Kemp v. Metropolitan Life Ins. Co.

• Decision Date: 24 August 1953
• Docket Number: No. 14368.,14368.
• Citation: 205 F.2d 857
• Parties: KEMP v. METROPOLITAN LIFE INS. CO. et al.
• Court: U.S. Court of Appeals — Fifth Circuit

205 F.2d 857 (1953)

KEMP v. METROPOLITAN LIFE INS. CO. et al.

No. 14368.

United States Court of Appeals Fifth Circuit.

July 24, 1953.

Rehearing Denied August 24, 1953.

Lloyd Tarlton Wilson, Wichita Falls, Tex., Wilson & Wilson, Wichita Falls, Tex., for appellant.

J. W. Hassell, Jr., and Hawkins Golden, Dallas, Tex., Hassell & Hassell, Dallas, Tex., for appellees.

Before HOLMES, BORAH, and RIVES, Circuit Judges.

RIVES, Circuit Judge.

Metropolitan Life Insurance Company filed a bill of interpleader to determine whether appellant, Martha Maud Kemp, or appellees, Natalie Kemp Baker and Mary Lou Smith, were entitled to all or any part of the proceeds of an insurance policy issued on the life of George G. Kemp, deceased. The proceeds of the policy, $12,638.14, were paid into court and the insurance company discharged. The case here, as it was in the trial court, is solely between the other appellees, who were sisters of the insured, named in the policy as beneficiaries, and hereinafter sometimes referred to as the appellees, and the appellant, who was the widow of the insured. It is the contention of the appellant that the insurance policy was community property and that the naming of her husband's sisters as beneficiaries constituted a gift by her deceased husband in fraud of her rights. The case was tried to the court without a jury and judgment for the entire proceeds of the policy was entered for the appellees.

There is no material dispute in the evidence. Most of the facts were stipulated and only two witnesses testified, Mrs. Martha Maud Kemp, the widow, and Mrs. Laura Savage, one of her friends. The insurance proceeds came from a certificate issued under an Annuities and Insurance Plan of Magnolia Petroleum Company. George G. Kemp was employed by Magnolia Petroleum Company February 15, 1919, and continued in such employment until the date of his retirement on January 1, 1952. He died intestate on July 3, 1952. The date of Mr. Kemp's entry into the Magnolia Petroleum Company's Annuities & Insurance Plan was March 1, 1931, when that plan was established. He and the appellant were married on the 29th day of September, 1942, and lived together as husband and wife in Wichita County, Texas, until his death. There were no children.

While Mr. Kemp had entered into the Annuities & Insurance Plan on March 1, 1931, the certificate in question, numbered 6498, was issued by Metropolitan Life Insurance Company on January 1, 1940, and in that certificate George G. Kemp reserved the right to change the beneficiary. Mrs. Willie Kemp, mother of George G. Kemp, originally was named beneficiary. On April 1, 1943, about six months after the marriage, George G. Kemp changed the beneficiary in said certificate to his wife, Martha Maud Kemp. The mother of George G. Kemp, Mrs. Willie Kemp, died March 26, 1946. Thereafter on December 2, 1946, George G. Kemp again changed the beneficiary in said certificate from Martha Maud Kemp to his sisters, Natalie Kemp, now Natalie Kemp Baker, and Mary Lou Smith. There were no further changes of the beneficiaries prior to his death.

The community estate and the financial condition of George G. Kemp and his wife, Martha Maud Kemp, at the time of the husband's death may be briefly described in this paragraph. George G. Kemp left one other policy of life insurance with Southland Life Insurance Company in the original face amount of $2,500.00, against which he had borrowed in his lifetime approximately $500.00. This policy was payable in three annual interest installments of $46.19, each payable July 22, 1953, 1954 and 1955, and twenty-five monthly installments of $73.90 each, commencing August 22, 1955, with a final and 26th installment of $44.34. The installments were payable to the widow, Martha Maud Kemp, and in the event of her death prior to receiving the full number of installments, the remaining installments were payable to one of the sisters, Natalie Kemp Baker. Both policies of insurance were procured by George G. Kemp prior to his marriage and until the time of his marriage the premiums on both were paid out of his separate estate and thereafter were paid from the community income. George G. Kemp left no separate estate, but left as community property cash on hand and in banks in the amount of $3,143.47, against which the widow asserts claims on account of advancements of her separate funds in the amount of $1,320.00. He left as community property the home in which he and Martha Maud Kemp lived at Burkburnett, Texas, consisting of a five room cottage located upon approximately one-half acre of land together with the furnishings. The purchase price of the house and lot had been $3,000.00. A part of the lot had been sold off and the widow testified that the house had become old and in bad condition, but that she supposed she could get $4,000.00 or $5,000.00 for the property. There was no other testimony as to its value. The widow, Martha Maud Kemp, had possession of a 1950 Pontiac automobile which she claimed as her separate property. George G. Kemp owed no debts at the time of his death, except for current bills in the sum of approximately $400.00. His funeral expenses amounting to $1,283.75 remain unpaid.

