In re Verchot's Estate

• Court: Washington Supreme Court
• Writing for the Court: STEINERT, Justice.
• Citation: In re Verchot's Estate, 104 P.2d 490, 4 Wn.2d 574 (Wash. 1940)
• Decision Date: 16 July 1940
• Docket Number: 27675.
• Parties: In re VERCHOT'S ESTATE. v. BELLINGHAM BRANCH SEATTLE-FIRST NAT. BANK OF BELLINGHAM. HEALY et al.

104 P.2d 490

4 Wn.2d 574

In re VERCHOT'S ESTATE.

HEALY et al. v. BELLINGHAM BRANCH SEATTLE-FIRST NAT. BANK OF BELLINGHAM.

No. 27675.

Supreme Court of Washington, En Banc.

July 16, 1940

Proceeding in the matter of the estate of Louis Satollie Verchot deceased, by Tim Healy, administrator thereof, and others against the Bellingham Branch Seattle-First National Bank of Bellingham, Washington, administrator with the will annexed of the estate of Louis Verchot, deceased. From that part of a decree of distribution wherein the commuted value of the unpaid balance of a war risk insurance policy issued to Louis Satollie Verchot, deceased, was ordered to be distributed to the administrator with the will annexed of the estate of Louis Verchot, deceased, Tim Healy, administrator of the estate of Louis Satollie Verchot, deceased, and others appeal.

Affirmed.

BEALS J., dissenting.

It is presumed that residuary clause in a will carries with it every interest, whether known or unknown, immediate or remote, unless the clause by express provision, or necessary implication, excludes some particular fund or interest of estate.

Appeal from Superior Court, Whatcom County; Edwin Gruber, judge.

Tim Healy, J. W. Kindall, and Carl F. Roehl, all of Bellingham, for appellants.

John R. Strickland, of Bellingham, for respondent.

STEINERT Justice.

This is an appeal by the administrator of the estate of an intestate decedent, and by the next of kin of the same decedent, from that part of a decree of distribution wherein the commuted value of the unpaid balance of a war risk insurance policy issued to decedent was ordered to be distributed to the administrator with the will annexed of the estate of decedent's father.

The facts of the case are not in dispute. Louis Satollie Verchot, a soldier in the United States army during the world war, was issued a yearly renewable term war risk insurance policy in the amount of $10,000. He named his mother, Eugenie Verchot, beneficiary, and his father, Louis Verchot, alternate beneficiary, in the certificate of insurance. The insured, a bachelor, died intestate in 1919, leaving his mother and father as his only heirs. Installments were accordingly paid on the policy by the United States government to the mother, as beneficiary, until her death on November 6, 1935, and thereafter to the father, Louis Verchot, as alternate beneficiary, until his death on May 6, 1936.

The mother had died testate, leaving all of her property to her husband, Louis Verchot, father of the insured. The father likewise died testate, leaving all of his property to specific beneficiaries and to a residuary beneficiary, none of whom was next of kin of any of the Verchots. The commuted value of the balance of the war risk insurance, amounting to $1,958, was paid by the United States government on September 28, 1937, to the administrator of the estate of the insured.

At the final hearing in the insured's estate, on March 21, 1939, the court entered a decree distributing these funds, which were the sole assets of that estate, to the administrator with the will annexed of the father's estate for distribution as ordinary assets of the latter estate. If the decree is upheld, the funds in question will be distributed to a parochial school, the residuary legatee named in the will of the insured's deceased father.

Counsel are agreed that the questions involved upon this appeal are the following:

1. Does the commuted value of war risk insurance of an intestate deceased insured person (whose only heirs are his mother and father) pass to the insured's next of kin determined (a) as of the date of the insured's death [affirmed by the superior court], or (b) as of the date of the distribution of the insured's estate [negatived by the superior court]?

2. Do the wills of the insured's mother and father (beneficiaries under the policy and sole heirs of the insured) operate upon the war risk insurance [affirmed by the superior court]?

3. Is payment limited to the 'permitted classes' referred to in the federal statute [negatived by the superior court]?

We will consider questions 1 and 3 together. Question 2 will discussed separately.

Upon the two questions considered together, it is appellants' position that the insurance proceeds should be distributed to the intestate insured's next of kin determined as of the date of the distribution of such funds, upon the theory that the insured's estate is a mere conduit for passing the funds to those persons within the permitted classes of beneficiaries who, under the state intestacy laws, are entitled to the personal property of the deceased insured.

