Williams v. Williams

Annotate this Case

121 S.E.2d 536 (1961)

255 N.C. 315

Florence H. WILLIAMS v. Alice H. WILLIAMS.

No. 28.

Supreme Court of North Carolina.

September 20, 1961.

*537 McMullan, Aydlett & White, Frank B. Aycock, Jr., Elizabeth City, for plaintiff appellant.

John H. Hall, W. W. Cohoon, Elizabeth City, for defendant appellee.

DENNY, Justice.

It is provided in 38 U.S.C.A. § 749, as follows: "Subject to regulations, the insured shall at all times have the right to change the beneficiary or beneficiaries of a United States Government life insurance *538 policy without the consent of such beneficiary or beneficiaries."

In light of the provisions of the foregoing statute, the appellant concedes that since she did not pursue the exclusive procedure provided in 38 U.S.C.A. § 784, she has no claim against the Government of the United States, or any agency thereof, as a result of the adverse ruling of the Veterans' Administration and its Board of Veterans' Appeals awarding the proceeds of the two policies of insurance to the defendant as the proper beneficiary named in such policies. Moreover, such ruling is not open to challenge in a State court. In re Greiner's Estate, 195 Wis. 332, 218 N.W. 437; United States ex rel. Norris v. Forbes, Director, 51 App.D.C. 248, 278 F. 331.

In the absence of an appeal in pursuing one's claim to proceeds of insurance policies issued by the Government of the United States, serviced by the Veterans' Administration, the decisions of the administrator of such administration are final and conclusive and "no other official or any court of the United States shall have power or jurisdiction to review any such decision." 38 U.S.C.A. §§ 211 and 785.

Consequently, the plaintiff in this action seeks to impress a trust on the proceeds of these insurance policies in her favor. She contends that the defendant's right to retain the proceeds from said insurance policies must be determined in light of the terms of the separation agreement and property settlement entered into between the plaintiff and her former husband.

The appellant further contends there is no distinction between the status of the proceeds of United States savings bonds in the hands of the owner or beneficiary therein and the proceeds of Government life insurance policies in the hands of the beneficiary named in such policies. We do not concur in this view.

While Government savings bonds, Series E, are not assignable and the Code of Federal Regulations provides that "if either co-owner dies without having presented and surrendered the bond for payment * * *, the surviving co-owner will be recognized as the sole and absolute owner of the bond, and payment will be made only to him," Tanner v. Ervin, 250 N.C. 602, 109 S.E.2d 460, 462, the weight of authority is to the effect that when the proceeds from such bonds are paid to the owner, such proceeds may be impressed with a trust growing out of a bona fide agreement whereby the holder of such bonds has surrendered his or her interest in the bonds to the co-owner for a valuable consideration. Tanner v. Ervin, supra; In re Hendricksen's Estate, 156 Neb. 463, 56 N.W.2d 711, certiorari denied, Kelly v. Rohn, 346 U.S. 854, 74 S. Ct. 68, 98 L.Ed 368; Tharp v. Besozzi, 128 Ind.App. 73, 144 N.E.2d 430; Chase v. Leiter, 96 Cal. App. 2d 439, 215 P.2d 756; Roman v. Smith, 228 Ark. 833, 314 S.W.2d 225.

Furthermore, the Government of the United States has not, by congressional legislation or otherwise, sought to exempt the proceeds from Government savings bonds in the hands of the owner or beneficiary thereof, from attachment, levy, or seizure under any legal or equitable process after receipt by the owner or beneficiary. The proceeds of a Government life insurance policy have been so exempted by congressional action, 38 U.S.C.A. § 3101, which in pertinent part reads as follows: "(a) Payments of benefits due or to become due under any law administered by the Veterans' Administration shall not be assignable * * * and such payments made to, or on account of, a beneficiary shall be exempt from taxation, shall be exempt from the claim 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."

