Heifner v. Soderstrom

• Decision Date: 19 September 1955
• Docket Number: Civ. No. 865.
• Citation: 134 F. Supp. 174
• Parties: Frances Marie HEIFNER, Plaintiff, v. Lawrence A. SODERSTROM and Mrs. Lawrence A. Soderstrom, Defendants.
• Court: U.S. District Court — Northern District of Iowa

134 F. Supp. 174

Frances Marie HEIFNER, Plaintiff, v. Lawrence A. SODERSTROM and Mrs. Lawrence A. Soderstrom, Defendants.

Civ. No. 865.

United States District Court N. D. Iowa, W. D.

September 19, 1955.

Louis S. Goldberg and P. L. Nymann, Sioux City, Iowa, for plaintiff.

Audley W. Johnson, Sioux City, Iowa, for defendants.

F. E. Van Alstine, U. S. Dist. Atty., Sioux City, Iowa, amicus curiae.

GRAVEN, District Judge.

In this action the plaintiff seeks to impose a trust upon the proceeds of a National Service Life Insurance policy which were paid to the defendant, Mrs. Lawrence A. Soderstrom. The plaintiff is a citizen of the state of California. The defendants are citizens of the state of Iowa. The insured was Erwin Barrett Heifner. He served in the armed forces of the United States in World War II. On January 1, 1942, there was issued to him a National Service Life Insurance policy in the amount of $10,000. He designated his mother, the defendant Mrs. Lawrence A. Soderstrom, as the principal beneficiary. He was separated from the military service in 1946. On August 23, 1947, he married the plaintiff. Following their marriage they made their home in California. On September 18, 1947, he designated the plaintiff as the principal beneficiary of his policy. He and she worked for an oil company until September, 1949. In September, 1949, they acquired a bulk gasoline plant at Ramona, California, which they operated until some time in 1953. On November 22, 1949, the insured applied for the renewal of his policy on a level premium five-year term basis. His policy was renewed on that basis effective January 1, 1950, with the plaintiff as the sole beneficiary. In the spring of 1953 he and she became estranged. On April 2, 1953, the plaintiff instituted a divorce action in a California state court. At the time both the plaintiff and her husband were residents of that state. In her complaint in the divorce action the plaintiff alleged that her husband's National Service Life Insurance policy constituted community property. On May 29, 1953, he designated his mother the beneficiary of the policy. On October 22, 1953, the California court entered an interlocutory judgment of divorce. That judgment provided, in part, as follows:

"The Court finds that all of the allegations contained in the complaint are true, and that a divorce should be granted as prayed for in said complaint; that the family home and furnishings, Shell Oil Service Station, Packard sedan, and insurance policies * * * are community property of the parties.

"Wherefore, it is hereby Ordered, Adjudged and Decreed that the plaintiff is entitled to a divorce from the defendant; that when one year shall have expired, after the entry of this interlocutory judgment, a final judgment and decree shall be entered, granting a divorce herein, wherein and whereby the bonds of matrimony heretofore existing between said plaintiff and said defendant shall be dissolved.

"It is further Ordered, Adjudged and Decreed that all of said community property of the parties is hereby awarded to the plaintiff. * * *."

On May 14, 1954, the insured died. Following his death the Veterans' Administration paid the proceeds of his National Service Life Insurance policy in the amount of $10,000 to his mother, the defendant Mrs. Lawrence A. Soderstrom. The defendant Lawrence A. Soderstrom received no part of the proceeds.

The plaintiff learned she was the beneficiary of her husband's policy soon after she was designated as such in 1947. The plaintiff testified that she paid the premiums on the policy thereafter until she and her husband became estranged. There was no agreement between him and her in regard to the policy save such as might be implied from the circumstances just stated. After their estrangement he paid the premiums on the policy. Neither of the defendants paid any of the premiums on the policy and neither of them paid any consideration for the change of beneficiary in favor of the defendant Mrs. Lawrence A. Soderstrom.

The plaintiff in her amended complaint alleged, in part, as follows:

"7. That on or about May 29, 1953 and after having been served with a copy of the complaint in the aforesaid divorce action and after having retained an attorney in said action and with intent to defraud the plaintiff herein said Erwin Barrett Heifner without the knowledge of the plaintiff and without consideration therefor gave notice to the Veterans Administration of a change of beneficiary under the aforementioned policy, such notice purporting to make the defendant, Mrs. Lawrence A. Soderstrom, beneficiary under said policy. * * *."

