American General Life Insurance Company v. Jenson

Filing 33

REPORT AND RECOMMENDATION recommending granting defendant Amy Jenson's 15 MOTION for Summary Judgment. Objections to R&R due by 3/29/2012. Signed by US Magistrate Judge Veronica L. Duffy on 03/12/12. (Duffy, Veronica) Modified by changing document type to Opinion on 3/13/2012 (DLC).

UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH DAKOTA
WESTERN DIVISION
AMERICAN GENERAL LIFE
INSURANCE COMPANY,
Plaintiff,
vs.
AMY JENSON,
Defendant.

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CIV. 11-5057-JLV
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) REPORT AND RECOMMENDATION
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INTRODUCTION

This matter is before the court on a complaint filed by plaintiff American
General Life Insurance Company (“American General”) interpleading the funds
from a life insurance policy on decedent Patrick M. Jenson with the court and
seeking a declaration from the court as to who is entitled to those policy
proceeds. Jurisdiction is premised on diverse citizenship of the parties and an
amount in controversy in excess of $75,000. See 28 U.S.C. § 1332. Defendant
Amy Jenson, Patrick’s ex-wife, is the only party to make an appearance and
assert a claim to the life insurance proceeds. She now moves for the entry of
summary judgment in her favor on undisputed facts. See Docket No. 15. The
district court, the Honorable Jeffrey L. Viken, referred Ms. Jenson’s motion to
this magistrate judge for a recommended disposition pursuant to 28 U.S.C.
§ 636(b)(1)(B).

FACTS
The facts upon which Ms. Jenson bases her motion are entirely
undisputed by American General. As such, the following is a recitation of the
facts taken from Ms. Jenson’s statement of undisputed facts found at Docket
No. 17. Additional facts have been added from the depositions of Ms. Jenson
and Hugh Boyle and from the life insurance policy at issue.
Amy Jenson and Patrick Jenson were married in South Dakota on July
5, 2003, after having dated for 15 years. They lived together in Rapid City,
South Dakota. They had a son in 2004 and a daughter in 2006. Those
children are still minors today. Amy and Patrick each had their own, separate
checking account. They never maintained a joint checking account for
household expenses.1
In 2002, before their marriage, Pat and Amy met Hugh Boyle of BMS
Financial Advisors in Rapid City. Mr. Boyle provided estate planning services,
selling life insurance and securities. He had his series 7, 63, 65, 24, and 51
licenses. As part of his overall estate planning advice, Mr. Boyle recommended
that Pat and Amy purchase life insurance for themselves. In 2006, the
Jensons, now husband and wife, followed Mr. Boyle’s advice, purchasing
policies from American General through Mr. Boyle.

1

The Jensons did have one joint account that was used solely to pay
expenses for a cabin that the Jensons owned jointly with Patrick’s parents.
2

On May 18, 2006, American General issued to Patrick Jenson a “20 year
renewable level benefit term life insurance” policy in the amount of $500,000.
See Docket No. 20-1, page 4. Under the terms of the policy, Patrick was
required to pay an annual premium in the amount of $645.00 (which was
broken down into 12 equal installments that were billed and paid monthly),
and American General agreed to pay $500,000 upon Patrick’s death. American
General promised to keep the premium payment the same for the first 20 years
of the policy, after which American General reserved the right to change the
premium. Amy was named as the beneficiary on Patrick’s policy. See Docket
No. 26-1, page 11.
The policy says nothing about the effect of divorce upon one’s
designation of beneficiary, although the policy and accompanying materials
make specific references to other provisions of South Dakota law, as well as
specific provisions of California, New Mexico and Vermont law. See Docket No.
20-1 at pages 5, 12-13. The policy provisions state that the owner may change
the beneficiary by written notice to American General. See Docket No. 26-1,
page 2. The policy states that the beneficiary remains as stated in the policy
unless the owner changes it. Id. The policy states that its terms may not be
changed except in writing by an officer authorized to make such changes. Id.
Mr. Boyle never told the Jensons about any change in beneficiary by operation

3

of law after a divorce because, quite simply, he himself was unaware of any
such possibility.
A mirror-image American General policy in the same amount insuring
Amy’s life was issued. Amy’s policy named Patrick as the beneficiary.
Throughout the life of Patrick’s American General life insurance policy, Amy
paid the premiums on the policy out of her personal, separate checking
account via direct electronic funds transfer. She never missed any premium
payment at any time. Patrick’s life insurance policy did not list any contingent
beneficiary other than Amy. Id. The couple met annually with Mr. Boyle to
review their financial circumstances.
Patrick developed a problem with alcohol that became an issue in the
Jensons’ marriage. Amy wanted Patrick to seek help for his alcohol problem.
When he refused, Amy divorced Patrick. A default divorce decree was entered
on February 24, 2008. Amy told Patrick that he needed to get help with his
alcohol consumption and the divorce was intended to motivate him to do so.
Patrick never moved out of the marital residence. Amy and Patrick
continued to live together and to function as a couple, raising their children
and enjoying marital relations. Patrick did seek help for his alcoholism,
attending inpatient treatment in 2007, 2008, and 2009.2 Other than the times

2

The treatment program in 2007 lasted two weeks, the 2008 program
lasted 30 days, and the 2009 program lasted six months. While attending
treatment, Patrick lived at the treatment facilities.
4

when he attended inpatient treatment or when he was drinking, Patrick
continued to reside with Amy and their children in their home in Rapid City.
Patrick never had a separate residence.
Patrick continued to list the address at which he and Amy lived as his
residence post-divorce. The couple sent out Christmas cards featuring them
and their children. Patrick wrote letters in which he continued to refer to Amy
as his “wife.” Many of the couple’s friends did not even know that Amy and
Patrick had divorced.
Following the divorce, Amy and Patrick had an agreement regarding child
care, household and other expenses. Patrick contributed $500.00 per month,
a figure that coincided with his child support obligation pursuant to the
stipulated divorce decree. This $500 payment satisfied all Patrick’s monetary
obligations to the family and was his sole financial contribution.
During the divorce, Amy changed the beneficiary on her life insurance
policy to her mother. In 2010, after Patrick had finished a six-month
treatment program for alcohol abuse the previous year, Amy changed the
beneficiary designation on her own life insurance policy back to Patrick. She
indicated that she wanted Patrick to have the life insurance money if she
should die.
Part of the divorce decree split an Individual Retirement Account
(“IRA”)in Patrick’s name 50:50 between Patrick and Amy. Patrick met with

5

Mr. Boyle to discuss this change in Patrick’s IRA. At that time, Mr. Boyle
asked Patrick if he wanted to remove Amy as the beneficiary on his life
insurance policy. Patrick told Mr. Boyle he did not want to change his
policy–he wanted Amy to remain as the beneficiary. The post-divorce
arrangement was the same as when the couple was married–Amy continued to
pay the premiums on Patrick’s policy every month out of her own personal
checking account. Patrick knew of and consented to this arrangement. Amy
would not have continued to pay the premiums on Patrick’s policy if she had
not been named as the beneficiary on that policy.
Patrick expressed this agreement to Hugh Boyle, the parties’ financial
advisor, at annual face-to-face meetings that the couple had with Mr. Boyle
post-divorce. The couple told Mr. Boyle of their divorce. Mr. Boyle asked
Patrick if he still wanted to keep Amy as the beneficiary on his policy. Patrick
told Mr. Boyle that he did want to keep Amy as the beneficiary. Patrick told
Mr. Boyle that he wanted Amy to have the proceeds of his life insurance policy.
Mr. Boyle did not have Patrick fill out any additional paperwork as Amy
was already the beneficiary on the policy. Specific post-divorce discussions
occurred between Mr. Boyle and Patrick regarding Amy continuing as the
beneficiary on Patrick’s life insurance policy in the years 2009 and 2010. In
each instance, Patrick told Mr. Boyle that it was his intention that Amy remain
as his beneficiary. Patrick never changed the beneficiary designation on his life

