Prudential Insurance Company v. King

• Decision Date: 07 April 1971
• Docket Number: Civ. A. No. 17099-3.
• Citation: 324 F. Supp. 1236
• Parties: PRUDENTIAL INSURANCE COMPANY, Plaintiff, v. Aleene T. KING, Pamela Nicholson Coleman, Judy C. Crick, Merlin C. Silvey and Louise Silvey, Defendants.
• Court: U.S. District Court — Western District of Missouri

324 F. Supp. 1236

PRUDENTIAL INSURANCE COMPANY, Plaintiff, v. Aleene T. KING, Pamela Nicholson Coleman, Judy C. Crick, Merlin C. Silvey and Louise Silvey, Defendants.

Civ. A. No. 17099-3.

United States District Court, W. D. Missouri, W. D.

December 22, 1970.

As Amended April 7, 1971.

Milton C. Clarke, Swanson, Midgley, Jones, Eager & Gangwere, Kansas City, Mo., for plaintiff.

Frank Brockus, Kuraner, Oberlander, Dingman, Brockus & Lowe, Kansas City, Mo., for defendant Aleene T. King.

Leroy Crouther, Jr., St. Louis, Mo., for defendant Louise Silvey.

William A. Jolley, Jolley, Walsh & Gordon, Kansas City, Mo., for defendant Merlin C. Silvey.

M. Randall Vanet, McLaughlin & Vanet, Kansas City, Mo., for defendant Judy C. Crick.

Duke W. Ponick, Jr., Morris, Foust, Moudy & Beckett, Kansas City, Mo., for defendant Pamela Nicholson Coleman.

FINDINGS OF FACT, CONCLUSIONS OF LAW, JUDGMENT

WILLIAM H. BECKER, Chief Judge.

This is an action under the Federal Interpleader Act, Section 1335, Title 28, U.S.C., in which the defendants claim various interests in $10,000, the death benefits of a policy of life insurance issued by plaintiff upon the life of Harold R. Silvey, who was killed in action while a member of the Armed Forces of the United States. Plaintiff has paid the death benefits of the policy into Court and has been discharged by the interlocutory order of interpleader and judgment of discharge reserving an obligation of plaintiff to respond to discovery requests of defendants. The controversy among the defendants was then tried by the Court without a jury on April 28, 1970. The facts are found as follows.

On November 28, 1967, Harold R. Silvey, deceased, was a member of the Armed Services of the United States on active duty. On the same date Silvey executed DA Form 3054, an Election of Amount, Beneficiary Designation and Settlement Options for Servicemen's Group Life Insurance, designating defendants Pamela Nicholson Coleman and Judy C. Crick (neither of whom is kin by blood or marriage to the insured) each as beneficiary of 50% of the benefits of the life insurance policy issued by plaintiff as the insurer of Servicemen's Group Life Insurance. Thereafter, Silvey, who had been born on July 14, 1948, and who had never married, was killed in military action in Viet Nam on July 3, 1968. At the time of Silvey's death, his father, defendant Merlin C. Silvey, and his mother, defendant Aleene T. King, who were divorced, survived him. On August 30, 1968, defendant Judy C. Crick filed a VA Form 29-8283, Claim for Death Benefits (Servicemen's Group Life Insurance), in the office of Servicemen's Group Life Insurance, 212 Washington Street, Newark, New Jersey 07102. On September 10, 1968, defendant Pamela Nicholson Coleman filed a similar claim on VA Form 29-8283 in the same office. On September 12, 1968, defendant Aleene T. King, deceased's mother, filed a suit against plaintiff in Division 1 of this Court claiming the proceeds of the policy. Other persons also made claims to the proceeds of the life insurance policy prior to the trial of this cause on April 28, 1970,¹ but they did not participate in the trial and announced prior to trial that they did not intend actively to participate or pursue their claims. Further, defendant Merlin C. Silvey executed an assignment of any interest which he might have to defendant King, mother of the insured. This assignment was introduced in evidence at the trial of this cause. Therefore, the controversy has resolved itself into one between defendant King, insured's mother, and the defendants Coleman and Crick, named by the deceased as beneficiaries in the DA 3054 Form. The defendant King was the only party to offer oral testimony at the trial.

Mrs. King testified without contradiction that she had obtained the sole legal custody of the insured, Harold R. Silvey, by decree of the Circuit Court of St. Francois County, upon her divorce from his father, Merlin Silvey; that Merlin Silvey, the father, was ordered to pay child support (for the deceased and two other sons) by the judgment in the divorce action, but that he paid nothing for child support in 1953 or thereafter; that defendant King provided the insured's sole support from 1953 to 1965;² that the insured entered the service without her knowledge or consent in March 1966; that she received a letter from the insured in March 1966, informing her that he had joined the Army; that she subsequently continued to receive letters from him through the date of May 23, 1968;³ and that she had received an assignment of any rights in the policy here litigated from the defendant Merlin Silvey.

