Kindleberger v. Lincoln Nat. Bank of Washington

• Decision Date: 29 April 1946
• Docket Number: No. 9053.,9053.
• Citation: 155 F.2d 281
• Parties: KINDLEBERGER v. LINCOLN NAT. BANK OF WASHINGTON et al.
• Court: U.S. Court of Appeals — District of Columbia Circuit

155 F.2d 281 (1946)

KINDLEBERGER v. LINCOLN NAT. BANK OF WASHINGTON et al.

No. 9053.

United States Court of Appeals District of Columbia.

Argued November 14, 1945.

Decided April 29, 1946.

Mr. Leslie C. Garnett, of Washington, D. C., for appellant.

Mr. Arthur C. Keefer, of Washington, D. C., for appellees.

Before EDGERTON, WILBUR K. MILLER, and PRETTYMAN, Associate Justices.

WILBUR K. MILLER, Associate Justice.

In 1924, the New York Life Insurance Company issued two policies on the life of Michael E. Buckley, in each of which his wife, Julia C. Buckley, was named beneficiary. Both policies contained the following provisions:

"The insured may at any time and from time to time change the beneficiary, provided this policy is not then assigned."

"In the event of the death of any beneficiary before the insured, the interest of such beneficiary shall vest in the insured unless otherwise provided herein."

Julia C. Buckley died in 1935 and the appellant qualified as administrator of her estate. Michael E. Buckley died in 1943 without having changed the beneficiary designated in the policies. The appellees are the executors of his will.

The appellant, as the beneficiary's administrator, claimed the proceeds of the policies, as did the executors of the insured. The latter collected from the New York Life Insurance Company the sums payable by virtue of the policies, with the agreement, however, that the money should be held by the appellees to await the determination of the question whether the sums received properly belong to the estate of the beneficiary or to the estate of the insured. This suit was filed in the District Court of the United States for the District of Columbia by the administrator of the beneficiary against the executors of the insured in order to obtain that determination.

The appellees' motion to dismiss the complaint was granted by the trial court, and on this appeal the appellant complains of that action.

Notwithstanding the fact that the decedent died before the death of the insured, in which event the language of the policies provides that the interest of the beneficiary shall vest in the insured, the appellant asserts that he is entitled to the proceeds of the policies because of a statute which was enacted by the Congress on June 19, 1934, 48 Stat. 1175, ch. 672, § 16, ch. V, District of Columbia Code, Title 35, § 716 (5:220o).¹

The pertinent sentence of the statute, which is reproduced in full in the margin, is clarified when it is read with the omission of certain irrelevant phrases, thus:

"When a policy of insurance, whether heretofore or hereafter issued, is effected by any person on his own life or on another life in favor of some person other than himself * * * the lawful beneficiary * * * other than the insured or the person so effecting such insurance, or his executors or administrators, shall be entitled to its proceeds and avail(s) against the creditors and representatives of the insured * * *."

With the skeleton of the statute exposed as above, and with attention directed to the words which we have italicized, it is seen immediately that the meaning depends on the antecedent of the word "his" in the italicized phrase. We have no doubt that the word "beneficiary" is the antecedent of the word "his" in the statutory phrase "or his executors or administrators"; and that the meaning, therefore, is that the lawful beneficiary, or his executors or administrators, shall be entitled to the proceeds against the creditors and representatives of the insured.

In considering the matter, we are without the aid of the views of the members of the Congressional committees concerning the purpose and meaning of the language which they wrote into the act, because the hearings on the bill which became the statute under consideration contain no information concerning the section herein involved.

There is a dearth of authority for the reason that the question is one of first impression in this jurisdiction and does not seem to have arisen elsewhere, as far as we have ascertained, under an identical statute. But such authority as does exist confirms our view that the Congress intended the statute to mean that the lawful beneficiary, or the executors or administrators of the beneficiary, should be entitled to the proceeds of the policy against the creditors and representatives of the insured. In this view, the statute is contrary to the quoted provisions of the policies, and overrides them. This will appear from the cases we now proceed to discuss.