The widow, Martha Maud Kemp, undertook to testify to what George G. Kemp had said to her at the time he changed the beneficiary from his mother to her on April 1, 1943. The court sustained an objection to this testimony as hearsay and as prohibited under the statute, Article 3716, Rev. Civ.Statutes of Texas.¹ That ruling is the basis of one of the specifications of error. The widow further testified that she did not know anything at all about a subsequent change being thereafter made in the beneficiary from her to the two sisters; that it was after Mr. Kemp's death that she first learned of that change having been made.

The other witness, Mrs. Laura Savage, testified that she was present at the Kemp home after Mr. Kemp's death when the policy of insurance was found, and it was discovered that the beneficiary had been changed from the widow to the sisters. She was asked whether she had any discussion with Mr. Kemp with reference to insurance policies at anytime in the earlier part of 1952, and further "Did you know whether or not Mr. Kemp had given this policy to his wife?" The court sustained objections to each of these questions and those rulings are also assigned as error.

At the conclusion of argument by counsel, the District Court rendered a brief opinion and entered judgment for the appellees, sisters of the insured, the beneficiaries named in the policy.

It is now settled that a policy of life insurance is regarded in Texas as property.² Whether the policy in this case, taken out before the insured's marriage, is community property presents a more difficult question. Without more, it is doubtful that such a policy comes within the Texas Statute prescribing the property that shall be considered community property.³ The problem has had varying solutions in different community property states.⁴

The appellant insists that when the insured, after his marriage, changed the beneficiary to his wife, he made a gift of this insurance policy, if not to the wife's separate estate, at least to the community estate. The husband could make a parol gift of such a policy, even though as to the insurance company he failed formally to relinquish his right to change the beneficiary. Aaron v. Aaron, Tex.Civ.App., 173 S. W.2d 310, 313. Such failure, however, made his action ambiguous as to whether he intended to make a gift, and if so, whether it was to be effective at once, or effective only in the event he died without changing the beneficiary. See 1 de Funiak, Principles of Community Property, Sec. 79, p. 215.

Was the testimony as to statements made by the insured admissible to explain his action and to help solve that ambiguity? Such statements could have been without the hearsay rule either because a part of the transaction itself or as admissions against interest. In a case similar to the present case on its facts, Aaron v. Aaron, supra, the wife was permitted without objection to testify that the husband stated, "that he was making them (the two policies of life insurance) a gift to the community estate so we could both enjoy them."

Were such statements of the insured inadmissible and prohibited by the statute, Article 3716, Revised Civil Statutes of Texas, Footnote 1, supra? As to her one-half of the community property, the surviving widow is not an heir of her husband, Briggs v. McBride, Tex.Civ.App., 190 S.W. 1123, 1125. Nor would the designated beneficiaries under the policy have taken as heirs or legal representatives of the deceased. This action was not brought by the administrator as was the suit in International Travelers' Ass'n v. Bettis, 120 Tex. 67, 35 S.W.2d 1040. It is true, however, that the widow's answer and claim set forth "that not only does she own an undivided one-half interest in the policy, but, under the laws of inheritance, she is entitled to all of the community assets of herself and her deceased husband; * *." If the widow might be entitled to recover in a dual capacity, either in her own right as a community survivor or as the sole heir of her husband, and if the interests sought to be recovered on such theories are not severable, then, the testimony being inadmissible in her behalf as an heir of her husband it might have to be excluded altogether. Spencer v. Schell, 107 Tex. 44, 173 S.W. 867, 868; Connecticut General Life Ins. Co. v. Banderbee, Tex.Civ.App., 82 S.W.2d 764, 766.

Under our Rules of Civil Procedure, 28 U.S.C.A., however, the case is to be tried on the proofs rather than on the pleadings. De Loach v. Crowley's, Inc., 5 Cir., 128 F.2d 378, 380. For reasons to be presently stated, we think that the widow could in no event recover as an heir, but could recover, if at all, only the interest which she may have owned and of which her...