Statement as to Jurisdictional — Wissner v. Wissner

Supreme Court brief1950

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INDEX

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| ; Page

Statement as to Jurisdiction ; pee a |

Statement of the case ‘ / 1

Opinion below i}

. Statutory provision sustaining jurisdietion 3

Statutes involved ! 4

Date of Judgment and application for appeal 5

Cases believed to sustain jurisdiction wees

Raising the federal questions (i

Grounds upow which it is contended the qpes

tions involved are substantial 10

Appendix A—Opinion of Distriet Court of Appeal of

tiie State of ¢ ‘alifornia, Third Appellate. District,

89 A.C.A. 857, 201 Pac. 2d 837 . 44

Appendix B--Memorandum Ruling, Daisy Edda

Johnson vy. Ada Shelton, No, 522648 (Sup. Court,

County of Los Angeles). Not a companion case 26

Appendix C-—Findings of Fact and Conclusions of

~ Law. James v. United: States, No. 6063-BH

. (Southern District of California). Not a com.

panion case | . 3u

Tasur or Cases Crrep -

Anderson v. Carkins, 135 U.S. 483, 485-486

Barton v. United States, et al., No. 5527-WM (8. D.

Cal.) 75 Fed. a aga 708 an, 12

Bennett, Cora Belle ‘Benne tt, Modesta Lee, No.

BOB386 (Sup.Ct. Co. a Lax Angeles) °3n

Bradley v. United States, (C.CLA. 10) 143 Fed. a4

ee RRS 11

Carballo v. NcPina, No. 43410 (Sup. Ct. C o. of Los

Angeles) : - 8a

Cassareéllo v. United States, (C.C.A. 3) 279 Fed. 3962,

398 11

Clearfield Trust Co. v. United States, 318 U. 8. 363,

366 3, 11

—3415 : 7

id INDEX

; 0 Page

Culp v Ww ebster, 25 Cal. App. Supp. 2d 759, 70 Pae.

ad 373... 12

Dodart, Amy Jean v. United. States, et al. No.

R201- WM (S.D. Cal.) ices

Erie Railroad Co. ¥. Tompkins, 304 U.S. 64. Dieta

a Be ? oe : 11

Flournoy v. Weimer, 8321 UL S. 253, “e 35

Garrett v. Moore-McCormack, 317 U.S. 239, 245. = q

Green Bay Canal Co, vy, Patten Paper ¢C o., 172 U.

oS, 66 D

Hayek v. Hayek and the United States of America,

No, 7400-W (S.D. Cal.) on, 12

James Vv. United Stat®s, et al., No. 6061-BH (S.D. |

Cal.) on, 12

Joknson y. Shelton, No. 522, 648 (Sup. Ct. Co. of

Los . Angeles) on, 12

Lawrence v. Shaw, 300 US 7% 11

Lewis v. United States, (c C. . 3) 06 Fed. 2d, 563,

«6G 11

Logan County National Bank v. Townsend, 139 U,

67, 72 | i)

Lynch vy. United States, 292 U. 8. 571, 577-579 11

McGuire v. Massachusetts, 3 Wall. 382, 385 5

Maddox v. » Elliot, 248 Ala. 271, 27 So. 2d 408, 499 im

Missouri,ete. R. Co. v. Haber, 169 ULS. 613, 621-622 D

Murphy v. United States (Dist. Ct. D. Mass.), 5 Fed.

Supp. 583, 584 , 12

Nobles v. Cannell, No. WRT Sup. Ct. Co. of Los |

Angeles on, 12

Pack, Angel L. v. United States and L ily Pack, —

7651-BH (S.D. of Cal.) 3n, 12

Pfudentiabins. Co. v. Cheek, 259 U.S. 530.2 : °

Rhodes v. United States of America, - al., No. S84 »-B

(S.D. Cal.) 3n, 12

Robe rtson Vv. McSpadden, (Dist. Ct. E.D. Ark. N.D.)

46 Fed. “d 702 7 1]

Sizemore v. Stzemore’s Guardian, et al., 222 Ky. 713,

2 S.W. 2d 395, 396-7. > 11

- Sutton’s Ex’rv. Barr's Adm’'r, 219 Ky. 543, 293 S.W.

eee ees, 12

INDEX Hae iii

. Page

Tennessee v. Davis, WOOL S, 257, 262-264 i

Taledo ete. Raidroad Co, vx. ‘Slavi mm, ab U.S. 454, 457 5

Tomiins vo Tomkins, 182 NM. 72 38 Ath 2d 890. 11

Uneted States vo County of Alle Bs ny, 322 U.S. 1743,

TS3 11

United States v. Emory, 314 U.S. 423, 426-27 hil

United States v. Fuller, (CC.A, My OF Ped. 2d 5415 ii

United States v. Ste rlhng, (C.CLA. 2) 12 Fed. ad Y21,

ppd ” ; 1}

United States vo Williams, 302 U.S. 46 11

Washburn v. United States, (Dist. ot D. Mo.) 63

Fed. Supp. 2245, 227 12

We hite Vv. Untitled Stafes, 270 US, 175 10

Wissner x. Wisener, SO ALCLA, 857, 201 Pae. 2d 837,

Opinion of District Court of Appeal of the State

of California, Third: Appellate Dist. 6, 7,8, 9-

Woodward v. United States, (C-C.A. 8) 167 Fed. 2d

7740, 778 . 11

STATUTES Cirep

Civil Code of California:

Section l6la 4

Section 162 4

Section 163 4

Section 164 4

Constitution of California: Article 6, Sees. 4, 4a, 4b,

4e 5

Constitution of the United States:

Arti¢le I, Section § 7, 8, 19, 22

Article VI, Paragraph 2 7,8, 19, 22

Fifth Amendment 8, 19, 22

Fourteenth Amendment 8, 22

Section 3, 49 Statute 609, 38 ULS.C_A. Section 454a, -

Act of August 12, 1935, Chapter 510 4

United States Code, Title 28, Section 1257 (1), (2),

‘ms 3

‘

. “aite*

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iota COURT OF THE UNITED STATES

OCTOBER Porcare, 1949

ST ener ens ret he

LOUISE M. WISSNER axp LEANDOUS H. WISSNER,

Appellants,

Vv.

