Sveen v. Melin

52

Minnesota law revokes a spouses designation as a life insurance beneficiary upon divorce. Does that violate the Contract Clause of the Constitution?1


  1. We talked about this case in Episode 52. More information about the case can be found here

5-4 Sveen/Minnesota

8-1 Sveen

9-0 Melin

7-2 Sveen

Notes

Mark Sveen and Kaye Melin were married in 1997. Sveen had a life insurance policy that made Melin the beneficiary with children as contingent beneficiaries. The couple divorced in 2007 and Sveen died in 2011. Mark Sveen never changed his beneficiaries.

Does his life insurance go to his ex-wife or his children?

If you look at just the life insurance designation, it would go to his ex-wife. But Minnesota has a law that says on death, that designation is automatically revoked when a couple divorces. So under that law, it would go to the ex-wife. But the Contracts Clause of the U.S. Constitution says:

No State shall … pass any … Law impairing the Obligation of Contracts.

The district court held that the Minnesota law applies and the children should get the life insurance proceeds. The Eight Circuit reversed, holding the Minnesota law violates the Contracts Clause because it retroactively applies to him.2

What is the contracts clause of the constitution?

The Framers of the Constitution added this clause in response to the fear that states would continue a practice that had been widespread under the Articles of Confederation—that of granting “private relief.” Legislatures would pass bills relieving particular persons (predictably, influential persons) of their obligation to pay their debts. It was this phenomenon that also prompted the framers to make bankruptcy law the province of the federal government.1

The seminal case is Home Building & Loan Ass’n v. Blaisdell, which held that in light of the Great Depression, a Minnesota law extending the time mortgagers had to redeem their mortgages from foreclosure did not violate the Contracts clause, even though it interfered with the banks right to foreclose. The case has received criticism, particular from the Chicago School of Economics, that the ruling was a departure from the text of the Constitution.


  1. Per Wikipedia 

  2. The Minnesota law was passed in 2002. Sveen purchased the life insurance policy and designated Melin in 1998.  

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