                                                                                            January 22 2013
                                           OP 12-0408

              IN THE SUPREME COURT OF THE STATE OF MONTANA
                                           2013 MT 13



THRIVENT FINANCIAL FOR LUTHERANS,

               Plaintiff-Appellee,

         v.

LUCIA E. ANDRONESCU, FKA Lucia E. Anderson,

               Defendant-Cross-defendant-Appellee,

         v.

JOHANNA M. ANDERSON,

               Defendant-Cross-claimant-Appellant.


APPEAL FROM:           Certified Question, U.S. Court of Appeals for the Ninth Circuit
                       Cause No. 11-35437

COUNSEL OF RECORD:

                For Appellant:

                       Roberta Anner-Hughes; Anner-Hughes Law Firm; Billings, Montana

                For Appellee:

                       Gary Zadick; Ugrin, Alexander, Zadick & Higgins, PC; Great Falls,
                       Montana



                                                    Submitted on Briefs: November 7, 2012

                                                                Decided: January 22, 2013


Filed:

                       __________________________________________
                                         Clerk
Justice Beth Baker delivered the Opinion of the Court.

¶1     We accepted the following certified question from the U.S. Court of Appeals for

the Ninth Circuit, which we have reformulated in accordance with M. R. App. P. 15(4)

and our order of July 17, 2012:

¶2    Does § 72-2-814, MCA, apply to a life insurance policy owner’s designation of his
spouse as the beneficiary, where the parties were later divorced prior to enactment of
§ 72-2-814, MCA, and the policyholder died after enactment of the statute?

¶3     Our answer is “yes” because § 72-2-814, MCA, operates at the time of the

insured’s death and applies to any divorce that took place during the insured’s lifetime.

                  FACTUAL AND PROCEDURAL BACKGROUND

¶4     We summarize the undisputed facts from the Ninth Circuit’s certification order.

In August 1990, Brent Anderson (Brent) purchased life insurance from Thrivent

Financial for Lutherans and named the following beneficiaries: first, his then-wife Lucia,

second, his parents, and third, his sister. In June 1993, Brent and Lucia divorced in

Arizona. Brent was awarded his life insurance policy in the divorce decree. Later that

same year, in October 1993, § 72-2-814, MCA, became effective in Montana.1 The

statute provides that a divorce revokes “any revocable disposition or appointment of

property made by a divorced individual to the individual’s former spouse in a governing

instrument[.]” Section 72-2-814(2)(a)(i), MCA.

¶5     Brent died in Montana in August 2010. He had never changed his designation of

Lucia as primary beneficiary under his life insurance policy.               Thrivent filed an

1
 Section 72-2-814, MCA, was enacted during the 1993 legislative session and became effective
on October 1, 1993, because the statute did not provide a different effective date. Section 1-2-
201(1)(a), MCA.
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interpleader action to determine the rightful beneficiary under Brent’s policy. The U.S.

District Court for the District of Montana granted judgment on the pleadings in favor of

Lucia, based in part on the fact that § 72-2-814, MCA, became effective after Brent and

Lucia’s divorce.

                                STANDARD OF REVIEW

¶6     When answering a certified question as permitted by M. R. App. P. 15(3), this

Court’s review is “purely an interpretation of the law as applied to the [pertinent] facts

underlying the action.” BNSF Ry. Co. v. Feit, 2012 MT 147, ¶ 6, 365 Mont. 359, 281

P.3d 225 (quoting State Farm Fire & Cas. Co. v. Bush Hog, LLC, 2009 MT 349, ¶ 4, 353

Mont. 173, 219 P.3d 1249).

                                       DISCUSSION

¶7     Our precedents establish that the interest of an insurance policy beneficiary is like

that of a legatee under a will—“a mere expectancy of a gift at the time of the insured’s

death.” In re Guardianship & Conservatorship of Anderson, 2009 MT 344, ¶ 23, 353

Mont. 139, 218 P.3d 1220 (quoting Grimm v. Grimm, 157 P.2d 841, 842-43 (Cal. 1945));

see also Feely v. Lacey, 133 Mont. 283, 297, 322 P.2d 1104, 1111 (1958). A life

insurance policy owner, like a testator, may alter or revoke designations at any time until

death; thus, either instrument—whether will or insurance policy—must be interpreted

and applied at death in order to effectuate the transferor’s final intent.

¶8     The Official Comments to § 72-2-814, MCA, support the conclusion that the life

insurance policy, like a will, is not given effect until the time of death. Montana adopted

the revocation-upon-divorce statute from the Uniform Probate Code (UPC) in order to

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“unify the law of probate and nonprobate transfers.” Tit. 72, ch. 2, Mont. Code Ann.,

Annotations, Official Comments at 635 (2012).           The Comments indicate that the

revocation statute operates at the time the “governing instrument is given effect” and the

provision to the former spouse is to be treated “as if the divorced individual’s former

spouse (and relatives of the former spouse) disclaimed the revoked provisions[.]” Tit. 72,

ch. 2, Mont. Code Ann., Annotations, Official Comments at 636 (2012).