A somewhat similar statute has been in effect in Massachusetts since 1844, and § 55-a of the Insurance Law of New York, from which the statute involved here was largely copied, was adopted in 1927, c. 468, and has been rewritten as § 166 of the Insurance Law of 1939. Yet counsel do not cite from either of those jurisdictions any case construing the statute with respect to a factual situation such as that presented in this case, nor has our own rather extensive search discovered authority from either state. The closest approach is a decision of the Surrogate's Court of Niagara County, New York, in 1931, styled In re Czarniak's Estate, 140 Misc. 754, 251 N. Y.S. 536, 538. There the court said, "The executor of the estate of the beneficiary makes claim to the same (the proceeds of the policy) by virtue of section 55-a of the Insurance Law * * *. This section was added by chapter 468 of the Laws of 1927 and is not retroactive." Thus the surrogate did not construe § 55-a, but dismissed it as not being applicable, because the section was enacted after the policy was issued. Accordingly he rejected the claim of the beneficiary's executor. But it is a possible inference, if not a necessary one, that his decision would have been otherwise if he had considered the statute to be retroactive. With that exception, we find no New York decision which discusses § 55-a of the Insurance Law in a contest for the proceeds of a life insurance policy between the estate of a deceased beneficiary on the one hand, and the estate of a deceased insured on the other, when the designated beneficiary died first and the insured then died without having named another beneficiary.

We find, however, that for more than fifty years Kentucky has had a statute² almost identical with that now being considered, except that the statutory sentence involved in this case has additional material at its close which does not appear in the Kentucky statute. Numerous opinions have been written by the Court of Appeals of Kentucky concerning the effect of the statute in situations in which the designated beneficiary died before the insured and in which, after the subsequent death of the insured, the administrators or executors of both beneficiary and insured claimed the proceeds of the policy.

From the beginning the Kentucky court has held consistently that the term "legal representatives" in its statute means "legal representatives of the beneficiary."³ The accretions to the rule as the decisions flowed on have been only to the effect that the statutory provision does not apply to those cases in which the policy either (1) saves to the insured the right to change the beneficiary, or (2) as in the latest case, Colovos' Admr. v. Gouvas,⁴ vests the interest of a deceased beneficiary in the insured himself. That is to say, the Kentucky statute is interpreted by the court of that state as giving the proceeds to the estate of the beneficiary who predeceased the insured when the policy is silent as to what should happen under these circumstances; but the court recognizes the right of the insured to stipulate in the policy for a different disposition of the proceeds, should the beneficiary die first, since the statute does not provide otherwise.

But the District statute goes further than does Kentucky's, and specifically preserves to the estate of the beneficiary the right to the proceeds in instances in which the insured survives the beneficiary, and then dies without having designated another, even if the policy contains a contrary provision. The Colovos case does not overrule the previous opinions of the Kentucky court, but serves to reaffirm the earlier interpretations of the statute. It seems quite plain that, had there been appended at the end of the Kentucky statute, the following language which appears in the act here under consideration: "whether or not the right to change the beneficiary is reserved or permitted and whether or not the policy is made payable to the person whose life is insured, if the beneficiary or assignee shall predecease such person," the Kentucky court would have held its statute to be applicable even in those situations in which the policy reserved the right to change the beneficiary or gave its proceeds to the insured if the beneficiary died before him. It is the absence from the Kentucky statute of the language just quoted which has led the Court of Appeals of Kentucky to hold, in the Colovos and earlier cases, that the statute of that state does not apply if the right to change the beneficiary is reserved and if the policy is made payable to the insured in the event of the prior death of the beneficiary. The presence of the quoted provision in the statute here under consideration clearly overrules stipulations to the contrary which may be contained in policies.

Some of the Kentucky opinions, including that in the Colovos case, say that, when the beneficiary dies first and the policy saved to the insured the right to change beneficiaries or provided that the insured should have the proceeds if the beneficiary died before him, the interest of the beneficiary has not become vested. This would seem to make the statute applicable only if the deceased beneficiary could be said to have acquired a vested interest in the policy before his death. That is but another way of saying that the Kentucky statute does not apply if the policy provides that the beneficiary may...