The opinion
Mrs. B. B. Sapp
Director.and Executive Secretary
Teacher Retirement System of Texas
Austin, Texas
Dear Mrs. Sappr Opinion Nmber O-5126
Re: Payment of contributions of de-
oeassd member where benefioiary des-
ignated inwill is different from
benefiaiary designated on regularform.
lYe have received your letter of Harch 12, 1943, which we quote in part
as follcws,
"The Teacher Retirmnent System of Texas respectfully requests an opinion from
ycur Department on the following matter:
"If a member who has on regular form filed in this offiae designated a benefi-
ciary to receive her aocmnulated contributions in case of death and in a sub-
sequent will specifies another individual to receive the said ccntributions
from the Teacher Retirement System, what would be the aorreot legal procedure
for the Teacher Retirement System to fcllcw in disposing of the aocmulated
contributions of said member?”
Subsection 5, Section 5 of the Teacher Retirement Act (ktiole 2922-1,
Vernon's Annotated Civil Statute8) reads in part as follows:
"Should a member cease to bs a teacher except by death or retirement under
the provisions of this Act, he shall be paid in full the amount of the PC-
cumulated contributions standing to the credit of his individual acaount in
the Teacher Saving Fund. Should a memver die before retirement, the amount
of h$.saccumulated contributions standingto ths credit of b.isindividual ac-
count shall be paid as provided by the laws of desoent and distribution of
Texas unless he has direoted the account to be paid otherwise. . . ."
You have supplied us with additional information as fcllcws:
The original beneficiary named predeceased the member, end the member
drew her will three days before she (the member) died. The will has been
probated, and a aertified copy thereof has been furnished you. The original
designation piasmade on a form adopted by the Retirement System which contains
the following provisioner
- .
Mrs. B. B. Sapp, Page 2 (O-5126)
"I hereby designate
(First given name) (Second given name) (Last name)
(Aeel (Relationship) (Address)
as my beneficiary to receive my accumulated contributions in the Teacher Sav-
ing Fund of the Teacher Retirement System in the event of my death before re-
tirement. Should I, at scms future time, decide to have my accumulated contri-
butions paid to scme one other than the party or person named above, I will
make such change in writing upon a form prescribed by the System and file the
same with the System, and it is my understanding that unless such change of
beneficiary is filed at the office of the Teacher Retirement System at Austin,
Texas, during my lifetime, it shall be void and of no effect. Should the
beneficiary named above die before me, and I fail to name another, it is
understood that my accumulated contri?uticns shall bs paid as provided by the
laws of descent and distribution of Texas.
(BAVE TV?GWITNESSES)
(Signature of Rltness) (Member's Signature)
Signed the day cf
(Signature of Wtness)
You wish to know (1) whether the contributions should be paid according
to the laws of descent and distribution or to the person named in the will; 2nd
(2) whether under the,quoted statute and the form adopted by the Retirement
System the ccntributions of a deceassd member should be paid to a beneficiary
in a will in the evant that both such persons are still living.
Ppe havs answered the first cluesticnin Opinion Rc. o-2907. In that
Opinion two members of the Retirsment System, who were sisters, designated
each other as beneficiary. One sister died, but before her ocntributicns
aculd be paid to her sister, the second sister died. The seccnd sister in
her mill had provided that all of her "earthly goods" should go to another
person. In Opinion Eb. O-2907 it was held that the will constituted a suf-
ficient designation under the statute and that the contributions of both
sisters should be paid to the person designated in the will of the second
sister.
In the situation under ccsideration the designation in the will was
even more specific in that it was expressly stated that the contributions
should be paid to the person named. In accordance with opinion NC. O-2907
you are advised in answer to your first question that the contributions of
the deceased member should be paid to the person named in the will.
-
. -
Mrs. 2. B. Sapp, Page 3 (O-5126)
The second point in whioh you are interested presents mars serious
questions. In Opinion NC. O-2048 your department was advised that the gen-
eral clause, "all property of whatsoever kind, real, personal or mixed of
which I may dies possessed" is bequeathed to a named person, did not change
the banefioiary named in the form on file in the cffioe of the Retirement
system. But we said in that opinion: "The question hare would bs muohmcre
difficult if the will/%!d% on executed subsequent to the original designa-
tion in the Teacher Retirement System had provided specifically that the
accumulated contributions should be paid to someans other than the person
designated in the form filed with the Teacher Retirement System."
Fe have been unable to find any decisions which have passed upon this
question, and a resort to analogous oases relating tc the payment cf insur-
anoe prcoeeds produces confusion rather than enlightenment.
In the case of Grand Lodge, Knights and Daughters of Tabor, v. MannI
282 S.W. 266, plaintiff had been named as beneficiary in a policy or oertif-
icate of insurance, but at a later date the insuisd in a will had named other
persons as beneficiaries. These other persons presented a certified copy of
the will to defendant, snd it treated the instrument as a change of benefici-
aries, and paid the amount of the oertifioate to such persons. The by-laws
of the order provided that no change in the designation of beneficiaries
should be effective until the old certificate had been received and a new
and issued during the lifetime of the member, and until such time the crig-
inal designation should remain in full force. Payment of a fee for such
change wus also covered. The court in holding that a change of benoficiar-
ies had been effected made the following statamentr
"Our Supreme Court, in the case of Splawn v. Chow, 60 Tsx. 532, which holding
has been a number of times reaffirmed since that deoisicn, has directly hold
that such a provision in the by-laws of an insurance company, or other ocrpcr-
aticn, as the one hre involved, is for the benefit and protection of the oom-
pany alone, can be waived by it as it sees fit, and cannot be taken advantage
of by others. In that case, as here, the change in beneficiaries was effected
by the will of the insured, sndit was held that those designated took the
benefits under the certificates rather than those designated as bsneficiarias
in the certificate itself.