In said complaint the plaintiff further alleged:

"11. That the attempt of said Erwin Barrett Heifner to change the beneficiary of the life insurance contract as described above was a fraud against the court and a fraud against plaintiff * * *."

Subsections (g) and (i) of Section 802, Title 38 U.S.C.A., relating to National Service Life Insurance, respectively, provide as follows:

"The insurance shall be payable only to a widow, widower, child (including a stepchild or an illegitimate child if designated as beneficiary by the insured), parent, brother or sister of the insured. The insured shall have the right to designate the beneficiary or beneficiaries of the insurance, but only within the classes herein provided, and shall, subject to regulations, at all times have the right to change the beneficiary or beneficiaries of such insurance without the consent of such beneficiary or beneficiaries but only within the classes herein provided: Provided, That the provisions of this subsection as to the restricted permitted class of beneficiaries shall not apply to any national service life-insurance policy maturing on or after August 1, 1946. * * *

"If no beneficiary is designated by the insured or if the designated beneficiary does not survive the insured, the beneficiary shall be determined in accordance with the order specified in subsection (h) (3) of this section and the insurance shall be payable in equal monthly installments in accordance with subsection (h) (1) or (2) of this section, as the case may be. The right of any beneficiary to payment of any installments shall be conditioned upon his or her being alive to receive such payments. No person shall have a vested right to any installment or installments of any such insurance and any installments not paid to a beneficiary during such beneficiary's lifetime shall be paid to the beneficiary or beneficiaries within the permitted class next entitled to priority, as provided in subsection (h) of this section. The provisions of this subsection shall not be applicable to insurance maturing on or after August 1, 1946."

Section 816, Title 38 U.S.C.A., makes Section 454a, Title 38 U.S.C.A., applicable to National Service Life Insurance insofar as applicable. Said Section 454a provides, in part, as follows:

"Payments of benefits due or to become due shall not be assignable, and such payments made to, or on account of, a beneficiary under any of the laws relating to veterans shall be exempt from taxation, shall be exempt from the claims of creditors, and shall not be liable to attachment, levy, or seizure by or under any legal or equitable process whatever, either before or after receipt by the beneficiary. * * *"

The United States District Attorney for this district made application for and was given leave to appear as amicus curiae. The amicus curiae filed a written brief and argument. It is the view of the amicus curiae that what is really involved in this action is an attempt on the part of a state court to control the designation of the beneficiary of a National Service Life Insurance policy. It is the claim of the amicus curiae that the right given the insured under Subsection (g) of Section 802 to change the beneficiary or beneficiaries of his National Service Life Insurance policy without the consent of the previously designated beneficiary or beneficiaries may not be denied him by a state court.

The plaintiff and the defendants made a number of contentions in their briefs and arguments. The plaintiff contends that Section 454a and similar statutes relating to exemptions do not encompass alimony payments. The plaintiff in support of that contention cites Schlaefer v. Schlaefer, 1940, 71 App.D.C. 350, 112 F.2d 177, 130 A.L.R. 1014; In re Flanagan, D.C.1940, 31 F.Supp. 402; In re Bagnall's Guardianship, 1947, 238 Iowa 905, 29 N.W.2d 597. In this last case there is an extensive and excellent discussion of a great number of relevant cases. The cases cited and relied upon by the plaintiff and the cases discussed by the Iowa Supreme Court in the case last cited either involved pensions or veterans' relief payments, or property acquired by means of such payments or with policies issued by private insurance companies. None of them involved National Service Life Insurance policies. The general rule is that in a divorce action the court may award the wife a life insurance policy on the life of her husband issued by a private insurance company. See annotation 145 A.L.R. 522. For annotations on related matters, see 93 A.L.R. 327; 85 A.L.R. 339; 59 A.L.R. 172; 52 A.L.R. 386.

It has been held that an award to the wife in a decree of divorce of an insurance policy issued by a private company on the life of the husband will prevail over any subsequent change of beneficiary by the husband. Mutual Life Ins. Co. v. Franck, 1935, 9 Cal.App.2d 528, 50 P.2d 480. It has been held an award made in a decree of divorce of an insurance policy issued divests the named beneficiary of his rights. United Benefit Life Insurance Co. v. Price, Wash.1955, 283 P.2d 119. In that case the Court stated Id., 283 P.2d at page 121: "The decree operates not only to vest in the spouse designated the property awarded to him or her, but to divest the other spouse of all interest in the property so awarded, except as the decree may otherwise...