                IN THE COURT OF APPEALS OF TENNESSEE
                           AT KNOXVILLE
                                  August 28, 2012 Session

                     ERIK HOOD v. CASEY JENKINS, ET. AL.

                Appeal from the Chancery Court for Grainger County
                No. 0908101 Hon. Telford E. Forgety, Jr., Chancellor




              No. E2011-02749-COA-R3-CV-FILED-OCTOBER 9, 2012




This appeal involves a claim for breach of a life insurance contract issued by Old Line.
Father named his son, a minor, as the beneficiary of his life insurance policy. When Father
died, the proceeds of the policy were issued to minor’s older sister, who depleted the funds.
Beneficiary filed suit against Sister and Old Line, alleging that Sister misappropriated the life
insurance proceeds and that Old Line erroneously awarded the proceeds to Sister without
proper documentation. A default judgment was entered against Sister. Following a trial on
Beneficiary’s claim against Old Line, the court ordered Old Line to re-issue a portion of the
proceeds to Beneficiary. Old Line appeals. We affirm the decision of the trial court.


 Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed;
                                  Case Remanded


J OHN W. M CC LARTY, J., delivered the opinion of the court, in which H ERSCHEL P. F RANKS,
P.J., and C HARLES D. S USANO, J R., J., joined.

Michael S. Kelley, Knoxville, Tennessee, for the appellant, Old Line Life Insurance
Company of America.

Bruce T. Hill, Sevierville, Tennessee, for the appellee, Erik Hood.
                                               OPINION

                                         I. BACKGROUND

       In 2002, David R. Hood (“Father”) purchased a $100,000 life insurance policy from
Old Line Life Insurance Company of America (“Old Line”). Father named his son, Erik
Hood (“Beneficiary”), as the beneficiary under the policy. On September 17, 2007, Father
died. Beneficiary’s older sister, Casey Jenkins (“Sister”), invited Beneficiary to live with her
and her family. After Beneficiary moved into Sister’s house, Sister filed a petition for
guardianship in the juvenile court. Thereafter, Old Line received a claim on the policy from
Beneficiary. Realizing that Beneficiary was a minor, Old Line responded to the claim by
requesting “Guardianship Papers for the Finances of the Minor Beneficiary.” In response to
Old Line’s request, Sister faxed the order of guardianship received from the juvenile court,
along with the petition for guardianship to Old Line. The order provided,

                       APPOINTMENT OF GUARDIAN OF THE PERSON

           This cause came to be heard upon a sworn petition and IT APPEARING to the
           [c]ourt that it is in the best interest of the [child] that a Guardian of the Person
           be appointed and that: Casey Jenkins [is] a fit and proper person[] to be so
           designated.

           IT IS HEREBY ORDERED AND DECREED that: Casey Jenkins be
           appointed Guardian of the Person of Erik C. Hood with the authority to
           provide the necessary care and protection pending the filing of a petition
           pursuant to Tennessee Code Annotated, Section 37-228,1 and that no bond be
           required.

This order was signed by the judge and filed on December 11, 2007. Upon its receipt of the
order, Old Line notified Sister that the order was inadequate in a letter stating, in pertinent
part,

           We received the documents regarding the Guardianship of the Minor
           beneficiary [Erik] Hood. Unfortunately, the documents received only indicate
           Guardianship and does not indicate Guardianship for the Finances of the
           Minor.

           To release the proceeds on this policy, we will need the following:


1
    This statute has been repealed.
                                                   -2-
                   GUARDIANSHIP PAPERS FOR THE FINANCES OF THE
                   MINOR BENEFICIARY

Thereafter, Sister filed another petition in the juvenile court, seeking guardianship of
Beneficiary’s finances. The court complied and issued a second order that provided,

              APPOINTMENT OF FINANCIAL 2 GUARDIAN OF THE PERSON

           This cause came to be heard upon a sworn petition and IT APPEARING to the
           [c]ourt that it is in the best interest of the [child] that a Guardian of the
           Person[’]s Financial Responsibilities3 [be] appointed, and that: Casey Jenkins
           [is] a fit and proper person[] to be so designated.