6

insurance policy. Mr. Boyle never had Patrick fill out a new designation of
beneficiary form post-divorce because Mr. Boyle did not believe such a redesignation was necessary. Mr. Boyle had no knowledge of SDCL § 29A-2-804
or the effect of that statute.
Patrick died on January 2, 2011. At the time of his death, all premiums
had been timely paid by Amy. There were no contingent beneficiaries on
Patrick’s life insurance policy. There are no conflicting claims or claimants
regarding the proceeds to this policy. Defendant Amy Jenson was and is the
only person making a claim to the benefits.
This lawsuit was filed by American General because of a South Dakota
probate statute, SDCL § 29A-2-804, which generally provides that a divorce
automatically revokes any revocable disposition of property to an ex-spouse.
This statute is discussed in more detail below. The two issues presented by
Amy’s motion are: (1) is the revocation provided by SDCL § 29A-2-804
absolute, or does it establish only a presumption which can be rebutted by
showing a contrary intent on the part of the decedent, and (2) was there a
“contract” between Patrick and Amy within the meaning of the exception to the
revocation provided for under § 29A-2-804?
The court notes at the outset what is not at issue here: American
General’s obligation to pay out the proceeds from Patrick’s life insurance policy.
American General must pay those proceeds, but the question presented is

7

whether those proceeds go to Amy as the designated beneficiary under the
policy, or whether they are paid into Patrick’s estate.
DISCUSSION
A.

Summary Judgment Standard
Under Rule 56(c) of the Federal Rules of Civil Procedure, a movant is

entitled to summary judgment if the movant can “show that there is no genuine
issue as to any material fact and that [the movant] is entitled to judgment as a
matter of law.” In determining whether summary judgment should issue, the
court views the facts, and inferences from those facts, in the light most
favorable to the nonmoving party. See Matsushita Elec. Co. v. Zenith Radio
Corp., 475 U.S. 574, 587-88 (1986). The burden is placed on the moving party
to establish both the absence of any genuine issue of material fact and that the
moving party is entitled to judgment as a matter of law. FED. R. CIV. P. 56(a).
Once the movant has met its burden, the nonmoving party may not
simply rest on the allegations in the pleadings, but must set forth specific facts,
by affidavit or other evidence, showing that a genuine issue of material fact
exists. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986); FED. R. CIV.
P. 56(e)(each party must properly support its own assertions of fact and
properly address the opposing party’s assertions of fact, as required by Rule
56(c)). In determining whether a genuine issue of material fact exists, the court
views the evidence presented in light of which party has the burden of proof

8

under the underlying substantive law. Id. Summary judgment will not lie if
there is a genuine dispute as to a material fact, that is, if the evidence is such
that a reasonable jury could return a verdict for the nonmoving party.
The substantive law identifies which facts are “material” for purposes of a
motion for summary judgment. Anderson, 477 U.S. at 247. “Only disputes
over facts that might affect the outcome of the suit under the governing law will
properly preclude the entry of summary judgment. Factual disputes that are
irrelevant or unnecessary will not be counted.” Id. at 248 (citing 10A C.
Wright, A. Miller, & M. Kane, FEDERAL PRACTICE AND PROCEDURE § 2725, pp.
93-95 (1983)). The Supreme Court has further explained that:
the issue of material fact required by Rule 56(c) to be present to
entitle a party to proceed to trial is not required to be resolved
conclusively in favor of the party asserting its existence; rather, all
that is required is that sufficient evidence supporting the claimed
factual dispute be shown to require a jury or judge to resolve the
parties’ differing versions of the truth at trial.
Anderson, 477 U.S. at 248-49 (quoting First National Bank of Arizona v. Cities
Service Co., 391 U.S. 253, 288-89 (1968)(emphasis added)). Essentially, the
availability of summary judgment turns on whether a proper jury question is
presented. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-59 (1970).
“The inquiry performed is the threshold inquiry of determining whether there is
the need for a trial-whether, in other words, there are any genuine factual
issues that properly can be resolved only by a finder of fact because they may
reasonably be resolved in favor of either party.” Anderson, 477 U.S. at 250.
9

American General cannot properly be said to oppose Amy’s motion for
summary judgment as it never affirmatively argues for entry of judgment
against Amy and, as stated above, does not contest any of the facts asserted by
her. Nevertheless, a failure by an opposing party to resist summary judgment
“does not automatically compel resolution of [the motion] in favor of” the
movant. United States v. One Parcel of Real Property, 27 F.3d 327, 329 n.1
(8th Cir. 1994); Canada v. Union Elec. Co., 135 F.3d 1211, 1213 (8th Cir.
1997). Federal Rule of Civil Procedure 56(e) allows for the possibility that a
party may fail to resist another party’s assertion of fact. When this happens,
the court must still make a determination as to whether the moving party is
entitled to judgment in her favor on the merits. One Parcel of Real Property, 27
F.3d at 329 n.1. See also Fed. R. Civ. P. 56(e)(3) (upon a party’s failure to
contest facts asserted by the movant, the district court may grant summary
judgment if the facts and the law show that the movant is entitled to judgment
in her favor).
B.

Whether SDCL § 29A-2-804 Creates an Absolute Revocation or Only
a Presumption of Revocation that May be Rebutted?
This case is before the court on diversity jurisdiction. Accordingly, the

substantive law of the forum state–here, South Dakota–must be applied. Erie
R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938). Where there is no direct state
court decision on point, this court must attempt to predict how the state court
would decide the issue, using decisions from other jurisdictions as guides.
10

Midwest Oilseeds, Inc. v. Limagrain Genetics Corp., 387 F.3d 705, 715 (8th
Cir. 2004).
Section 29A-2-804 of the South Dakota Codified Laws is adopted from
the Revised Uniform Probate Code (“UPC”). The South Dakota statute provides
that “. . . a divorce or annulment of a marriage . . . [r]evokes any . . . revocable
disposition of property made by a divorced individual to a former spouse in a
governing instrument . . .” See SDCL § 29A-2-804(b)(1).
The proceeds of a life insurance policy are a “disposition of property”
covered by the statute. Section 29A-2-804 defines “disposition of property” as
follows:
(a)

In this section:
(1) “Disposition or appointment of property” includes a
transfer of an item of property or any other benefit to a
beneficiary designated in a governing instrument.

See SDCL § 29A-2-804(a)(1).
A “governing instrument is defined by the statute as:
“Governing instrument” means a will, trust, or other governing
instrument executed by the divorced individual before the divorce
or annulment of the individual’s marriage to the former spouse.
See SDCL § 29A-2-804(a)(4). The court notes that the statute commits the
cardinal sin of using the term “governing instrument” to define the term
“governing instrument,” thus clouding the utility of the definition.
Nevertheless, “governing instrument” is elsewhere defined under the South

11

Dakota Code in a way which makes clear that a life insurance policy is a
“governing instrument” which makes a “disposition of property.” See SDCL
§ 29A-1-201(19) (defining “governing instrument” to include insurance and
annuity policies). In addition the comments to the UPC indicate that this
provision was expanded in 1990 to include “will substitutes” such as life
insurance policies. UPC § 2-804, cmt.
The beneficiary designation in a life insurance policy is a “revocable”
disposition. A “revocable” disposition is one that, “with respect to a disposition,
appointment, provision, or nomination,” “the divorced individual, at the time of
the divorce. . . was alone empowered, by law or under the governing
instrument, to revoke or cancel the designation in favor of the former
spouse . . . whether or not the divorced individual then had the capacity to
exercise the power.” See SDCL § 29A-2-804(a)(6).
Exceptions to the statutory revocation-upon-divorce provision are made
where there exists, inter alia, “a contract relating to the division of the marital
estate made between the divorced individuals before or after the marriage,
divorce, or annulment. . .” See SDCL § 29A-2-804(b). The divorcing spouses
may also avoid the statutory revocation provided under § 29A-2-804(b) by
expressly providing otherwise in the terms of the governing instrument. Id. In
addition, a court order to the contrary will avoid the statutory revocation. Id.

