Stratton v. Servicemen's Group Life Ins. Co., Civ. No. 76-115-2.

Decision Date23 November 1976
Docket NumberCiv. No. 76-115-2.
Citation422 F. Supp. 1119
PartiesJudy Ann STRATTON, Plaintiff and Defendant to Counterclaim, and Kenneth James Stratton et al., Defendants to Counterclaim, v. SERVICEMEN'S GROUP LIFE INSURANCE COMPANY, Defendant and Counterclaimant.
CourtU.S. District Court — Southern District of Iowa

Oscar E. Jones, Des Moines, Iowa, for plaintiff and defendant to counterclaim.

Daniel L. Power, Des Moines, Iowa, guardian ad litem, for defendants to counterclaim.

Kent M. Forney and William L. Chaplin, Bradshaw, Fowler, Proctor & Fairgrave, Des Moines, Iowa, for defendant and counterclaimant.

CONCLUSIONS OF LAW and ORDER FOR JUDGMENT

HANSON, Chief Judge.

Following oral argument on November 3, 1976, this matter was submitted to the Court for final disposition. The parties, prior to said hearing, entered a joint stipulation of facts and exhibits, and no objection has been made to the Court's taking of jurisdiction pursuant to 38 U.S.C. § 775.1 Hence, the only question remaining for consideration herein pertains to which of the parties, under 38 U.S.C. § 765, et seq., are legally entitled to the proceeds from a Servicemen's Group Life Insurance policy. Before addressing itself to the proceeds question, the Court briefly reviews the facts and procedural history of this action.

FACTS AND PROCEDURAL HISTORY

Richard Paul Stratton and Judy Ann Stratton were married on September 23, 1957. The Strattons, before their divorce on June 18, 1970, had three children — Kenneth James Stratton, Keith Eugene Stratton and Richard Paul Stratton, Jr. At the time of the final decree of divorce, and continuing throughout the period now in question, Richard Paul Stratton was a member of the United States Armed Forces. A joint stipulation entered into by Richard Paul and Judy Ann Stratton on April 9, 1970, and subsequently incorporated and made part of their divorce decree, provided that Richard Paul Stratton would maintain his military life insurance policy in the amount of at least $10,000.00 and would maintain Judy Ann Stratton as the sole beneficiary of that policy. However, Richard Paul Stratton at some time thereafter executed an election or designation of beneficiaries by filing the Record of Emergency Data (DA Form 41). Said DA Form 41 has been completed to require that the proceeds of his Servicemen's Group Life Insurance policy, underwritten by the Servicemen's Group Life Insurance Company in the amount of $20,000.00, be distributed as provided "by law." Richard Paul Stratton died on December 14, 1975.

Following the death of Stratton, Judy Ann Stratton requested that the Servicemen's Group Life Insurance Company pay her the proceeds from her former husband's policy. The Insurance Company's refusal to make that requested payment precipitated plaintiff's filing of the pending action on April 6, 1976. Later, on April 27, 1976, the defendant Insurance Company was permitted to add as defendants to its counterclaim and cross claim the three Stratton children; and, after a guardian ad litem had been appointed for the three minor children, the Company's motion for interpleader as between plaintiff Stratton and her three defendant children was sustained. Defendant Insurance Company, on August 24, 1976, was discharged from the instant action. Subsequent to that discharge, the remaining parties, plaintiff Stratton and defendants Kenneth James Stratton, Keith Eugene Stratton, and Richard Paul Stratton, Jr., through their guardian ad litem, briefed and orally argued the merits of their respective claims to the disputed life insurance proceeds.

CONCLUSIONS OF LAW

Critical to the determination of whether plaintiff or defendants are entitled to the insurance proceeds is 38 U.S.C. § 770(a) of the Servicemen's Group Life Insurance Act. That section, relating to designation of beneficiaries, provides in part:

(a) Any amount of insurance under this subchapter in force on any member or former member on the date of his death shall be paid, upon the establishment of a valid claim therefor, to the person or persons surviving at the date of his death, in the following order of precedence:
First, to the beneficiary or beneficiaries as the member or former member may have designated by a writing received in the uniformed service prior to such death; . . .
Second, if there be no such beneficiary, to the widow or widower of such member of former member;
Third, if none of the above, to the child or children of such member or former member and descendants of deceased children by representation;
. . . . .

