Wade v. Madding

• Decision Date: 31 May 1930
• Citation: 28 S.W.2d 642,161 Tenn. 88
• Parties: WADE et al. v. MADDING.
• Court: Tennessee Supreme Court

28 S.W.2d 642

161 Tenn. 88

WADE et al. v. MADDING.

Supreme Court of Tennessee.

May 31, 1930

Appeal from Chancery Court, Dyer County; V. H. Holmes, Chancellor.

Suit by Forrest A. Wade and others against Mrs. Lee Butler Madding. From a decree overruling defendant's demurrer to complaint, defendant appeals.

Affirmed and remanded.

W. H Fisher, of Memphis, for appellant.

G. T Fitzhugh and W. F. Murrah, both of Memphis, for appellees.

SWIGGART J.

Clarence F. Butler, a resident of Tennessee at the date of his death was killed in action in France, in 1918, while a soldier in the Army of the United States. In 1930, the administratrix of his estate, appointed in 1926, received from the United States Veterans' Bureau the sum of $3,892, by check payable to her as administratrix, as the balance of war risk insurance on the life of the said Clarence F. Butler.

In 1916, Clarence F. Butler married Mable Lofton Wade, widow of W. A. Wade, mother of the three complainants herein, Forrest A. Wade, Ruby Wade Jensen, and Bobbie Wade. No children were born to Butler and his wife. Mrs. Butler, as widow of the insured, was paid monthly payments of the insurance from the date of the death of her husband until her death, which occurred July 31, 1920. No other payments of the insurance were made, after the death of Mrs. Butler, until the payment to the administratrix in 1930.

The father and mother of Clarence F. Butler predeceased him, and, at the date of his death, the mother of the complainants, as his widow, was entitled to all of his personal estate, under the statutes of descent and distribution of Tennessee. Shannon's Code (all editions), § 4172.

The defendant, Mrs. Lee Butler Madding, is a sister of Clarence F. Butler; and, so far as is disclosed in the bill, Clarence F. Butler had no other brothers or sisters.

The theory of the bill is that, upon the payment of the balance of the war risk insurance to the administratrix of the insured by the government of the United States, it became a part of the personal estate of the insured, for distribution to the persons who were entitled to take his personal estate at the date of his death under the laws of the state of his residence; that the mother of the complainants was entitled to the whole of the personal estate of the insured, as his widow; and that complainants are entitled to represent their deceased mother, as her heirs and distributees, in the distribution of the insured's personal estate.

By demurrer, the administratrix denied any right of the complainants in and to any of the proceeds of the insurance which is the only property of the estate.

The chancellor held the demurrer insufficient and overruled it, granting the defendant a discretionary appeal to this court from his decree.

The bill does not describe the insurance, from which the fund in litigation arose, except to say that the fund was paid by the United States Veterans' Bureau, by its check drawn on the Treasury of the United States "in payment on a certificate of War Risk Insurance." It is charged in the bill that the administratrix should have collected an unpaid balance of $8,892, instead of $3,892. It does not appear from the bill whether the widow of the insured was named in the certificate of insurance as the beneficiary, or whether she became the beneficiary upon the death of the insured, by operation of the acts of Congress under which the certificate was issued. The bill fails to disclose any reason for the absence of any payments under the certificate, after the death of the widow in 1920, until the payment to the administratrix in 1930.

At the date of the death of the widow of the insured, the controlling statute of Congress provided that the remaining monthly installments of the insurance "shall be payable to such person or persons within the permitted class of beneficiaries as would, under the laws of the State of residence of the insured, be entitled to his personal property in case of intestacy; and if the permitted class of beneficiaries be exhausted before all of the two hundred and forty monthly installments have been paid, then there shall be paid to the estate of the last surviving person within the permitted class the remaining unpaid monthly installments." Act Cong. Dec. 24, 1919, 41 Stat. 371, § 15. The "permitted class of beneficiaries," referred to in the statute, includes a sister of the insured. USCA, title 38, § 511. It also includes a stepchild "if a member of the man's (insured's) household." World War Veterans' Act 1924,§ 3, 43 Stat. 607 (38 USCA § 424). The bill in this cause does not, however, aver that complainants, as stepchildren of the insured, were ever members of his household.