MARGARET WISSNER, Appellee

STATEMENT AS TO JURISDICTION

Statement of the Case

All facts necessary for the det termination of the questions

involved are admitted in the pleadings (R. 1-7 and 9-12).

Issues. involving property other than the proceeds of the

National Service Life Insurance policy with which we are

concerned have been settled 7 the decision of the court

_ below. |

Appellants are the mother and father of Dr. Leonard O.

Wissner who at the time of his death in Kalai Kunda, India,

on November 14, 1945, was a Major in the United States

my (R. 14, 16). Appellee is his surviving widow (R. 14):

Dr. Wissner and appellee were married at the City of |

Glendale, County of Los Angeles, State of € ‘alifornia, on

the 16th day of August, 1930, and ever since said date and

£3 .™

>> e%

up to the death of Leonard 0. Wissner werg husband: and

wife and at all times subsequent to the. marriage ‘and until -

‘bis death were residents of and domiciled in the’ State of

California (R. 14). : : .

While Dr. Wissner was serving in the army, he applied

for and there was issued to him a National Service Life

Insurance policy No. 14N8656931 (R. 3, 10), the premiums

of which were paid by Dr, Wissner from his army pay (R.

10,17). He designated his mother, Louise M. Wissner, as

principal beneficiary of the policy and his father, Leandous:

H, Wissner, as contingent beneficiary (R. 17). The policy

was in full force and effect at the time of the Doctor's death

(R. 30) and since that time the Doctor's mother, appel-

lant, Louise M. Wissner, has rece rived funds amounting to

$76.70 for each month (R. 18). :

Appellee claims to be entitled to one-half of this pay-

ment gs received each month undgr the community. prop.

erty laws of the State of California] The state courts found

in favor of appellee’s claim and refused to apply the pro-

visions of the federal statutes which control the rights in

the proceeds of National Service Jiife Insurance (R. 19).

The matter is ‘of great importafice to the residents of the

eleven community property statéssince, as the court will

take judicial notice, millions of govetyment life insurance

policies were issued to members of. theJarmed forces in the

first and second: world wars and a majority of the men

taking out these policies are now or will be married and

many may desire to designate someone other than their

wife as beneficiary of their insurance. The decision of

the court below nullifies the clear intent of one soldier in

this regard and thereby seriously cireumscribés the value

of government life insurance to many present and pros.

pective owners.

. 3

To counsels’ knowledge ten cases' involving this question

have been filed.in, the County of Los Angeles alone, and if

the decision of the court below is correct, there will be

_ hundreds of new cases filed because the United States is

paying money every day to the designated beneficiaries of |

these insurance policies and ignoring the claimed rights of

widows in one-haif the payments as community property.

Opinion Below

The Superior Court rendered no opinion; its findings of.

fact, conclusions of law and judgment are at (R. pp.

27-38). The opinion of the Distriet Court of Appeal (Ap.

aaa A) filed January 21, 1949, is reported in 89 A. Ce A..

857, 201° Pacific 2d 837, The Appellate Court de nied re ty

hearing without opinion (R. 36). The Supreme Court of

California denied a hearing without opjaton, (R. 37). "

Statutory Provisions Sustaining J urisdiction

The statutory provisions believed to sustain’ the juria\

diction of this court are Title 28, U. 8.-€ ‘ode, Section 1257

(1) and (2) and under the authority of Prudential Ins. C 0.

v. Cheek, 259 U. 8. 530, 547, and Flournoy vy. Weiner, 321

U.S. 253, 263, the right to a review of the judgment of ~

lower. court by writ of certiorari under: Title ao, U.

Code, Section 1257 (3) is also presented herein.

‘James v. United States, et al., No. 6061-BH (8. D. Cal.}, Horton vy.

United States, et al., No. 5527-WM (8. D. Cal.) 75 Fed. Supp. 763.

Rhodes v. United States of America, et al., No, 5845-B (8S. D. Cal); Hayek

Vv. Hayek and the United States of America, No. 7400-W (S. D. Cal.):

Angel L. Pack ¥. United States of America and Lilly Pack, No. 7651-BHI

(S. D. Cal.) Appealed to the Ninth Cireuit; Nobles ¥. Cannell, No. 502587,

Supenor Court in and for the County and City of Los Angeles; Johnson

¥. Shelton, No. 522648, Superior Court in and for the County and City

of Los Angeles; Carbalio v. McFann, No, 543410, Superior Court in and

for the County and City of Los Angeles; Cora Belle Bemartt v. Modesta

Lee Bennett, No. 503386, Superior Court in and for the County and City

of Los Angeles; Amy Jean Dodart vy. United States, et al., 8201-WM

(S. D. Cal).

_ Statutes Involved

The federal statute, the provisions of which were held

inapplicable and void is Section 3, 49 Statute 609, 38 U. S.

C. & Section 454a, Act of August 12, 1935, Chapter 510;

‘*Payments of benefits due or to become due shall

not be assignable, and such paymelts made to, or on

‘account of, a beneficiary under any of the laws relating

to veterans shall be exempt from taxation, shall be

exempt from the claims of creditors, and shall not be

liable to attachmeni, levy or seizure by or under any

legal or equitable process whatever, either before or

after receipt by the beneficiary * * * "' (Italics ours.) °

The provisions of the state statute which the court applied

and which appellants claim are inapplicable to the’case and

void as applied by the lower court to the property involved

are Civil Code of California, Seétions 162, 163; 164, 161a.

Section 162. ‘‘ All property of the wife, owned by her,

before marriage, and that acquired afterwards by gift,

bequest, devise, or descent, with the rents, issues, and

_ profits thereof, is her separate property. The wife

may, without the consent of her husband, convey her

separate property.’’

Section 163. ‘All property owned by the husband

before ge gy a that acquired afterwards by gift,

bequest, devise, r descent, with the rents, issues, and

profits thereof, is his separate property."