While conceding in oral argument that Section 770(a) has preempted state law in the area of Servicemen's Group Life Insurance, plaintiff maintains that the aforementioned stipulation which was incorporated in the 1970 divorce decree eliminates consideration of this section. Plaintiff first argues that the divorce decree was a final and binding legal determination of her entitlement to the insurance proceeds, and such a determination could not be upset by the filing of a DA Form 41. Also, plaintiff argues in an alternative but not inconsistent fashion, when her former husband completed the DA Form 41 to designate that his insurance proceeds should be distributed "by law", this both meant and was intended by him to mean that the proceeds were to be distributed in accordance with that earlier divorce decree. She alone, therefore, is said to be entitled to at least $10,000.00 of the insurance proceeds.

On behalf of the defendant Stratton children, the guardian ad litem contends that the provisions of the 1970 divorce decree cannot be considered in the resolution of the proceeds controversy. The basis for this contention is that Section 770(a), which allegedly controls the payment of proceeds under any Servicemen's Group Life Insurance policy, requires the designation of a beneficiary to be in "writing received in the uniformed service prior to the serviceman's death." Such a notice requirement, a requirement that is strictly construed, is argued to preclude plaintiff's recovery pursuant to the divorce decree: the decedent had not given written notification to the appropriate Armed Forces office of the beneficiary designation in the divorce decree. Thus, only DA Form 41, which was a properly executed notice, is significant. The "by law" designation in that form, defendants argue, unequivocally indicated that the insurance proceeds were to be distributed in accordance with Section 770(a). Pursuant to that section, since there was neither a named beneficiary nor a surviving "widow," the "children" of the decedent would be entitled to the proceeds under the third order of preference.2 See Section 770(a), supra.

This Court has no doubt that defendants are correct in arguing that the uncontested lack of notice renders the divorce decree provisions pertaining to the insurance proceeds unenforceable. This argument is fully supported by the rules promulgated pursuant to Section 770(a).

(d) Any designation or change of beneficiary or election of optional settlement will take effect only if it is in writing, signed by the insured and received prior to the death of the insured by his or her uniformed service . . ..
(f) No change or cancellation of beneficiary or election of optional settlement in a last will or testament, or in any other document shall have any force or effect unless such change is received by the
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5 cases
  • Ridgway v. Ridgway
    • United States
    • U.S. Supreme Court
    • November 10, 1981
    ...a cause of action, on behalf of her children, against the estate of her former husband," App. 42, citing Stratton v. Servicemen's Group Life Ins. Co., 422 F.Supp. 1119 (SD Iowa 1976). See id., at 2. The very title of the Act recited that it was "to provide special indemnity insurance for me......
  • Rice v. The Office of Servicemembers Group Life Ins.
    • United States
    • U.S. Court of Appeals — Tenth Circuit
    • August 14, 2001
    ...over suits against the OSGLI or Prudential. E.g., Kilburn v. SGLI Co., 587 F. Supp. 54, 54 (S.D. Ohio 1984); cf. Stratton v. SGLI Co., 422 F. Supp. 1119, 1120 (S.D. Iowa 1976) (noting that "no objection has been made to the Court's taking of jurisdiction" under former None of these cases pr......
  • Behrens v. Milliken
    • United States
    • South Dakota Supreme Court
    • March 22, 1990
    ...decree would give her a cause of action against the estate of her former husband citing the case of Stratton v. Servicemen's Group Life Ins. Co., 422 F.Supp. 1119 (S.D.Iowa, 1976). In Stratton the court If there is legal redress for the violation of the agreement within the divorce decree, ......
  • Prudential Life Ins. Co. v. Music, 1:96-CV-164.
    • United States
    • U.S. District Court — Western District of Michigan
    • April 30, 1997
    ...notification to the appropriate armed forces office of a change in his beneficiary designation. See Stratton v. Servicemen's Group Life Ins. Co., 422 F.Supp. 1119, 1121 (S.D.Iowa 1976). See also Matthews v. Matthews, 926 F.Supp. 650 (N.D.Ohio 1996) (insured's designation of current wife too......
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