Source: https://supreme.justia.com/cases/federal/us/338/655/
Timestamp: 2019-04-19 02:59:35+00:00

Document:
An insured under a National Service Life Insurance policy, who was domiciled in California, as was his wife, designated his mother as principal beneficiary and his father as contingent beneficiary. Premiums on the policy were paid from the insured's Army pay. Since his death, the proceeds of the policy were being paid to his mother in monthly installments. The insured's widow brought suit in a California court, alleging that, under the state community property law, she was entitled to one-half the proceeds of the policy. The court gave judgment to the widow for one-half of the payments already received and required payment to her of one-half of all future payments immediately upon receipt thereof.
1. The judgment of the state court was invalid as in conflict with the National Service Life Insurance Act of 1940. Pp. 338 U. S. 656-660.
(a) Under 38 U.S.C. § 802(g), the proceeds of such a policy belong to the named beneficiary, and the judgment below would nullify the soldier's choice and frustrate the purpose of Congress. Pp. 338 U. S. 658-659.
"shall be exempt from the claims of creditors, and shall not be liable to attachment, levy, or seizure by or under any legal or equitable process whatever, either before or after receipt by the beneficiary. . . ."
P. 338 U. S. 659.
(c) A different result is not required by decisions holding exemptions relating to pensions and veterans' relief inapplicable when alimony or the support of wife or children is in issue. Pp. 338 U. S. 659-660.
2. The National Service Life Insurance Act is a valid exercise of the congressional powers over national defense. Pp. 338 U. S. 660-661.
3. No issue under the Fifth Amendment is presented, because the Act precludes any claim by the widow of a "vested" right in the proceeds of the insurance. P. 338 U. S. 661.
89 Cal.App.2d 759, 201 P.2d 837, reversed.
In a suit in a California state court, by the widow of an insured under a National Service Life Insurance policy, to recover one-half the proceeds of the policy, the state court gave judgment for the plaintiff. The District Court of Appeal affirmed. 89 Cal.App.2d 759, 201 P.2d 837. The State Supreme Court denied a hearing. On appeal to this Court, reversed, p. 338 U. S. 661.
We are to determine whether the California community property law, as applied in this case, conflicts with certain provisions of the National Service Life Insurance Act of 1940, [Footnote 1] and, if so, whether the federal law is consistent with the Fifth Amendment to the Constitution of the United States. The cause is here on appeal from the final judgment of a California District Court of Appeal, the Supreme Court of California having denied a hearing. Reading the opinion below as a decision that the federal statute was unconstitutional, we noted probable jurisdiction. 28 U.S.C. § 1257(1).
United States Army. He had enlisted in the Army in November, 1942, and, in January, 1943, subscribed to a National Service Life Insurance policy in the principal sum of $10,000, which policy was in effect at the date of his death. The opinion below indicates that the decedent and appellee were estranged at the time he entered the Army, or shortly thereafter. In January, 1943, he requested his attorney to "get an insurance policy away" from appellee. After six months in the service, decedent stopped the allotment to his wife, and, in September, 1943, expressed the wish that he "could find some way of forcing plaintiff to a settlement and a divorce." It is not surprising, therefore, that, without the knowledge or consent of his wife, the Major named his mother principal and his father contingent beneficiary under his National Service Life Insurance policy. Since his death, the United States Veterans' Administration has been paying his mother the proceeds of the policy in monthly installments.
In 1947, the Major's widow brought action against the appellants in the Superior Court for Stanislaus County, California, alleging that, under California community property law, she was entitled to one-half the proceeds of the policy. Appellants answered that their designation as beneficiaries was "final and conclusive as against any claimed rights" of appellee. The court found that the decedent and his widow had been married in 1930, and, until the date of Major Wissner's death, had been legally domiciled there, and subject to the state's community property laws. Major Wissner's army pay, which was held to be community property under California law, [Footnote 2] was the source of the premiums paid on the policy.
But no claim was made for the premiums; the widow sought the proceeds of the insurance. The court concluded that, consistent with California law in the ordinary insurance case, the proceeds of this policy "were and are the community property" of the widow and the decedent, and entered judgment for appellee for one-half the amount of payments already received, plus interest, and required appellants to pay appellee one-half of all future payments "immediately upon the receipt thereof" by appellees or either thereof. The District Court of Appeal affirmed, 89 Cal.App.2d 759, 201 P.2d 837 (1949), holding that appellee had a "vested right" to the insurance proceeds, and the Supreme Court of California denied a hearing, one judge dissenting.
We are of the opinion that the decision below was incorrect. The National Service Life Insurance Act is the congressional mode of affording a uniform and comprehensive system of life insurance for members and veterans of the armed forces of the United States. A liberal policy toward the serviceman and his named beneficiary is everywhere evident in the comprehensive statutory plan. Premiums are very low, and are waived during the insured's disability; costs of administration are borne by the United States; liabilities may be discharged out of congressional appropriations.
