Biltoft v. Wootten

• Decision Date: 15 August 1979
• Citation: 157 Cal.Rptr. 581,96 Cal. App. 3d 58
• Parties: Bertha Rose BILTOFT, Plaintiff and Respondent, v. Bonnie L. WOOTTEN, Defendant and Appellant. Civ. 20191.
• Court: California Court of Appeals

Page 581

157 Cal.Rptr. 581

96 Cal.App.3d 58

Bertha Rose BILTOFT, Plaintiff and Respondent, v.Bonnie L. WOOTTEN, Defendant and Appellant.

Civ. 20191.

Court of Appeal, Fourth District, Division 2, California.

Aug. 15, 1979.

Hearing Denied Oct. 11, 1979.

[96 Cal.App.3d 59] Jones & Pittullo, a Professional Corp. and Sidney W. Jones, Upland, for defendant and appellant.

Richard J. Evans, Ontario, and Lawrence W. Dutton, Cucamonga, for plaintiff and respondent.

OPINION

MORRIS, Associate Justice.

The decedent, Wendell Edward Biltoft, had a Federal Employees' Group Life Insurance (FEGLI) policy.This appeal involves a contest between the wife and the daughter of the decedent over the proceeds of the FEGLI policy.

FACTS

During the marriage of the decedent and the wife, the decedent was employed by the federal government.The decedent therefore became eligible for coverage under the Federal Employees' Group Life Insurance program.The premiums on the insurance were paid by bi-weekly deductions from decedent's pay.The FEGLI policy was a term insurance policy with no cash surrender value and no accumulation of dividends.

The wife and the decedent were separated on March 20, 1976.The wife filed an action for dissolution shortly thereafter.After the wife and the decedent were separated, the decedent changed the beneficiary designation on the FEGLI policy from the wife to his daughter and his son.In November of 1976, the decedent died.The wife claims that a portion of the proceeds is community property because community property was used to pay the premiums.The daughter contends that the entire proceeds were separate property because at the time of death, the premiums had been paid with the decedent's separate property earnings.

DISCUSSION

The daughter's argument is premised on the view that term insurance only provides insurance for each premium period and that therefore each premium payment is a new contract and purchases a new policy of insurance.

This view was summarily rejected in Modern Woodmen of America v. Gray(1931)113 Cal.App. 729, 299 P. 754.The salient facts in that case were: The husband was issued a term life insurance certificate which named his first wife as beneficiary.The husband later attempted to change the beneficiary designation to his second wife.The attempted nomination of the second wife as beneficiary failed for procedural reasons.Nevertheless, his second wife argued that each quarterly premium constituted a new contract of insurance.She claimed that the entire policy was community property since the last four quarterly premiums were paid with community property.

The court looked at the evidence, which showed that the husband first acquired the insurance certificate when he was 42 years old and able to pass a health examination.At the time of his second marriage, however, he was 67 years old.If he had first applied for coverage at that time, he would have been ineligible under the age limits of the certificate.The court therefore concluded that each premium payment did not constitute a completely new insurance contract."(I)t was only by virtue of his having obtained the certificate of insurance prior to his marriage to (the second wife) and his having regularly paid the premiums thereon in the meantime, that he was entitled to continue to enjoy the protection afforded by the certificate.While the right of his beneficiaries to receive the proceeds of the policy was dependent upon his continuing to pay the accruing premiums thereon, nevertheless he had acquired the right to have the contract of insurance continued in force by virtue of the payment of premiums from its issuance to him in 1898 until the date of his second marriage in 1923.This was a valuable right in the eyes of the law and it would be unreasonable to hold that the payment of the premiums after 1923 from community funds would convert the entire proceeds of the certificate of insurance into...