## Facts

- Kansas Farm Bureau Life Insurance Company, Inc. (KFB) issued a life insurance policy insuring Keith J. Schreuder.
- Schreuder borrowed money from Farmway Credit Union (Farmway) and assigned the policy to Farmway as collateral security for the debt.
- Schreuder disappeared in 1982 and remained missing for more than seven years.
- During Schreuder’s absence, Farmway kept the policy in force by paying premiums.
- After seven years, Farmway obtained a court decree declaring Schreuder presumed dead under Kansas law.
- Farmway submitted a claim to KFB based on the presumption-of-death decree.
- KFB paid Farmway the policy proceeds and agreed that the payment was in full settlement of all claims under the policy.
- Years later, KFB learned Schreuder was alive.
- KFB demanded repayment of the proceeds; Farmway refused.
- KFB sued Farmway asserting (1) a contract implied by mutual mistake and (2) unjust enrichment.
- The trial court granted summary judgment to KFB on mutual mistake and treated unjust enrichment as moot.
- The Kansas Court of Appeals affirmed, characterizing mutual mistake and unjust enrichment as variants of the same restitution theory.
- Farmway sought review in the Kansas Supreme Court, arguing the payment was a compromise/settlement and that KFB assumed the risk Schreuder might be alive when it paid.

## Issues

1. Whether KFB could recover the insurance proceeds from Farmway under a theory of contract implied by mutual mistake or unjust enrichment after Schreuder was discovered alive.
2. Whether KFB’s payment, made in reliance on a presumption-of-death decree and stated to be in full settlement, constituted a compromise/settlement that allocated the risk to KFB and barred restitution.
3. Whether any statute-of-limitations defense mattered if KFB had no right to restitution on the merits.

## Decision

- The Kansas Supreme Court reversed the Court of Appeals and the district court.
- The Court held KFB was not entitled to restitution from Farmway on either mutual-mistake or unjust-enrichment theories.
- The Court concluded that by choosing to pay based on the presumption-of-death decree and by treating the payment as a full settlement of all claims, KFB assumed the risk that Schreuder might later be found alive.
- The Court remanded with directions to enter summary judgment for Farmway.

## Legal Principles

- Restitution for mistake is not available when the party seeking restitution knowingly accepted the risk that the assumed fact might be wrong.
- A payment made as a compromise or settlement in the face of uncertainty is generally final, even if later events show the underlying factual assumption was false.
- A presumption-of-death decree may support payment and settlement, but reliance on that decree can place the risk of error on the payer when the payer elects to close the matter through full settlement language.
- Unjust enrichment does not require repayment where the recipient’s retention is justified by a settled transaction and the payer’s conscious allocation of risk.

## Conclusion

Kansas Farm Bureau Life Insurance Company, Inc. v. Farmway Credit Union holds that an insurer that pays life insurance proceeds to an assignee-beneficiary after a court decree presuming the insured dead—and documents the payment as a full settlement—assumes the risk the insured is alive and cannot later reclaim the proceeds through mutual mistake or unjust enrichment.


Kansas Farm Bureau Life Insurance Company, Inc. v. Farmway Credit Union, 256 Kan. 968 (1995)