"The trial court's judment ssems to rest upon the conclusion that the change
in beneficiaries had not in fact been made during the lifetime of the member,
tut this ~ecise question, too, had been decided the other way by the Kansas
Court of Appeals in Heydcrf v. Ccnrack, reported in 52 P. page 700, 7 Kan.
App. 202, under facts not in legal effect different frcm those here obtaining;
that is, a member of the order having, during his lifetime, made a request for
a change in beneficiaries in substantial aoocrd with the contract between him-
self and the order in that respect, the designation so made of a nsw beneficiary
was held not void by reason of the member's death prior to the granting of the
same by the insurer. To the same effect appears to be the holding in Luhrs V~
Luhrs, 25 N. E. 366, 123 R. Y. 367, 9 L.R.A. 634, 20 Am. St. Rep. 754."
es. B. B. Sapp, Page 4 (O-5126)
See also Richardson v. Faithful, 289 S.W. 10543 MaNeill v. Chinn, 101 S.W.
46.5~ BLlls v. Bills at al., 207 S.W. 614.
Hcwsver, a rscent'decisicn of the Conrmissicnof Appeals and adopted by
the Supreme Court might pcssibley be considered as in ocnfliot rdth the Vann
case. In the case of Garabrant v. Burns, et al., 111 S.W. (2d) 1100, it was
held that the beneficiary named in the policy has a right to require that a
change of beneficiaries be made substantially in aocordanw with the rsgula-
ticns or manner provided in the pclioy, that the change may be made in nc
other way, and that a substantial compliance therewith was necessary tc sffoot
the change. While a distinction is attempted to bo drawn between the prinoi-
pal oaso and the Vann case, such distinction is not very clear in respect to
the question under ocnsideraticn.
See also: Wright v. Wright (W. E. Ref.), 44 S.W. (2d) 1019; Groat
Southern Life Ins. Cc. v. &kill (Dism. Judgm. Car.), 151 S.
Kelly v. McDonald, (W.E. Dims.), 83 S.W. (2d) 414; Adams V* ILzZd!W2’Dism )
78 S.W. (2d) 6641 Beck v. Beck, 90,S.W. (2d) 284; Brown v. Union Life Ins. Ci.'
et al., 72 S.W. (2d) 661; Korens Nat. Bank et al., v. Stockton, et alo, 40
S.W. (2d) 7.
Wore wo called on to decide whether the Vann oass or the Burns case con-
trolled the question under consideration, ww believs that ws would be inclined
tcdeoide that the Vann case is applicable. In the first place, the State
Board of Trustees derives its duties and powers from the Retirement Act. The
only provision relating to the designation of beneficiaries to whom the aooun-
ulated contributions of a msmber shall be paid upon the death of such member
is: ". . . unless ho has directed the account to be paid cthsrwiss." Can the
Board of Trustees impose duties mars onerous than the ones which the statute
itself impcsesl The Retirement Act is for ths benefit of the teachers, as
defined therein, and should be construed SC as to effect this purpose. The
Retirement Board of Trustees is under no duty to beneficiaries except to see
that the designation of the member, if made in accordance with the terms of
the Retirement A at, is carried cut. Of ocurss, the Board of Trustees may
make reasonable requirements SC as to satisfy itself that the designation is
genuine. Such would be necessarily implied. See Fort Worth Cavalry Club,
Inc. v. Sheppard, 83 S W. (2d) 660. We also thing that the Board may take
any reasonable moans tc protect the System and its funds, and in cur opinion
this is the object of ths beneficiary form adopted by the Board. In other
words, the Board does not want to pay aoomnulated contributions to one per-
son designated as beneficiary and later find cut that there was a later dss-
ignaticn naming scmocne else. But it may bs a different thing when the
Board is satisfiedthat a subsequent designation has been made, and is a
genuine one, before the money is paid cut.
The Retirement Aot set up forteachers in the City of Bsw York, ocn-
sidered bythe ocurt in the oass of Ward v. Teachsrs',Retiroment Board, 241
N.Y. S. 535, rsv. 246 H.Y. S. 522, aff. 175 NT.E. 347, required that a desig-
nation of beneficiaries be acknowledged. In accordance with the terms of
1 . -
Mrs. B. B. Sapp, Page 5 (O-5126)
the Act, the mm-t held that a designation not acknowledged was ineffect-
ive. Buttha aourt strongly intimPtsd that unless the Act itself required
an acknowledgment, the designation would have been given effect.
We are not definitely answering your second question for the reason
that the matters inquired about are not before you at this time. We simply
wanted to show you that the question is certainly not free from doubt. We
suggest that a possible mepllsof eliminating the ohanoe of such a situation
confronting you is the addition of a provision to your adopted form to the
effeot that these provisions relating to change of banefioiary are for the
sole protection and benefit of the Tsaoher Retirement System and the Board
of Trustees, and upon proof of a subsequent designation may be waived bythe
Board of Trustees in its discretion, and only by the Poard of Trustees.
Very truly yours
ATTOEREYG~ERAL OFTEXAS
By /s/George W. Sparks
George W. Sparks
APPROVED MAR 24, 1943 Assistant
/s/ GRWER SELLERS
iflET ASSISTANT
ATTORNEY GElTERAL
Gws-srsgw
O.K. C.C.R. APPROVED
opinion cxmlittee
By B.W.B.
Chairman