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State Farm Life Insurance Co. v. Fort Wayne National Bank

474 N.E.2d 524 (1985)

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State Farm Life Insurance Co. v. Fort Wayne National Bank

Indiana Court of Appeals
474 N.E.2d 524 (1985)

  • Written by Sheryl McGrath, JD

Facts

Insurance agent Robert Houser (defendant) sold a life-insurance policy to James Zimmerman in 1975. The insurance company on the policy was State Farm Life Insurance Co. (State Farm) (defendant). When State Farm issued the policy to Zimmerman, Houser and State Farm knew that Zimmerman’s purpose in purchasing the policy was to provide funds for his son to buy Zimmerman’s family business, Zimmerman Excavating Services, Inc. Zimmerman owned 95 percent of the business, and his son owned the other 5 percent of the business. The life-insurance policy named Zimmerman’s son as the beneficiary and named Zimmerman as policy owner. When Zimmerman died in 1980, the policy proceeds passed through Zimmerman’s estate because Zimmerman was the named owner of the policy. As a result of the life-insurance proceeds passing through the estate, the estate had to pay approximately $34,000 in taxes. The personal representative of the estate, Fort Wayne National Bank (personal representative) (plaintiff), sued State Farm and Houser to recover the tax consequences to the estate. Following a bench trial, the trial court found that State Farm and Houser were negligent, and the court entered judgment in favor of the personal representative. State Farm and Houser appealed.

Rule of Law

Issue

Holding and Reasoning (Hoffman, J.)

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