Johnson v. Nelson

861 N.W.2d 705 (2015)

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Johnson v. Nelson

Nebraska Supreme Court
861 N.W.2d 705 (2015)

  • Written by Sheryl McGrath, JD

Facts

Chad Johnson (plaintiff) leased two farmland parcels from Stewart Minnick. Minnick owned one of the parcels, and the other parcel was owned as tenants-in-common by Minnick and his sister, Mary Nelson (defendant). In 2006, when Minnick was about age 80, Johnson asked an insurance agent about purchasing a life-insurance policy on Minnick’s life and then using the life-insurance proceeds to buy the leased land. The insurance agent (who was Johnson’s cousin) told Johnson about the insurable-interest requirement, and the agent suggested a land-buyout agreement. In January 2007, Johnson and Minnick signed a buyout agreement that required Johnson to purchase a life-insurance policy on Minnick’s life. At that time, the land was worth about $450,000. The agreement stated that when Minnick died, Johnson would pay the policy proceeds to the personal representative of Minnick’s estate in exchange for a transfer of the land to Johnson. Later, Minnick and Johnson both signed a life-insurance application and submitted the application to an insurance company. The insurance company issued a policy effective in March 2007, with Johnson as the beneficiary of the $500,000 policy proceeds. Minnick died five years later, leaving his sister and her children as his heirs. By then, the land was worth about $1,250,000. Johnson tendered the $500,000 policy proceeds to the personal representative of Minnick’s estate, but the personal representative declined to transfer the land. Johnson sued Minnick’s estate in district court for specific performance of the buyout agreement. In response, the estate alleged that Johnson had no insurable interest on Minnick’s life. The estate sought summary judgment on Johnson’s claim. The district court found that the estate lacked standing to raise the insurable-interest argument but granted summary judgment in favor of the estate on other grounds. Johnson appealed.

Rule of Law

Issue

Holding and Reasoning (Stephan, J.)

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