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MINNESOTA MUT. LIFE INS. CO. v. LEACH

June 8, 1989

MINNESOTA MUTUAL LIFE INSURANCE COMPANY, Plaintiff,
v.
DEBORAH WELLS LEACH and JAMES L. LEACH and LOIS H. LEACH, Administrators of the Estate of Robert L. Leach, Defendants


Gerhard A. Gesell, United Sates District Judge.


The opinion of the court was delivered by: GESELL

GERHARD A. GESELL, UNITED STATES DISTRICT JUDGE

 This is an interpleader action initiated by Minnesota Mutual Life Insurance Company ("MML") which comes before the Court on fully documented cross-motions for summary judgment filed by the defendants, who are conflicting claimants to the policy proceeds now on deposit in the Registry of the Court. The controversy has been fully briefed and argued.

 Robert L. Leach II and Deborah Leach were married in 1967, and in 1979 they purchased a home in Kenwood, Maryland. In 1983 MML issued them a joint Group Mortgage Life insurance policy obligating MML to pay the balance of the mortgage to Perpetual American Bank in the event of the death of either Robert or Deborah Leach, and providing that any balance would be paid to the "surviving wife" in the event the husband died first. The policy provision reads as follows:

 
DEATH BENEFIT
 
What happens upon the death of a jointly insured debtor?
 
Subject to the terms of the group policy, the death benefit for the first joint insured to die will be paid.
 
If the jointly insured debtors are married and the wife is the first joint insured to die or if the jointly insured debtors are unmarried, the group insurance on the life of the surviving joint insured will be automatically converted to an individual policy of decreasing term insurance . . . If the jointly insured debtors are married and the husband is the first joint insured to die, the group insurance on the life of the surviving wife will be automatically converted to a survivor's benefit and will be paid immediately on behalf of the surviving wife . . .

 Another provision reads:

 
To whom will we pay the death proceeds?
 
We will pay the death proceeds to the lender to be used to reduce or extinguish your loan. Any remaining proceeds will be payable to a beneficiary named by you, or to your estate if no beneficiary has been named . . .
 
When a survivor's benefit is also payable, we will pay the survivor's benefit to the lender to reduce or extinguish any amount still remaining on the loan. Any remaining proceeds will be payable to the surviving wife.

 Later, while the policy was still in effect, the Leaches separated under a voluntary formal agreement in 1984 and were promptly divorced. As part of the separation agreement, Robert conveyed "all of his right, title and interest" in their jointly owned Maryland home to Deborah. The agreement *fn1" provided:

 
11. Residence. The parties are joint owners of certain real property located at 6411 Brookside Drive Chevy Chase, Maryland. As soon as is practicable after the execution of this Agreement, the husband shall convey all of his ...

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