Section 164. ‘‘All other property acquired after

marriage by either husband or wife, or both, including

_real property situated inAhis State and personal prop-

erty wherever situated, heretofore or hereafter acquired

while domiciled elsewhere, which would not have been

the separate property of-either if acquired while

domiciled i in this State, is gommunity property; * * °"’

and wife in community property tone continuance of

the marriage relation are present, existing and equal

interest under the management and control of the hus-

band as is provided in sections 172 and l72a of the

Civil Code. This section shall be construed as defining

the respective interests and rights of husband and wif e

in the community property.”’ °

Date of Judgment and Application for Appeal

The decision and judgment of the District Court of Appeal

- were filed Jannary 21, 1949 (R. 23). A petition for rehear-

ing was denied February 11, 1949 (R. 36).

The District Court of Ajveal is the highest court of the

State in which decision could be had unless a hearing were

granted by the Supreme Court of California at its disere.

tion (Constitution of California, Article VI, Sees. 4, da, 4b,

4c). A hearing was denied March 21, 1949 (R. 37).

The application for appeal was presented May 16, 1949.

Cases Believed to Sustain Jurisdiction of this Court |

Cases believed to sustain the jurisdiction of this court

are:

Logan County National Bank v. Townsend, 19 U. s.

67, 72;

Toledo ete. Railroad Company v. Slari am, : 236 U.S. 454,

| 457;

Green Bay Canal Co. v. Patten Paper Co., 172 U. S.

_ 58, 66; ;

"Missouri etc. R. Co. v. Haber, 169 U. S. 613, 621-622;

McGuire v. Massachusetts, 3 Wall. 382, 385;

Garrett v. Moore-McCormack, 317 U. 8. 239, 245-246:

Flournoy v. Weiner, 321 U. 8. 253, 263;

Anderson v. Carkins, 135 U. S. 483, 485, 486;

Clearfield Trust Co. v. United States, 318 U.S. 363, 366:

United States v. Emory, 3140.8 . 423, 426-427

Raising the Federal Questions

Appellants -raised the federal questions in their answer

as “(R. 18) pressed theny throughout the case, argued them

in all briefs on appeal? and the federal questions were

expressly passed on by the District Court of Appeal of the

State of California Third Appellate District (Appendix A

pages 14-26 herein) (R. 70-84). : :

The Appellate Court in its opinion summarizes appel-

_ lants’ contentions made in their briefs and argument. on

appeal as follows: | | 3

‘Appellants contend, however, that: rights to the

" proceeds of a National Service Life Insurance policy |

must be determined solely by federal statutes. They

cite section 802 (g¢) of Title 38 U.S. C. A. which pro-

vides, regarding such policies: ‘The insurance shall be

payable only to a widow, widower, child (including a

stepchild or an illegitimate child if designated as bene-

ficiary by the insured); parent {including person in

loco parentis. if ‘Aeddataind as beneficiary by the in-

sured), brother or sister of the insured. The insured

shall have the right to designate the beneficiary or

beneficiaries of the insurance, but only within. the

classes herein provided, and shalk, subject to regula-

tions, at all times havé the right to change the benefici-

ary or beneficiaries of such insurance without the con-_

sent of such beneficiary or beneficiaries but only within

the classes herein provided.’ __ oe

“They particularly rely upon section 454a of the

World War Veterans’ Relief Act, Title 38 U.S. C. A.,

which provides in part: ‘Payments of benefits due or

to become due shall aot be assignable, and such pay-

ments made to, or on account of, a beneficiary under —

any of the laws relating to veterans shall be exempt

from taxation, shall -be exempt from the claims of

creditors, and shall not be liable to attachment, levy, or

“2 Under the California practice, an appeal is taken merely by notice

{R. 40) and ‘there is no assignment of errors. The questions presented

on appeal are stated only in the briefs,

“

‘

seizure by or under any legal or equitable process.

whatever, either before or after receipt by the bene-

ficiary.’ (Italics added. )

‘And théy assert that Congress by the foregoing

enactment not only-intended to control the proceeds

of such policies after they were paid to them, but that

its power ‘to do so is found in the provisions of the

United States Constitution, art. I, 4 8, granting to Con-

_ Ress | the power to ‘provide for the common |\Defense

and general Welfare of the United States,’ to ‘rhi

support Armies,’ to.‘provide and maintain) a }

make rules and regulations for the governmpn

regulation of the land and naval forces, and to make

all laws which shall be necessary and proper for carry-

ing inte execution the foregoing powers. They also

rely upon art. VI, paragraph 2, of that Constitution

providing that such ( lonstitetion and the laws: of the

United States which shall be made in pursuance thereof,

shall be the supreme law of the land, and the judges i in

every state shall be bound thereby, anything in the

constitution and laws of any state to the contrary not.

withstanding’’ (Appendix A, pp. 18-19) (R. 75. 76)..

The court below affirmed the judgment of the lower court ;

awarding one-half of the proceeds of the National Seryice .

Life Insurance policy to appellee in these words: °

‘In the case before us the judgment was entered.

against the beneficiaries for one-half of the payments

on the policy which they had already received, and they

were ordered to pay to plaintiff one-half of proceeds

received by them. Such judgment is fully in aceord

with the judgments in the Cooke case and other cases

above cited, and cannot be said to infringe upon any

rights or powers of the United States under the pro-

visions of the United States Constitution relied upon

by appellants’’ (Appendix A, p. 22) (R. 86).

‘The court stated that the question to be decided. on

appeal was:

“The question before us, then, is ‘did Congress

intend, by section 454a, supra, to provide that the

proceeds of a National Service Insurance policy, after

and

payment of sqine to a named beneficiary, are not sub-

ject to the laws of a state governing title to property

within that state, and, if it did so intend, had it the

power under the Constitution to so provide, and thus

divest a wife in California of property rights which

under the laws of this state are community property

in which such wife has a vested interest’’ (Appendix

A., pp. 19-20) (R. 77).

in deciding the question said as follows:

. ‘Reasoning from the foregoing cases, the conclusion ;

seems to follow that, in view of the Fifth Amendment,

_ the federal government had no power to provide, as

it is contended it did in section 454a, swpra, that pay-

ments made to a beneficiary of a NationaWBervice Life

Insurance policy shall be exempt from the clims of the

widow of the deceased insured to the right wested in

her under the laws of this state to one-half of such pay-

ments after their receipt by the beneficiary" (Appendix

A, p. 22) (R. 79). (First italics ours.)

and continued as follows:

**As hereinbefore stated, appellants rely upon art.

VI, paragraph 2, and art. I, see. 8, of the United States

Constitution. But no cognizance is taken of the Fifth.

