Minnesota Mutual Life Insurance Co. v. Sullivant, ED 71-C-5.
| Citation | 334 F. Supp. 346 |
| Decision Date | 30 November 1971 |
| Docket Number | No. ED 71-C-5.,ED 71-C-5. |
| Parties | The MINNESOTA MUTUAL LIFE INSURANCE COMPANY, Plaintiff, v. Betty Jean SULLIVANT and Alida Sullivant, Defendants. |
| Court | U.S. District Court — Western District of Arkansas |
Martin G. Gilbert (Coleman, Gantt, Ramsay & Cox), Pine Bluff, Ark., for plaintiff.
Paul K. Roberts, Warren, Ark., for defendant Betty Jean Sullivant.
Richard H. Mays, El Dorado, Ark., for defendant Alida Sullivant.
This interpleader action was brought by The Minnesota Mutual Life Insurance Company, plaintiff herein, for determination of the claims of Betty Jean Sullivant and Alida Sullivant, defendants, in the proceeds of a policy of life insurance on the life of Robert N. Sullivant, deceased.
The plaintiff is a corporation organized and existing under and by virtue of the laws of the State of Minnesota. It is engaged in the mutual life insurance business with its principal place of business in said state. Defendant, Betty Jean Sullivant, is a citizen and resident of Bradley County, Arkansas. Defendant, Alida Sullivant, is a citizen and resident of the State of California. Both defendants claim the proceeds of the life insurance policy. The amount exceeding $500.00, plaintiff has deposited into the registry of the court the sum of $7,405.61, being the aggregate sum payable under the policy. Jurisdiction is established pursuant to the provisions of 28 U.S.C.A. § 1335.
The plaintiff issued its policy of life insurance No. 788325 on the life of Robert N. Sullivant May 4, 1962. Alida D. Sullivant, the wife of Robert N. Sullivant at that time, was designated as beneficiary of the policy. They were citizens and residents of the State of California. The premiums were paid by the insured from community funds during the existence of the marriage relationship of Alida Sullivant, defendant, and Robert N. Sullivant, deceased, commencing May 4, 1962, with monthly payments in the sum of $13.86 per month until August 24, 1964, at which time the marriage relationship was dissolved by divorce.
Application for the insurance policy in question was made by the insured to an authorized agent of the plaintiff, The Minnesota Mutual Life Insurance Company, within the State of California. From the application, the plaintiff issued the policy presumably from its home office in St. Paul, Minnesota, transmitted it to the company's regular authorized agent in California where the agent delivered the policy to Sullivant. From the time of the issuance and deliverance of the policy to the insured in California, the premiums on the policy were paid from the insured's allotments by the Navy. The allotment was made from the insured's regular pay as a member of the United States Navy. It is established and the Court concludes that the payment of the monthly premiums on the policy was from community funds as a result of the marriage relationship of the Deceased Sullivant and defendant, Alida Sullivant.
In 1964, Robert N. Sullivant left his family in California and moved to Arkansas. The wife, Alida Sullivant, and their child continued to live in California. Robert N. Sullivant obtained a decree of divorce from Alida Sullivant on August 24, 1964, at which time the marriage relationship between them no longer existed. No division of the property interest between them was made at the time the divorce decree was granted or at any time thereafter.
On November 7, 1964, Robert N. Sullivant married defendant, Betty Jean Sullivant. They resided in Arkansas during the existence of their marriage.
On March 12, 1965, Robert N. Sullivant made application to the plaintiff, The Minnesota Mutual Life Insurance Company, to change the beneficiary of the policy in question from Alida, his former wife, to Betty Jean, his then wife. Pursuant to the provisions of the policy, the plaintiff acknowledged the application for change in beneficiary, which was effectuated March 18, 1965. Alida Sullivant did not agree to give her consent nor in any way at any time acknowledge the change in beneficiary from her to Betty Jean. It is also established that no consideration was given in connection with the change of beneficiary. The defendant, Alida Sullivant, retained the original policy issued by Minnesota and did not learn of the change in beneficiary until after the death of the insured on September 15, 1970.
