Westphal v. Kansas City Life Ins. Co.

• Decision Date: 26 February 1942
• Docket Number: No. 7824,7825.,7824
• Parties: WESTPHAL et al. v. KANSAS CITY LIFE INS. CO. (two cases).
• Court: U.S. Court of Appeals — Seventh Circuit

126 F.2d 76 (1942)

WESTPHAL et al. v. KANSAS CITY LIFE INS. CO. (two cases).

Nos. 7824, 7825.

Circuit Court of Appeals, Seventh Circuit.

February 5, 1942.

Rehearing Denied February 26, 1942.

Arnold C. Otto, of Milwaukee, Wis., for appellant Westphal.

Bernard V. Brady, A. McC. Schlesinger, and John W. O'Boyle, all of Milwaukee, Wis. (Olwell & Brady, of Milwaukee, Wis., of counsel), for Kansas City Life Ins. Co.

Before EVANS, KERNER, and MINTON, Circuit Judges.

KERNER, Circuit Judge.

These appeals are from a judgment entered upon a jury verdict for the plaintiffs in their action to recover as beneficiaries on three insurance policies issued by the defendant upon the life of F. Gilbert Westphal. Westphal disappeared on November 5, 1931, and the jury found that he died before any of the lapse dates of the three policies — the earliest lapse date being 21 days after his disappearance. The Insurance Company raises as errors (1) the failure of the court to grant defendant's motions for a directed verdict and judgment notwithstanding the verdict, (2) the court's striking the Company's amendment to its answer setting up an alternative defense, and (3) certain rulings on the evidence. The insured's widow premises her appeal upon the theory that the trial court wrongfully allowed certain deductions from the face amounts of the policies as indebtedness of the insured to the defendant.

The important and controlling facts are not in dispute. On the date of his disappearance, F. Gilbert Westphal was a man of 33 years of age and had been married for ten years. He lived with his wife and three daughters in Shorewood, a suburb of Milwaukee, and was employed as cashier of the defendant Insurance Company's Milwaukee office. His salary at the time was $175 a month and he earned on the average an additional $110 a month from commissions on the sale of life insurance. Westphal came from a splendid family. His father and two of his brothers are ministers. A third brother is a physician and surgeon in the United States Public Health Service. The fourth brother is an aeronautical engineer. He had a married sister. With all of his family he had been on friendly terms and had visited and corresponded with them.

To all who knew him F. Gilbert Westphal seemed a wholesome and industrious man "filled with friendliness, love, duty, and devotion." At an early age he joined the church. When he attended college, he earned his expenses and made the highest grades; he sang in the Glee Club and was elected to a student office of honor; on occasions he would preach in the pulpits of absent ministers; and he was in the student army training corps. After leaving college, he held positions of financial trust as an employee of a bank and as treasurer of the school board. He did not speculate on the market and he and his wife did not live in an extravagant manner.

But for quite some time before his disappearance he had methodically embezzled the premium moneys paid to him as cashier of the defendant's Milwaukee office by falsifying the daily reports to the home office. The Company permitted an insured to pay his premiums on either an annual, semi-annual, quarterly, or monthly basis without advance notice as to which course he would pursue at the time. Westphal would collect an annual or semi-annual premium, but would deposit and falsely report a quarterly or monthly premium. Two weeks before the disappearance, the traveling auditor noticed an apparent irregularity in that there was a difference between a premium receipt of a policy holder and the amount that Westphal had reported as collected on the policy. The auditor decided to refer this matter to the auditor at the home office. At that time, the auditor also found Westphal's personal check for $340 in the cash box. This was contrary to the rules of the Company, but Westphal explained it resulted from his having to pay a large automobile repair bill.

Westphal kept accounts in two banks at Chilton, Wisconsin, both of which were overdrawn at the time he disappeared. Two weeks before his disappearance, he borrowed on his note $400 at the State Bank of Chilton. On the day he left, this note was unpaid and on the very day of his disappearance, he went unaccompanied to a Milwaukee bank and cashed his check for $450 drawn on the State Bank of Chilton. The drawee bank subsequently dishonored the check for lack of funds.