12

In situations covered by § 29A-2-804, the former spouse to whom the
disposition would have been made is treated as having predeceased the
decedent or having disclaimed the property. Id. at (d). A remarriage between
the divorced spouses nullifies the statutory revocation and revives the
previously-revoked disposition of property. Id. at (e). A third-party payor such
as American General cannot be held liable for having made a payment of a
benefit to an ex-spouse whose gift was revoked by action of the statute if it
relied in good faith on the governing instrument and had no notice of the
divorce. Id. at (g)(1). If the third-party payor had written notice of the divorce,
it can be held liable for making a payment to an ex-spouse of the decedent. Id.
Amy asserts that § 29A-2-804 merely creates a rebuttable presumption
that can be overcome by showing an affirmative intention by the decedent postdivorce to maintain the disposition of property covered by the governing
instrument, here Patrick’s life insurance policy. American General does not
argue affirmatively to the contrary, but seeks the court’s interpretation of the
statute in view of the existing authorities.
The South Dakota Supreme Court has stated that “[s]tatutes are to be
construed to give effect to each statute and so as to have them exist in
harmony.” In re Estate of Meland, 2006 S.D. 22, ¶ 6, 712 N.W.2d 1, 2 (quoting
In re Estate of Jetter, 1997 S.D. 125, ¶ 11, 570 N.W.2d 26, 29). When
interpreting uniform laws such as the UPC, courts are mandated “to effectuate

13

[their] general purpose to make uniform the law of those states which enact
[them].” Id. (quoting Jetter, supra). Interpreting SDCL § 29A-2-804 so as to be
in harmony with other states which have adopted the same UPC provision is
not an easy task, as will be seen below, because there is a split of authority in
interpreting the provision.
The South Dakota Supreme Court has interpreted § 29A-2-804 on only
one occasion--in Buchholz v. Storsve, 2007 S.D. 101, 740 N.W.2d 107. In that
case, Linda Buchholz died, leaving her ex-husband, Harold Storsve, as the
named beneficiary to her state retirement plan. Id. at ¶ 1, 740 N.W.2d at 109.
The divorce decree between Linda and Harold did not address her retirement
plan specifically. Id. at ¶ 3, 740 N.W.2d at 109. At the time of her death,
Linda also left behind a surviving spouse from her second marriage, Walter
Buchholz, who made a claim to the retirement plan proceeds. Id. The trial
court entered judgment in favor of Linda’s surviving spouse, Walter, holding
that § 29A-2-804 operated to revoke her designation of Harold as the
beneficiary to her plan. Id. at ¶5, 740 N.W.2d at 109-10.
The South Dakota Supreme Court affirmed. Id. at ¶ 28, 740 N.W.2d at
114. The court held that Linda’s retirement plan was a governing instrument
that made a disposition of property. Id. at ¶ 10, 740 N.W.2d at 110. The
primary issue on appeal was whether the statute had retroactive effect, as
Linda and Harold’s divorce predated enactment of § 29A-2-804 by 20 years. Id.

14

at ¶¶ 10-17, 740 N.W.2d at 110-13. This, in turn, depended on whether § 29A2-804 was a “rule of construction or presumption.” Id.
When South Dakota adopted the UPC in 1995, it provided that rules of
construction and presumptions would apply retroactively to governing
instruments that had been executed prior to 1995. Id. at ¶ 11, 740 N.W.2d at
111 (citing SDCL § 29A-8-101(b)(2)). The court, citing extensively to a Tenth
Circuit decision, Stillman v. Teachers Ins. & Annuity Ass’n College Retirement
Equities Fund, 343 F.3d 1311 (10th Cir. 2003), held that § 29A-2-804 was a
rule of construction and, thus, should be given retroactive effect under the
UPC. Buchholz, 2007 S.D. at ¶ 12, 740 N.W.2d at 111.
The following passage from Stillman was quoted by the Buchholz court:
The Uniform Probate Code provision on which [§ 2-804(b)] is
modeled derives from the recognition “that when spouses are
sufficiently unhappy with each other that they obtain a divorce,
neither is likely to want to transfer his or her property to the
survivor on death.” . . . Revocation-upon-divorce statutes “reflect
the legislative judgment that when the transferor leaves unaltered
a will or trust or insurance beneficiary designation in favor of an
ex-spouse, this failure to designate substitute takers more likely
than not represents inattention rather than intention.” . . . Thus,
[§ 2-804] attributes an intent to the donor based on an assessment
of a typical donor’s intention. We also note that this statutory
attribution of intent is rebuttable. It applies “[e]xcept as provided
by the express terms of a governing instrument [such as an
annuity contract], a court order, or a contract relating to the
division of the marital estate . . .”
Id. (quoting Stillman, 343 F.3d at 1318 (citations omitted by Buchholz court)).

15

Harold also argued that Linda’s inaction–her failure to remove him as
beneficiary–indicated an intention on Linda’s part to give her retirement plan
proceeds to Harold. Id. at ¶ 16, 740 N.W.2d at 112. The court rejected this
argument, noting that if inaction by a former spouse were sufficient to rebut
the revocation-upon-divorce statute, then the statute’s purpose would be
“eviscerated.” Id. at ¶ 16, 740 N.W.2d at 112. Instead, the court quoted an
Arizona decision holding that if the donor wishes to retain a former spouse as
the beneficiary post-divorce, the donor must evidence this intention in writing
“and must otherwise comply with applicable policy terms.” Id. at ¶ 16, 740
N.W.2d at 112 (quoting Estate of Lamparella, 210 Ariz. 246, 109 P.3d 959, 967
(Ct. App. Div. 1 2005) and citing Mearns v. Scharbach, 12 P.3d 1048 (Wash.
2000)).
Noting that Harold had not shown any evidence that Linda had ever read
the annual statements she received from her retirement plan on which Harold
was shown as the beneficiary, the court held that Harold “fail[ed] in his burden
under SDCL 29A-2-804 to show Linda’s inaction rises to a clear indication of a
contrary intent to her decree of divorce from [Harold] and its complete division
of their marital assets.” Id. at ¶ 17, 740 N.W.2d at 112. This statement
implies that the South Dakota Supreme Court viewed § 29A-2-804 as a
rebuttable presumption, otherwise there would be no point in evaluating the
quality of the evidence adduced by Harold.

16

Although the Buchholz decision is helpful to this court’s analysis, it is
not determinative. The Buchholz decision involved a decedent donor who
evinced no overt intent as to her desire to benefit Harold. There was no
evidence that she wanted to remove him as beneficiary, and there was no
evidence that she wanted to keep him in that capacity. In all likelihood,
Linda’s situation was the exact situation intended to be covered by UPC
§ 2-804: inattention by a divorced donor.
Here, by contrast, Patrick made known his specific intention to benefit
Amy by verbally expressing that intention to both Amy and to American
General’s agent, Hugh Boyle. Mr. Boyle never asked Patrick to execute a new
designation of beneficiary form in Amy’s favor because he believed none was
necessary. Amy’s claim to the benefits under Patrick’s American General life
insurance policy raises two questions: (1) does SDCL § 29A-2-804 create a
rigid rule of revocation, or is it a rebuttable presumption; and (2) if rebuttable,
what evidence is sufficient to rebut the statutory presumption of revocation?
A case involving nearly-identical facts is an unreported decision from the
District of Alaska, State Farm Life Ins. Co. v. Davis, 2008 WL 2326323
(D. Alaska 2008). In that case, a husband and wife were married for 28 years.
Id. at *1. Five years prior to their divorce, the husband took out a life
insurance policy on himself, naming his then-wife as the beneficiary. Id. The
couple then divorced and the husband died four years later. Id. After the

17

divorce, the husband had verbally told an agent of the life insurance company
that he wanted his former wife to remain as the beneficiary on his policy. Id.
The insurance agent in Davis, like Mr. Boyle in this case, did not have the
husband execute any other document because she believed none was
necessary since the ex-wife was already designated as the husband’s
beneficiary on the policy. Id. The direct issue presented in that case was the
same as here: did Alaska’s revocation-upon-divorce statute (identical in effect
to SDCL § 29A-2-804) create a rigid rule of revocation, or merely a rebuttable
presumption that could be overcome by presenting evidence of a contrary
intent on the part of the decedent? Id. at *2.
The Alaska District Court reviewed decisions from Arizona and California
and the Stillman decision involving similar statutes and concluded that the
Alaska Supreme Court would decide that the rule, as a rule of construction,
created only a rebuttable presumption.3 Id. at *4. To overcome the
presumption, the Davis court held that the wife must present proof by a
preponderance of the evidence that the decedent actually intended her to be
the beneficiary of the life insurance policy despite their divorce. Id.