           IT IS HEREBY ORDERED AND DECREED that: Casey Jenkins [] be
           appointed Guardian of the Person of Erik Hood Finicial [sic] Responsibilities 4
           with the authority to provide the necessary care and protection pending the
           filing of a petition pursuant to Tennessee Code Annotated, Section 37-228,5
           and that no bond be required.

This order was signed by the judge and filed on January 9, 2008.

        Upon receipt of the second order, Old Line submitted a request to the juvenile court,
seeking clarification as to whether the second order was valid. The juvenile court responded
by submitting a document entitled, Exemplification, which provided that the order was a true
and perfect copy of the original appearing in the record, that the clerk’s signature was valid,
and that the judge’s signature was valid. On January 11, 2008, Old Line issued a check to
Sister in the amount of $100,854.88. Sister deposited the check into a joint checking account
that she shared with Beneficiary. Eight months later, the entirety of the life insurance
proceeds deposited into the account was depleted.

        On August 31, 2009, Beneficiary filed suit against Sister and Old Line. Relative to
Sister, Beneficiary alleged that she had withheld the life insurance proceeds from him, had
failed to provide an accounting of the proceeds to him or the juvenile court, and had


2
    This word was handwritten.
3
    The term, “Financial Responsibilities” was handwritten.
4
    The term, “Finicial Responsibilities” was handwritten.
5
    This statute has been repealed.
                                                     -3-
converted and spent most of his money on herself and others. He also alleged that she had
acquired other death benefits payable to him. Sister did not respond to the complaint, and
the court issued a default judgment against her. Sister did not appeal the default judgment
entered against her and is not a party to this appeal.

        Relative to Old Line, Beneficiary contended that Old Line breached its duty to him
as a third-party beneficiary by disbursing the insurance proceeds to Sister “without
confirming that she was properly appointed and duly authorized to act” as his financial
guardian. He also contended that Old Line erred by disbursing the proceeds without
requiring proof that Sister held duly executed letters of guardianship from the juvenile court.
He sought reimbursement of the life insurance proceeds that he was unable to retrieve from
Sister. Old Line denied the allegations and claimed that it was entitled to rely on the valid
order appointing Sister as Beneficiary’s financial guardian; that it acted in good faith in
disbursing the proceeds; that any fault apportioned to it should be reduced or eliminated in
proportion to the fault of other persons, namely the juvenile court, the clerk, and Sister; and
that the injuries and damages were caused by the acts or omissions of other parties. Old Line
also filed a motion to dismiss, alleging that it was entitled to rely upon the order issued by
the court appointing Sister as Beneficiary’s financial guardian.6 Thereafter, Beneficiary and
Old Line filed competing motions for summary judgment. The court denied the motions,
finding that there were “disputes of material fact which preclude the granting of either
motion for summary judgment.”

       The case proceeded to a bench trial at which several witnesses testified. Charlotte
Swanks, a claims examiner for American General Life Insurance Company,7 testified that she
processed Beneficiary’s claim on Father’s life insurance policy through Old Line. She stated
that after she received the proof of death form and the death certificate, she requested
guardianship papers for Beneficiary because the documents indicated that he was a minor.
After receiving the first order of guardianship, she consulted her manager because the order
did not mention that the purported guardian was to be in charge of the minor’s finances.
When she requested further documentation concerning the guardianship of Beneficiary’s
finances, the second order of guardianship was submitted for her review. Upon reviewing
the second order, she contacted the juvenile court and asked the court to confirm that the
document was valid because portions of the document were handwritten. She stated that in



6
 Old Line also filed a cross-complaint against Sister, alleging that it was entitled to reimbursement from
Sister for any funds it might be required to submit to Beneficiary. Sister did not respond to the cross-
complaint, and the court issued a default judgment against Sister.
7
 Old Line had been purchased by American International Group, Incorporated, a conglomerate of several life
insurance companies.
                                                   -4-
response to her request, the court faxed her an exemplification. She processed the claim after
speaking with her manager a second time and reviewing all of the documents that she had
received. She acknowledged that Old Line through American International Group,
Incorporated had a legal department staffed with attorneys and admitted that she did not
submit the documents that she received concerning Beneficiary’s purported financial
guardianship to the legal department.

