Sieroty v. Silver

• Decision Date: 04 December 1962
• Citation: 58 Cal.2d 799,26 Cal.Rptr. 635,376 P.2d 563
• Parties: , 376 P.2d 563 * Jullan M. SIEROTY and Alan Sleroty, as Executors of the Estate of Marc Silver, Deceased, Cross-Complainants and Appellants, v. Ethel E. SILVER, Cross-Complainant and Cross-Appellant. L. A. 26400.
• Court: California Supreme Court

Page 635

26 Cal.Rptr. 635

58 Cal.2d 799, 376 P.2d 563

^*

Jullan M. SIEROTY and Alan Sleroty, as Executors of the Estate of Marc Silver, Deceased, Cross-Complainants and Appellants, v. Ethel E. SILVER, Cross-Complainant and Cross-Appellant.

L. A. 26400.

Supreme Court of California, In Bank.

Dec. 4, 1962.

S. V. O. Prichard, Hollywood, for cross-complainants and appellants.

Robert I. Kronick, Los Angeles, for cross-complainant and cross-appellant.

McCOMB, Justice.

Occidental Life Insurance Company of California filed a suit in interpleader for the purpose of obtaining an adjudication as to who was entitled to the proceeds of two policies of life insurance.

The named defendants are the surviving widow of the deceased insured and the executors of his will.

After depositing the proceeds of the policies with the court, plaintiff insurance company was discharged from further participation in the matter.

Facts: The executors filed a cross-complaint, in which they claimed they were entitled to the proceeds, totaling $90,062.05, because at the time of the death of the insured they were the named beneficiaries of the policies.

The widow also filed a cross-complaint. In the first count she claimed that she was entitled to the entire proceeds as her separate property, on the ground that she had originally been designated the beneficiary under each policy; that the policies constituted community property of the decedent and herself; and that the attempted changes of beneficiary were made without her knowledge or consent and without the receipt of any consideration and were therefore without force and effect.

In additional counts she claimed that she was entitled to the entire proceeds on the ground that the decedent either was incompetent at the time he executed the changes of beneficiary or had agreed in 1946 to take out the policies and make her the sole and irrevocable beneficiary.

The executors contend that the policies were the separate property of the decedent and, in the alternative, assuming they were community property, that section 202 of the Probate Code requires that the proceeds be delivered to them, to be administered in the decedent's estate.

The executors objected to the introduction of any evidence on the first count of the widow's cross-complaint, on the ground that the superior court sitting in probate has exclusive jurisdiction to determine what constitutes community property; but the objection was overruled.

The trial court found that the decedent was competent to execute the changes of beneficiary and that he had not agreed to obtain the insurance and make his wife the sole and irrevocable beneficiary thereof, but found that the premiums had been paid with community funds and that the proceeds constituted community property and awarded the widow half the proceeds as her separate property. The other half was awarded to the executors. The court ordered the funds disbursed in accordance with its judgment. Both the widow and the executors appeal.

Questions: First. Did the superior court not sitting in probate have jurisdiction to determine the controversy?

Yes. The widow claimed that the entire proceeds constituted her separate property. Accordingly, she was claiming adversely to the estate, not in privity with it; and since she was not a personal representative of the estate, the superior court sitting in probate would not have had jurisdiction to decide the claim. (Merola v. Superior Court, 125 Cal.App.2d 1, 4(2) (3), 269 P.2d 664 (hearing denied by the Supreme Court).) Therefore, it was a matter in which only the superior court not sitting in probate had jurisdiction. (See Ludwicki v. Guerin, 57 Cal.2d 127, 130(1), (2), 17 Cal.Rptr. 823, 367 P.2d 415; Schlyen v. Schlyen, 43 Cal.2d 361, 374(16) et seq., 273 P.2d 897; Wells Fargo Bk. etc. Co. v. Superior Court, 32 Cal.2d 1, 12, 193 P.2d 721; Medeiros v. Cotta, 130 Cal.App.2d 740, 746(2) et seq., 279 P.2d 814; Colden v. Costello, 50 Cal.App.2d 363, 368(2) et seq., 122 P.2d 959 (hearing denied by the Supreme Court); McCaughna v. Bilhorn, 10 Cal.App.2d 674, 684(5), 52 P.2d 1025 (hearing denied by the Supreme Court).)

