The opinion of the court was delivered by: Dalzell, J.
Monarch Life Insurance Company ("Monarch") sues the defendants in this statutory interpleader action to determine the proper beneficiary of an annuity for which the late Robert Tarone, III ("Tarone") was the annuitant. Tarone's Estate and its Executor, James P. McEvilly, Jr. (collectively the "Estate"), and Tarone's sister, Laura Sipio, have both made claims against Monarch for the remaining annuity payments, and Monarch asks us to resolve this dispute. The Estate and Sipio have moved for summary judgment. For the reasons we discuss below, we will deny both motions.*fn1
A. Settlement of Prior Dispute and Creation of the Annuity
In 1980 Tarone was injured in a motorcycle accident. He thereafter signed a Settlement Agreement and Release with Transamerica Insurance Company -- as insurer for the defendants in that case -- to resolve the claims that arose from that accident. Settlement Agreement and Release, August 1, 1984, Sipio Ex. 1*fn2 ("Settlement Agreement"). Under the terms of the Settlement Agreement, Tarone would receive certain monthly payments for the remainder of his life, and those payments were guaranteed for a minimum of 360 months. Id. at ¶ 2(c). The Settlement Agreement stated that if Tarone died before the end of those 360 months, "the remaining monthly payments in the guaranteed period shall continue to be paid monthly to the estate of Plaintiff [Tarone] as they fall due and not in a lump sum."
The parties to the Settlement Agreement agreed that Transamerica could fund its liability to Tarone by purchasing an annuity policy from Monarch. Id. at ¶ 5. Under the terms of the Settlement Agreement, "[t]he Transamerica Insurance Company and/or the assignee [which became Monarch] shall be the owner of any such annuity policy, may hold any such annuity policy and shall have all rights of ownership." Id.
The same day the Settlement Agreement was signed, Tarone, Better Materials, Inc. -- apparently one of the defendants in Tarone's motorcycle accident lawsuit -- and Monarch Capital Corporation entered into a "Qualified Assignment and Consent" agreement. Qualified Assignment and Consent, August 1, 1984, Sipio Ex. 2 ("Qualified Assignment"). Under the terms of that agreement, Better Materials, Inc. assigned, and Monarch assumed, the liability to make the payments that ¶ 2 of the Settlement Agreement required. Qualified Assignment at ¶ 1. Tarone released Better Materials from its obligations under the Settlement Agreement and agreed that he "may not anticipate, sell, assign or encumber any of said payments." Id. at ¶ 3. Monarch Capital could fund its obligations to Tarone by "purchasing a 'qualified funding asset'" -- specifically, an annuity policy from Monarch Life Insurance Company, the stakeholder here -- that would be Monarch's "sole property." Id. at ¶ 4. Under the terms of the Qualified Assignment, Tarone would "have no right or interest" in the annuity. See id.
Someone*fn3 filled out an Annuity Application and dated it August 2, 1984, and the "DATE OF ISSUE" and "POLICY DATE" are both August 3, 1984. Monarch Life Insurance Company, Annuity Policy ("Policy"), Annuity Application ("Application"), Sipio Ex. 3, at 3, 4-5. Tarone is listed as the "proposed annuitant" on the Application, and the "Estate of Annuitant - Robert J. Tarone, III" is the beneficiary for any death benefits. Id. at 4. The Application is part of the "entire contract" of the policy. Policy at 9 (stating that the "entire contract" consists of the policy, the application, and any attached endorsements). The Application included a box to identify the "owner of policy," and the two choices were "Proposed Annuitant" and "Applicant." Neither box was checked. Application, Policy at 4. On the second page of the Application, someone wrote "Personal Injury Case Do Not 1099." Id. at 5. It appears that representatives of Monarch Capital Corp. and Huver & Associates, Inc. signed the Application. Id.
The Policy states that "you refers to the annuitant shown below [Tarone]" and that "[y]ou are the owner of this policy unless another owner has been named in the application." Policy at 1, 9. The Application did not name another owner.*fn4 In a blank space on the first page of the Application someone wrote "See Attached Schedule of Payments," and the only document with that title is Exhibit A to the Settlement Agreement. See Settlement Agreement at ¶ 2(c); Schedule of Payments, Sipio Ex. 4. The policy states that it "is a contract between its owner and us [Monarch]." Policy at 9.
Regarding the beneficiary for death proceeds, which is at the heart of the dispute between Sipio and the Estate, the Policy states that "[t]he owner can reserve the right to change beneficiaries." Id. The Beneficiary section of the Application instructs the applicant to "Indicate beneficiary for any death benefits with.....right reserved to change beneficiary." Application, Policy at 4. Nothing is written in the blank space above the dots between "with" and "right."*fn5 See id. The Policy states that "[d]uring your [Tarone's] lifetime the owner can transfer ownership of this policy or change the beneficiary. To do this, the owner must send us written notice of the change in a form satisfactory to us. The change will take effect as of the day the notice is signed. But the change will not affect any payment made or action taken by us before recording the change at our main office." Id. at 10.
The Annuity Policy provided that Monarch would pay income to Tarone during his lifetime and pay any death proceeds to his beneficiary. Id. at 1. Tarone would receive $550.10 monthly starting on September 3, 1984 "INCREASING AT 3% COMPOUNDED ANNUALLY WHILE THE ANNUITANT IS LIVING." Basic Policy Data, Policy at 3. The death proceeds were the monthly payments "UNTIL A TOTAL OF 360 PAYMENTS, INCLUDING THOSE PAYABLE PRIOR TO THE ANNUITANT'S DEATH, HAVE BEEN MADE." Id. There is no dispute that 360 payments had not been made before Tarone's death in 2008 and that some payments remain outstanding.*fn6 The policy also provides for six "GUARANTEED PAYMENTS" of varying lump-sum amounts. See id.*fn7
Atilla Aritan, who is Monarch's records custodian for the Policy at issue here, certified that the insurer's original file for the Policy included a Contract Change Form ("Change Form") and a letter that Monarch sent to Tarone in response to receiving that form. Certification of Atilla Aritan, Aug. 11, 2009, Sipio Ex. 11 at ¶¶ 1-2. According ...