Kansas City Life Ins. Co. v. Jones

• Decision Date: 29 October 1937
• Citation: 21 F. Supp. 159
• Court: U.S. District Court — Southern District of California
• Parties: KANSAS CITY LIFE INS. CO. v. JONES et al. JONES v. JONES.

21 F. Supp. 159

KANSAS CITY LIFE INS. CO. v. JONES et al.

JONES v. JONES.

District Court, S. D. California, C. D.

October 29, 1937.

Alfred J. Smallberg, of Los Angeles, Cal., for respondent and cross-complainant Ethel Jones.

Mark F. Jones, W. L. Engelhardt, and A. G. Divet, all of Los Angeles, Cal., for respondent and cross-defendant Flora S. Jones.

NETERER, District Judge.

Flora S. Jones was named beneficiary in an insurance policy issued upon the life of A. B. Jones, her son. Upon his death, his wife, to whom he was married after the issuance of the policy, claimed the deceased, for a good consideration, agreed to designate Ethel Jones, the wife, as the beneficiary. Claim is also made by Ethel Jones for the proceeds of the policy for payment of premiums upon the policy in issue for a number of years prior to the death of the deceased insured; the deceased agreeing that these payments should be a lien upon the proceeds of the policy. The insurance company, upon these claims, by interpleader, deposited the fund in this court.

Flora S. Jones, mother of the deceased, as beneficiary in the policy when it was issued in 1923, had a contingent interest which became absolute upon the death of the insured on January 23, 1936, subject only to the reserved power of the insured to change the beneficiary. The change could be made by the exercise of the reserved power according to the rules or conditions of the insurance company indorsed on the policy. Lovinger v. Garvan (D.C.) 270 F. 298, and cases cited on page 300.

Change of beneficiary may also be made by a valid contract where the new beneficiary for a consideration given to the insured is to be made the beneficiary, and, if the change of beneficiary was not made at death of insured, the promisee may compel specific performance of the reserved power by decree in equity. In such case equity will disregard formal steps and consider the promisee as the beneficiary. Lovinger v. Garvan, supra, and cases cited. An enforceable contract creates an enforceable right of the promisee to the status obtained if the insured had exercised his reserved power during life.

The filing of this interpleader and payment into court by the insurer does not affect the rights of the claimed beneficiaries. The only office served by the interpleader and deposit of the fund is to protect the insurer against double liability.

Ethel Jones claims to be a promisee for value by reason of the following facts, which the evidence establishes: In 1927, the insured, "a lawyer and a stock raiser," of Ryegate, Mont., had in his employ as stenographer, the cross-complainant, Ethel Jones (née Stinton). By reason of "drought and grasshoppers" he was short of funds. He told cross-complainant the premium on the policy in issue for 1926 was in default, and for 1927 was due, and he would let the policy go.

Cross-complainant and insured were good friends, and she persuaded the insured not to default this as he had the other policies. He had at different prior times borrowed money from cross-complainant. He then said that if cross-complainant "would pay up his premiums, keep his premiums and insurance in good standing, that the policy was mine (hers) until the liquidation of the debt was paid to me (her)."

Cross-complainant thereupon reinstated the policy, paid the premiums to that date, and continued to pay the premiums annually until the date of the insured's death, in the total sum of $537.72. It is obvious that these payments were not voluntary payments, as contended by cross-defendant. As to these payments with legal interest from the date of the respective payments, there can be no doubt as to the existence of the lien on the fund in this court (proceeds of the policy).

The more serious question, was a contract supplanting the beneficiary by Ethel Jones, for a consideration, made? Ethel Jones and the deceased "had anticipated marrying in the future for a number of years before we were married," June 29, 1935. She was in the employ of his office during 1927 and 1928 while he was county attorney of the county of his residence. After 1928, she "worked as Deputy Clerk of Court and as assistant (in) County Superintendent's office for eight years." Prior to the marriage, approximately in April, 1935, in contemplation of matrimony, they discussed their financial relations. Cross-complainant says that the deceased stated to her: "He said that as long as we are getting married that whatever was mine was his, and whatever was his was mine, and that upon our marriage that we would transfer the beneficiaries of our insurance to each other."