Second. Did the trial court properly award the widow half the proceeds of the policies as her separate property?

No. The interest of the beneficiary of a life insurance policy designated by an insured who has the right to change the beneficiary is not a vested right but a mere expectancy, and the insured may change the beneficiary at any time during his lifetime. (Grimm v. Grimm, 26 Cal.2d 173, 175(3), 157 P.2d 841.)

In the present case, the decedent was under no obligation to retain his wife as the named beneficiary of the policies. He had a right to revoke the inchoate gift to her that he made in 1964, when he first designated her as the beneficiary. The changes of beneficiary achieved that revocation.

Nevertheless, a policy of insurance on a husband's life is community property when the premiums have been paid with community funds; and even though the insurance contract gives the husband the right to change the beneficiary without the wife's consent when she is designated as such, any such change without her consent and without a valuable consideration other than substitution of beneficiaries is voidable, and after the husband's death the wife may maintain an action for her community share in the proceeds of the policy. (Tyre v. Aetna Life Ins. Co., 54 Cal.2d 399, 402(1), 404(6), 6 Cal.Rptr. 13, 353 P.2d 725; Grimm v. Grimm, supra, 26 Cal.2d 173, 175(2), 157 P.2d 841; New York Life Ins. Co. v. Bank of Italy, 60 Cal.App. 602, 606, 214 P. 61 (hearing denied by the Supreme Court).)

On the death of the husband, however, all the community property is subject to administration in his estate and is chargeable with a proportionate part of the debts and the expenses of administration. (Prob. Code, §§ 202, 300 ¹; Estate of Coffee, 19 Cal.2d 248, 250 et seq., 120 P.2d 661; Estate of Manley, 169 Cal.App.2d 641, 644(1), 337 P.2d 487; Estate of Algee, 158 Cal.App.2d 691, 697, 323 P.2d 221; Chase v. Leiter, 96 Cal.App.2d 439, 457, 215 P.2d 756.)

As we said in Estate of Coffee, supra, 19 Cal.2d at page 252(3), 120 P.2d at page 664: '* * * the portion of the community property which belongs to the wife is the one-half which remains after the payment of the husband's debts and the expenses of administration apportioned between the community and separate property in accordance with the value thereof, and this is true even when the husband's share of the community, together with his separate property, is ample to pay those debts and expenses.'

Furthermore, a decree of distribution by the superior court sitting in probate is indispensable as a muniment of a widow's title to property which comes to her as survivor of the community. (Estate of Nash, 132 Cal.App.2d 233, 237(2), 282 P.2d 184; Colden v. Costello, supra, 50 Cal.App.2d 363, 370, 122 P.2d 959.

Accordingly, after a determination, supported by substantial evidence, that all the premiums on the policies had been paid during the marriage from community funds and that the proceeds constituted community property, in which the widow had a one-half interest, the trial court should have awarded possession of the proceeds to the executors, in accordance with the provisions of section 202 of the Probate Code. ²

The widow contends that the trial court correctly ordered that half the proceeds be paid directly to her, citing Travelers Ins. Co. v. Fancher, 219 Cal. 351, 356(3), 26 P.2d 482. In that case it was held that a surviving wife was entitled to have her community property interest in the proceeds of certain policies of insurance on the life of her deceased husband, under which policies other persons had been named beneficiaries, paid directly to her. The effect of section 202 of the Probate Code, however, was apparently not considered. To the extent that the holding in Travelers Ins. Co. v. Fancher, supra, is inconsistent with our holding here, it is overruled.

Third. Was the evidence sufficient to support the findings of the trial court (a) that the decedent was competent to execute the changes of beneficiary on the policies, and (b) that it is not true that the decedent agreed to obtain additional life insurance...