3

The Alaska District Court, as this court does, exercised jurisdiction over
the Davis case by reason of the diverse citizenship of the parties and, thus, was
required to apply state law. Davis, 2008 WL 2326323 at *1. Because no
Alaska Supreme Court opinion on point existed, the Alaska District Court had
to predict how the Alaska Supreme Court would decide the issue. Id. at ** 2, 4.
18

The court noted that the evidence proffered by the wife was an oral
statement by the decedent made to the insurance agent. Id. at *5. However,
the court noted that this would not be considered hearsay because it was “a
statement of the declarant’s then existing state of mind” and thus, within the
exception to the hearsay rule found at Fed. R. Evid. 803(3). Id. Having
determined that the evidence proffered was admissible evidence, the court held
that the wife had rebutted the statutory presumption by presenting proof of the
decedent’s contrary intent by a preponderance of the evidence. Id. The Davis
decision has not been contravened by a higher federal court, nor has the
Alaska Supreme Court disagreed with it.
An interpretation similar to the Davis holding was reached in Allstate Life
Ins. Co. v. Hanson, 200 F. Supp. 2d 1012 (E.D. Wis. 2002). In that case, a
federal district court sitting in diversity stated that Wisconsin’s version of UPC
§ 2-804 “presumptively revokes” an ex-wife’s interest in decedent’s life
insurance proceeds. Id. at 1017. The court went on to explain that
Wisconsin’s revocation-upon-divorce statute “only created a default rule” and
did not prevent the decedent “from maintaining” his former spouse as his life
insurance beneficiary. Id. at 1020. The court stated that the decedent “merely
had to perform some small affirmative act indicating his intent.” Id. For
example, the court stated he could have “altered the life insurance contract,
executed some separate document, or even performed some informal act which

19

[the ex-wife] could use to show a court that she was still his intended
beneficiary.” Id.
However, the district court in the Eastern District of Wisconsin was
interpreting a slightly different version of UPC 2-804 than the one enacted in
South Dakota. Id. The Wisconsin statute provides that the revocation does not
take place in any of the following situations:
1.

the express terms of a governing instrument provide
otherwise.

2.

The express terms of a court order provide otherwise.

3.

The express terms of a contract relating to the division of the
decedent’s and former spouse’s property made between the
decedent and the former spouse before or after the marriage
or the divorce, annulment, or similar event provide
otherwise.

4.

The divorce, annulment or similar event is nullified.

5.

The decedent and the former spouse have remarried or
entered into a new domestic partnership before the death of
the decedent.

If the transfer is made under a governing instrument and the
person who executed the governing instrument had an intent
contrary to any provision of this section, then that provision
is inapplicable to the transfer. Extrinsic evidence may be used
to construe the intent.
See Wis. Statutes Ann. § 854.15(5) (emphasis supplied) (cited by Hanson, 200
F. Supp. 2d at 1020). Thus, the Wisconsin statute being interpreted by the
Hanson court specifically contemplated that the statutory presumption might
be rebutted by “extrinsic evidence” and the statute did not require the
20

“extrinsic evidence” to be written evidence. The South Dakota Supreme Court
cited Hanson favorably, albeit for its holding as to the retroactivity of the
statute. See Buchholz, 2007 S.D. 101, ¶ 12, 740 N.W.2d at 112. The Hanson
decision has also been cited favorably by district courts within the Eighth
Circuit for the same holding. See Lincoln Benefit Life Co. v. Heitz, 468 F.
Supp. 2d 1062, 1068-69 (D. Minn. 2007) (citing to and relying on Hanson in
interpreting Minnesota’s version of UPC § 2-804).
In Coughlin v. Board of Admin. of the Pub. Employees’ Retirement Sys.,
199 Cal. Rptr. 286 (Ct. App, 2d Dist. 1984), the California Court of Appeal was
interpreting a California provision that revoked all beneficiary designations (not
just to an ex-spouse) under a state retirement system when the employee
divorced. Id. at 287. After the divorce was final (and the statutory revocation
had taken place), the employee could fill out a new designation of beneficiary
form and re-designate a new beneficiary or his former spouse. Id.
In Coughlin, the husband had designated his wife as the beneficiary to
his plan. Id. Upon initiating divorce proceedings against his wife, the husband
filled out and filed with the state retirement system a new beneficiary form
designating his mother as the beneficiary. Id. However, because the statute
revoked all designations upon the happening of a divorce, when the husband’s
divorce became final several months later, his designation of his mother as

21

beneficiary would have been statutorily revoked if the court had applied the
California provision strictly. Id. at 286-87.
The court declined to do so because it went against the clear
manifestation of the husband’s intent to benefit his mother. Id. at 286-88. The
court held that the statute was a rule of construction and, as such, should be
liberally construed to give effect to the husband’s intent. Id. at 286. Like
SDCL § 29A-2-804, the California statute was intended to protect the
inattentive donor after he or she divorces a former spouse. Id. at 288. The
husband’s only fault in attempting to carry out his intent was that he acted too
promptly in changing the beneficiary designation–if he had procrastinated and
waited until the divorce was final before redesignating his beneficiary, his
mother would clearly receive the proceeds of his retirement plan. Id. at 28788. The court refused to interpret the revocation-upon-divorce provision
strictly and thereby achieve a result that was exactly the result the provision
was intended to avoid–i.e. a result at odds with the decedent’s intent. Id. at
288.
The court noted that in prior decisions, technical lapses on the part of
the decedent were not used against him to defeat his intent. Id. at 287-88. In
one case, a decedent had properly filled out a designation of beneficiary form,
but failed to file it with the state retirement system before he died. Id. at 287
(citing Watenpaugh v. State Teachers’ Retirement, 336 P.2d 165 (Cal. 1959)).

