NY Life Ins v. Culpepper ( 2004 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
______________
No. 95-60511
Summary Calendar
______________
NEW YORK LIFE INSURANCE AND ANNUITY COMPANY,
Plaintiff,
versus
MARIE W. CULPEPPER, ET. AL,
Defendant.
STEPHANIE SEVERANCE, WILLIAM S. CULPEPPER, EILEEN WHITE,
CHARLES NAYLOR, JR., RUTH NAYLOR, ELIZABETH COMBUS,
Defendants-Cross Claimants-Appellants,
MARIE W. CULPEPPER,
Cross Defendant-Appellee.
_________________________________________________________________
Appeal from the United States District Court
for the Southern District of Mississippi
(4:93CV152LN)
_________________________________________________________________
March 14, 1996
Before KING, SMITH, and BENAVIDES, Circuit Judges.
FORTUNATO P. BENAVIDES, Circuit Judge:*
Appellants appeal the district court's order and final
judgment finding Appellee successor owner of four annuity policies,
and awarding Appellee the funds from those annuities. Finding the
district court erred in admitting and relying on inadmissible
hearsay that is not harmless, we reverse and render.
*
Pursuant to Local Rule 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in Local Rule 47.5.4.
BACKGROUND
Appellee Marie Culpepper is the widow of Bryan Culpepper, who
died on May 1, 1993. Bryan Culpepper lost both his eyes and his
left arm in World War II. After being discharged, he moved in with
his parents and siblings in Meridian, Mississippi until he met and
married Marie Culpepper eleven years later.1 Bryan and Marie
Culpepper divorced within a few years, but remarried a short time
later, remaining married until Bryan Culpepper's death in 1993.
Bryan Culpepper managed a courthouse concession stand. He was a
bright man with a good business sense, who invested his money well.
He died leaving a sizable estate to his wife as sole beneficiary
under his will.
Despite his interest and ability to handle his own business
affairs, Bryan Culpepper required assistance with his day-to-day
activities, which his wife provided. Marie Culpepper often either
assisted her husband in signing documents or signed his name for
him. Over the years, Marie Culpepper signed checks, credit cards,
medical forms, and insurance policies for her husband. However,
she usually signed such documents in the presence of Bryan
Culpepper and a third party.
Bryan Culpepper purchased four annuity policies from New York
Life Insurance and Annuity Corporation ("New York Life"). At the
time of the purchase, Bryan Culpepper had his wife sign his name
1
Appellants in this case include a brother, three sisters,
a nephew, and a niece of Bryan Culpepper. One sister, Ruth Naylor,
and one brother, William S. Culpepper, testified at trial about the
care they provided Bryan Culpepper both before and after he married
Marie Culpepper.
2
for him as owner and annuitant in the presence of his insurance
agent and close friend, Ron Gardner ("Gardner").
In August 1984, following a change in federal tax law, New
York Life issued a mass mailing, consisting of several hundred
thousand letters, to all of its annuitants "strongly
recommend[ing]" that a successor owner be named on the policies.
Bryan Culpepper was sent four of theses letters, one for each
policy. A form was included to be used in naming a successor
owner. Marie Culpepper signed Bryan Culpepper's name to the forms,
designating her as successor owner, and mailed them directly to New
York Life.2 No third party witnessed the signing, and none of the
forms required a witness or notary. Neither Bryan nor Marie
Culpepper notified Gardner of the change in successor owner.
In May 1992, while Bryan Culpepper was in the hospital
undergoing treatment for cancer, he called Gardner to his hospital
room and presented Gardner with a slip of paper upon which he had
listed the names of his relatives and certain amounts of money he
wished these relatives to receive upon his death. Gardner drafted
the appropriate documents, which Bryan Culpepper signed with
Gardner's assistance, naming the listed relatives as beneficiaries
on certain annuity and life insurance policies, including the four
annuities in which Marie Culpepper had been named successor owner
back in 1984.
2
Because some many customers were affected by the new tax
law, New York Life sent the letters and successor owner forms
directly to the annuitants to avoid flooding its local agents with
calls from its customers.
3
Bryan Culpepper died a year later from cancer. Soon after his
death, Marie Culpepper and Gardner received a letter from New York
Life stating that Marie Culpepper was named as successor owner of
the four annuity policies. However, after Marie Culpepper was
informed of her status as successor owner, she changed the
beneficiaries on the four annuity policies to her estate.
New York Life brought an interpleader action in the district
court, asking for directions as to whom to pay proceeds of the four
annuities. They named as defendants Marie Culpepper and those
relatives of Bryan Culpepper named as beneficiaries in 1992
("Appellants"). Marie Culpepper filed an answer making claim to
the proceeds of the annuities, and Appellants filed a separate
answer making claim to the proceeds, along with an action against
New York Life and Gardner for failing to effectuate the change of
beneficiaries made by Bryan Culpepper in 1992. The district court
dismissed New York Life and Gardner upon its ruling on a motion for
summary judgment. The case then proceeded to a bench trial between
Marie Culpepper and Appellants. On July 26, 1995, judgment was
entered in favor of Marie Culpepper. The court found that Marie
Culpepper was authorized to sign the successor owner forms because
she did so at her husband's request and therefore, her rights as
successor owner were superior to Appellants.
