Pack v. United States, 12139.

• Decision Date: 07 September 1949
• Docket Number: No. 12139.,12139.
• Citation: 176 F.2d 770
• Parties: PACK v. UNITED STATES et al.
• Court: U.S. Court of Appeals — Ninth Circuit

176 F.2d 770 (1949)

PACK v. UNITED STATES et al.

No. 12139.

United States Court of Appeals Ninth Circuit.

September 7, 1949.

Sylvester Hoffmann and Irving G. Bishop, Los Angeles, Cal., for appellant.

James M. Carter, U. S. Attorney, Ernest A. Tolin, Asst. U. S. Attorney, Clyde C. Downing and Robert Komins, Asst. U. S. Attorneys, Los Angeles, Cal., H. G. Morison, Asst. Atty. Gen., D. Vance Swann and Thomas E. Walsh, Attorneys, Dept. of Justice, Washington, D. C., for appellee U. S. A.

Cameron & Perkins, W. E. Cameron, Long Beach, Cal., for appellee Lilly Pack.

Before STEPHENS, BONE and ORR, Circuit Judges.

ORR, Circuit Judge.

Appellant Angel L. Pack is the widow of Clyde A. Pack, deceased. She instituted this suit in an attempt to establish a right to a part of the proceeds of a policy of National Service Life Insurance on the life of Clyde A. Pack, deceased. Jurisdiction is based on § 617 of the National Service Life Insurance Act of 1940, as amended, 38 U.S.C.A. § 817, which incorporates §§ 19 and 500 of the World War Veterans' Act of 1924, as amended, 38 U.S.C.A. §§ 445, 551.

Appellant and Clyde, the deceased, were married in California. From the date of the marriage to the death of the deceased which occurred June 11, 1945, they were residents of the state of California. On February 25, 1944, Clyde enlisted in the United States Marine Corps. He applied for and was issued a $10,000 policy of National Service Life Insurance, effective March 6, 1944. He named his mother, Lilly Pack, as sole beneficiary of the policy, this without the consent of his wife. He at no time changed or attempted to change the beneficiary. All premiums due on the policy were paid by deductions from the insured's earnings as a member of the Marine Corps.

Appellant asserts that the insurance is community property and the surviving widow had a vested interest in one-half thereof because the premiums were paid out of earnings of Clyde while he and appellant were living together as husband and wife and were residents of California. This is the rule in California with respect to insurance policies issued by private corporations. An entirely different situation is presented in dealing with a policy issued by the federal government. It is important to keep in mind that the insurance policy with which we are concerned in this case was issued pursuant to the authority of a Congressional Act. That Act, in permitting a veteran to apply for an insurance policy under its terms, limited his right to designate beneficiaries. A wife and mother were within the designated class. The Act further provides that the proceeds of the policy may be paid only to the person designated; that the benefits are not assignable;¹ that payments made to, or on account of, a beneficiary under any of the laws relating to veterans shall be exempt from taxation; Shall be exempt from the claims of creditors and shall not be liable to attachment, levy or seizure by or under any legal or equitable process whatever, either before or after receipt by the beneficiary.² Thus, the contract of insurance issued by the Government has certain restrictions and limitations placed thereon by Congress, among which is the mandate that the proceeds may be paid only to the person designated in the policy as beneficiary. To order the Government to pay a portion of the proceeds of the policy to the wife would necessarily require us to ignore the plain provisions of the statute and the provisions of the contract. This we are not permitted to do if, in enacting the statute, Congress was lawfully exercising the authority vested in it. We see no constitutional limitation on the power of Congress to make provision as to the manner in which the Government shall contract with holders of National Service Life Insurance. These are contracts of the United States and possess the same legal incidents as other Government contracts. Lynch v. United States, 292 U.S. 571, 54 S. Ct. 840, 78 L.Ed. 1434. The validity and construction of such policies present questions of federal law. Clearfield Trust Co. v. United States, 318 U.S. 363, 63 S. Ct. 573, 87 L.Ed. 838. exempting of proceeds of insurance from the operation of some state laws has been held a valid exercise of congressional power. Lawrence v. Shaw, 300 U.S. 245, 57 S.Ct. 443, 81 L.Ed. 623, 108 A.L.R. 1102. Appellant insists, however, that a different situation exists here in that she has a vested right in the proceeds by reason of the California community property law and a congressional act divesting her of that right would be void as contrary to the Fifth Amendment. The vested right is based upon the use of community funds to pay premiums. The vested right, if it exists, cannot be asserted against the Government. The Government, by reason of congressional mandate must pay the proceeds to the mother, the beneficiary named in the policy. This is essentially so in order to permit the Veterans Administration to administer the Act in a uniform manner.

Appellant asks, in the event the Government cannot be required to pay her claimed share of the proceeds directly to her, that a trust be imposed on the proceeds received by the mother or that the mother be required to execute an assignment.³ This claim of the wife, if it exists, is not a claim against the United States. It is, at most, a claim against proceeds which may be received by the mother and can only be litigated between wife and mother in a separate action. The case of Wissner v. Wissner, 89 Cal.App.2d 759, 201 P.2d 837, is relied on by appellant. It is not authority here. In that case the United States was not a party and the state court expressly refrained from expressing an opinion as to the operation of the state community property laws as against the United States.

The statute under which this action was brought provides: "In the event of disagreement as to claim * * * under a contract of insurance between the Veterans' Administration and any person or persons claiming thereunder an action on the claim may be brought against the United States either in the district court of the United States for the District of Columbia or in the district court of the United States in and for the...