22

In another, a decedent had properly filled out the form and mailed it to the
state retirement system, but it had not been filed prior to the decedent’s death.
Id. (citing Wicktor v. County of Los Angeles, 2 Cal. Rptr. 352 (Ct. App. 1960)).
In both cases, the court employed a liberal rule of construction to do justice to
the decedent’s intent. Id.
The Coughlin court rejected an argument that its interpretation would
muddy what would otherwise be a “bright-line” rule. Id. at 288-89. The court
noted that, before enactment of the revocation-upon-divorce provision, the law
in California was the opposite: that a designation of beneficiary form would be
given effect regardless of divorce. Id. at 288. After enactment of the provision,
the law in California was that the designation prior to the divorce would not be
given effect. Id. Each rule was equally clear according to the Coughlin court.
Id. Nothing in the legislative history indicated that the California legislature
wished to obliterate the liberal rule of construction to effectuate a decedent’s
intent, which rule pre-dated the enactment of the revocation-upon-divorce rule
by eleven years. Id.
A case presenting a stark contrast to Davis, Hanson, and Coughlin is
Mearns v. Scharbach, 12 P.3d 1048 (Wash. 2000). In that case, the
decedent/husband had taken out several life insurance policies and also had a
retirement plan. Id. at 1050-51. His ex-wife was named as beneficiary in all
these “governing instruments.” Id. The decedent divorced his wife and a few

23

weeks later, called his insurance agent to cancel one of the life insurance
policies on which his ex-wife was a designated beneficiary. Id. at 1050. The
insurance agent reminded the decedent that there was a second life insurance
policy through the Guardian Life Insurance Company that also named the exwife as beneficiary. Id. The decedent stated that he wished his ex-wife to
remain as the beneficiary on the Guardian policy. Id. The agent did not have
the decedent re-designate his ex-wife as beneficiary. Id.
Seven months later, the decedent contacted his employer and changed
all the beneficiaries on his retirement plan and on his life insurance policies
through his employer which named his ex-wife as beneficiary. Id. The
decedent substituted his adult children as beneficiaries on these “governing
instruments.” Id. at 1050-51. When making these changes, the decedent told
the human resources employee that he intended to change the beneficiary
status from his ex-wife to his adult children on some, but not all, of his
policies. Id. at 1051. The decedent died within a few months of making these
changes. Id. at 1050-51.
The ex-wife submitted a claim for the proceeds from the Guardian life
insurance policy on which she remained the named beneficiary, but the adult
children contested her right to the proceeds. Id. at 1051. The children argued
that Washington’s version of UPC § 2-804 revoked the designation of the exwife as beneficiary on the Guardian policy. Id.

24

The Court of Appeals of Washington held that the provisions of the
Washington statute were automatic upon the divorce, and that in order for the
decedent to have maintained the ex-wife as beneficiary, it would have been
necessary for him to redesignate her as beneficiary after the divorce was final.
Id. at 1052. The ex-wife argued that the statute was a remedial statute the sole
purpose of which was to devine a decedent’s intention. Id. Since there was
evidence of her ex-husband’s contrary intention in this case, she argued that
the statute did not apply. Id. The court rejected this argument, stating that
the Washington legislature had adopted its statutory revocation provision in
response to a particular case that had been decided and that there was
legislative history indicating that the legislature wanted an automatic, brightline rule rather than a rule intended to discern a decedent’s intent. Id. at
1052-53.
The ex-wife also argued that, although the statute required a postdivorce redesignation of her as beneficiary, the statute did not require that
redesignation to be in writing. Id. at 1053. The decedent’s oral statements,
she argued, were a redesignation within the meaning of the statute. Id.
Relying on legislative history, which showed that the legislators were told that
the statute required a writing, the Court of Appeals also rejected this argument
by the ex-wife. Id. The court affirmatively held that the decedent, if he wished

25

his ex-spouse to continue to benefit under a life insurance policy or will postdivorce, had to execute a writing to that effect. Id.
The South Dakota Supreme Court, in rejecting the ex-husband’s
argument that the decedent’s inaction showed she wanted him to remain as
beneficiary, cited Mearns with approval for the proposition that if an ex-spouse
wanted to avoid the application of the statute, there must be a writing postdivorce that specifically reaffirmed the decedent’s intention to have the exspouse benefit under the policy. Buchholz, 2007 S.D. 101, ¶ 16, 740 N.W.2d
at 112-13.
Besides the Mearns decision, the other case cited by the South Dakota
Supreme Court for the proposition that the presumption of revocation must be
rebutted in writing is In re Estate of Lamparella, 109 P.3d 959 (AZ Ct. App.
2005). In that case, the decedent, like Linda in the Buchholz case, never
changed a beneficiary designation after his divorce. Id. at 960-61. The ex-wife,
like Harold, argued that her husband’s inaction represented an affirmative
decision that she should remain as beneficiary on an annuity policy. Id. at
961. In addition, the ex-wife submitted an affidavit averring that her exhusband had told her he intended that she remain as the beneficiary, that the
ex-husband had hoped for a reconciliation, and that he had “loved [her] until
the day he died.” Id. at 962.

26

The Court of Appeals soundly rejected the ex-wife’s florid self-serving
testimony, which no other witness confirmed having heard from the decedent.
Id. at 964-65. The court cited Mearns for the proposition that the decedent
must have redesignated his ex-wife as the beneficiary of the annuity in writing
in order to rebut the statutory revocation-upon-divorce presumption. Id.
In a subsequent decision, the Arizona Court of Appeals held that it would
not apply Arizona’s revocation-upon-divorce statute where to do so did not
advance the purpose of the statute. See In re Estate of Rodriguez, 160 P.3d
679, 686-87 (AZ Ct. App. 2007). In that case, Kathryn and Mauro had been
married in 1988. Id. at 681. Unbeknownst to Kathryn, Mauro was married to
someone else at the time, his previous marriage not being dissolved until 1989.
Id. Kathryn died, leaving a will designating Mauro as a beneficiary. Id. The
lower court had ruled that Kathryn’s marriage to Mauro was void ab initio, that
the probate court’s declaration of the invalidity of the marriage was a
“declaration of invalidity” under Arizona’s revocation-upon-divorce statute, and
that the declaration of invalidity of the marriage triggered the revocation-upondivorce statute, revoking any bequest to Mauro under Kathryn’s will. Id. at
682.
The Rodriguez court stated that the statute “rests on the belief that a
spouse who has terminated his or her marriage will not usually wish to leave
any part of his or her estate to the former spouse.” Id. at 686. The court held

27

that the purpose of the statute would not be advanced under these facts, where
Kathryn and Mauro did not terminate their marriage, but rather a court
declared it to be invalid after Kathryn’s death. Id. This contravened the
general rule that “a man may dispose of his property as he sees fit, regardless
of the fact that the prevailing code of morals may consider such disposition as
unwarranted from any standpoint.” Id. The court held that the fact that
Mauro was not validly married to Kathryn did not interfere with Kathryn’s
freedom to dispose of her property as she saw fit. Id. at 687.
Two decisions do not affirmatively endorse the position of the Mearns
court, but are somewhat in the same vein. The Colorado Supreme Court
decided that Colorado’s version of UPC § 2-804 did not violate the constitution
by applying retrospectively to life insurance contracts that had been executed
prior to the enactment of the revocation-upon-divorce provision. In re Estate of
DeWitt, 54 P.2d 849, 859-61 (Colo. 2002). In discussing the statute, the
DeWitt court stated that “[§ 2-804] merely creates a default rule. It did not
prevent [the] decedent from maintaining his former spouse as his designated
beneficiary under the contract. Instead, [the] decedent merely needed to
comply with the statute to maintain that designation.” Id. at 860 (citing
specifically to part (2) of the Colorado statute, which corresponds to part (b) of
the South Dakota statute) (emphasis supplied). Thus, the Colorado court
stated in dicta that the statute creates a rebuttable presumption, but implied

28

that the only way to rebut the presumption is to satisfy one of the three specific
exceptions found in the statute. Id.
In Aetna Life Ins. Co. v. Schilling, 616 N.E.2d 893 (Ohio 1993), the
Supreme Court of Ohio held that Ohio’s version of UPC § 2-804 was
unconstitutional. Id. at 896. The facts in that case were that the decedent had
died just twenty days after the enactment of the revocation-upon-divorce
provision, his divorce having occurred thirteen years prior to his death. Id. at
894. In analyzing the statute, the Schilling court stated in dicta that the only
way the decedent could have avoided the statutory revocation would have been
if his divorce decree contained a specific contrary agreement, if the beneficiary
designation itself specifically provided to the contrary, or if the decedent–in the
20 days between enactment of the statute and his death–had redesignated his
ex-wife as the beneficiary on his policy. Id. at 896, 896 n.2. See also Matter of
Estate of Dobert, 963 P.2d 327, 333 (AZ 1998) (noting that a insured/decedent
could avoid the application of Arizona’s version of UPC § 2-804 by designating
the former spouse as his beneficiary after the divorce).
Given the above cases, this court is faced with the proposition of
choosing between the Davis line of authority and the Mearns line of authority
in trying to predict how the South Dakota Supreme Court would decide this
issue. The Stillman court–relied on the most heavily by the Buchholz court-noted that a rule of construction in the law of donative transfers is a rule that