Defendants Coleman and Crick, who did not personally appear, through their respective counsel offered evidence of the claims executed by each of them on VA Forms 29-8283 and also offered the DA Form 3054 executed by deceased purportedly designating them as beneficiaries of his policy.

Defendants Coleman and Crick, however, did not offer any oral testimony in the trial of this cause, but rather rested on the record at the conclusion of the case presented by defendant Aleene T. King and the presentation of the documents noted above.

For the reasons hereinafter stated in detail, judgment should be entered for defendant King because:

(1) The defendants Coleman and Crick relied upon a claimed divestiture of the parents as statutory beneficiaries of the insured's Servicemen's Group Life Insurance by a beneficiary designation on DA Form 3054 which was defective in that it was not executed in accordance with the policy and the governing Army Regulations; and

(2) The defendants Coleman and Crick failed to produce evidence to show that the insured, in using the unauthorized DA Form 3054, intended to change the beneficiaries by divesting the statutory beneficiaries of their right to the proceeds of his Servicemen's Group Life Insurance; and

(3) The defendants Coleman and Crick failed to produce evidence to show that it was not practicable for the insured to use the correct form to designate them as the beneficiaries of his life policy, as required by the governing regulations.

The order of preference of beneficiaries in respect of Servicemen's Group Life Insurance is found in Section 770 of Title 38, United States Code, which reads as follows:

"First, to the beneficiary or beneficiaries as the member may have designated by a writing received in the uniformed services prior to such death;

"Second, if there be no such beneficiary, to the widow or widower of such member or former member;

"Third, if none of the above, to the child or children of such member or former member and descendants of deceased children by representation;

"Fourth, to the parents of such member or former member or the survivor of them;

"Fifth, if none of the above, to the duly appointed executor or administrator of the estate of such member or former member;

"Sixth, if none of the above, to other next of kin of such member or former member entitled under the laws of domicile of such member or former member at the time of his death." (Emphasis added.)

In respect of change of beneficiary with general reference to Government life insurance policies, Section 749 of Title 38, United States Code, provides as follows:

"Subject to regulations, the insured shall at all times have the right to change the beneficiary or beneficiaries of a United States Government life insurance policy without the consent of such beneficiary or beneficiaries."

Pursuant to the above statute, the following regulation was issued by the Administrator:

"The insured shall have the right at any time, and from time to time, and without the knowledge or consent of the beneficiary to cancel the beneficiary designation, or to change the beneficiary, but a change of beneficiary to a person not within the permitted class of beneficiaries set forth in § 8.46 shall not be effective as to insurance which matured prior to August 1, 1946. A change of beneficiary to be effective must be made by notice in writing signed by the insured and forwarded to the Veterans' Administration by the insured or his agent, and must contain sufficient information to identify the insured. Whenever practicable such notices shall be given on blanks prescribed by the Veterans' Administration. Upon receipt by the Veterans' Administration, a valid designation or change of beneficiary shall be deemed to be effective as of the date of execution: Provided, That any payment made before proper notice or designation or change of beneficiary has been received in the Veterans' Administration shall be deemed to have been properly made and to satisfy fully the obligations of the United States under such insurance policy to the extent of such payments." 38 C.F.R. § 8.47-1. (Emphasis added)

As stipulated and shown in the record, decedent made his designation of defendants Pamela Nicholson Coleman and Judy C. Crick as principal beneficiaries of the life insurance policy (to receive $5,000 each) on DA Form 3054, entitled "Election of Amount, Beneficiary Designation and Settlement Options for Servicemen's Group Life Insurance" on November 28, 1967. Army Regulation No. 608-2, "Personal Affairs, Servicemen's Group Life Insurance," provides as follows at paragraph 24(b) (3):

"It is emphasized that a beneficiary designation for death gratuity and unpaid pay and allowances on DA Form 41 (Record of Emergency Data) does not constitute a beneficiary designation for Servicemen's Group Life Insurance. VA Form 29-8286, Servicemen's Group Life Insurance (Part I) will be used to designate beneficiaries for this insurance. The form will be prepared in triplicate and copies will be distributed in accordance with paragraph 20 of this regulation." (Emphasis added.)

Further, it is provided in paragraph 24 (a) of the same regulation that, in the absence of any designation of beneficiary:

"The amount of insurance in force on the date of death will be paid to the person or

...