Ridgway v. Ridgway

• Citation: 454 U.S. 46,102 S.Ct. 49,70 L.Ed.2d 39
• Decision Date: 10 November 1981
• Docket Number: No. 80-1070,80-1070
• Parties: Donna RIDGWAY and Prudential Insurance Company of America, Petitioners v. Hayley D. RIDGWAY et al
• Court: United States Supreme Court

454 U.S. 46

102 S.Ct. 49

70 L.Ed.2d 39

Donna RIDGWAY and Prudential Insurance Company of America, Petitioners

v Hayley D. RIDGWAY et al.

No. 80-1070.

Argued Oct. 7, 1981.

Decided Nov. 10, 1981.

Syllabus

When Army Sergeant Ridgway and his first wife, April, were granted a divorce by a Maine court, the decree, inter alia, ordered Ridgway to keep in force the insurance policies on his life then outstanding for the benefit of the Ridgways' three children. At the time of the divorce, the sergeant's life was insured under a $20,000 policy issued by petitioner Prudential Insurance Co. of America (Prudential) pursuant to the Servicemen's Group Life Insurance Act of 1965 (SGLIA), and April was the designated beneficiary. Subsequently, Ridgway married petitioner Donna, and changed the policy's beneficiary designation to one directing that the proceeds be paid as specified "by law," which meant that under the SGLIA the proceeds would be paid to the insured's "widow," i. e., his "lawful spouse . . . at the time of his death." Thereafter, Ridgway died, survived by Donna as his lawful wife. After April and Donna had both filed claims to the policy proceeds, April instituted suit in Maine Superior Court against Prudential, seeking to enjoin payment of the proceeds to Donna and to obtain a declaratory judgment that the proceeds were payable to the children under the divorce decree. Donna joined the suit as a plaintiff asserting a claim to the proceeds based on the beneficiary designation and her status as Ridgway's widow. April filed a cross-claim, praying for the imposition of a constructive trust for the children's benefit on any proceeds paid to Donna. The Superior Court rejected April's claims, taking the view that a constructive trust would interfere with the operation of the SGLIA and thus would run afoul of the Supremacy Clause. The Maine Supreme Judicial Court vacated the dismissal of April's cross-claim, and remanded with directions to enter an order naming Donna as constructive trustee of the policy proceeds.

Held: The insured's beneficiary designation under the SGLIA policy prevails over the constructive trust imposed upon the policy proceeds by the state court. Pp. 53-63.

(a) As a consequence of the Supremacy Clause, a state divorce decree, like other law governing the economic aspects of domestic relations, must give way to clearly conflicting federal enactments. Here, the provisions of the SGLIA according the insured service member the right freely to designate the beneficiary and to alter that choice at any time by communicating the decision in writing to the proper office prevail over and displace inconsistent state law. Wissner v. Wissner, 338 U.S. 655, 70 S.Ct. 398, 94 L.Ed. 424, controlling; Yiatchos v. Yiatchos, 376 U.S. 306, 84 S.Ct. 742, 11 L.Ed.2d 724, distinguished. Pp. 53-60.

(b) The imposition of a constructive trust upon the insurance proceeds is also inconsistent with the provision of the SGLIA which, in addition to exempting policy proceeds "from the claims of creditors," prohibits any "attachment, levy, or seizure by or under any legal or equitable process whatever," whether accomplished "either before or after receipt by the beneficiary." Any diversion of the proceeds of the policy by means of a court-imposed constructive trust would operate as a forbidden "seizure" of those proceeds. Pp. 60-61.

419 A.2d 1030, reversed.

Stephen P. Beale, Lewiston, Me., for petitioners.

Joshua I. Schwartz, Asst. Sol. Gen., Washington, D. C., for United States as amicus curiae by special leave of Court.

Curtis Webber, Auburn, Me., for respondents.

Justice BLACKMUN delivered the opinion of the Court.

This case presents the issue whether an insured serviceman's beneficiary designation under a life policy issued pursuant to the Servicemen's Group Life Insurance Act of 1965 (SGLIA), Pub.L. 89-214, 79 Stat. 880, prevails over a constructive trust imposed upon the policy proceeds by a state-court decree.

I The Facts

Richard H. Ridgway was a career sergeant in the United States Army. April D. Ridgway was his wife. Richard and April were the parents of three children, Hayley, Laurie, and Brady, all minors. The Ridgways' marriage, however, ended with a divorce granted by a Maine court on December 7, 1977. The state divorce judgment, entered on April's complaint and apparently following property settlement negotiations, ordered Richard, among other things, to pay specified amounts monthly for the support of the three children. App. 13. It also ordered him

"to keep in force the life insurance policies on his life now outstanding for the benefit of the parties' three children. If any of such insurance policies should subsequently be terminated for any reason, defendant shall immediately replace it with other life insurance of equal amount for the benefit of the children." Id., at 14.

