Gail Michelman v. Lincoln National Life Insuranc

We are asked to decide whether an adverse claim to a stake may be so lacking in substance that a neutral stakeholder cannot interplead in good faith. Interpleader is proper when a stakeholder has at least a good faith belief that there are conflicting colorable claims. We conclude that Appellee met this requirement.

I. BACKGROUND

Gail and Irwin Michelman submitted a life insurance application to Lincoln National Life Insurance Company in 1999 to obtain coverage for their minor daughter, Elizabeth. At the time, Gail and Irwin were married. The application listed Gail and Irwin as the primary beneficiaries and their other daughter, Jessica, as a contingent beneficiary. The application designated Gail as the policy owner, with policy ownership passing to Elizabeth upon her 21st birthday. Lincoln subsequently issued the policy memorializing this.

Whether Irwin also had an ownership interest in Elizabeth’s life insurance policy is less certain. The insurance contract unhelpfully defined the policy “Owner” — in the singular — as “the Owner identified in the application or a successor.” Although Irwin’s name was written on the line of the application designated for the…