CASE2: Flood v. Fidelity & Guaranty Life Insurance Co. 394 So 2d 1311; Web 1981

Question

CASE2:

Flood v. Fidelity & Guaranty Life Insurance Co. 394 So 2d 1311; Web 1981 La App Lexis 3538 Court of Appeal of Louisiana.

Flood v. Fidelity & Guaranty Life Insurance Co. (La.)

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Facts.  Ellen and Richard Alvin Flood, who were married in 1965, lived in a house trailer
in Louisiana. Richard worked as a maintenance man and Ellen was employed at an
insurance agency. Evidence at trial showed that Ellen was unhappy with her marriage.
Ellen took out a life insurance policy on the life of her husband and named herself as
beneficiary. The policy was issued by Fidelity & Guaranty Life Insurance Co. (Fidelity).
In June 1972, Richard became unexpectedly ill. He was taken to the hospital, where his
condition improved. After a visit at the hospital from his wife, Richard died. Ellen was
criminally charged with the murder of her husband by poisoning. Evidence showed that
six medicine bottles at the couple's home, including Tylenol and paregoric bottles,
contained arsenic. The court found that Ellen had fed Richard ice cubes laced with arsenic
at the hospital. Ellen was tried and convicted of the murder of her husband. Ellen, as
beneficiary of Richard's life insurance policy, requested Fidelity to pay her the benefits.
Fidelity refused to pay the benefits and returned all premiums paid on the policy. This
suit followed. The district court held in favor of Ellen Flood and awarded her the benefits
of the life insurance policy. Fidelity appealed.

Issue.
Was the life insurance policy an illegal contract that is void?

Opinion. Lear, Judge.  Louisiana follows the majority rule that holds, as a matter of
public policy, that a beneficiary named in a life insurance policy is not entitled to the
proceeds of the insurance if the beneficiary feloniously kills the insured.
  The genesis of this litigation is the escalating criminal action of Ellen Flood, bent
on taking the life of her lawful husband. Our courts have previously adjudicated (1) the
issue of the cause of death of Richard Flood, (2) the culprit in that death, and (3) the
motives for the death. Under the peculiar circumstances of the case, it was unreasonable
of the trial court not to consider and to assign great weight to the mountain of evidence
tending to prove Mrs. Flood's scheme to defraud both the insurer, Fidelity, and the
insured, Mr. Flood. It is clear to us that the entirety of the transaction here reviewed is
tainted with the intendment of Ellen Flood to contravene the prohibitory law.
  Life insurance policies are procured because life is, indeed, precarious and
uncertain. Our law does not and cannot sanction any scheme that has as its purpose the
certain infliction of death for, inter alia, financial gain through receipt of the proceeds of
life insurance. To sanction this policy in any way would surely shackle the spirit, letter,
and life of our laws.

Holding.  The appellate court held that the life insurance policy that Ellen Flood had
taken out on the life of her husband was void based on public policy. Reversed.

Case Questions
Ethics.  Did Ellen Flood act unethically in this case? Did she act illegally?
Policy.  Should Ellen Flood have been allowed to retain the insurance proceeds in this
case?
Business Implication.  What would be the economic consequences if persons could
recover insurance proceeds for losses caused by their illegal activities (e.g., murder,
arson)?

Legal Statement

2. Answer the following questions

Should a person be allowed to disaffirm a contract he or she made as a minor after reaching the age of minority?

What is a reasonable length of time after reaching the age of majority to permit disaffirmance?

What ethical considerations are involved in these cases?

Explanation / Answer

As per the contracts law for minor, the first right given to the minors is the right to disaffirm. Disaffirming is the scenario when the minor states that he does not intend to be bound by the terms of a contract. The minor can take the decision for disaffirming when he attains a majority age. If he does not disaffirm the same within stipulated time period, it is considered to be ratified. The state government fixes this time period. Some governments consider this time period to be 6 months from the time, the minor attains majority age.

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