Chase v. Chase

• Decision Date: 01 August 1968
• Docket Number: No. 38881,38881
• Citation: 444 P.2d 145,74 Wn.2d 253
• Parties: Fern A. CHASE, Respondent and Cross-Appellant, v. William F. CHASE, Appellant.
• Court: Washington Supreme Court

Page 253

74 Wn.2d 253

444 P.2d 145

Fern A. CHASE, Respondent and Cross-Appellant, v.William F. CHASE, Appellant.

No. 38881.

Supreme Court of Washington, Department 1.

Aug. 1, 1968.

Whitmore, Powers, Manion & Ohnick, Seattle, for appellant.

Newman H. Clark, Seattle, for respondent.

HALE, Judge.

Fern and William Chase were married in 1937 and divorced in 1964.After the divorce, the husband became permanently disabled from heart disease and unable to work.The divorce and the husband's subsequent disability raise two main questions: One involves the disposition of a lump sum settlement received by the husband under his group insurance policy, and the other concerns reducing his child support payments to the extent of the child's social security benefits.

In 1933, William Chase joined the Navy; in 1937, he married Fern.They had 3 children.After 23 years in the Navy, Chase retired January 31, 1957, as a chief warrant officer with a retirement pay of $318.23 per month.A few days later he went to work for the Boeing Airplane Company in Seattle, where, as an employee, he signed up for a group life, disability and medical insurance program carried by the employer with the Aetna Life Insurance Company as insurer.Premiums for this insurance protection came from both Boeing Company contributions and deductions from Chase's salary commencing with his employment and continuing to the onset of disability in May, 1964.The policy provided for waiver of premiums during the employee's disability.

When Chase first went to work for Boeing on February 5, 1957, he had stated on a company medical questionnaire that he had 'no health problems.'His first heart attack occurred December 22, 1958, and he was then given medical leave of absence, but returned to work January 19, 1959.Five years later, he had another heart attack, March 13, 1964, and took another leave of absence from his job but returned to work a few weeks later, April 2, 1964.He and his wife then were and for a long time had been separated.

Shortly after this last return to work, Chase, in contemplation of divorce, signed a property settlement agreement April 27, 1964.An uncontested divorce hearing April 30, 1964, led to a decree of divorce entered May 7, 1964, which confirmed and adopted the property settlement agreement.After the uncontested hearing, but prior to the entry of the decree, Chase became ill while at work from recurring heart trouble and his doctor sent him immediately to the Public Health Hospital.During this hospitalization, which lasted until May 20, the doctor told him he should never return to work.Thus, although Chase was in the hospital May 7, 1964, when the uncontested divorce decree was actually entered, neither he nor his wife were then aware that he was totally and permanently disabled or entitled to a lump sum settlement for permanent disability from his Boeing group policy.

The divorce decree of May 7, 1964, gave plaintiff custody of their minor son, required the defendant to pay her $100 per month for his support and maintenance, and allowed the defendant liberal visitation.The property settlement agreement contained a provision that the support payments for the child 'are based upon the present capacity of the defendant to maintain his job at Boeing and that if he should lose said job for reasons of health, the said support payments will have to be adjusted.'In summary, at the time of the uncontested divorce hearing and subsequent decree, defendant was regularly employed at Boeing, drawing his Navy retirement, and paying into his group insurance through a payroll deduction.Being regularly employed at the time, he was, of course, not then entitled to social security payments either for himself or his child or to any benefits under the Boeing group insurance plan.

Between May 20, 1964, when he was released from the hospital with a prognosis of total disability, and the following October, defendant did not work.In October, he applied for disability benefits under his Boeing group policy and shortly thereafter for social security disability benefits which he subsequently received.Later, in the spring of 1965, defendant was offered and accepted a lump sum settlement of $16,389.30 from the Aetna Insurance Company for his disability claims under the Boeing group policies, and in June, 1965, began receiving monthly social security benefits, too.

Included among these benefits, the United States paid to plaintiff wife $63.70 per month for the support of the minor child as the dependent child of a recipient of social security disability payments.42 U.S.C. § 402(d).On learning that his child would receive $63.70 per month, the defendant deducted this sum and reduced his child support payments from $100 per month to $36.30.

Plaintiff petitioned to modify the divorce decree, seeking judgment for one half the Boeing group policy settlement and also to recover the $63.70 per month deducted by the defendant from child support for a period of some 10 months.Defendant answered and petitioned to have the child support payments reduced by the amount of the social security benefits paid to his wife for the support of the minor child.Defendant now appeals from a decree awarding the plaintiff.$8,194.65, constituting one half the insurance settlement of $16,389.30, and an award to her of $660.50 for delinquent child support, representing the total social security deduction for a period of approximately 10 months.The plaintiff wife cross-appeals from that part of the decree which allowed the defendant to deduct in futuro the social security payments to the wife for their child, commencing February 1, 1966.

First, as to the award to the wife on one half the insurance settlement, we note that the policy under which the settlemetn of $16,389.30 had been made was a part of a group plan entitled the Boeing Salaried Employees Group Life Insurance Plan.The policy provided for benefits to the employee's survivor, or to the employee for permanent total disability or dismemberment.¹Premiums had been paid in part through deduction from the defendant's salary and except for those few months of his employment following the divorce decree--a period de minimus--would be deemed community funds.

Insurance proceeds in this state are property and not mere expectancies or choses in action, and, if the premiums are paid with community funds, the insurance proceeds are community property.Occidental Life Ins. Co. v. Powers, 192 Wash. 475, 74 P.2d 27, 114 A.L.R. 531(1937).A community which pays the premiums on a group policy of life insurance acquires a property right in the insurance proceeds.Small v. Bartyzel, 27 Wash.2d 176, 177 P.2d 391(1947).The wife's insurable interest in her husband's life does not terminate automatically with the entry of a divorce decree if the policy was taken out during marriage and premiums paid from community funds.Northwestern Life Ins. Co. v. Perrigo, 47 Wash.2d 291, 287 P.2d 334(1955);In re Leuthold's Estate, 52 Wash.2d 299, 324 P.2d 1103(1958).Favoring, as it does, the existence of community as opposed to separate property, the law will resolve the doubts between them in favor of a community status.In re Salvini's Estate, 65 Wash.2d 442, 397 P.2d 811(1964).Accordingly, the group insurance policy, and the settlement made thereunder to the defendant, was community property.

Neither the property settlement agreement nor the decree mentioned the insurance nor did either make any disposition whatever of any avails therefrom which might come into...