Succession of Videau

• Decision Date: 03 April 1967
• Docket Number: No. 2501,2501
• Citation: 197 So.2d 655
• Parties: Succession of Irene SELLARS, wife of Jules L. VIDEAU.
• Court: Court of Appeal of Louisiana — District of US

Page 655

197 So.2d 655

Succession of Irene SELLARS, wife of Jules L. VIDEAU.

No. 2501.

Court of Appeal of Louisiana, Fourth Circuit.

April 3, 1967.

Rehearing Denied May 1, 1967.

Writ Refused June 9, 1967.

Deutsch, Kerrigan & Stiles, Marian Mayer Berkett, New Orleans, for Jules L. Videau, testamentary executor, appellant.

Kepper, Moulin & Kepper, Stewart J. Kepper, New Orleans, for Mrs. Valda Videau Farrell, appellee.

Before McBRIDE, JANVIER and BARNETTE, JJ.

BARNETTE, Judge.

This appeal is from a judgment maintaining an opposition to the descriptive list of succession property filed by the testamentary executor, in respect to two items in dispute, and dismissing the opposition in respect to two other items in dispute.

The decedent Mrs. Irene Sellars Videau was the third wife of Jules L. Videau. Two daughters were born of their marriage, both of whom have survived their mother. The opponent Mrs. Valda Fay Videau, Farrell, Jr., wife of Thomas C. Farrell, Jr., is one of these daughters and is therefore a forced heir.

Mr. Videau, the surviving husband of decedent and the testamentary executor of the succession, has appealed from the judgment insofar as it is adverse to him in the two respects mentioned. Mrs. Farrell answered the appeal in this court and prays for affirmance of the judgment in the two respects favorable and for reversal in the two respects in which it is adverse to her. In our reference to them in this opinion, we will avoid the use of 'appellant' and 'appellee' to prevent confusion.

Mrs. Videau left an olographic will which was presented for probate, part of which included the following bequest:

'I bequeath to my said husband, Jules L. Videau, the usufruct of my entire estate for his life, without bond. I bequeath the naked ownership of so much of my estate as shall constitute the legitime allowed her by law to my daughter Valda Fay (Mrs. Farrell); and I bequeath the entire remainder of my estate to my daughter Marion Sellars (Mrs. Johnston).'

The items in dispute are: (1) six insurance policies on the life of Mr. Videau, assigned to and owned by Mrs. Videau at the time of her death; (2) thirteen United States War Savings Bonds, Series E, issued to Jules L. Videau or Mrs. Irene Sellars Videau; (3) $51,938.28 claimed by Mr. Videau as a debt of the community due and owing his separate estate; and (4) a retirement annuity of Mr. Videau under contract with Aetna Insurance Company.

We will dispose of each of these issues in the order mentioned above.

LIFE INSURANCE POLICIES

At the time of her death, Mrs. Videau owned six insurance policies on the life of her husband. Five of these were issued by The Massachusetts Mutual Life Insurance Company, the other was issued by The Equitable Life Insurance Society of the United States. Jules L. Videau is the insured; his wife, Irene Sellars Videau, or her executor or administrator (in five policies) or her legal representative (in one policy), the owner; Mrs. Videau was named the primary beneficiary and her daughter Mrs. Marion V. Johnson, the alternate beneficiary. The right to change beneficiaries was specifically granted to the owner, Mrs. Videau, by a rider attached to each of the policies. All rights and privileges concerning the policies (which would include surrender for cash value) were also granted to the owner, Mrs. Videau.

Mr. Videau, as testamentary executor, contends that the life insurance policies owned by Mrs. Videau at the time of her death, but payable to a named alternate beneficiary, do not become part of the decedent's estate. His argument is based mainly on the wording of LSA-R.S. 22:647, subd. A which states:

'The lawful beneficiary, assignee, or payee, including the insured's estate, of a life insurance policy or endowment policy heretofore or hereafter effected shall be entitled to the proceeds and avails of the policy against the creditors and representatives of the insured and of the person effecting the policy or the estate of either, and against the heirs and legatees of either such person, and such proceeds and avails shall also be exempt from all liability for any debt of such beneficiary, payee, or assignee or estate, existing at the time the proceeds or avails are made available for his own use.'

It is contended by the executor, Mr. Videau, that the exemption of 'proceeds and avails' in favor of the beneficiary includes the cash surrender value of the policies. The question then presented is whether the cash surrender value is considered to be 'proceeds and avails.' Numerous cases are cited in support of the argument that a beneficiary takes the proceeds or avails of a life insurance policy free from the claims of policy owners, heirs, creditors, etc.

