Morris v. United States, 5936-5938.

• Decision Date: 31 May 1962
• Docket Number: No. 5936-5938.,5936-5938.
• Citation: 303 F.2d 533
• Parties: Gertrude Welch MORRIS, Plaintiff, Appellant, v. UNITED STATES of America, Defendant, Appellee. Verna D. MORRIS, Plaintiff, Appellant, v. UNITED STATES of America, Defendant, Appellee. Henry Carl MORRIS et al., Plaintiffs, Appellants, v. UNITED STATES of America, Defendant, Appellee.
• Court: U.S. Court of Appeals — First Circuit

303 F.2d 533 (1962)

Gertrude Welch MORRIS, Plaintiff, Appellant, v. UNITED STATES of America, Defendant, Appellee.

Verna D. MORRIS, Plaintiff, Appellant, v. UNITED STATES of America, Defendant, Appellee.

Henry Carl MORRIS et al., Plaintiffs, Appellants, v. UNITED STATES of America, Defendant, Appellee.

Nos. 5936-5938.

United States Court of Appeals First Circuit.

May 31, 1962.

Francis W. McCauley, Detroit, Mich., with whom Hugh J. Corcoran, Springfield, Mass., McCauley & Anderson, Detroit, Mich., and Ely, King, Kingsbury & Corcoran, Springfield, Mass., were on the brief, for appellants.

Richard J. Heiman, Attorney, Department of Justice, with whom Louis F. Oberdorfer, Asst. Atty. Gen., Lee A. Jackson and Joseph Kovner, Attorneys, Department of Justice, W. Arthur Garrity, Jr., U. S. Atty., and Joseph F. Gargan, Asst. U. S. Atty., were on the brief, for appellee.

Before WOODBURY, Chief Judge, and HARTIGAN and ALDRICH, Circuit Judges.

ALDRICH, Circuit Judge.

Now deceased taxpayer, a resident of Michigan, was insured under several policies of life insurance issued by Massachusetts Mutual Insurance Co., a Massachusetts corporation. By a divorce decree he was required to maintain one policy in force for the benefit of his former wife, but with the right to borrow against it. His other policies named his mother and sons, respectively, as revocable beneficiaries. Taxpayer assigned all of these policies to a Michigan bank to secure a loan. Subsequently the local district director of Internal Revenue filed tax liens against taxpayer. When the bank learned of this it made certain demands upon taxpayer, as a result of which he obtained maximum policy loans from the company, which allegedly had no notice of the liens. With the proceeds he made required premium payments and discharged the bank loan. Thereafter the policies were maintained in force by automatic premium loans until notices of liens and levy were served upon the company. Following taxpayer's death, which occurred shortly afterwards, the beneficiaries made demand upon the insurance company. The divorced wife sought the net proceeds of her policy. The others requested the net proceeds of their policies less the cash surrender value at the date of death. Cf. United States v. Bess, 1958, 357 U.S. 51, 78 S.Ct. 1054, 2 L.Ed.2d 1135. The company replied that since the levy exceeded the total net proceeds it could make no payment. The beneficiaries then requested the government to recognize their claims and after the government failed to take action brought the present three suits against it as sole defendant. Jurisdiction was asserted under 28 U.S.C. § 2463.¹ On the government's motions to dismiss, the district court agreed that it lacked jurisdiction and held, in addition, that the complaints attempted to secure declaratory judgments in violation of 28 U.S.C. § 2201. Plaintiffs appeal.

It seems to us that plaintiffs have chosen to approach this matter in the most difficult manner. Their legal claim is against the insurance company, but they have not sued it. Their asserted reason is that "no dispute" exists between them. However, in the company's absence how is this to be determined? Plaintiffs liken their suit to an action to quiet title. Even without considering the possible issue of premium payments in fraud of creditors, in no sense is the title fully before the court in the absence of the debtor on whom the levy was made. In plaintiffs' case of Seattle Ass'n of Credit Men v. United States, 9 Cir., 1957, 240 F.2d 906, the plaintiff, as an assignee for the benefit of taxpayer's creditors, was levied upon for taxpayer's unpaid taxes. The court held that section 2463 conferred jurisdiction for its suit to quiet title, and that 28 U.S.C. § 2410(a), while admittedly not jurisdictional, constituted the government's consent. But there plaintiff was the party in actual possession.²

...