APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA, D.C. Civil No. 83-1095.
Before: HUNTER, WEIS, and MANSMANN, Circuit Judges.
A murder prosecution against the primary beneficiary lasting for a number of years delayed the determination of the proper payees of life insurance proceeds. The district court decided that in the interim the insurance company was required to interplead and pay the proceeds into court. Having failed to do so, the company became liable for interest at the rate it had realized, one which was in excess of the legal rate. We conclude that there is no duty of interpleader in Pennsylvania and that the carrier is responsible for prejudgment interest, but only at the legal rate. Accordingly, we will remand for modification of the judgments.
This case arises out of claims for the proceeds of life insurance policies covering Michael DeJohn, who was killed on February 12, 1976. At the time of his death, he was insured by plaintiff Benefit Trust Life Insurance Company under two group policies purchased by his employer. One was a standard life policy, and the other covered accidental death. Each had a face amount of one and one-half times DeJohn's annual earnings, which resulted in the sum of $62,000 on each policy. The central issue in this case is the amount of prejudgment interest, if any, due on the proceeds of the two policies.
The primary beneficiary on each of the policies was the insured's wife, Jill DeJohn. The contingent beneficiaries on the life policy were his two minor children, Dawn and Michelle. The contingent beneficiary on the accident policy was the insured's estate.
Michael DeJohn died as a result of a gunshot wound, and within a few days after his death, the police arrest his wife, Jill. She was indicted for murder soon thereafter. The criminal proceedings dragged on for many years. After two trials and an appeal to the state supreme court, Mrs. DeJohn finally confessed, on April 30, 1982, to the murder of her husband.
On May 6, 1976, Benefit Trust had received a claim by Jill DeJohn for the proceeds of the two policies. The company knew that Mrs. DeJohn had been indicted and was also aware that the Pennsylvania Slayers' Act, 20 Pa. Cons. Stat. Ann. §§ 8801-8815 (1985), would bar payment to her if she were guilty of causing her husband's death.
In March, 1976, a guardian had been appointed for the estates of the two children. Mrs. DeJohn, having initially taken out letters on her husband's estate, resigned, and the Union National Bank was appointed administrator. In a letter to the insurance company dated August 23, 1976, the bank stated,
"As administrator . . . the Bank has opened two separateaccounts. The first account will hold the assets whichare properly payable to the Estate. . .. The second . . .has been established to hold funds which would otherwisebe payable to Mrs. DeJohn and/or the two minor children.It is our intention to hold these funds pending the outcomeof Mrs. DeJohn's trial . . .. It is very important thatsome sort of financial assistance be forthcoming for thesupport of the two minor children."
In 1976, the insurance company stated it would not pay the benefits until the resolution of the criminal matter. It did, however, offer to make a partial payment to the estate or to the guardians on behalf of the children if a hold harmless agreement was signed by the parties in interest, including Jill DeJohn.
In November of that year, after reviewing the company's terms, the bank stated that,
"It has been decided not to seek payment on this policyuntil the final outcome of the legal proceedings againstthe primary beneficiary, Mrs. DeJohn . . . .Due to severalcomplications which have developed, we do not feel that muchadvantage will be derived in seeking payment before theactual beneficiary has been determined."
From 1976 through 1982, regular correspondence passed between Union National Bank and the insurance company. The guardian for the children did not contact the ...