As final support for his argument, he contends that LSA-R.S. 22:647, subd. C makes it clear that this exemption applies, especially if the owner should predecease the person whose life is insured. LSA-R.S. 22:647, subd. C provides in part as follows:

'The provisions of Sub-section A and B of this Section shall apply:

(2) Whether or not the policy or contract is made payable to the person whose life is insured, to his estate or to the estate of an annuitant if the beneficiary, assignee or payee shall predecease such person; except, that this Sub-section shall not be construed so as to defeat any policy or contract provision which provides for disposition of proceeds in the event the beneficiary, assignee or payee shall predecease the insured or annuitant.'

In answer to these contentions it is our opinion that the exemption provided under LSA-R.S. 22:647 does not apply in the case before us. Where the owner of a life insurance policy reserves the right to change beneficiaries, the right of a named beneficiary to the proceeds or avails does not vest until the death of the insured. Pollock v. Pollock, 164 La. 1077, 115 So. 275 (1927); Dorsett v. Thomas, 152 La. 60, 92 So. 734 (1922). Here the owner, the deceased, had the contractual right to change beneficiaries, and the rights of the secondary beneficiary to the proceeds or avails were dependent upon the will of the owner. The proceeds of the policies will not become available and, hence, will not vest with the beneficiary until the death of the insured who is still alive. While Mrs. Johnston is the named beneficiary at present, she has no assurance that she will be at the time of the insured's death. Thus, Mr. Videau's argument on this issue based on LSA-R.S. 22:647, subd. A has no validity since the secondary beneficiary has no vested interests in the policies at the present time. The many cases cited by him supporting this argument are without value since in all such cases the insured party was dead at the time of the claim and the right to proceeds had vested in the beneficiary.

Mr. Videau tries to draw a distinction between 'proceeds' and 'avails,' and claims that 'avails' includes cash surrender value. We think no distinction can be made between 'proceeds' and 'avails.' The two words are synonymous both in their dictionary meaning and their use in other jurisdictions. Although no Louisiana jurisprudence could be located which specifically so holds, other jurisdictions have held the two words to mean the same. Sand v. Merchant Nat. Bank & Trust Co., 81 N.W.2d 748 (1957); In re Coughlin Estates, 205 N.W. 14, 53 N.D. 188 (1925), quoting Webster, New International Dictionary; Black, Law Dictionary (4th ed. 1951).

We must reject Mr. Videau's interpretation of the meaning of LSA-R.S. 22:647, subd. C. We believe it to mean that, should the beneficiary predecease the insured and no new beneficiary is named, the exemption of LSA-R.S. 22:647, subd. A shall still apply even though the proceeds go to the estate of the beneficiary. However, should the owner by contract have provided an alternate beneficiary, the alternate beneficiary will get the proceeds free from all claims by the estate or heirs of the primary beneficiary. Such is the case here. A secondary beneficiary was named and she will get all the proceeds when the insured dies, provided the owner of the policy does not change beneficiaries or surrender the policies for their cash value in the interim. The authority to do this is expressly reserved to the owner, which is now the estate of Mrs. Videau.

Therefore, we hold that the six insurance policies, worth approximately $48,000, are to be included in the estate of Mrs. Irene Sellars Videau. Upon the assignment to her of these policies by her husband, they became her separate property and the right to the cash surrender value of these policies vested in her as of that time. At the time of her death this right to the cash surrender value vested in her estate, and must be included for the computation of the value of that estate.

UNITED STATES WAR SAVINGS BONDS

During the lifetime of Mrs. Videau, she and her husband acquired with community funds the United States War Savings Bonds described in items 10 and 10a of the descriptive list of the succession property. These bonds were purchased and registered in the names of Jules L. Videau Or Mrs. Irene Sellars Videau. They are of the type generally referred as to co-owner bonds. Under Federal Treasury Regulations, the survivor will be recognized as the sole and absolute owner entitled to immediate possession without the necessity of probate proceedings or any other formality. 31 C.F.R. § 315.62. Our courts have recognized this method of transmission or disposition of property as an additional method superimposed upon our laws relative to donations Inter vivos and Mortis causa. Succession of Mulqueeny, 248 La. 659, 181 So.2d 384 (1965); Succession of Gladney, 223 La. 949, 67 So.2d 547 (1953); Winsberg v. Winsberg, 220 La. 398, 56 So.2d 730 (1952); Succession of Mulqueeny, 172 So.2d 326 (La.App.4th Cir. 1965); Succession of Weis, 162 So.2d 791 (La.App.4th Cir. 1964); Succession of Mulqueeny, 156 So.2d 317 (La.App.4th Cir. 1963).

For the reasons fully discussed by ...