Sergeant Ridgway's life was then insured under a $20,000 policy issued by Prudential Insurance Company of America pursuant to a group contract with the Administrator of Veterans' Affairs. At the time of the Ridgways' divorce, April was the designated beneficiary of that policy.

On March 28, 1978, less than four months after the divorce, Ridgway married his second wife, Donna, the individual petitioner here. Six days later, the sergeant, as insured, changed the policy's beneficiary designation to one directing that its proceeds be paid as specified "by law." This referred to the statutory order of beneficiary precedence set forth in 38 U.S.C. § 770(a). See also 38 CFR § 9.16(i) (1980). Under that statutory prescription, the policy proceeds, in the event of Ridgway's death, would be paid to his "widow," that is, his "lawful spouse . . . at the time of his death." 38 U.S.C. § 765(7).

Sergeant Ridgway died on January 5, 1979. Donna survived him and was his lawful wife at the time of his death. Both April and Donna filed claims for the proceeds of the policy. April based her claim, which was on behalf of the children, on the divorce decree. Donna's claim rested on the beneficiary designation and her status as Ridgway's widow.

April thereafter instituted the present suit in the Superior Court for Androscoggin County, Me. As legal representative of the three minor children, she sued Prudential, seeking both to enjoin the payment of the policy proceeds to Donna, and to obtain a declaratory judgment that those proceeds were payable to the children. Donna joined the litigation and was aligned as a plaintiff asserting a claim to the proceeds. April then filed a cross-claim against Donna, praying for the imposition of a constructive trust, for the benefit of the children, on any policy proceeds paid to Donna. Prudential supported Donna's position.

The Superior Court rejected April Ridgway's claims. It acknowledged that the terms of the judgment of divorce and the beneficiary designation were inconsistent.¹ But it felt that the imposition of a constructive trust would interfere with the operation of the federal SGLIA, and that such a disposition would therefore run afoul of the Supremacy Clause, U.S.Const., Art. VI, cl. 2. App. 38-43.

On the ensuing appeal to the Supreme Judicial Court of Maine, the parties stipulated, inasmuch as the policy proceeds by that time had been deposited in court, that the sole issue was "[w]hether or not the presiding justice erred in ruling that, on the basis of the facts found, he could not impose a constructive trust on the proceeds of Sergeant Ridgway's insurance." Id., at 48. That court, sympathetic to April, vacated the Superior Court's dismissal of her cross-claim, and remanded the case with directions to enter an order naming Donna as constructive trustee of the policy proceeds. The Court Clerk, who held the proceeds, was directed to pay them to April for and on behalf of the three children. Ridgway v. Prudential Ins. Co. of America, 419 A.2d 1030, 1035 (Maine 1980).

We granted certiorari, 450 U.S. 979, 101 S.Ct. 1512, 67 L.Ed.2d 813 (1981), to review the important issue presented by the case.

II The Statutory Background

In order to make life insurance coverage available to members of the uniformed services on active duty, particularly in combat zones, Congress in 1965 enacted the SGLIA. See H.R.Rep.No.1003, 89th Cong., 1st Sess., 7 (1965), U.S.Code Cong. & Admin.News 1965, 3232. The impetus for the legislation was the escalating level of hostilities and casualties in the then ongoing Vietnam conflict; this had prompted private commercial insurers to restrict coverage for service members.² See 111 Cong.Rec. 24339 (1965) (remarks of Rep. Teague, Chairman of the House Committee on Veterans' Affairs); see also S.Rep.No.619, 89th Cong., 1st Sess., 3 (1965). The earlier program of federally sponsored life insurance for service members, see National Service Life Insurance Act of 1940, 54 Stat. 1008, and National Service Life Insurance Act of 1958, as amended, 38 U.S.C. § 701 et seq. (NSLIA), placed in effect shortly before the involvement of this country in World War II, had been allowed to lapse after the end of the Korean hostilities when commercial insurance generally became available to service members.³ Accordingly, NSLIA coverage could not be obtained by many service members on active duty in 1965. See 111 Cong.Rec. 24339 (1965) (remarks of Rep. Teague).

Although its purposes and provisions resemble those of the NSLIA in many respects, the SGLIA differs from the predecessor program in that it directs the Administrator of Veterans' Affairs to purchase coverage from one or more qualified commercial insurers instead of offering coverage by the United States itself. See 38 U.S.C. § 766. Thus, under the SGLIA, the Government is the policyholder, rather than the insurer. The Administrator has contracted with petitioner Prudential Insurance Company of America, which now serves as the primary insurer under the SGLIA and which operates, under Veterans' Administration supervision and pursuant to 38...