Sveen v. Melin: Retroactive application of statute revoking upon divorce spousal life-insurance-beneficiary designations upheld by U.S. Supreme Court

Charles E. Rounds, Jr.
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A life insurance policy is a third-party-beneficiary contract. A revocation-upon-divorce statute that applies to a life insurance beneficiary-designation extinguishes the beneficiary’s contract-based intangible personal property rights. In 2018, the U.S. Supreme Court held that it may do so retroactively. See Sveen v. Melin, 584 U.S. ____ (2018) [No. 16-1432]. Why? Because the statute does not substantially impair contractual rights. Justice Gorsuch, the lone dissenter, counters: “The Contracts Clause categorically prohibits states from passing ‘any…Law impairing the Obligation of Contracts.’” Could not the same practical result have been achieved without any impairment of legal contractual obligations and with a lot less fuss had the plaintiffs brought a simple mistake-based unjust-enrichment claim for equitable restitution against the third-party-beneficiary? See, e.g., Restatement of Restitution §22 (1937). Unjust enrichment is taken up generally in §8.15.78 of Loring and Rounds: A Trustee’s Handbook (2018). The section is reproduced in its entirety below.

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