Amendment, which limits the power of the Federal yov-

ernment as the Fourteenth Amendment limits those

of the states, and prohibits the taking of private prop-

erty without due process of law. It therefore seems to

follow that if,.as decided in Cooke tv. Cooke, supra, a

surviving wife of a decedent who had paid for an insur-

ance policy out of community funds ebuld not be de-

prived of her vested interest in the proceeds of such

policy without violating the provisions of the Four-

teenth Amendment, the Federal government could not

deprive a wife of the deceased veteran of her vested

right to one-half of the proceeds of a National Service

Life Insurance policy paid for out of community funds,

at least after such funds had come into the possession of

“ag

a nained beneficiary other than the wife, without violat

‘ing. the Fifth Amendment*t (Appendix A, po 22) CR.

(TESO) | 3

and the court belaw expressly disagreed with the decision of

a Federal Digtrict Court in this Hate which had held that.

the Federal statutes. relied upon by the appellants con.

trolled the rights in the proceeds of a National Service Life

Insurance policy and that the California community prop-

erty laws were not applicable and in disagreeing with the

Federal Court said :- |

“appellants cite numerous cases which, they contend,

sustain their position; but, with one exception, none

of them: involved divestiture of vested rights in com.

munity property. Assuming, but not deciding, the

vorrectness of such decisions, they do not determine

the issues in thix case, nor is it necessary herein to

determine to what extent the Congress could, under

its limited powers, exercise control over the proceeds

of National Service Life Insurance policies prior to

their receipt by the beneficiaries. The exception above

mentioned is Barton rv. United States, D.C. 75 F.

Supp. 703, in which a widow of a deceased veteran

applied to the Administrator of Veterans’ Affairs to

pay to her a one-half interest in the portion of. the

proceeds of an insurance policy which had resulted

from the payment of premiums out of community funds

of the spouses. The claim was disallowed and pay-

ments were made to the named beneficiary, decedent *s

mother. It may he conceded without affecting the con.

clusion in the ease before us, that the Administrator

properly so acted pursuant to the terms of the poliey,

which was a contract between the United States and the

insured, and that the trial court properly concurred

inchis decision. The Barton decision is not. of course,

conclusive upon this court; and we think Jt j clearly

distinguishable in so far as the necessities of that case

were determined. But if, as some of the language of

the opinion indicates, that court decides) hat because

10.

of the provisions of section 454a, supra, the Congress

intended to and did attempt. to provide that where

premiums on a National Service Life Insurance policy

are paid for out of the community property, in which, :

under the laws of California, a wife has a vested inter-_

est, it must follow that the widow of decedent may be

divested of her comniunity property right by the action

‘of the husband in using such funds for payment of

premiums on such insurance without her knowledge or

conseni, and by naming another than the wife as bene-

ficiary deprive the surviving widow of her vested rights

and render it impossible for her to.enforce her rights

_ against the beneficiaries after their receipt of the pro

_ceeds of the policy, then we must respectfully disagree

with the Barton case’? (Appendix A, pp. 24-25) (R.

» $2-83). ee

Grounds Upon Which It Is Contenjed the Questions

Involved Are Substantial |

The result of the decision of the court below is to take

one-half of the proceeds of a National Service Life Insur-

ance policy, paid and to be paid, to the parents of the de-

_ ceased soldier as he intended them to be paid and to deliver .

them to his widow with whom he was estranged. The result

is reached by applying the state statutes to the determina- |

tion of the controversy and refusing to apply the federal

statutes which created the insurance and which provide:

‘*Payments of benefits due or.to become due shall

not be assignable, and such payments made to, or on

account of, a beneficiary under any of the laws relat-

ing to veterans shall be exempt from taxation, shal] 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 * * *,7"

{a) The court below is in direct conflict with basic

principles of law followed by this Court in: ee

White v. United States, 270 U.S. 175:

Lynch v. United States. tS U.S. 57, DEE OTE;

— U wated States v. County of Ald gheny, 322 U.S. 174,

ee | ee ae ae

Clearfield Trust Co. v. United States, 318 U.S, 36.5,

Lawrence v. Shaw, 300 U.S. 240;

United States v. Williams, 302 U.S. 46;

| Evie Railroad C ompany v. Tompkins, 304 U.S. 64 dicta

78, 79;

United States v. Emory. 314 U.S, 423;

Tennessee vy. Davis, 100 US. seh 262-264.

(b) It is also in direct conflict with eases in other juris-

dictions construing this act. ‘The following among many

others involving government insurance have applied the

rules contained in the federal statutes to dete riiine the

rights of the parties rather than the conflicting state rules.

So far as we are informed, no re stich ge agrees with

the court below: Ta

United States n. Sterling (C. C. A. 2), 12 Fed. 2d 921,

922 ;. : 2 eg

Woodward ». United States (C. CoA. 8), 167 Fed. 2d

774, 778; eee ee ie

~ Cassarello vy. Wnited States.(C, C. A. 3), 279 Fed. 396,

398 ; 4

United States v, Fuller (CC. A. 5), 97 Fed. 2d O41;

Lewis v. United States (C. C. A. 3}, 56 Fed. 2d. 563,

‘564; :

Bradley \Knited States (C.C. A. 10), 143 Fed, 24.573:

Robertson ¥. McSpadden oka Ct. E. D. Ark. N. D.),

46 Fed. 2d 702: | |

Tomkins v. Tomkins, 132 N. J. L. 217, 38 Atl 2d son; |

Sizemore ¥. Sizemore's Ciuardian. ef al.. 222 LY. 713,

2S. W. 2d 395, 396-7;

Maddor vy. Ellict, 248 Ala. 271, 2 27 So. 24 498, 499.

‘statutory rules rather than the conflicting state rules,

12.

Murphy v. Pnited States, (Dist. Ct. D. Mass.) 5 she’

Sapp. S83, S84;

Washiturn v. United States, (Dist € t. W. D. Mo.) 63

Bed. Supp. set, 221 ;

Suttons’ Ex'r vy. Barr's Adm’, 219 Ky. 543, 293 S. LW.