INADMISSIBLE HEARSAY
"District courts are given broad discretion in rulings on the
admissibility of evidence; we will reverse an evidentiary ruling
only when the district court has clearly abused this discretion and
4
'a substantial right of [a] party is affected.'" Rock v. Huffco
Gas & Oil Co., 922 F.2d 272, 277 (5th Cir. 1991) (citing Muzyka v.
Remington Arms Co., Inc., 774 F.2d 1309, 1313 (5th Cir. 1985);
McNeese v. Reading and Bates Drilling Co., 749 F.2d 270, 275 (5th
Cir. 1985); FED. R. EVID. 103(a)).
Appellants contend that the district court erred in admitting
Marie Culpepper's testimony that Bryan Culpepper told her to sign
the successor owner forms in 1984 because the statement is hearsay
tending to show Bryan Culpepper's intent. Specifically, Appellants
argue that Marie Culpepper's statement that her husband instructed
her to sign the successor owner forms directly addresses the
validity of the 1984 designation of Marie Culpepper as successor
owner to the four annuity policies at issue in this case. The
district court overruled Appellants' objection, finding that Marie
Culpepper's statement was not hearsay because it was not offered
for the truth of what was said, but to the reason why she signed
Bryan Culpepper's name to the successor owner forms. We disagree.
An out-of-court statement constitutes hearsay when offered in
evidence "to prove the truth of the matter asserted." See Anderson
v. United States, 417 U.S. 211, 219, 94 S. Ct. 2253, 41 L. Ed. 2d 20
(1974); FED. R. EVID. 801(c). The hearsay rule applies even when
the statement is made by a witness unavailable to testify due to
death. See FED. R. EVID. 804(a)(4). We find that Marie Culpepper's
statement is clearly hearsay because it speaks to the validity of
the signature on the successor owner forms. Although the district
court ruled that the statement was only offered to show Marie
5
Culpepper's state of mind, the court's memorandum opinion and order
filed after the bench trial makes apparent that the court relied on
Marie Culpepper's statement as evidence in support of its judgment.
The court's memorandum and order states: "Marie testified credibly
that she completed and signed the forms at Bryan's request."
Marie Culpepper argues that her testimony as to her husband's
out-of-court statement falls under the hearsay exceptions listed in
Rule 804, without specifying which exception applies.3 The only
exception that is remotely relevant is the residual exception, Rule
804(b)(5).4 However, this Court has held that this exception must
only be used sparingly. Rock, 922 F.2d at 282. The admission of
Bryan Culpepper's statement to Marie Culpepper instructing her to
designate herself as successor owner and sign his name to the
applicable forms establishes not only the reason why Marie
Culpepper signed her husband's name to the successor owner forms,
but also Bryan Culpepper's intent that Marie Culpepper become
3
Any challenge to Gardner's testimony regarding Bryan
Culpepper's out-of-court statements is not properly before this
Court because no objection was raised during the testimony to
preserve error for appeal.
4
The Rule states in pertinent part:
A statement not specifically covered by any of the
foregoing exceptions but having equivalent circumstantial
guarantees of trustworthiness, if the court determines
that (A) the statement is offered as evidence of a
material fact; (B) the statement is more probative on the
point for which it is offered than any other evidence
which the proponent can procure through reasonable
efforts; and (C) the general purposes of these rules and
the interests of justice will best be served by admission
of the statement into evidence.
FED. R. EVID. 804(b)(5).
6
successor owner and consent for her to sign his name to the forms.
Such a statement is inherently unreliable, and therefore cannot
meet the requirement of Rule 804(b)(5) that the statement have
"equivalent circumstantial guarantees of trustworthiness."
Therefore, we find that Marie Culpepper's testimony regarding Bryan
Culpepper's out-of-court statement is not admissible under any
hearsay exception.
Having determined that Marie Culpepper's testimony regarding
Bryan Culpepper's out-of-court statement constitutes inadmissible
hearsay, we must next determine whether the admission of hearsay
was harmless. "The question of harmless error is inseparable from
that of the sufficiency of the evidence to support the finding or
verdict the erroneously admitted evidence went toward proving. For
if, without it, the remaining evidence is insufficient to support
the final result, the error cannot be said to have been harmless."
Lubbock Feed Lots, Inc. v. Iowa Beef Processors, Inc., 630 F.2d
250, 269 (5th Cir. 1980) (citing 11 Wright & Miller, Federal
Practice and Procedure: Civil § 2885, at 289-90 (1973). Because
Bryan Culpepper did not sign the successor owner forms himself, the
evidence presented apart from the inadmissible hearsay testimony is
insufficient to prove the validity of the signature on the forms
and is therefore not harmless. The evidence clearly proves that
the change of beneficiary documents signed by Bryan Culpepper in
1992 were properly executed, and as there is no proper evidence in
the record sufficient to support a reasonable conclusion that the
successor owner forms were executed with the consent of Bryan
7
Culpepper or that it was his intent that Marie Culpepper be the
successor owner, we reverse the final judgment of the district
court and render judgment in favor of Appellants.
CONCLUSION
For the reasons articulated above, the final judgment of the
district court is REVERSED, and judgment is RENDERED in favor of
Appellants.
8