        Beneficiary, who was 20 years old at the time of trial, testified that he had graduated
from high school, was married, had a child, and was employed. He said that while he
currently lived with his grandparents, he moved in with Sister and her family after Father
died. Shortly before Father died, he was told about Father’s life insurance policy. He filled
out the claim for the insurance proceeds and was subsequently advised that the money would
be entrusted with a guardian because he was only 16 years old. He said that while he
believed he was mature enough to handle the money, he consented to Sister’s management
of the money as his financial guardian until he was old enough to legally accept responsibility
for the money. He asserted that he trusted that the juvenile court would properly appoint
Sister and that she would safeguard the life insurance proceeds.

        Beneficiary stated that he and Sister opened a joint checking account to deposit the
donations that he received when Father died and to deposit his social security payments. He
related that Father’s friends and family were instructed to provide donations for him instead
of sending flowers and that he received a monthly social security check until he turned 18
years old. Originally, he used a debit card to make purchases from the first account, but after
he lost the card, he primarily paid for items with checks. He admitted that a second checking
account was opened using his name but claimed that he did not know the life insurance
proceeds were deposited into the second account. He acknowledged that he had written some
checks using the second account but explained that he had mistakenly used a checkbook
linked to the second account. He claimed that when he depleted the checks for the first
account, he took another checkbook from a stack of checkbooks in a box. He believed that
the checks he found in the box were linked to the first account that contained his social
security payments but later learned that the checks were linked to the second account
containing the life insurance proceeds. He alleged that he never wrote checks in excess of
the amount he received each month from social security but admitted that he did not keep a
precise accounting of the amount he spent each month.

       Beneficiary reviewed the checking account statements for both accounts prior to trial.
He asserted that Sister spent most of the money from the second account containing the life
insurance proceeds and that she also spent a substantial amount of the money from the first
account. He claimed that she used his life insurance proceeds to purchase liquor and various
sex enhancement products, to eat at restaurants, to fund massive renovations of Father’s

                                              -5-
house, and to compensate employees of Jenkins Construction, Sister’s family business
managed by her husband. He admitted that he gave Sister permission to spend $10,000 of
the life insurance proceeds to renovate Father’s house with the understanding that he would
be reimbursed but asserted that she used in excess of $48,000 for the renovations and that he
never received any money in return. He related that he became concerned about his money
when he noticed that she had been frequently visiting the hair salon and eating at restaurants
on a regular basis. When he became suspicious of her, he asked her if he could see the bank
statements. She refused to provide any documentation, and the bank refused to release any
information about the accounts to him. He eventually moved out of the house in August
2008. He acknowledged that he did not seek legal advice or contact Old Line prior to
moving out and filing his complaint. He admitted that Sister also used some of the insurance
proceeds for his benefit and asserted that he only sought reimbursement from Old Line for
the amount of money that was not used for his benefit.

      Donna Hood, Beneficiary’s mother, testified that she consented to Sister’s
appointment as Beneficiary’s guardian and that she was present at the hearing when Sister
was appointed.

       Sister testified that she was 26 years old when Father died. She related that at the time
of Father’s death, she worked for Community South Bank in the small business
administration department and that she had obtained a degree in accounting. She admitted
that she had been arrested three times for passing bad checks.

       Relative to Beneficiary, Sister claimed that when Beneficiary moved in with her, he
was treated like a member of the family and lived with her family on a full-time basis. She
admitted that she used funds from the joint checking accounts to provide for his medical
needs and general living expenses. She identified the orders appointing her as Beneficiary’s
guardian and insisted that she merely signed the documents where she was instructed to sign.