About the first week of August, 1935, following the marriage, "we talked it over and I said, * * * `my premiums are due, therefore I am sending in my two policies and asking the two companies to change my beneficiaries to you as my husband, according to our agreement.'" After "register of change of beneficiary," she said, "I showed them to my husband and told him that I had made him beneficiary to my two policies in accordance with our agreement, and he said, `I must attend to mine.'"

Upon objection and motion to strike, upon the ground that the communications between husband and wife are inadmissible, this testimony was received upon a reserved ruling.

The competency of Ethel Jones' testimony as to statements of deceased during marriage is governed by section 631, U.S. Code, tit. 28 (28 U.S.C.A. § 631), which in this case makes applicable section 1881 (1) of the Code of Civil Procedure of California (as amended by St.1935, p. 1609), which provides: That husband and wife cannot, "during the marriage or afterwards, be, without the consent of the other, examined as to any communication made by one to the other during the marriage; but with this exception does not apply to a civil action."

Husband and wife may make contracts between themselves and hold property in severalty. Section 158 Civil Code, California. The rule fixing confidential communications between husband and wife, stated in the clause preceding the section, 1881, supra, is to "encourage confidence and preserve inviolate" the conjugal confidence was stated in the criminal case of People v. Mullings, 83 Cal. 138, 23 P. 229, at page 230, 17 Am.St.Rep. 223, where by cross-examination of the defendant husband (in a criminal case) it was sought to elicit statements made to his wife, clearly confidentially communicated in marital relation. This case, it is contended by crossdefendant, is decisive here, as it construes the California statute and is binding on this court. This, it will hereinafter appear, is unfounded. By section 1881, supra, the rule is founded in public policy, and until the contrary appears all communications between husband and wife are presumed to be confidential, and this presumption was not overcome in People v. Mullings, supra. The confidential communication was the only issue before the court. The court expressed no opinion on a communication obviously not confidential and relating to civil matters adjusting their property rights between them. When the confidential relation disappears it would be "an intolerable anomaly in the law in confidential communications" to so continue it. Wigmore on Evidence, Vol. 4, p. 3263. And the California Court did not do so.

The statement "to encourage confidence and preserve inviolate" conjugal relations, preceding, the exception during the marriage or afterwards, etc., must be considered with relation to each other, and, when so applied, it clearly shows that the limitation is lifted when the marital confidential relation disappears. The rule can only apply as to matters received through the confidential marriage relation. 40 Cyo. 2354. It is the confidential marital communication that is protected. There can be no public policy except to foster the conjugal status. Sexton v. Sexton, 129 Iowa 487, 105 N.W. 314, 2 L.R.A.(N.S.) 708; Sackman v. Thomas, 24 Wash. 660, 64 P. 819; Van Alstine's Estate, 26 Utah 193, 72 P. 942; Graves v. Graves, 70 Ark. 541, 69 S.W. 544; State v. Snyder, 84 Wash. 485, 147 P. 38; Ward v. Oliver, 129 Mich. 300, 88 N.W. 631; State v. Pearce, 87 Kan. 457, 124 P. 814; Moseley v. Eakin, 15 Rich. (S.C.) 324, 339; Macon Ry. Co. v. Mason, 123 Ga. 773, 51 S.E. 569; Stanley v. Stanley, 112 Ind. 143, 13 N.E. 261.

The case at bar is clearly distinguished from People v. Mullings, supra, in that the testimony sought from the husband witness (criminal case) was clearly a confidential communication and challenged the public policy, whereas the testimony given by Ethel Jones was not a marital confidential communication, the publication of which tended to betray conjugal confidence and trust, or tended to produce discord between husband and wife. N. Y. Life Ins. Co. v. Mason, 272 F. 28 (C.C.A. 9). The husband and wife could hold separate property and contract with relation thereto (the insurance policies were property and this is a civil action), and in so contracting the statement from one to the other was not and did not tend to be a marital confidential communication, but was of a civil matter affecting their respective properties.

Judge Gilbert for the circuit court, with whom sat Circuit Judges Ross and Morrow, in New York Life...