1OG4, « ‘

(e) The decision of, the court below is also in direct con-

fet with cases in California which have applied the federal

° .

“Phe section of the statute involved in the ease at bar was

a consider ed binding and followed in Culp v. Webaste no 5 Cal.

ATR

App. upp. 2d 7 tal ZO Pacifie 2d vi 3.

The decision of the court below is in direct contliet with

eases arising in the State of California involvi ng. commiunity 6

property; Barton v. U. S., 75 Fed. Supp 703—the decision

with whieh the eourt be lows respectfally disagrees, Johnson

\. Sh Tton Na. 922648, Superior Court in and for the County

and City of Los. Angeles, Memorandam Ruling printed

herein, .f Appendix B, pp. 26-30) a decision expressly «is-

agree ime with the court heliw, Jatnes.v, US. , No. 6061-BH,

Southern District of Ca fornia, an unreported case, Find-

ings of Fact and ConeVisions of Law printed herein, (Ap. -

pendix C, pp. 30-34) “Rhodes v. United States, et al., No.

‘OS45-B, Southern District of California; Hayek v. Hayek

_. and United States, No, 7400-W, Southern District of Cali-

“fornia; Angel L. Pack +l ‘niled States and Lally Pack, No.

Sg = eee

THOACBH, Southern District of California appealed to the

U nitesd States Court of Appeals for the Ninth Cireuit' and

hearing there had on April 20, 1949. Nobles v. Connell,

No, 02587, in Which the Superior Court for the County

and (tty of Los Angeles made among others the following

. ° ‘ ; .

aa xe ‘ :

“the cymmunity property laws of the State of Cali.

forma confer yo rights on plaintiff toshare in the pro-

PON

_ Rea Be oa

ceeds of the poliey involved in this detion since it was,

the purpose of the Congress of the United Stes to

provide in all detatis fer the Issaane

tion and svttloment of National Serv ice Life

on a National basis, and state laws or their ‘edwinis

\ tration may not interfere with the carrying out of a

National purpose."’

:* anil arterniniat rn.

SO Cere SOS Ae eeeee rn 8 ee

ay Conclusion

>» We reapectfully submit that this Court haa jurisdiction

of the appeal. |

Dated: May 16, 1949,

Respectfully sabyaitted,

W. Corstrs Coon,

Vernon FY. Gaw ca) ¢

Cantos J. Banger,

, Counsel for Appellants,

— e

14 at

APPENDIX A

IN THE DISTRICT COURT OF APPEAL OF THE

STATE OF CALIFORNIA IN AND FOR THE THIRD

APPELLATE DISTRICT

(Stanislaus)

Civ. No. 1028 « .

Sae. No. UGG

Mancarer V. Wisswer, Plaintiff and Respondent,

Us. ete

Lovisk M. Wissnea and Lraxpous H. Wissner, Defendants

, and Appellants |

Filed: Jan. 21, 1949

~~ "Plaintiff, respondent before this court, brought this

action against Louise and Leandous Wissuer, the parents of

‘plaintiff's deceased husband, Leonard O. Wissner. The

couiplaint alleged that plaintiff and said decedent were

niarried in California in 1930; that at the fime of said mar-

riage decedent had no property and that all property which

he thereafter acquired was community property acquired

by the joint efforts of the spouses; that Leonard died testate

on November 14, 1945, leaving plaintiff as his surviving

widow; that during the marriage the husband Leonard made

transfers of comniunity property to defendants, consisting

of money, stocks, bonds and an automobile, without -plain-

tiff’s knowledge or consent and without consideration, and

as a result plaintiff was defrauded of her community in-

terest in such transferred assets; and that defendants re-

fused to account to plaintiff for such assets and claimed

to be the owners thereof, though they were without right,

title or interest therein or thereto. : .

In a second count plaintiff alleged that decedent had.

served in the army for several years prior to his death, and

had taken out a National Service Life Insurance Policy in

the sum of $10,000.00; that he had paid the premiums

thereon from his salary, which was community property,

byt had, without plaintiff's knowledge or consent, made his

mother principal beneficiary and his father contingent bene

ficiary. thereof; and that since the death of plaintiff's said

husband defendants had received from the proceeds of said

policy $882.05, but refused on demand to pay to plaintiff

any portion thereof. ;

A third cause of action was stated, but it is not involved

in this appeal.

As an answer to plaintiff's first cause of action defend.

ants set up that moneys which decedent bad paid over to

thern had been patd te them to satisfy a debt of decedent

to them for aid and assistance which they had given him

during his attendance at medical school. Ax for the second

cause of action, they conceded that premiums on the life

insurance policy had been paid with community funds, but”

alleged that the proceeds of such policy were payable to

them alone by virtde of the’ federal statutes governing the

issuance of such policies, and that such statutes alone con

trolled, and prohibited plaintiff from claiming any interest

therein.

After trial of the issues findings were made in favor of

plaintiff on the first and second causes of action; and from

the judgment which followed defendants have appealed,

raising two issues, the first, whether the evidence supperts

the finding that the transfers-to defendants were without

consideration; and, second, whether the community prop-

erty law of California gives plaintiff a right to any part of

the proceeds of the life insurance policy.

We are satisfied that there is sufficient evidence to sup

port the conclusion of the trial court on the first count.

Defendants admitted that during his service in the army,

decedent, who was first a captain and then a major, had

paid to them approximatety $3000 in cash, and that hé trans.

ferred to them an automobile which had been purchased in

1939. The moneys turned over were deposited in. a joint

bank account io the names of defendants and decedent,

upon which both decedent and defendant Louise Wissner

drew checks. After Leonard's death the defendants with:

drew the balance remaining in the account. ‘The automobile

pink slip was received by defendants from their son in the

fall of 1943, and they sold the automobile after bis death for

* $1080.00.

> the aut

In a letter written by Leonard from India on October 22,

144, beginning ‘*Dear Folks All" which letter was de-

livered tou the Bank ef America, Modesto, by defendants,

he stated that he had already sent a check for $30.00 and’

' was one losing another for $00.01. He then added: ‘'] want

a bank account, probably commercial, to be held jointly by

you folks and by me-4 want ~~ alletments to be deposited

in it. [ want-a reserve of $250 to $500 to be allowed to

accumulate and the bonds to be purchased as | previously

instructed them, and turned over to you for safekeeping.