       Relative to the two checking accounts, Sister stated that she told Beneficiary that she
would need to open a second joint checking account to deposit the insurance proceeds. She
claimed that they both received a checkbook and a debit card for each account and that she
kept the bank statements for both accounts in the computer desk at the house. She stated that
while she used money from both accounts, she also deposited “over $24,000” of her own
money into the second account. She related that she spent approximately $46,000 to preserve
Father’s estate and approximately $17,000 for her own personal items. She explained that
some of the money was used to pay the two mortgages on the house, to renovate the house,
to preserve Father’s business, and to reclaim Father’s car that had been repossessed. She
believed that her actions would benefit Beneficiary because she was attempting to preserve
Father’s estate for Beneficiary, who was to receive 90 percent of Father’s estate. She

                                              -6-
asserted that Beneficiary consented to some of her attempts to preserve the estate but
admitted that she never sought guidance from a lawyer regarding her use of the insurance
proceeds to preserve the estate. She alleged that while she understood that she was to care
for Beneficiary, “[n]othing was ever explained to [her] about the financial part” of the
guardianship.

       The deposition of Sheena Frost was taken prior to trial and attached as an exhibit. In
the deposition, Ms. Frost testified that she worked for Community South Bank in Fall 2007
as a customer service representative. She said that Sister also worked at the bank but that
Sister worked in the business lending department. She recalled that Sister and Beneficiary
came into the bank together on two separate occasions and signed the appropriate forms to
open two joint banking accounts. The first account was opened on September 27, 2007,
while the second account was opened on December 18, 2007. She claimed that other than
helping Sister and Beneficiary open the accounts, she did not speak with Beneficiary again.
She stated that as a named holder on each account, Beneficiary would have been able to write
checks, use the debit cards that were assigned to the accounts, and obtain information about
the accounts in person or through online banking. She admitted that she did not know
whether debit cards were issued for the particular accounts and that only one statement for
each account would have been mailed to the address on the account.

        Following the arguments of counsel, the court entered judgment against Old Line in
the amount of $86,842.37 because Old Line failed to issue the insurance proceeds to
someone who had the legal authority to receive the money. In so holding, the court explained
that the juvenile court did not have subject matter jurisdiction to appoint a financial guardian.
The court continued that even if the juvenile court had subject matter jurisdiction to appoint
a financial guardian, the order appointing Sister was deficient. The court noted that letters
of guardianship were not issued, that Sister was not required to take an oath of guardianship,
and that the bond requirement was not properly waived as required by statute. The court held
that while Beneficiary consented to some of the expenditures using the insurance proceeds,
Beneficiary did not have the “legal capacity nor authority” to consent to the expenditures
because he was a minor. The court stated that if Sister had been properly appointed, the court
would not have approved the expenditures to preserve Father’s estate because the use of the
life insurance proceeds made the proceeds subject to the debts of the estate. The court later
acknowledged that it was incorrect in stating that the juvenile court did have subject matter
jurisdiction to “grant a guardianship of the property of a minor.” The court continued that
despite the fact that the juvenile court likely had subject matter jurisdiction, it would not
change its ruling that Old Line improperly awarded the life insurance proceeds to Sister.
This timely appeal followed.




                                               -7-
                                        II. ISSUES

       We consolidate and restate the issues raised on appeal by Old Line as follows:

       A. Whether Sister was properly appointed as Beneficiary’s financial guardian.

       B. Whether Old Line fulfilled its contractual duty to Beneficiary by submitting
       the life insurance proceeds to Sister upon its receipt of the order of
       guardianship from the juvenile court.

       C. Whether Beneficiary had the capacity to consent to Sister’s receipt of the
       life insurance proceeds in the absence of a valid appointment of guardianship.

                             III. STANDARD OF REVIEW

       On appeal, the factual findings of the trial court are accorded a presumption of
correctness and will not be overturned unless the evidence preponderates against them. See
Tenn. R. App. P. 13(d). The trial court’s conclusions of law are subject to a de novo review
with no presumption of correctness. Blackburn v. Blackburn, 270 S.W.3d 42, 47 (Tenn.
2008); Union Carbide Corp. v. Huddleston, 854 S.W.2d 87, 91 (Tenn. 1993). Mixed
questions of law and fact are reviewed de novo with no presumption of correctness; however,
appellate courts have “great latitude to determine whether findings as to mixed questions of
fact and law made by the trial court are sustained by probative evidence on appeal.” Aaron
v. Aaron, 909 S.W.2d 408, 410 (Tenn. 1995).

                                    IV. DISCUSSION

                                             A.