¶9     The Comments reference two law review articles that provide “[t]he theory of this

section[.]” See Tit. 72, ch. 2, Mont. Code Ann., Annotations, Official Comments at 636

(2012) (citing Lawrence W. Waggoner, The Multiple-Marriage Society and Spousal

Rights Under the Revised Uniform Probate Code, 76 Iowa L. Rev. 223 (1991) and John

H. Langbein, The Nonprobate Revolution and the Future of the Law of Succession, 97

Harv. L. Rev. 1108 (1984)). The articles discuss the history and purpose of revocation-

upon-divorce statutes and confirm that, under those statutes, life insurance is to be treated

in the same manner as a will. According to Langbein:

       The label aside, life insurance is functionally indistinguishable from a will,
       for it satisfies the twin elements of the definition of a will. We say that a
       will is revocable until the death of the testator and that the interests of the
       devisees are ambulatory—that is, nonexistent until the testator’s death.
       Unless specially restricted by contract, the life insurance beneficiary
       designation operates identically.

Langbein, 97 Harv. L. Rev. at 1110 (emphasis added).

¶10    This commentary is consistent with the interpretation of other jurisdictions that

apply the revocation-upon-divorce statute as a rule of construction at the time the

governing instrument is given effect. See e.g. Buchholz v. Storsve, 740 N.W.2d 107, 111


                                             4
(S.D. 2007); Stillman v. Teachers Ins. & Annuity Assn. College Ret. Equities Fund, 343

F.3d 1311, 1317-18 (10th Cir. 2003) (“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.’”) (quoting Statement of

the Joint Editorial Board for Uniform Probate Code Regarding the Constitutionality of

Changes in Default Rules as Applied to Pre-existing Documents at 3-4 (1991)).2

¶11    Lucia argues that revoking her status as beneficiary would require impermissible

retroactive application of the law. Section 1-2-109, MCA (“No law contained in any of

the statutes of Montana is retroactive unless expressly so declared.”).          A statute is

retroactive if it “takes away or impairs vested rights, acquired under existing laws, or

creates a new obligation, imposes a new duty or attaches a new disability, in respect to

transactions already past.” Allen v. A. Richfield Co., 2005 MT 281, ¶ 16, 329 Mont. 230,

124 P.3d 132 (quoting Williams v. Wellman-Power Gas, Inc., 174 Mont. 387, 390, 571

P.2d 90, 92 (1977)); see also Porter v. Galarneau, 275 Mont. 174, 183, 911 P.2d 1143,

1150 (1979). A statute is not given retroactive effect “merely because it is applied in a

case arising from conduct antedating the statute’s enactment.” Porter, 275 Mont. at 183,

911 P.2d at 1148.

2
  Both South Dakota and Utah law, construed in Buchholz and Stillman, respectively, include the
UPC’s “rule of construction” statute expressly providing that the law applies to governing
instruments executed before its effective date. See Utah Code Ann. § 75-2-1301(2); S.D.
Codified Laws § 29A-8-101(b)(2). Although Montana’s code lacks the express statutory
provision, the Official Comments nonetheless suggest that the statute operates at the time the
instrument is given effect—i.e., upon death. Tit. 72, ch. 2, Mont. Code Ann., Annotations,
Official Comments at 636 (2012).
                                              5
¶12      Because § 72-2-814, MCA, operates at the time of the transferor’s death, the

statute is not given retroactive effect when applied to a divorce predating its enactment.

Prior to Brent’s death, Lucia had no vested rights in the proceeds of his insurance policy.

Anderson, ¶ 23. Instead, her property interest was equivalent to that of a devisee under a

will—“ambulatory” and “nonexistent.”         Langbein, 97 Harv. L. Rev. at 1110.        The

operation of the revocation-upon-divorce statute therefore does not “impair[] vested

rights” and did not result in a different legal effect from that which the transaction had

under the law at the time it occurred. Porter, 275 Mont. at 183, 911 P.2d at 1148-49.

The designation of Lucia as beneficiary had no legal effect before the date of Brent’s

death.

¶13      Lucia also points out the U.S. District Court’s reliance on Eschler v. Eschler, 257

Mont. 360, 849 P.2d 196 (1993), a case decided prior to the effective date of § 72-2-814,

MCA, which held that the life insurance policyholder’s designation of his wife as

beneficiary was not revoked by subsequent divorce. There, the insured died having

begun, but not completed, the necessary paperwork to change his policy beneficiary and

we determined that his “actions do not evidence a sufficient determination to change the

beneficiary designation[.]” Eschler, 257 Mont. at 369, 849 P.2d at 202. Eschler does not

apply here because § 72-2-814, MCA, establishes the insured’s intention to revoke an

ex-spouse’s beneficiary status and would have affected the analysis in that case. Eschler,

moreover, is not relevant to the question certified for our review—whether the

revocation-upon-divorce statute applies to a divorce that pre-dates the statute’s



                                              6
enactment. The language of § 72-2-814, MCA, and the authorities we discuss address

that question and direct us to answer in the affirmative.



                                                            /S/ Beth Baker


We concur:

/S/ Mike McGrath
/S/ Michael E Wheat
/S/ Patricia O. Cotter
/S/ Jim Rice




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