Inasmuch as the war risk insurance involved in this case is a product of the acts of Congress, it is well that we have Before us the pertinent federal statutes.

The Act of March 4, 1925, c. 553, § 12, 43 Stat. 1308, as amended by the Act of July 3, 1930, c. 863, § 1, 46 Stat. 1016, 38 U.S.C.A. § 511, provides in part as follows: 'Yearly renewable term insurance shall be payable only to a spouse, child, grandchild, parent, brother, sister, uncle, aunt, nephew, niece, brother-in-law, or sister-in-law, or to any or all of them * * *.' From a reading of that entire section, it is apparent that this provision has reference solely to the permitted classes of persons from which the insured may designate the beneficiary of his yearly renewable term insurance.

The situation with which we are here particularly concerned is covered by the specific provisions of section 14 of the Act of 1925 (c. 553, § 14, 43 Stat. 1310, 38 U.S.C.A. § 514), which read: 'If no person within the permitted class be designated as beneficiary for yearly renewable term insurance by the insured either in his lifetime or by his last will and testament or if the designated beneficiary does not survive the insured or survives the insured and dies prior to receiving all of the two hundred and forty installments or all such as are payable and applicable, there shall be paid to the estate of the insured the present value of the monthly installments thereafter payable, said value to be computed as of date of last payment made under any existing award * * *.' (Italics supplied.)

In the case of In re Cross' Estate, 152 Wash. 459, 278 P. 414, 415, decided in 1929, the identical question here involved was presented. After a thorough consideration of the matter, this court receded from the position that it had theretofore thrice taken, in successive appeals involving the same estate ( In re Cross' Estate, 147 Wash. 441, 266 P. 711; In re Cross' Estate, 147 Wash. 699, 266 P. 712; In re Cross' Estate, 148 Wash. 422, 269 P. 339), and held on the final appeal that: '* * * the proceeds of the insurance policy should be distributed, in the estate of LeRoy W. Cross [the insured], to those living at the time of the distribution who come within the permitted class in the order of their priority under the laws of the state of Washington, they to receive as beneficiaries under the policy, and not as heirs at law.' (Italics supplied.)

That was an en banc decision, and we would be constrained to follow it were it not for the fact that since the date of that decision the Supreme Court of the United State has considered the same question and has arrived at a contrary conclusion. Singleton v. Cheek, 284 U.S. 493, 52 S.Ct. 257, 259, 76 L.Ed. 419, 81 A.L.R. 923, decided February 15, 1932.

In that case, wherein the facts were analogous to those in the case at bar, the Supreme Court of the United States pointed out that the statute applicable to such cases had been amended in a very important respect. The statute in existence prior to 1925 provided that if a person to whom such yearly renewable term insurance was awarded died, or his rights were otherwise terminated after the death of the insured, but Before all of the two hundred and forty monthly installments had been paid, then the monthly installments payable and applicable should be payable to such person or persons within the permitted class of beneficiaries as would, under the laws of the state of residence of the insured, be entitled to his personal property in case of intestacy. 41 Stat. 376.

That provision, however, was amended by § 14 of the Act of 1925 (c. 553, § 14, 43 Stat. 1310, 38 U.S.C.A. § 514), which the Supreme Court quoted exactly as it has been set out above. The court, through Justice Sutherland, then disposed of the matter in the words of the following paragraph:

'By that amendment, the rule, which, upon the happening of the contingencies named in the prior acts, limited the benefit of the unpaid installments to persons within the designated class of permittees, was abandoned, and 'the estate of the insured' was wholly substituted as the payee. All installments, whether accruing Before [the death of the insured] or after the death of the beneficiary named in the certificate of insurance, as a result, became assets of the estate of the insured upon the instant of his death, to be distributed to the heirs of the insured in accordance with the intestacy laws of the state of his residence, such heirs to be determined as of the date of his death, and not as of the date of the death of the beneficiary. The state courts, with almost entire unanimity, have reached the same conclusion.'

That decision is directly in point, and is conclusive of these four propositions: (1) The restriction of payment to 'permitted classes,' after the death of the named beneficiary, no longer obtains. (2) All installments of such insurance which accrue Before the death of the insured or after the death of the beneficiary become assets of the estate of the insured as of the instant of the insured's death. (3) Such assets are to be distributed to...