Although the day before his disappearance he was in good spirits and that evening had taken his wife and eldest daughter downtown, he became ill after returning home and had to take soda. But on November 5, the day of his disappearance, he kissed his wife and said goodbye in the usual manner before leaving for the office. Later on that morning, Westphal telephoned his wife and told her he had to go to Racine, and could not drive her to a friend's home that noon. Mr. Madden, the Company's agent, called up Mrs. Westphal later that day and told her that her husband had "flown the coop." Westphal left two letters, one to his wife and the other to Madden, admitting the misappropriations. In his letter to Mrs. Westphal he said:

"My Dear:

"When you receive this letter you will know that I am gone, not to return until I prove before myself and my God that I am worthy of you and our three beautiful daughters.

"I know that you cannot stand a shock such as this is going to be and still remain with me as my wife. I am therefore removing all danger of my presence annoying you by quietly slipping away.

* * * * * *

"Goodbye Sweetie and may your loved ones be kinder to you than I have been is the wish of

"Your Tubbie.

"There is a chattel on the car. (The car is in the garage). Payments are due on the 21st of each month at the Wisc. Acceptance Corp. I long to kiss you but dare not. I love you.

"F. G. W."

In his letter to Madden he wrote:

"My Dear Lou:

"I feel that this is going to hurt you keenly, yet I must tell you that I have not been faithful to the trust you have placed in me. You have always been so fine to me — much better than I deserved.

"`Buzz' Hale was right — I have used premiums paid in to the Company. No policies have been allowed to lapse, and the Company has received six percent interest on all the money I have used.

* * * * * *

"I myself am going to try to go to some town in which I can get an absolutely new start and try to make good — or I will pass out in the attempt.

"There seems to be no other way out, and I feel that I cannot look you in the eye again until my self-respect and my innermost self tells me that I can come to you with clean hands and in a position to repay all that I am in arrears.

"Most sincerely yours "Gil."

Westphal was last seen at about 7:30 P. M. on November 5, 1931, when he put his automobile in the garage a block from his home and left with a valise in his hand. Since that time, he has not returned and no tidings of him have been received by wife, relatives, or friends.

More than seven years have elapsed since the insured was last seen and heard from. With the stated facts before them, the jury found that Westphal was deceased and that he had died before the lapse periods of his three insurance policies. The jury necessarily fixed the time of death as sometime within twenty-one days after the disappearance.

In the view that we take of this case, it will only be necessary to discuss the contention that the District Court erred in overruling defendant's motion for a directed verdict.

In support of the judgment of the District Court, plaintiffs contend that under the Wisconsin decisions the time of death during the seven years' absence of Westphal was a jury question to be decided from all the facts and circumstances. Delaney v. Metropolitan Life Ins. Co., 216 Wis. 265, 257 N.W. 140; Whiteley v. Equitable Life Assurance Society, 72 Wis. 170, 39 N.W. 369; and White v. Brotherhood of Locomotive Firemen, 165 Wis. 418, 162 N.W. 441.

The presumption of death is based on the belief that persons who are absent from their homes will naturally return or at least communicate with their relatives and friends at home. In Wisconsin, the presumption of death arises from a seven-year absence without tidings where, ordinarily, the absent individual would have communicated if he had been alive, Hansen v. Central Verein, etc., 198 Wis. 140, 223 N.W. 571, 64 A.L.R. 1284 and Egger v. Northwestern Mutual Life Ins. Co., 203 Wis. 329, 234 N.W. 328, and when the presumption arises, a question of fact is presented for the jury to decide as to whether the absent individual was in fact deceased. Hansen v. Central Verein, etc., and Egger v. Northwestern Mutual Life Ins. Co., supra. This presumption of death however has no evidentiary effect on the issue of whether the absent person was dead or alive at any particular time within the seven-year period, and the burden of proving that the absent individual died at any particular time rests upon the party asserting that fact. Dobelin v. Ladies of Maccabees, 171 Wis. 54, 174 N.W. 897; Whiteley v. Equitable, etc.; and Delaney v. Metropolitan, etc., supra.

Implicit in every case involving the seven-year presumption of death is the ultimate question of the determinative weight to be given to different inferences. Although the Wisconsin courts refer to the choice as a question of fact, the very pleading of the presumption demonstrates that the necessary nature of the finding is one of inference and not of fact. It therefore seems clear that the ordinary formulae concerning the province of judge and jury are of little value in a case of this nature. Unmistakably, there are two inferences made from the evidence. The important question is whether the one made by the jury was a legitimate one under the decisions of the Wisconsin courts. Assuming the facts adduced would justify an inference of death after the seven years' silence, Hansen case, supra, it is quite another matter to say that the same facts justify a jury to...