Murray v. United States

• Citation: 107 F. Supp. 290
• Decision Date: 09 January 1950
• Docket Number: Civ. No. 737.
• Parties: MURRAY v. UNITED STATES.
• Court: U.S. District Court — Western District of Michigan

107 F. Supp. 290

MURRAY v. UNITED STATES.

Civ. No. 737.

United States District Court E. D. Michigan, N. D.

January 9, 1950.

Maurine L. Jones, Flint, Mich., for plaintiff.

Janet E. Kinnane, Asst. U. S. Atty., Bay City, Mich., for defendant United States.

McTaggart & Krapohl, Flint, Mich., for defendant Citizens Commercial & Savings Bank.

PICARD, District Judge.

The facts in this case pose a legal question for which we can find no direct authority. On October 3, 1944, plaintiff, as the wife of George Almy, Jr., filed a petition in the Probate Court for Genesee County to have him declared insane and a guardian appointed. The intervening third party, Citizens Commercial and Savings Bank, now administrator of his estate, was appointed guardian. George Almy, Jr., the husband, was a veteran and carried a government insurance policy payable to plaintiff, his wife.

On January 24, 1945, plaintiff started action for divorce and decree granted July 9, 1945, plaintiff being awarded the sum of $1 in full satisfaction of all claims in and to the property of her husband whether then owned or acquired thereafter. Later, January 21, 1946, the guardian, by court action, compelled plaintiff to turn over to it an insurance policy in a private insurance company which the veteran husband then also carried. Nothing was said about the government insurance policy, but during the life of the veteran, and after the decree of divorce was granted, the guardian, through the Probate Court received authority to change the beneficiary in that policy, and it was made payable to the veteran's estate. In the meantime plaintiff had remarried and notice of the intended change was not given or required under Michigan Probate law. The Veterans Administration accepted designation of the new beneficiary.

The veteran died March 11, 1949, and action was brought by plaintiff to recover the full amount of the policy on the theory that being the original beneficiary named therein, she was still entitled to the proceeds thereof because the guardian had no legal right to change the beneficiary. She contends further that the State of Michigan, which automatically upon divorce deprives the former wife of all right, title and interest in any insurance policy of her husband, was inoperative, because payment on all government insurance policies is controlled entirely by federal legislation not to be hampered or affected by local or state laws.

At the time the veteran was declared insane the law governing beneficiaries in government insurance policies read as follows:

Title 38, § 802, subsec. (g), U.S.C.A.:

"(g) The insurance shall be payable only to a widow, widower, child (including a stepchild or an illegitimate child if designated as beneficiary by the insured), parent (including person in loco parentis if designated as beneficiary by the insured), brother or sister of the insured. The insured shall have the right to designate the beneficiary or beneficiaries of the insurance, but only within the classes herein provided, and shall, subject to regulations, at all times have the right to change the beneficiary or beneficiaries of such insurance without the consent of such beneficiary or beneficiaries but only within the classes herein provided".

As the veteran's wife, therefore, she came within the permitted class.

Later, however, the law was changed and the following clause added:

"Provided, That the provisions of this subsection as to the restricted permitted class of beneficiaries shall not apply to any national service life-insurance policy maturing on or after August 1, 1946."

The policy in question matured after August 1, 1946, and while it will be noted that a "wife" is still within the class of permitted beneficiaries, by the new legislation the veteran may designate any one to receive the benefits of his National Service Life Insurance.

One would suppose that since plaintiff was not the wife of the deceased veteran at the time of his death she would have no claim on the proceeds of his government insurance policy, but the fact remains that she was still the designated beneficiary "Thelma M. Almy" in that policy and could have been re-named by the veteran (whether she was his wife or not) had he so desired or the same result would have followed if no other beneficiary was or could be so designated.

The question presented is —

Was plaintiff, the remarried widow of the deceased veteran, the legal beneficiary of George Almy, Jr.'s National Service Life Insurance policy at the time of his death, March 11, 1949, despite requested change of beneficiary (his estate) by his legal guardian —which change was accepted, approved and recorded by the Veterans Administration?

And the answer turns upon two issues —

(a) Whether the divorce in 1945 terminated plaintiff's rights to proceeds of the insurance policy; or

(b) Whether a legal guardian, acting under order of the Probate Court, having jurisdiction, may effect change of beneficiaries for an incompetent insured veteran?

Conclusions of Law.

The decided cases apparently tend to support plaintiff's contentions. There are several decisions holding that a divorced wife is entitled to the proceeds of her former husband's insurance even after her divorce if she was named as the beneficiary originally and the beneficiary never changed. Conklin v. U. S., 9 Cir., 27 F.2d 45; U. S. v. Smith, 9 Cir., 55 F.2d 141, 81 A.L.R. 926; Tannehill v. U. S., D.C., 82 F.Supp. 362.

It has also been held that a stepdaughter named beneficiary who lost such status when her mother divorced the veteran can recover, Benefield v. U. S., D.C., 58 F.Supp. 904, and that if the statute was amended so as to bring a beneficiary within the permitted class when previous to such amendment he could not be so designated, he could also recover. Small v. U. S., 71 App.D.C. 332, 110 F.2d 122, 127 A.L.R. 814; Dodd v. U. S., D.C., 76 F.Supp. 991.

Furthermore, there are cases holding that state laws cannot effect government insurance in any way, particularly in controlling those who are entitled to the proceeds as beneficiaries. Laws and regulations governing beneficiaries of government insurance are under control of the federal government and must be uniform. Admittedly chaos would exist if the Veterans Administration must follow one law for one state and a different law for another state. See Barton v. U. S., D.C., 75 F.Supp. 703.

However, in this case a somewhat different fact situation is presented and there are certain provisions of the act, regulations, state laws and decisions of our courts, all of which must be considered — First, Sec. 25.131 of the Michigan Statutes Annotated, Comp.Laws 1948, § 552.101, provides as follows:

"Hereafter every decree of divorce shall determine all rights of the wife in and to the proceeds of any policy or contract of life insurance, endowment or annuity upon the life of the husband in which she was named or designated as beneficiary, or to which she became entitled by assignment or change of beneficiary during the marriage or in anticipation thereof, whether such contract or policy was heretofore or shall hereafter be written or become effective, and unless otherwise ordered in said decree such policy or contract shall thereupon become and be payable to the estate of the husband or to such named beneficiary as he shall affirmatively designate. * * *."

Construed favorably in Minnesota Mut. Life Ins. Co. v. Hendrick, 316 Mich. 253, 25 N.W.2d 189. But — and this is important — it is to be noted that in none of the states in which the above Conklin, Smith, Tannehill, Barton, Benefield, Small or Dodd cases arose could we find a similar provision to that found in the Michigan law. California definitely has none.

Second, Plaintiff's claim originated when she was the "wife" of the veteran. In Brown v. United States, 3 Cir., 164 F.2d 490 it was held that whether the beneficiary was the...