"shall have the right to designate the beneficiary or beneficiaries of the insurance [within a designated class], . . . and shall . . . at all times have the right to change the beneficiary or beneficiaries. . . ."
to one-half of the proceeds, substitutes the widow for the mother, who was the beneficiary Congress directed shall receive the insurance money. We do not share appellee's discovery of congressional purpose that widows in community property states participate in the payments under the policy, contrary to the express direction of the insured. Whether directed at the very money received from the Government or an equivalent amount, the judgment below nullifies the soldier's choice, and frustrates the deliberate purpose of Congress. It cannot stand.
of the Visigoths, [Footnote 3] but we must note that the community property principle rests upon something more than the moral obligation of supporting spouse and children: the business relationship of man and wife for their mutual monetary profit. See de Funiak, Community Property, § 11 (1943). Venerable and worthy as this community is, it is not, we think, as likely to justify an exception to the congressional language as specific judicial recognition of particular needs, in the alimony and support cases. Our view of those cases, whatever it may be, is irrelevant here. [Footnote 4] Further, Congress has provided in the National Service Life Insurance Act that the chosen beneficiary of the life insurance policy shall be, during life, the sole owner of the proceeds.
the congressional powers over national defense, and the means are adapted to the chosen end. The Act is valid. McCulloch v. Maryland, 4 Wheat. 316, 17 U. S. 421 (1819). And, since the statute which made the insurance proceeds possible was explicit in announcing that the insured shall have the right to designate the recipient of the insurance, and that "No person shall have a vested right" to those proceeds, 38 U.S.C. § 802(i), appellee could not, in law, contemplate their capture. The federal statute establishes the fund in issue, and forestalls the existence of any "vested" right in the proceeds of federal insurance. Hence, no constitutional question is presented. However "vested" her right to the proceeds of nongovernmental insurance under California law, that rule cannot apply to this insurance. Compare W. B. Worthen Co. v. Thomas, 292 U. S. 426 (1934); Lynch v. United States, 292 U. S. 571 (1934). See Hines v. Lowrey, 305 U. S. 85 (1938); Norman v. Baltimore & Ohio R. Co., 294 U. S. 240 (1935); Ruddy v. Rossi, 248 U. S. 104 (1918).
54 Stat. 1008, as amended, 38 U.S.C. § 801 et seq. Amendments added in 1946, 60 Stat. 781, do not concern us here.
We assume the correctness of the lower court's statement of state law. See also French v. French, 17 Cal.2d 775, 112 P.2d 235 (1941). The view we take of this case makes it unnecessary to decide whether California is entitled to call army pay community property.
See Lobingier, An Historical Introduction to Community Property Law, 8 Nat.L.Rev. (No. 2), p. 45 (1928); de Funiak, Community Property, c. II (1943).
There are, of course, support aspects to the community property principle, and, in some cases, they may be of considerable importance. Likewise, alimony may not be limited to the amount essential to support the divorced spouse. But we do not think the Congress would have intended decision to turn on factual variations in the spouse's need. If there is a distinction to be drawn, we think it must be based upon a generalization as to the dominating characteristics of a particular class of cases -- alimony cases, support cases, community property cases. The alimony cases have uniformly been decided on that basis.
MR. JUSTICE FRANKFURTER, MR. JUSTICE JACKSON, and I are unable to agree with the majority in this case. The husband's earnings are community property under § 161a, California Civil Code. The wife has a vested interest in one-half of such earnings. United States v. Malcolm, 282 U. S. 792; Bank of America Nat. Trust & Savings Assn. v. Mantz, 4 Cal.2d 322, 49 P.2d 279; Cooke v. Cooke, 65 Cal.App.2d 260, 150 P.2d 514.
What did Congress contemplate by the enactment of this provision? I think the statute presupposes that the beneficiary is the undisputed owner of the proceeds, and that a creditor has sought to reach the fund on an independent claim. Under those circumstances, the remedy is denied, for the statute immunizes the fund from levy or attachment. That is not the case before us. The nature of this dispute is a claim by the wife that she is the owner of a half portion of these proceeds because such proceeds are the fruits of funds originally hers.
"You may take your wife's property and purchase a policy of insurance payable to your mother, and we will see that your defrauded wife gets none of the money."
Certainly Congress did not intend to upset the longstanding community property law of the states where it was not necessary for the protection of the Government in its relation to the soldier or to the integrity of the fund from "attachment, levy, or seizure." These are words of art. They have a definite meaning and usage in the law. This usage is not present here. I find nothing in the section that prohibits the beneficiary from being sued at any time on a matter growing out of the transaction by which the soldier acquired the insurance at least where there is no attempt to attach, levy, or seize the fund. It was the fund Congress was interested in protecting, not the beneficiary. I would affirm.
". . . the only test applied to this problem has been whether the premiums (on a policy issued on the life of a husband after coverture) are paid entirely from community funds. If so, the policy becomes a community asset, and the nonconsenting wife may recover an undivided one-half thereof 'without regard' . . . to the disproportionate size of the premium when compared with the face of the policy."
Mundt v. Connecticut General Life Ins. Co., 35 Cal.App.2d at 421, 95 P.2d at 969.
The Court has sought to distinguish, unsuccessfully I think, the many cases holding that payments received as pension, disability insurance, or veterans' compensation are not exempted from claims for alimony or family support by exemption statutes in the pattern of § 454a. Exhaustive discussions may be found in In re Bagnall's Guardianship, 238 Iowa 905, 29 N.W.2d 597; Schlaefer v. Schlaefer, 71 App.D.C. 350, 112 F.2d 177. See also Gaskins v. Security-First Nat. Bank of Los Angeles, 30 Cal.App.2d 409, 86 P.2d 681; Hollis v. Bryan, 166 Miss. 874, 143 So. 687. Cf. Note, 11 A.L.R. 123, and succeeding annotations.

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