        As a threshold issue, we must address whether the juvenile court’s appointment of
Sister as Beneficiary’s financial guardian was an effective order of financial guardianship.
In order for the court’s appointment of a guardian to become effective, the court must enter
an order of appointment, administer an oath of faithful performance, and accept any required
bond. Tenn. Code Ann. § 34-1-109(a). If the guardian is to manage the minor’s property,
the “faithful performance oath shall include a promise to timely file each required inventory
and accounting and to spend the assets of the minor [] only as approved by the court.” Tenn.
Code Ann. § 34-1-109(b). An order designating a person as financial guardian of a minor
must:




                                             -8-
              (A) Set the amount of the guardian’s bond unless waived as
              authorized in § 34-1-105;

              (B) Set forth the nature and frequency of each approved
              expenditure and prohibit the guardian from making other
              expenditures without court approval;

              (C) Set forth the approved management of the minor’s property;
              and

              (D) Prohibit the sale of any property except as permitted by §
              34-1-116 without court approval or as permitted in the property
              management plan approved by such order[.]

Tenn. Code Ann. § 34-2-105. The court is authorized to waive the requirement of a bond if
it finds that the requirement of a bond would be unjust or inappropriate and that one of the
following circumstances exists:

       (1) The fiduciary is a financial institution excused from the requirement of
       bond under § 45-2-1005;

       (2) The total fair market value of the minor’s [] non-real estate property does
       not exceed the sum of ten thousand dollars ($10,000) and the court finds the
       benefit to the ward by saving the expense outweighs the risks incident to the
       absence of a bond;

       (3) The document naming the suggested or preferred fiduciary excuses the
       fiduciary from posting bond;

       (4) The property of the minor [] is placed with a financial institution and the
       fiduciary and the financial institution enter into a written agreement, filed with
       the court, in which the financial institution agrees it will not permit the
       fiduciary to withdraw the principal without court approval;

       (5) The property of the minor [] is deposited with the clerk and master or clerk
       of the court; or

       (6) The fiduciary is appointed fiduciary over the person of the minor [] but has
       not also been appointed as fiduciary over the person’s estate.



                                              -9-
Tenn. Code Ann. § 34-1-105(b). Additionally, a guardian may not undertake the
administration of a minor’s estate valued more than $20,000 unless he or she has been issued
letters of guardianship. Tenn. Code Ann. § 34-1-104(a).

        The order of guardianship in this case is woefully deficient. The order lacked any
information regarding the “nature and frequency” of approved expenditures, did not preclude
the guardian from making expenditures without court approval, and did not set forth an
approved management plan for the insurance proceeds. Tenn. Code Ann. § 34-2-105. Also,
the order referenced a repealed statute and did not contain any reasoning regarding the
waiver of the bond requirement. The record before this court is devoid of any proof that the
court even administered an oath of faithful performance. Additionally, Sister did not possess
letters of guardianship. In consideration of the aforementioned deficiencies, we conclude
that the order before this court was not an effective order of guardianship. Accordingly, we
also conclude that Sister was not properly appointed as Beneficiary’s guardian of his estate.

                                              B.

        Old Line argues that it complied with its contractual obligations under the life
insurance policy by paying the face amount of the policy to Sister. Old Line contends that
it was entitled to rely on a facially valid court order appointing Sister when the court issuing
the order had subject matter jurisdiction. Old Line notes that the life insurance policy did not
even specify that the proceeds would be delivered to a guardian if the beneficiary was a
minor. In the alternative, Old Line argues that regardless of its alleged breach of the
contract, it was not the proximate cause of Beneficiary’s injury. Beneficiary responds that
Old Line failed to comply with state law by issuing the life insurance proceeds to Sister, who
did not possess valid letters of guardianship.