I want a routine accounting sent to you and. referred to me

as you think best or necessary. 1 wouldlike to have a check

book sent me in case of need.” P lease make this all very

clear to the bank. Present this letter if necessary."’, The

evidence shows that the joint account between the defend.

ants and their son was opened November 10, 1944; with an

initial deposit of $337.50. Thereafter 12 deposits of like

amounts were inade through allottinents by decedent direetly

to. the bank, and there were others. Decedent from time

to time drew upon the account and once his mother drew

$500 and sent it te him. After Leonard's death she with-

‘drew the balance and deposited it-in defendants’ own

account with the American Trost Company. The Bank of

America account was then closed.

Mrs. on testified that $2906.27 and thes money for

bile was all defendants received. She stated

that prior to the time this account was opened the bank

had been buying bonds’ for decedent out of funds sent it

by Leonard, which bonds were in the names of decedent and

one Naomi Beiler; that the bank had mailed the bonds

to defendants who had put them in a safe deposit box,

and after Leonard’s death, had turned them over to the

attorney for his estate.

Plaintiff testified that she aad Leonard were married

in 1930, before the lattet had completed his medical train-

ing. She was a hurse, and contigued to practice her pro-

fession, her earnings being put into a joint account with

her hushand, which account continued until November,

1944, at which time Leonard withdrew alt of the balance. i

Regarding the automobile turned over to defendants, she:

o fe

Zé

stated that she finished payments thereon after her hus; ,

7 RENEE eee eee

band went into the service. For six months after be went

‘into the service plaintiff! received an allotment ef $90

per month, then it was discontinued.

Lloyd Wissner, brother of Leonard, te tified regarding

—detters which he received from Leonard, One, dated Septens-

ber 26, 1943, requested Lloyd to get the dector's instru.

ments and equipment moved ‘before M. receiver the notice

that I have stopped ber allotment." In anothef dated

January 7, 1943, he stated- that he wished his attorney

could get an insurance policy away from plaintiff. In

one dated September 14, 143, Leonard mentioned ** Naomi,"

and stated that he wished he could find some way. of forcing

plaintiff to a settlement and a divorce. Another dated

August 24, 143. referred to efforts to get the pink slip

for the ‘automobile away from plaintiff and or ea to

exeruing pressure upon ber. In another dated August 14,

1943, be stated he stopped the allotment to Margaret to

force her to come to toxms, Also he stated that he was.

enclosing the pink sliyy tothe automobile, saying, ** Possibly

it woyld be best te have it transferred to you and then no

one could touch it."? On Jane 19, 1945, he referred to the

automobile, stating Lilevd vould continue to use it, ‘Sat any

rate for the time being’ : and in another dated July 21,

1945, decedent again expressed his wishes reyarding the car.

Mrs. Louise Wissner testified regarding moneys sent to

Leonard while he was in Medical sehool in 1927 and 1929,

but she was unable to state the amount thereof, She also

introduced letters from:Leonard sent while still.in training, |

expressing thanks for money received, and making varue

statements such as, ‘‘Maybe some day we ean make things

right.’’ At the time the bank aceonnt was directed to be

opened in 1944 it was directed that the parents continue

the: purchase of bonds; hut that was not done,

The testimony of defendant Leandous Wissner was indefi.

‘nite and vague, both as to moneys sent te Leonard while

at school, the amount thereof, and any promises to repay ;

and there is no evidence that any statement was ever xent

him, or any payments made by himon account of same.

From the evidence in the case and the inferences de-.

ducible therefrom, the trial court’s findings in favor of

plaintiff are fully justified. Evidence and presumptions

contra merely created a conflict which that court was au-

thorized to resolve; and with its conclusions this court may

~not interfere. Furthermore, we think it is apparent that

the transfers made to defendants were not made with an

intent to repay them for moneys expended for his medical

education, but were made in order to prevent his wife from

receiving them, atid to force her into a divorce and settle-

ment to further plans which decedent was making, for his

future from which she was to be excluded.

Regarding the right of plaintiff to recover from defend-

ants a portion of the proceeds of the life insurance policy,

it is not denied that premiums paid by decedent were paid

from community funds; and that plaintiff had a vested

interest in one- half of such community property cannot be

gainsaid. (Civ. Code, sec. 16la.) In Mazman v. Brown,

12 Cal. App. 2d 272, 273, it was held that where insurance on

a husband's life was bought and paid for with community

funds, the hushand could give away no more than one-half.

of the proceeds without the written consent of the wife.

| Numerous authorities x0 holding were there cited. Also see

Grimm rv. Grimm, 26 Cal. 2d 173, 175. From those decisions

it is obvions that had the policy been issued by a private

insurance company, no question of plaintiff's right to

one-half of the proceeds could arise. -

Appellants contend, however, that rights to the sreckeds

of a National Service Life Insurance Policy must- be de-

termined solely by federal statutes. They cite section 802( g)

of Title 38 U. S. C. A. which provides, regarding such pol-

icit.s: ?

‘The insurance shall be payable only to a widow,

widower, child (including a stepchild or an illegitimate

- child if designated as beneficiary by the insured), par-

ent (including person in loco parentis if designated as

beneficiary by the insured), brother: or sister_of the

“insured. The insured shall have the right to designate

the beneficiary or beneficiaries of the ihsurance, but

- only within the classes herein provided, and shall, sub- .

ject to regulations, at all times have the right to change

the beneficiary or beneficiaries of such insurance without

the consent of such beneficiary or beneficiaries but

only within the classes herein provided.

