Magruder v. Northwestern Mutual Life Insurance Co.
| Decision Date | 05 March 1975 |
| Docket Number | No. 74-1647,74-1647 |
| Citation | 512 F.2d 507 |
| Parties | Claudia E. MAGRUDER, Plaintiff-Cross-Defendant-Appellant, v. NORTHWESTERN MUTUAL LIFE INSURANCE CO., Defendant-Cross-Plaintiff, and Linda C. Magruder et al., Cross-Defendants-Appellees. |
| Court | U.S. Court of Appeals — Sixth Circuit |
John E. Hundley, Memphis, Tenn., for appellant.
Edward G. Thompson, Memphis, Tenn., for appellees.
Before PHILLIPS, Chief Judge, MILLER, Circuit Judge, and DeMASCIO, District Judge. *
This is an interpleader action brought to determine the right to the proceeds of a life insurance policy. District Judge Harry W. Wellford held that the insured had failed to do all that he reasonably could have done to comply with the procedure necessary to change the beneficiaries named in the policy. We affirm.
The action originally was filed in the Chancery Court of Shelby County, Tennessee, and was removed to the District Court. Northwestern Mutual Life Insurance Company, the insurer, filed an answer and cross-complaint for interpleader. Jurisdiction is based upon diversity of citizenship, and the interpleader statute, 28 U.S.C. § 1335. Tennessee law controls.
The policy has a cash value of $11,571.94 and was issued to the insured, Milton V. Magruder, on August 15, 1953. The insured had been in the insurance business in Memphis for many years before his death. The original beneficiary was Mr. Magruder's first wife, Mrs. Jeanne E. Magruder. After a divorce had terminated his first marriage, the insured executed a change of beneficiary form designating his three children, or their trustee for so long as they were minors, as the beneficiaries. This form was mailed to the home office of the insurance company and recorded. Endorsement was formally waived by the registrar of the company. These children and their trustee maintain that subsequent events did not change their statutes as beneficiaries.
On August 21, 1971, Mr. Magruder sent a handwritten note to the insurance company's home office in Milwaukee, Wisconsin, stating,
The insurance company mailed a change of beneficiary form in October 1971 along with a form response stating: "(t)he form should be completed as required, signed as indicated and returned to us." Mr. Magruder performed the first two of these instructions. In October 1971 he entered the name of Mrs. Claudia E. Magruder on the form as the new beneficiary. The signatures then were attested by the appropriate witnesses, including one witness who was the trustee for the existing beneficiaries, the three children.
After the insured had executed the form, he and Mrs. Claudia E. Magruder experienced marital difficulties. A separation occurred and she went to live with her daughter by a former marriage. On May 2, 1972, Mrs. Magruder filed a complaint for a divorce, which was pending at the time of the death of the insured. Judge Wellford found that: "Despite Mr. Magruder's problems with drinking, it is apparent that he was competent to manage his affairs while not drinking." This finding of mental competency is supported by the record and is not challenged on appeal.
Even though the change of beneficiary form had been executed, it was not mailed to the insurance company during Mr. Magruder's lifetime. After his death the form was found with his papers and was mailed to the insurance company by Mrs. Claudia E. Magruder's attorney. The executed form had remained in Mr. Magruder's possession for ten months.
Mrs. Claudia E. Magruder's claim to the insurance proceeds must be founded either on actual or substantial compliance with the policy provisions governing the change of beneficiaries. We agree with the District Court that allegations of actual compliance were without merit. Under the original policy the insured had the right to change the beneficiary, but an endorsement provision was as follows:
No designation, revocation, change or direction shall be effective unless duly made in writing and until filed at the Home Office accompanied by this Policy for endorsement prior to or at the time this Policy becomes payable by reason of the death of the Insured. (Emphasis added.)
The change of beneficiary form which named the children contained an amendment to this provision which allowed the company to waive endorsement. The amendment further provided that "A request for ... change of beneficiary must be filed at the Home Office and shall then be effective as of the day the request was signed." We further agree with the District Court that the language of this amendment...
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