Both defendants claiming the proceeds of the policy upon the death of the insured, the plaintiff failed to pay the amount due to either. The defendant, Betty Jean Sullivant, filed a complaint against the insurance company in the Circuit Court of Bradley County, Arkansas, on January 16, 1971, seeking judgment for the sum due on the policy. This action prompted Minnesota to interplead the funds into the registry of this court on February 9, 1971.
The defendant, Alida Sullivant, filed an answer and cross-complaint for a determination that she have judgment for the amount interplead by The Minnesota Mutual Life Insurance Company, the sum due on the policy of the deceased, Robert N. Sullivant.
The defendant, Betty Jean Sullivant, filed answer and cross-complaint for a determination that she be given judgment for the sum due on the policy. In addition to the cross-complaint of defendant, Alida Sullivant, she sought judgment against Minnesota for the total sum due from the policy, notwithstanding the results of the interpleader action and the determination of the Court as to whom should have the proceeds from the policy.
The suit was regularly scheduled for trial to a jury October 18, 1971. At the commencement of the trial counsel for the defendant, Alida Sullivant, announced that she no longer seeks judgment from the plaintiff, The Minnesota Mutual Life Insurance Company, and the case went to trial on the interpleader for a determination of the funds deposited by the plaintiff.
The defendant, Alida Sullivant, assumed the burden of establishing that she was entitled to the entire proceeds of the interplead funds due from the policy. Her contention was that the beneficiary of the policy as originally issued was irrevocable and, in the alternative, pursuant to the application for the policy originally, the company was required to issue an irrevocable policy as to the beneficiary. She claimed a mistake was made or fraud in the issuance of the policy and contended for a revision.
At the conclusion of the testimony of the defendant, Alida Sullivant, the Court ruled as a matter of law that she failed to establish that the policy contained an irrevocable clause or that there was a mistake, misrepresentation or fraud in connection with the issuance of the policy. The Court sustained a motion for a directed verdict and discharged the jury from further consideration.
At this point the defendant, Alida Sullivant, moved to amend the pleadings to include a claim for 50% of the proceeds from the insurance policy on the basis that the payments of the premiums on the policy were made with community property funds. The Court granted the motion and counsel for the parties were given an opportunity to file briefs on this question. Briefs have been filed and having the benefit of the testimony, the pleadings and interrogatories the Court proceeds to a determination on the question of whether the defendant, Alida Sullivant, is entitled to any of the proceeds from the policy.
There are two primary questions for the Court's determination. The first question is the applicable state law for determination of which beneficiary is entitled to part or all of the proceeds of the policy. The Court concludes that it is a fact question to be determined under applicable law. Since it is established that the application of the policy was made in California to a representative of the plaintiff, The Minnesota Mutual Life Insurance Company, and after being issued, the policy was delivered by the agent and representative of Minnesota in California to the insured Robert N. Sullivant, whereupon premiums were paid in California, the law of the State of California is applicable to this proceeding.
It is well established that where an insurance policy is the result of an application to an agent of the insurance company within a state, the policy after having been issued, delivered by the company's agent within the state, and the premiums paid by the insured within the state to the company, the policy becomes a contract of that state, subject to the applicable laws of said state. Where the most significant contacts of the contract are made, the applicable law of that place is controlling. New England Mut. Life Ins. Co. v. Olin, 7 Cir., 114 F. 2d 131, 136, 137; Equitable Life Assur. Society v. Clements, 140 U.S. 226, 11 S. Ct. 822, 35 L.Ed. 497; Northwestern Mutual Life Ins. Co. v. McCue, 223 U.S. 234, 32 S.Ct. 220, 56 L.Ed. 419; New York Life Ins. Co. v. Head, 234 U.S. 149, 34 S.Ct. 879, 58 L.Ed. 1259; Mutual Life Ins. Co. v. Liebing, 259 U.S. 209, 42 S.Ct. 467, 66 L.Ed. 900.
In New England Life Ins. Co. v. Olin, supra, at page 137, it is stated:
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