19 -

They particularly rely upon section 454a of the World —

War Veterans’ Relief Act, Title 38 U. S. C. A., which pro-

vides in part:

“Payments of benefits due or to become due shall

not be assignable, and such paymbnts made te, or on

accotnt of, a beneficiary under any of the laws relat.

ing to veterans shall be exer! from taxation, 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 whats; er, either before

or after receipt by the beneficiary.” (Italics added. )

And they assert that Congress thy, tho foregoing ennct-

ment not only intended to control the proceeds of such

policies after they were paid to them, but that its power

to do so is found in the prov isions of the United States

Constitution, art. I, 48 granting to Congre as‘the power to

‘*provide for the common defense and general welfare of

the United States,’’ to ‘‘raise and support armies,"* to

‘*provide and maintain a Navy,"’ to make rules and regu.

lations for the government and regulatiow of the land and .

naval forces, and to make all laws which shall be necessary

and proper for carrying into execution the foregoing

powers. They also rely upen Art. VI, paragraph 2, of that”

Constitution providing that such Constitution and the laws

of the United: States which shall be —— in pursuance

thereof, shall he the supreme law of the land) and the judges

in every state shall be bound thereby, anythibg i in the con-

stitution and° laws of any state to the contrary’ notwith-

standing. :

However, the fariaeiie dentaiations are ‘all subject to

the limitations imposed by the Tenth Amehdment, to, wit,

that the powers of the Federal government] are only such

as are delegated and all other powers, except such as are

specifically denied to the states, repo.e in, the states and

not in the Féderal government; and the Fift Amendment,

providing-that the Congress shall not deprive any person

of life, liberty or property. without due process-oftaw tor

take his property for publi¢ use withont juat compensation,

The question before us, then, is did Congress intend, by

section 454a, supra, to provide that the proceeds of a

é ee

<-—¥ = ‘4 LSE 3

. =—=—

r «4

™)

National Se vice Insurance polices vy, after “payment of same

to a named beneficiary, are not subject to the laws of a

‘ state governing title to prope rty within that State, and, if

it did so intend, had it the power under the Constitution to

so provide, and thus divest a wife in California of property

rights which under the laws of this.state aré community

- property in which such wife has a vested interest.

It cannot be denied that since the enactment of section

161a of the California Civil Code in 1927, a wife in this

state bas a vested interest in one-half of the earnings of-the

sponse since that date. Such rights have been recognized

by both federal and state — See Lang r. Commissioner

_of Internai Revenue, 304 U.S. 264, 82 L. Ed. 1331, 1336;

United States vc. Maleolm, 282 ve. S. 792, 75 L. Ed. 714;Com-

missioner of Internal Revenue v. Harmon, 323 U. S. 44,

89 L. Ed. 60, 63, 67; Poe r. Seaborn, 282 U.S. 101, 75 L. Ed.

239, 243; United States r. Pettigrew, 81 Fed. 2d 666.

In Mundt r, Connecticut Gen. Life Ins. Co. 35 Cal App.

— 2d 416, $21, decedent‘s mother was designated as the bene-

ficiary of a life insurance policy paid for with community

earnings. A judgment awarding one-half the proceéds to

the widow was affirmed, the court saying:

“From the leading case of New York Life Ins. Co. «.

~ Bank of Italy, 60 Cal. App. 602 (214 Pac. 61), through

the many intervening cases, down to Travelers Ins. Co.

vr. Fancher, 219 Cal. 351 (26 Pac. (2d) 482), the only

test applied to this problem has been whether the

premiums (on a policy issued on the life of a hashand

after coverture) are paid entirely from community

funds. If so, the policy becomes a community asset and

the nofi-consenting wife may recover an undivided one-

half: thereof 4without regard’ das said in Dargie rv.

Patterson, 176 Cal.. 714, 721, 169 Pac. 360) ‘to the

amount or eondition of the estate remaining in his

- (the husband's) hands at the time of his death’, and we—~

might add, without regard to the disproportionate size

of the preminm when yt sah with the face of the

policy."* y

: “In Bazzell Sudirien. 41-Cal. App. 2d 463, the trial court

found that the naming of the mother of an insured husband

as beneficiary of, his life insurance constituted a voluntary

“gift without valuable consideration, and was supported by

evidence which showed that the premiums were paid from

the husband's earnings during coeverture and that at vo

-time did his wife consent to a gift ef her community inter.

est in the policy, (See Civ. Cade, secs, Ota, 172.

In Grimm. rv. Grimm, 26 Cal: 2d 173, the vourt said that

where prenfaims on-an insurance policy issued.on the bus-

band’s life are paid with community funds, the policy ix

community property: and that ‘It is settled that even

though the insurance contract may provide that the insured

husband has the right to change the benefic iury without the

wife’s consent where she it named as such, anv change of

beneficiary without her consetit and without a valuable con-

sideration i is voidable, and after the death of thy husband

the wife may maintain an action for community share i in the

proceeds of the poliew. . (Mazman’. Brown, 12 ( ‘al. App,

2d 272, 275. (55 P. 2d 539): Travelers Ins. Co. rv. -- Fancher, 7

supra (219 Cal. 351), at p. 356; Dixen Lumber Co. v. Pea-

cock, 217 Cal. 415, 418 (19 P. 2d 223); Blethen rv. Pacifie Mut.

L. Ins. Co, supra (198 Cal. 91), at P. 161; see 3 Cal. Jur.

_10-¥r, Supp. 622; 114 ALL. R. 545, 554.)""

The principles set forth in the foregoing cases are reiter-

ated in Pacific Mutual Life Insurance Co, rv. Cleverdon,

16 Cal. 2d 788, 792, though the decision in that case was dif-

ferent because it was found'that the earnings out of which

the preminms were paid were not community property, and

that they were applied to. the premiums with the- knowledge

and consent of the surviving spouse of the insured.