         ‘“Insurance contracts are subject to much the same rules of enforcement and
construction which apply to contracts generally.”’ Gray v. Estate of Gray, 993 S.W.2d 59,
64 (Tenn. Ct. App. 1998) (quoting Draper v. Great Am. Ins. Co., 458 S.W.2d 428, 432
(Tenn. 1970)). The cardinal rule of contract interpretation is that the court “must attempt to
ascertain and give effect to the intent of the parties.” Christenberry v. Tipton, 160 S.W.3d
487, 494 (Tenn. 2005). In attempting to ascertain the intent of the parties, the court must
examine the language of the contract, giving each word its usual, natural, and ordinary
meaning. See Wilson v. Moore, 929 S.W.2d 367, 373 (Tenn. Ct. App. 1996). The “court’s
initial task in construing a contract is to determine whether the language of the contract is
ambiguous.” Planters Gin Co. v. Fed. Compress & Warehouse Co., 78 S.W.3d 885, 889-90
(Tenn. 2002). Where the language of a contract is clear and unambiguous, its literal meaning
controls the outcome of the dispute. Id. at 890. “The trial judge is required, if the contract
is ambiguous, to determine the intention of the parties not alone from the language of the

                                              -10-
contract but also from the surrounding facts and circumstances.” HMF Trust v. Bankers
Trust Co., 827 S.W.2d 296, 299 (Tenn. Ct. App. 1991) (citing Nat’l Garage Co. v. George
H. McFadden & Bro., Inc., 542 S.W.2d 371 (Tenn. Ct. App. 1975)).

       The contract at issue in this case is silent as to how insurance proceeds are to be
distributed to a minor beneficiary; however, the contract provided, “Due proof of the
insured’s death will consist minimally of our company claim form completed by the
beneficiary and a certified copy of the death certificate of the insured.” Relative to minor
beneficiaries, the special instructions to the company claim form provided,

       Minor Beneficiary. The Statement is to be completed by the legally
       appointed guardian of the Estate of the minor and an official certificate of the
       guardian’s appointment must be furnished.

(Emphasis added). Thus, in order for a minor beneficiary to recoup life insurance proceeds
from Old Line, the minor must have been represented by a legally appointed guardian of the
minor’s estate. Indeed, Ms. Swanks sought documentation concerning the appointment of
Sister as Beneficiary’s purported financial guardian and would not release the life insurance
proceeds until she received a court order. Sister was simply not the legally appointed
financial guardian of Beneficiary.

       Nevertheless, this court has held that an insurance company that has submitted
payment to the wrong party in violation of its contract may forego re-payment to the correct
party when the initial payment is made in good faith. See Snow-Koledoye v. Horace Mann
Ins. Co., No. M2000-02954-COA-R3-CV, 2002 WL 225893, at *6 (Tenn. Ct. App. Feb. 14,
2002); Atkins v. Sec. Connecticut Life Ins. Co., No. 02A01-9710-CV-00257, 1998 WL
900057, at *2 (Tenn. Ct. App. Dec. 28, 1998). However, “[a]n insurer is required to
investigate a claim when the company is aware of suspicious circumstances.” Atkins, 1998
WL 900057, at *2 (citations omitted). Upon the receipt of the second order, Old Line was
put on notice that the order of guardianship was ineffective for purposes of awarding the life
insurance proceeds to Sister as Beneficiary’s financial guardian. Id. The order appeared to
be a replica, with minor handwritten and misspelled changes, of the original order that Ms.
Swanks rejected as insufficient. Instead of determining what was required to establish a legal
guardianship of a minor’s finances, Ms. Swanks simply confirmed that the order had been
drafted by the juvenile court and then paid the claim after consulting with her manager. We
agree that the order of guardianship was a facially valid court order that was signed by the
juvenile court judge. However, the order did not effectively establish Sister as Beneficiary’s
legally appointed guardian of his estate. At most, the order simply established Sister as a
guardian over Beneficiary’s person. See Tenn. Code Ann. § 34-2-105 (listing the elements
of an order establishing a fiduciary as the financial guardian of a minor). A reasonably

                                             -11-
prudent investigation would have revealed that the order was ineffective for purposes of
establishing Sister as Beneficiary’s legally appointed financial guardian. Atkins, 1998 WL
900057, at *3. Thus, we reject Old Line’s assertion that its payment to Sister was made in
good faith because it relied on the court order purportedly establishing Sister as Beneficiary’s
financial guardian.

