Shanna M. Fox and Michael D. Fox v. Kathleen R. Burden f/k/a/ Kathleen R. Fox

Fraudulent Concealment - Misapplication of Insurance Funds - Kathleen and Jerald were originally married on November 29,
1975. While married, the couple had two children: Michael and
Shanna. On August 7, 1990, the couple was granted a divorce
pursuant to a judgment and decree of divorce. Pursuant to a
stipulation and agreement (agreement) signed by the parties on
August 3, 1990, and later incorporated into the divorce decree,
Jerald agreed to change the name of the beneficiary on his
$100,000 life insurance policy from Kathleen to his minor
children. The agreement was drafted by Kathleen's attorney. Jerald
was not represented by counsel during the divorce proceeding or
the drafting of the agreement.

Unexpectedly, Jerald died in a car accident ten days after
the divorce decree was entered. He had not drafted a will, nor
made the change of beneficiary on his life insurance policy. At
the time of his death, Michael and Shanna were his only two
children. After Jerald's death, Kathleen applied for and received
the $100,000 proceeds from Jerald's $100,000 life insurance policy
with Old Line Life through the Kouri Agency in Sioux Falls, South
Dakota. The Old Line Life policy was originally purchased in June
1983 and named Kathleen as the designated beneficiary.

Prior to receiving the insurance proceeds, Kathleen never
informed anyone of the insurance provision in the divorce
agreement. In addition to the life insurance proceeds from Old
Line Life, Kathleen received a small death benefit from an auto
insurance policy with Allied Life Insurance. When Jerald
originally obtained his life and auto insurance policies from the
Kouri Agency, Kouri only sold Allied auto insurance, not Allied
life insurance. The life insurance was covered by Old Line Life.

Nearly eight years later, Kathleen decided to sell her
residence. The original agreement required certain equity to go to
Jerald. Therefore, Kathleen contacted her daughter, Shanna, to
arrange for settlement of Jerald's equity in the home. Kathleen
had offered Jerald's share of the proceeds from the sale of the
house to Shanna and Michael.

Before responding to her mother's offer, Shanna went to the
county courthouse and obtained a copy of the agreement. Under the
document, in paragraph nine, the "insurance provision" read as
follows:

That the Defendant [Jerald Fox] agrees to name his
minor children as beneficiary on his $100,000 life
insurance policy with Allied Insurance Company. The
Defendant agrees to show proof of insurance to
Plaintiff [Kathleen Burden] whenever requested by
the plaintiff.

Upon discovering the provision, Shanna contacted her attorney and,
subsequently, Michael and Shanna filed suit against their mother
for misapplication of the life insurance proceeds and fraudulent
concealment.

Plaintiff's verdict for $50,000 plus interest.

Unknown

Unknown

Affirmed in part, Reversed in part by the Supreme Court of South Dakota. See: 1999 SD 154, ___ N.W.2d ___. Note: The above date reflects the appellate court decision date, not the original trial date. Reported by kkm.