29

aids “in determining and giving effect to the donor’s intention or probable
intention . . .” Stillman, 343 F.3d at 1317 (quoting Restatement (Third) of
Property: Wills & Other Donative Transfers § 7.2 cmt. a (2001)). The Stillman
court noted that the approach under the UPC, of which § 2-804 is a part, was
to withdraw the prior emphasis on legal formalism in interpreting wills, trusts
and other transfers and instead to favor policies that fulfilled the intent of the
donor. Id. (citing Prefatory Note to Revised Article II, Uniform Probate Code at
75 (1990)).
The Stillman court went on to note that application of a “rule of
construction is not insuperable; it can be overcome by a clear expression of
contrary intent.” Id. (emphasis supplied). The Stillman court affirmatively
held, as did the Buchholz court, that UPC § 2-804 was a rule of construction.
Id.; see also Buchholz, 2007 S.D. ¶ 11, 740 N.W.2d at 111. Nevertheless, a
conclusion that the statute can be rebutted begs the question of how must it be
rebutted.
The Stillman court relied, in part, on a law review article written by
Professor Lawrence Waggoner. See 26 Real Property Probate and Trust Jrnl.,
Winter 1992 Spousal Rights in Our Multiple-Marriage Society: The Revised
Uniform Probate Code, Lawrence W. Waggoner, 683, page 699. In that article,
Professor Waggoner wrote that the presumption established by UPC § 2-804
“yields to a contrary intention.” Id. The Stillman court accorded “particular

30

respect” to the interpretation of § 2-804(b) by Professor Waggoner because he
had a prominent role in drafting the UPC. Stillman, 343 F.3d at 1319 (citing
UPC § 2-804 at 221). The court also noted that the Commentary to UPC § 2804 cites Professor Waggoner’s law review article approvingly. Id.
The court notes that Eighth Circuit has had occasion to interpret
Oklahoma’s version of UPC § 2-804. See Whirlpool v. Ritter, 929 F.2d 1318
(8th Cir. 1991). In Whirlpool, the issue was whether an Oklahoma revocationupon-divorce statute should be applied retroactively. Whirlpool, 929 F.2d at
1319-20. The decedent had obtained life insurance naming his then-wife as
beneficiary. Id. at 1319. Two years later, Oklahoma passed its revocationupon-divorce statute. Id. at 1319-20. The decedent died two years after the
law was enacted. Id. at 1320. Thus, the court was presented with the question
whether retroactive application of the statute to a contract that had been
created before the effective date of the statute was constitutional. Id. The
Eighth Circuit concluded that the Oklahoma statute violated the contracts
clause of the United States Constitution. Id.
The Whirlpool decision is inapplicable to this case. First, as noted above,
the controlling law here is South Dakota state law and the South Dakota
Supreme Court has rejected the Whirlpool analysis. See Buchholz, 2007 S.D.
¶¶20-28, 740 N.W.2d at 113-15. Secondly, the issue in Whirlpool was the
constitutionality of applying the statute retroactively, while Amy’s case

31

presents no constitutional issues regarding retroactive application of the
statute: Patrick first obtained the life insurance policy naming Amy as
beneficiary more than a decade after the South Dakota legislature enacted
SDCL § 29A-2-804. Thus, the issues in Whirlpool are not presented here.4
Returning to the question of how the South Dakota Supreme Court
would decide this issue, this court believes that, faced with the undisputed
facts present in this case, the South Dakota Supreme Court would adopt the
position outlined in the Davis and Hanson decisions.
The South Dakota Supreme Court has already decided that SDCL § 29A2-804 is a rule of construction. Buchholz, 2007 S.D. 101, ¶ 12, 740 N.W.2d at
111. That is a two-edged sword. While on the one hand it means the
legislature can provide for retroactive application of the statute without
running afoul of the Constitution, it also means that the rule must give way to
a decedent’s contrary intention. Stillman, 343 F.3d at 1318; Hanson, 200 F.
Supp. 2d at 1020; Coughlin, 199 Cal. Rptr. at 286; 26 Real Property Probate

4

The court also notes that Whirlpool and the line of cases it spawned
“has been persuasively criticized by other distinguished authorities. After
Whirlpool was decided, the Joint Editorial Board for the Uniform Probate Code
issued a statement asserting that the opinion was ‘manifestly wrong.’ ”
Stillman, 343 F.3d at 1322. See also Lincoln Benefit Life Co. v. Heitz, 468 F.
Supp. 2d 1062, 1068 (D. Minn. 2007) (distinguishing Whirlpool and refusing to
follow it); In re Estate of DeWitt, 54 P.3d 849, 859-60 (Colo. 2002) (rejecting
analysis of Whirlpool court).
32

and Trust Jrnl., Winter 1992 Spousal Rights in Our Multiple-Marriage Society:
The Revised Uniform Probate Code, Lawrence W. Waggoner, 683, page 699.
How must a beneficiary show sufficient intent on the part of the
decedent? The beneficiary must present proof by a preponderance of the
evidence that the decedent actually intended her to be the beneficiary of the life
insurance policy despite their divorce. Davis, 2008 WL 2326323 at ** 4-5. In
order to meet this standard, showing mere inaction by the decedent is clearly
insufficient to carry the would-be beneficiary’s burden. Buchholz, 2007 S.D.
101, ¶ 16, 740 N.W.2d at 112; Lamparella, 109 P.3d at 961-65. In addition,
self-serving statements made by the decedent only to the beneficiary and not
witnessed by any other person are insufficient. Lamparella, 109 P.3d at 96165. Such evidence has too great a tendency to be self-serving and has
insufficient “guarantees of trustworthiness” to carry the day. Clearly, providing
a writing from the decedent in compliance with the terms of the life insurance
policy would satisfy the beneficiary’s burden. Lamparella, 109 P.3d at 966;
Mearns, 12 P.3d at 1053.
The evidence in this case falls between those two extremes: Amy does
not rely on mere inaction by Patrick to make her case, nor on statements
allegedly made to her alone. She relies on statements made by Patrick to a
financial expert for the purpose of obtaining financial advice. The court notes
that the statements made by Patrick would be admissible under Fed. R. Evid.

33

803(3), a contemporaneous statement of a then-existing mental condition or
state of mind to show intent. Evidence admissible under a long-recognized rule
of evidence has been held to hold sufficient guarantees of trustworthiness to
make it reliable. United States v. Barraza, 576 F.3d 798, 805 (8th Cir. 2009).
Although Amy does not have a separate writing from Patrick evidencing
his intentions, the court finds that the evidence adduced by Amy in this case
satisfies her burden of proof. Here, Patrick made his intentions known not
only to Amy, but to his financial advisor whom he trusted to carry out his
wishes with regard to his estate planning. Mr. Boyle held himself out to Amy
and Patrick as having expertise in the area of estate planning. Patrick cannot
be faulted for failing to know more about how to carry out his estate plan than
did American General’s own agent. Thus, Patrick’s oral statement that he
wanted Amy to remain as his beneficiary was witnessed by a neutral thirdparty who had no interest in who was named as Patrick’s beneficiary.
Moreover, this third-party was exactly the person Patrick expected to apply his
body of specialized knowledge to ensure that Patrick’s wishes were carried out.
In addition, the terms of the policy gave Patrick no notice that he needed
to do anything else to carry out his wishes. No specific reference is made in the
policy to the effect of divorce or to SDCL § 29A-2-804. The policy told Patrick
that once he designated a beneficiary, his designation would remain in full

34

force and effect until he notified American General in writing of a contrary
intention.
The court also notes that SDCL § 29A-2-804 provides that the
revocation-upon-divorce is negated if the parties remarry–and the parties do
not have to do anything to effectuate the negation. See SDCL 29A-2-804(e).
Although South Dakota does not recognize common law marriage, and the
court is not suggesting that Amy and Patrick were married at the time of
Patrick’s death, nevertheless, it is clear that they had made a determination to
remain together as a couple indefinitely. This bolsters the court’s conclusion
that it was Patrick’s intention to have Amy remain as his beneficiary.
The court notes that, had Amy been the first one to die, the law would
have honored her intent to have Patrick benefit under her life insurance policy
due to the mere fortuity that she had re-designated him after their divorce was
final. It would be perverse to give effect to Amy’s designation of Patrick as the
beneficiary on her life insurance policy and not to give effect to Patrick’s
designation of Amy. Both designations sprang from the same impulse on the
part of the couple to have in place mirror-image life insurance policies as part
of their joint estate plan. It would be doubly-perverse to reach a conclusion
contrary to Patrick’s clearly expressed intent by using a “rule of construction”
to arrive at that conclusion. Coughlin, 199 Cal. Rptr. at 288.