In the case of Eldin v. United States, D. C., 157 F. Supp. 34, 36, the plaintiff, Caroline *539 S. Eldin, was married to one Zaky Eldin, and the other plaintiffs, Patricia Eldin and Karen Eldin, were children born of the marriage. Zaky Eldin served in the military forces of the United States and there had been issued to him a National Service Life Insurance policy. Caroline S. Eldin was designated as beneficiary and this policy was in full force and effect at the time of the insured's death on 28 February 1954. On 4 January 1946 Caroline and the decedent separated and on 17 January 1946 a separation agreement was entered into. They were later divorced. The divorce decree entered in the State of Illinois ratified and confirmed the separation agreement. In the separation agreement the decedent agreed to name his wife Caroline his irrevocable primary beneficiary in the insurance policy involved and to name their two children as his irrevocable secondary beneficiaries. On 27 August 1946 the decedent married Eleanor A. Eldin and named her as the beneficiary under his policy. Upon the death of the insured, the plaintiff and the second wife filed claims for the proceeds of the policy. The Court said: "Upon maturity the proceeds of a National Service Life Insurance policy are payable to the designated beneficiary. There is no dispute that at the maturity date of the policy the defendant was and still is within the class of permitted beneficiary * * *. At one time plaintiff was the designated beneficiary in the policy but plaintiff was not the designated beneficiary at the time the policy matured. It is the opinion of the Court that plaintiff lost all rights under the applicable Act and regulations when the veteran exercised his right in his lifetime in proper form and in accordance with law to change his beneficiary to the defendant. It is the opinion of the Court that the separation agreement between the veteran and his first wife in which he agreed to irrevocably name his first wife and their children as beneficiaries of the policy and also the divorce decree granted to the first wife approving the terms of the separation agreement, had no force and effect so far as the proceeds of the policy are concerned."

In Kauffman v. Kauffman, 93 Cal. App. 2d 808, 210 P.2d 29, 33, Gertrude A. Kauffman and her husband, Barton H. Kauffman, entered into a separation agreement and property settlement on 27 August 1941. It was agreed between the parties that the wife should remain the beneficiary in the husband's War Risk Insurance policy, but if they should be divorced it was agreed that their two children should be named beneficiaries. Gertrude A. Kauffman secured a final divorce decree from Barton H. Kauffman on 20 October 1942. The children were named beneficiaries in the insurance policy as provided in the separation agreement. However, on 20 November 1942, Barton H. Kauffman married Angie F. Kauffman and on 20 October 1947 the insured changed the beneficiary in his policy to his second wife. The insured died on 28 February 1948. An action was instituted to impress a trust upon the proceeds of the policy. The Court held: "We conclude that the property settlement agreement was an assignment of the proceeds of the policy in question, Chilwell v. Chilwell, 40 Cal. App. 2d 550, 553, 105 P.2d 122; that such an assignment is prohibited by the terms of the Federal Statute, § 454a, supra (now 38 U.S.C.A. § 3101), and is therefore not enforceable against the defendant beneficiary. Lewis v. United States, 3 Cir., 56 F.2d 563; Von Der Lippi-Lipski v. United States, 55 App.D.C. 202, 4 F.2d 168; Bradley v. United States, 10 Cir., 143 F.2d 573; Tompkins v. Tompkins, 132 N.J.L. 217, 38 A.2d 890; Yake v. Yake, 170 Md. 75, 183 A. 555; Robertson v. McSpadden, D.C., 46 F.2d 702; United States v. Williams, 302 U.S. 46, 50, 58 S. Ct. 81, 82 L. Ed. 39."

In Wissner v. Wissner, 338 U.S. 655, 70 S. Ct. 398, 400, 94 L. Ed. 424, after the death of an Army officer, the proceeds of his National Service Life Insurance policy were paid by the Veterans' Administration to his mother, whom he had named as principal beneficiary. His widow, claiming to be entitled, under state community property law, to one-half of these proceeds, obtained a judgment in her favor for that *540 amount in the state courts of California. On appeal to the Supreme Court of the United States, the Court in reversing the lower court, said: "It is plain to us that the judgment of the lower court, as to onehalf 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."

Counsel for the respective parties have filed excellent and exhaustive briefs. However, no case has been cited by the appellant and we have found none, in which the facts are similar to those in the instant case where the judgment has been upheld if contrary to the judgment entered below.

The judgment of the court below is