, 550, 256 P.3d 801
(2011), cert. denied 132 S. Ct. 1594 (2012) (a court abuses its discretion if its decision is
based on an error of law).

Judgment of the Court of Appeals affirming the district court is reversed.
Judgment of the district court is reversed.

MORITZ, J., not participating.
THOMAS H. SACHSE, District Judge, assigned.
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REPORTER'S NOTE: District Judge Sachse was appointed to hear case No. 101,834
vice Justice Moritz pursuant to the authority vested in the Supreme Court by Art. 3, § 6(f)
of the Kansas Constitution.