35

The court has done its best to devine how the South Dakota Supreme
Court would decide this case. The Buchholz decision contains conflicting
indications. On the one hand, the court cited Lamparella and Mearns for the
proposition that the decedent’s post-divorce intent must be expressed in
writing. Buchholz, 2007 S.D. 101, ¶16, 740 N.W.2d at 112. However, when
Harold alleged that Linda’s inaction evinced an intent that he benefit under her
plan, the court evaluated that evidence and stated that Harold had not shown
that Linda had read the statements from the plan showing him as the listed
beneficiary. Id. at ¶ 17, 740 N.W.2d at 112. Why would the court make this
observation if the only method of proof was to provide a writing? It suggests
that there may be quantums of proof less than a writing that would suffice.
And both Mearns and Lamparella are distinguishable. In Mearns, the
Washington legislature had enacted its statute to overturn a specific decision of
the Supreme Court of Washington which was widely criticized. Mearns, 12
P.3d at 1052 (discussing Aetna Life Ins. Co. v. Wadsworth, 689 P.2d 46 (Wash.
1984)). Furthermore, there is legislative history in Washington and this history
shows that the legislature believed that the presumption provided in its statute
could be overcome only by providing a writing to the contrary. Id. at 1053.
The Mearns court specifically held that its statute was not a mere rule of
construction intended to discern the intent of the decedent. Id. South Dakota
does not have legislative history, so we do not have the same explicit backdrop

36

against which SDCL § 29A-2-804 can said to have been enacted. And the
South Dakota Supreme Court, unlike the Mearns court, has held that SDCL
§ 29A-2-804 is a rule of construction.
The Lamparella decision, like Buchholz itself, can best be understood
with reference to the facts in that case: both ex-spouses alleged “evidence” of
the decedent’s intent that was inherently unreliable. Lamparella, 109 P.3d at
961-65. Furthermore, when the Arizona Supreme Court was subsequently
called upon to enforce a strict construction of its revocation-upon-divorce
statute, it refused to do so, stating that the statute was a rule of construction
intended to give effect to a decedent’s intent and that it would not apply the
rule where to do so would not further the purpose of the statute. In re Estate
of Rodriguez, 160 P.3d at 686-87.
This court interprets Buchholz to hold that a writing is sufficient to rebut
the effect of SDCL § 29A-2-804, but that a writing is not the exclusive way to
rebut the statute. The court further concludes that Amy has carried her
burden of rebutting the statutory presumption.
C.

Whether Amy and Patrick Had a “Contract” Within the Meaning of
the Exception to the Revocation Brought About by § 29A-2-804?
As an alternative argument to her assertion that § 29A-2-804 creates

only a rebuttable presumption, Amy argues that she and Patrick had a
“contract” within the meaning of the exception to the statute. Reiterating,
§ 29A-2-804 provides for revocation upon divorce “except as provided by the
37

express terms of a governing instrument, a court order, or a contract relating to
the division of the marital estate made between the divorced individuals before
or after the marriage, divorce, or annulment . . .” See § 29A-2-804(b). Again,
the Buchholz decision is this court’s only guidance as to how the South Dakota
Supreme Court would interpret this provision.
In that case, Harold, Linda’s ex-husband, argued that the first exception
applied because the “express terms of” Linda’s retirement plan named him as
the beneficiary. Buchholz, 2007 S.D. at ¶ 13, 740 N.W.2d at 112. The South
Dakota Supreme Court rejected Harold’s interpretation, noting that if his
interpretation prevailed, § 29A-2-804 would never have any application
because every governing instrument would specifically name the ex-spouse as
the recipient of the property. Id. at ¶ 14, 740 N.W.2d at 112. Instead, the
court held that in order for the express terms of a governing instrument to fit
within the first exception stated in the statute, the express terms must refer
specifically to divorce and state that the beneficiary will remain the same as the
designated beneficiary despite divorce. Id. at ¶ 15, 740 N.W.2d at 112.
The South Dakota Supreme Court has not addressed the “contract”
exception, however. This court has found only one case interpreting that
provision in light of an argument that the decedent and the former spouse had
an “oral contract.” See Lincoln Benefit Life Co. v. Heitz, 468 F. Supp. 2d 1062
(D. Minn. 2007). In the Heitz case, the federal district court was called upon to

38

interpret a Minnesota statute nearly identical to UPC § 2-804 and SDCL § 29A2-804. Id. at 1066, 1066 n.2. Under the facts of that case, the decedent and
his ex-wife had divorced three years before the decedent died. Id. at 1064-65.
During the interim between the divorce and his death, the decedent had
contacted his life insurance company four times, and had asked that his exwife be removed as an additional insured from his account, and that his exwife be “removed from my account,” but the decedent never asked the
insurance company to remove his ex-wife as the beneficiary on the life
insurance policy. Id. at 1065. After holding the Minnesota statute to be
constitutional, the court turned to the ex-wife’s argument that she and the
decedent had an oral agreement that she remain the beneficiary, which would
have satisfied one of the exceptions to the revocation-upon-divorce statute. Id.
at 1069-70.
The district court held that contracts could be entirely oral under
Minnesota law, but that the proponent of such a contract must show definite
and certain terms of the contract by clear and convincing evidence. Id. at
1069. The ex-wife could not provide any specific details of the oral contract.
Id. She admitted that she gave no consideration, that there was no specific
duration to the contract, and that she did not know when the contract was
formed. Id. The court rejected her argument that she fit within the exception
to UPC § 2-804 because she could not meet the requirements of Minnesota law

39

for proving an oral contract. Id. at 1069-70. The court thus left open the
possibility that an oral contract could satisfy the exception to UPC § 2-804.5
Id.
South Dakota law, like Minnesota law, recognizes the validity of oral
contracts. South Dakota defines a contract as an agreement to do or not to do
a certain thing. See SDCL § 53-1-1. The essential elements of a contract are:
(1) parties capable of contracting, (2) their consent, (3) a lawful object, (4) and
sufficient cause or consideration. See SDCL § 53-1-2. A contract can either be
express or implied, and if implied, the terms are not stated in words but are
instead manifested by conduct. See SDCL § 53-1-3.
Contracts may be oral except those that are required to be in writing by
statute. See SDCL § 53-8-1. Four types of contracts are required by statute to
be in writing: (1) those that by their terms cannot be performed within a year
from the making of the contract, (2) an agreement made upon consideration of
marriage other than a mutual promise to marry, (3) contracts for the sale of
interests in real estate, and (4) an agreement for a loan of money or for an