       We also reject Old Line’s argument that it was not the proximate cause of
Beneficiary’s injury, namely Sister’s misappropriation of the insurance proceeds. Quoting
Anderson-Gregory Co., Inc. v. Lea, 370 S.W.2d 934 (Tenn. Ct. App. 1963), Old Line states
that a defendant is not liable for damages in an action for breach of contract unless such
damages are the “natural and proximate consequences” of the breach. We hold that it was
reasonably foreseeable that entrusting a large sum of money with someone who had not been
briefed on the “nature and frequency” of approved expenditures, was not precluded from
making expenditures without court approval, and had not been given an approved
management plan would result in the misappropriation of the life insurance proceeds to
Beneficiary’s detriment. See Tenn. Code Ann. § 34-2-105. Thus, Beneficiary’s injury was
a natural and proximate consequence of Old Line’s failure to ensure that the life insurance
proceeds were safeguarded with a legally appointed financial guardian. Accordingly, we
conclude that the trial court did not err in awarding judgment against Old Line because Old
Line violated its contractual obligations by submitting the life insurance proceeds to Sister,
who was not Beneficiary’s legally appointed guardian.

                                              C.

       Old Line asserts that regardless of whether the guardianship statutes were complied
with, Beneficiary consented to the improper distribution of the life insurance proceeds to
Sister. Citing Cardwell v. Bechtol, 724 S.W.2d 739 (Tenn. 1987), Old Line argues that
Beneficiary had the capacity to consent to Sister’s improper receipt of the life insurance
proceeds. Old Line notes that Beneficiary knew that Sister had received and deposited the
check and that he also regularly used the checking account containing the life insurance
proceeds. Beneficiary responds that he did not possess the legal capacity to consent to
Sister’s misappropriation of the life insurance proceeds and that he did not know that he had
access to the life insurance proceeds.

        In Cardwell, the Supreme Court adopted the mature minor exception to the common
law rule that parental consent was required for medical treatment. 724 S.W.2d at 748-49.
The exception was adopted with the instruction that its application was a “question of fact
for the jury to determine whether the minor ha[d] the capacity to consent to and appreciate
the nature, the risks, and the consequences of the medical treatment involved.” Id. at 749.
In addition to the court’s adoption of the mature minor exception in limited circumstances,

                                              -12-
the legislature “recognized that persons under the age of [18] may have the capacity to make
significant and important decisions and to engage in activities that were traditionally viewed
as adult activities.” Seals v. H & F, Inc., 301 S.W.3d 237, 259 (Tenn. 2010) (Koch, J.,
concurring in part and dissenting in part). The activities recognized by the legislature
included working part-time, obtaining a learner’s permit, leasing a safety deposit box,
marrying at the age of 16, obtaining contraceptive advice and supplies, consenting to prenatal
care, seeking judicial consent for an abortion, and surrendering a child for adoption. Id.
(citations omitted).

        The statutory and court-approved extensions of a minor’s capacity to consent to
certain activities are distinguishable from the present case. The guardianship statutes at issue
protect minors and ensure that property and funds left to a minor are properly safeguarded
by a legally appointed guardian until the minor attains the age of majority. Tenn. Code Ann.
§ 34-2-106(b)(1). Once the minor attains the age of majority, the guardianship terminates
automatically unless a petition to continue the guardianship is filed. Tenn. Code Ann. § 34-
2-106(b). If a petition to continue the guardianship has been filed, the court must consider
whether termination of the guardianship is in the person’s best interest and whether the
person has attained the ability to “wisely manage and control the property.” Tenn. Code Ann.
§ 34-2-106(b)(3). Implicit in the guardianship statutes is the presumption that a minor is
unable to wisely manage and control the property he or she has been given. To hold that a
minor is capable of consenting to the improper appointment of a financial guardian who is
tasked with wisely managing and controlling the property at issue would render the
guardianship statutes obsolete. Accordingly, we hold that Beneficiary lacked the capacity
to consent to the improper appointment of Sister as his financial guardian and her subsequent
misappropriation of the insurance proceeds.

                                     V. CONCLUSION

       The judgment of the trial court is affirmed, and the case is remanded for such further
proceedings as may be necessary. Costs of the appeal are taxed to the appellant, Old Line
Life Insurance Company of America.


                                            ______________________________________
                                            JOHN W. McCLARTY, JUDGE




                                              -13-