If the complainants, as stepchildren of the insured, could be said to have been within the permitted class of beneficiaries, they would nevertheless not be within the class of persons "entitled to his (insured's) personal property in case of intestacy," under the law of the state of the insured's residence. Whether or not the language of the amendment of December 24, 1919, has reference only to persons in being at the date of the death of the designated beneficiary, to whom monthly installment payments had previously been made, it is clear that "the person entitled to the insurance, whether on the death or in the absence of a named beneficiary, must trace his claim directly from the insured." Salzer v. United States (D. C.) 300 F. 764, 766. This the complainants, under the averments of the bill, cannot do.

Upon the death of the widow of the insured, in 1920, the sister of the insured, the defendant herein, was the only living person within the permitted class of beneficiaries who would, under the laws of Tennessee, have been entitled to the personal property of the insured.

If the right to the payment of insurance, awarded by the Veterans' Bureau in 1930, must be determined by the laws of the United States, in force and effect at the date of the death of the widow of the insured, to whom payments of monthly installments had previously been awarded and made, at which time the status of the several parties in this litigation became fixed, it seems clear to us that the sister of the insured is entitled to the fund, to the exclusion of the complainants. White v. United States, 270 U.S. 175, 46 S.Ct. 274, 70 L.Ed. 530; Salzer v. United States (D. C.) 300 F. 764, affirmed (C. C. A.) 300 F. 767; Cassarello v. United States (D. C.) 271 F. 486, affirmed (C. C. A.) 279 F. 396.

It is, however, contended for the complainants, appellees here, that, if the distribution of the funds in the hands of the administratrix is controlled by the statutes of Congress, the only applicable statute is the Act of Congress of June 7, 1924, known as the "World War Veterans' Act 1924," 43 Stat. c. 320, p. 607, as amended by the Act of March 4, 1925, 43 Stat. c. 553, p. 1302.

Section 303 of the Act Cong. June 7, 1924 (43 Stat. 625), above cited, provided for payment of the commuted value of unpaid monthly installments of war risk insurance to the estate of the insured, upon the death of the beneficiary, only if "there be no surviving person within said permitted class." Section 303 was, however, amended by the Act of March 4, 1925, so as to read as follows:

"If no person within the permitted class be designated as beneficiary for yearly renewable term insurance by the insured either in his lifetime or by his last will and testament or if the designated beneficiary does not survive the insured or survives the insured and dies prior to receiving all of the two hundred and forty installments or all such as are payable and applicable, there shall be paid to the estate of the insured the present value of the monthly installments thereafter payable, said value to be computed as of date of last payment made under any existing award: Provided, That all awards of yearly renewable term insurance which are in course of payment on the date of the approval of this Act shall continue until the death of the person receiving such payments, or until he forfeits same under the provisions of this Act. When any person to whom such insurance is now awarded dies or forfeits his rights to such insurance then there shall be paid to the estate of the insured the present value of the remaining unpaid monthly installments of the insurance so awarded to such person: Provided further, That no award of yearly renewable term insurance which has been made to the estate of a last surviving beneficiary shall be affected by this amendment: Provided further, That in cases when the estate of an insured would escheat under the laws of the place of his residence the insurance shall not be paid to the estate but shall escheat to the United States and be credited to the military and naval insurance appropriation. This section shall be deemed to be in effect as of October 6, 1917." 43 Stat. 1310, § 14, USCA, title 38, § 514.

The only authority for the payment of the fund now in litigation to the administratrix of the insured is to be found in the foregoing section enacted by the Act of March 4, 1925. If the right of the sister of the insured to the installments falling due after the death of the widow, conferred by the act of December 24, 1919, is not saved from the application of the amendment of March 4, 1925, we are compelled to hold that the payment to the administratrix constituted the fund an asset of the personal estate of the insured, to be distributed among those persons, or their representatives, who were entitled to the personal estate of the insured at the date of his death. McDaniel v. Sloan, 157 Tenn. 686, 11 S.W.2d 894, 895.

In the case cited, this court said: "It is the duty of the administrator to pay the fund to the party coming...