5

The Heitz decision was criticized by another district court decision in the
District of Minnesota, but the criticism was directed at the Heitz court’s refusal
to follow the Eighth Circuit’s decision in Whirlpool in determining that the
retroactive application of Minnesota’s statute did not violate the contract clause
of the United States Constitution. See MONY Life Ins. Co. v. Ericson, 533 F.
Supp. 2d 921 (D. Minn. 2008). Neither MONY nor Heitz were appealed to the
Eighth Circuit and neither decision has been cited by any other court.
40

extension of credit which can be enforced by a beneficiary for whom the
agreement was made. See SDCL § 53-8-2.
Where the statute of frauds is raised as a defense, the party asserting the
existence of the contract may nevertheless recover on quantum meruit if the
party raising the statute of frauds defense has himself received the benefit of
the invalid promise. Clement v. Rowe, 33 S.D. 499, 146 N.W. 700, 702 (S.D.
1914). Where a contract is for an indefinite period of time and it is possible
that the contract will be performed within statute of frauds time period, the
statute of frauds is not a defense. Illinois Cent. R. Co. V. Byrd, 44 So. 3d 943,
949 (Miss. 2010); Acoustic Innovations, Inc. V. Schafer, 976 So. 2d 1139, 1143
(Fla. 2008); Mackay v. Four Rivers Packing Co., 179 P.3d 1064, 1068 (Idaho
2008); Balmer v. Elan Corp., 261 Ga. App. 543, 545, 583 S.E.2d 131, 133
(2003); Worley v. Wyoming Bottling Co., Inc., 1 P.3d 615, 622 n.1 (Wyo. 2000);
Sherman v. Haines, 652 N.E.2d 698, 700 (Ohio 1995). Where an oral contract
was for one party’s lifetime or “until retirement,” the contract did not run afoul
of the statute of frauds because the contract is “capable of” being performed
within a year as the party could die within a year. Mackay, 179 P.3d at 1068;
City of New York v. Heller, 127 Misc. 2d 814, 487 N.Y.S.2d 288, aff’d, 131 Misc.
2d 485, 503 N.Y.S.2d 995 (AT1 1985). Only where the performance of the
contract must, of necessity, take place longer than one year is the statute of

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frauds a defense. Muoz v. Kaiser Steel Corp., 156 Cal. App. 3d 965, 971, 203
Cal. Rptr. 345, 348 (1984).
“True contracts grow out of the intention of the parties. Where the
intention is expressed in words, the contract is express. A contract is implied
in fact where the intention as to it is not manifested by direct or explicit words
by the parties, but is to be gathered by implication or proper deduction from
the conduct of the parties, language used, or acts done by them, or other
pertinent circumstances attending the transaction. The difference lies in the
manner of manifesting assent and an express contract and one implied in fact
involve no difference in legal effect.” Mahan v. Mahan, 80 S.D. 211, 214-15,
121 N.W.2d 367, 369 (1963). See also Setliff v. Akins, 2000 S.D. 124, ¶ 12,
616 N.W.2d 878, 885 (quoting Weller v. Spring Creek Resort, Inc., 477 N.W.2d
839, 841 (S.D. 1991) (quoting Mahan, 80 S.D. at 215, 121 N.W.2d at 369)).
Oral contracts or contracts implied in fact must be proved by clear and
convincing evidence. Mahan, 80 S.D. at 215, 121 N.W.2d at 369. Courts must
consider “the totality of the parties’ conduct to learn whether an implied
contract can be found.” In re Estate of Regennitter, 1999 S.D. 26, ¶ 12, 589
N.W.2d 920, 924. See also Lien v. McGladrey & Pullen, 509 N.W.2d 421, 42323 (S.D. 1993). The existence of a valid contract is a question of law for the
court to determine. In re Neiswender, 2000 S.D. 112, ¶ 9, 616 N.W.2d 83, 86.

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“In determining whether an implied contract exists, [the South Dakota
Supreme Court] held that ‘[t]he pertinent inquiry is whether the facts and
circumstances properly evaluated permit an inference that services were
rendered in expectance by one of receiving and the other of making
compensation.’ ” Setliff, 2000 S.D. at ¶ 13, 616 N.W.2d at 885 (quoting Mahan,
80 S.D. at 215, 121 N.W.2d at 369). The facts must be “viewed objectively and
if a party voluntarily indulges in conduct reasonably indicating assent he may
be bound even though his conduct does not truly express the state of his
mind.” Id. (quoting Weller, 477 N.W.2d at 841 (quoting Federal Land Bank of
Omaha v. Houck, 68 S.D. 449, 463, 4 N.W.2d 213, 219-20 (1942))). Where an
implied contract is alleged, the court must “closely examine the course of
conduct between the parties. The ‘ “[c]onduct” can be both acts and words. By
its very nature, an implicit agreement is not as detailed as a written agreement
formally negotiated.’ ” Id. (quoting In re Estate of Regennitter, 1999 S.D. 26,
¶ 12, 589 N.W.2d 920, 924 (quoting Jurrens v. Lorenz Mfg. Co., 1998 S.D. 49,
¶ 9, 578 N.W.2d 151, 154 (quoting Mathews v. Twin City Const. Co., 357
N.W.2d 421, 423-24 (S.D. 1993)))).
There is no legal distinction between the legal effect of an express
contract and that of an implied contract. St. John’s First Lutheran Church v.
Storsteen, 77 S.D. 33, 37, 84 N.W.2d 725, 727 (S.D. 1957). “The distinction
between them is in the way in which mutual assent is manifested. In an

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express contract the terms are stated by the parties. In an implied contract
they are inferred from the circumstances.” Id.
Here, the court holds that an oral contract can meet the requirements of
the contract exception to SDCL § 29A-2-804(b). The court further holds that
Amy has met her burden of proving the elements of the oral contract between
she and Patrick by clear and convincing evidence. The consideration Amy gave
was the payment of the monthly premiums on Patrick’s life insurance policy
each and every month. The consideration Patrick gave was naming Amy as the
beneficiary on his life insurance policy and the agreement to pay $500.00
toward household expenses. The agreement was month to month. The
agreement does not run afoul of the statute of frauds because either party
could have ended the agreement at any time, or Patrick could have died at any
time. Thus, the agreement did not by necessity require performance outside of
the one-year time frame set forth by the statute of frauds.
The court expresses some doubt as to whether a payment of support like
Patrick’s of $500 pursuant to a divorce decree would satisfy the contract
exception under SDCL § 29A-2-804 in most ordinary circumstances. That is
because, under ordinary circumstances, the ex-spouse making the support
payment would be responsible for paying the premiums on his own life
insurance policy. A fact which serves to distinguish Amy and Patrick’s
situation from the ordinary payment of support following a divorce is their

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agreement that Amy would, in return for receipt of Patrick’s support payment,
agree to pay his life insurance premiums. She was not otherwise obligated to
do so and she has presented sworn, uncontradicted testimony that she would
not have made those payments if Patrick had not agreed to maintain her as the
beneficiary. As an alternative holding, then, the court holds that Amy is
entitled to the proceeds of Patrick’s policy because she has satisfied the
contract-exception requirement under SDCL § 29A-2-804.
CONCLUSION
The court recommends that Amy’s motion for summary judgment
[Docket No. 15] be granted and that judgment be entered in her favor declaring
that she is the lawful beneficiary of Patrick Jenson’s life insurance policy with
American General.
NOTICE TO THE PARTIES
The parties have fourteen (14) days after service of this report and
recommendation to file written objections pursuant to 28 U.S.C. § 636(b)(1)(B),
unless an extension of time for good cause is obtained. See also Fed. R. Civ. P.
72(b)(2). Failure to file timely objections will result in the waiver of the right to
appeal questions of fact. Objections must be timely and specific in order to

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require de novo review by the district court. See Thompson v. Nix, 897 F.2d
356 (8th Cir. 1990); Nash v. Black, 781 F.2d 665 (8th Cir. 1986).
Dated March 12, 2012
BY THE COURT:

/s/

Veronica L. Duffy

VERONICA L. DUFFY
UNITED STATES MAGISTRATE JUDGE

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