Also see In re Towey's Estate ( Vash. ), 155 Pac. 24.273,

275: In re Miller's Estate (N. Mex.), 100 Pac. 24 908, 910;

Blackmon rv. Hansen (Tex.), 169 S.. W. 2d 962, 965,

In Cooke r. Cooke, 65 Cal. App. 2d 260,266, 269; 272

(hearing i in Supreme Court denied) it was held that where

{ premiums on an insurance policy were paid by the husband

out of community funds (the earnings of the husband) the

wife had a vested interest i in the portion of the insurance

purchased by such community funds, and was entitled to at

least a proportionate amonnt of the proceeds of the policy

paid for with community funds; and that to deprive her of

it by a legislative: act would be to deprive her of a vested

4 -

property right of which she could not be divested without

due process of law; that. to do so would violate the Four.

teenth Amendment to the Federal Constitution, and section

13 of Art. I of the California Constitution. anes

Reasoning from the foregoing cases, the conclusion seems

to follow that, in view of the Fifth Amendment, the Federal

government liad no power to provide, as it is contended it

did in section 454a, supra, that payments made to a benefi-

ciary of a National Service Life Insurance Policy shall be

‘exempt from the claims of the widow of the deceased in-

sured to the right vested in her under, the laws of this state

—to-one-haif-of such payments after their receipt by the

beneficiary. -As hereinbefore stated, appellants rely upon

Art. VI, paragraph 2 2, and Art. I, sec. 8, af the United

_ States Constitution,’ But no cognizance is taken of the

Fifth Amendment, which limits the power of the Federal

government as the Fourteenth Amendment limits those of

the states, and prohibits the taking of private .property

without due process of law. It therefore seems to follow

that if, as decided in Cooke v. Cooke, supra, a surviving

wife of a decedent who had paid for an insurance policy out

of community funds could not be deprived of her vested.

interest in the proceeds of such policy without violating the

provisions of the Fourteenth Amendment, the Federal gov-

ernment could not deprive a wife of the deceased veteran

of her vested right to one-half of the proceeds of a National

Service Life Insurance policy paid for out of ¢ommunity

funds, at least after such funds had come into the posses-

sion of a named beneficiary other than the wife, without vio-

lating the Fifth Amendment.

' Inthe case before us the judgment was enter against

the beneficiaries for one-half of the payments on the policy

whick they had already received, and they were ordered to

pay to plaintiff one-half of proceeds received by them. Such

judgment is fully in accord with the judgments in the Cooke

case and other cases above cited, and cannot be said to

infringe upon any rights or powers of the United States

under the provisions of the United States Constitution re-

lied upon by appanenta, ;

As said in 6 R. C. L,, see. 436, pp. 440:

‘The requirement of due process of law was introduced

into the constitution of the United States by the fifth amend.

nent as a limitation upon the powers of the national gov.

ernment, and by the fourteenth amendmént ay a guaranty

against any encroachment upon an acknowledged right of

citizenship by the legislatures of the states."’ Pas eed.

As to the limits of the powers of Congress, ifi 1 Cooley's

Constitutional Limitations, Eighth Edition, 11, the. author

«Bays; | sa es re ie 5

‘The government of the United States is one of cnumer-

ated powers; the national Constitution being the instrument

which specifies them, afid in which authe rity should be found

for the exercise of any power which thé national government

Assumes to possess.”’

It is said in 11 Am. Jur., sec 334, p. 1143, that: ‘The

Fifth Amendment to the Fedefal Constitution prevents

the Federal Government or its agencies from depriving

any person of his property without due process of law.

The Fourteenth Amendment to the Federal Constitution,

and all the various state Constitutions, prevent any actton

_ by a state which would accomplish such deprivation.”

And in 12 Am. Jur., Sée. 569, p. 262, we find that: ‘The

* effect of the guaranty (of the Fifth and Fourteenth Amend.

_Mments) is to inhibit the taking of one person’s property

and giving it to another, contrary tm settled usages and

_ modes of procedure, without notice and opportunity for a

hearing. An attempt by statute to work such a change of

ownership would be a glaring violation of this guaranty

and could not be defended as an exercise of the police

— power. (Italics added.) ,

‘*The protection extends to rights, in the broadest sense

of the term. .In the determination of whether the require.

‘ment has been observed, regard must be had to substance

_ rather than to form, for the mere form of the proceeding

cannot convert the process used into due process of law, if

the necessary rc <uit_is illegally to deprive a person of his

property withou: compensation.’’ See Ochoa +. Hernandez

y Morales, 230 U. S. 139, 57 L. Ed. 1427: Carry v. MeCan-

less, 307 U. S. 357, 83 L. Ed. 1339. Also see 16 €. J. 8.

24,

. 1205, stating that *ta denial‘of due process of

daw results from any. statute, whether state or federal,

which takes away any of the essential attributes of pri-

vite property, . . ."’ (eiting Ferris v. Wilbur, 27 Fed.

2d 262); and C. J, sees. 486, 487, pp. 956, 957... ——

—hr-Finted States vr. Cohen Grocery Co. 255 U. S. 81.

65 L. Ed. 516, 14 A. es 1045, it was said that a state of

war could not suspend or change the operation upon the

power of Congress of the guarantees and limitations of

the Fifth Amendment (with citations), Also see Hamilton

vr. Kentucky Distilleries & W. Co., 251 U. S. 146, 155, 64

L. Ed. 194, 199. The same rule is stated in Darlington rv.

Roard of Councilmen (Ky.), 140 S. W. 2d 392, 396 (ening

the Cohen case, supra), and in Henderson rv. Bryan, 46 Fed.

Supp. 682, 684, and Schatte e) International Alliance, ic.,

70) Fed. Supp. 1008, TOTO (decided hy thie sane ae ae

decided the Barton case, infra).

Appellants cite numerous cases which, they contend, sus-

tain their position; but, with one exe eption, none of them

‘involved divestiture of vested rights in community prop-

erty. Assuming, but not deciding, the correctness of such

decisions, they do not determine the issues in this case,

nor is it necessary herein to determine to what extent the

' Congress could, under its limited powers, exercise control

over the proceeds of National Service Life Insurance pol-

icies prior to their receipt by the beneficiaries. The excep-

tion above mentioned is Barton rv. United States, 75 Fed.

Supp. 703, in which a widow of a deceased veteran applied

to the Administrater of Veterans’ Affairs to pay to ber a

one-half interest in the portion of the proceeds of an. in-

surance policy which had resulted from the payment of

premiums out of community funds of the spouses. -The |

claim was disallowed and payments were made to the named

beneficiary, decedent's mother. It may be eonceded with-

out affecting the conelnsion in the ease before us, that the

Administrator properly s6 acted pursuant to the terms of

the policy, which was a contract between the United States

and the insured, and that the trial court properly concurred

in his decision. The Barton decision is not, of course,

conclusive upon this court; and we think it is clearly dis-

tinguishable in so far’as the necessities of that case were

determined. But if, as some of the langu: ge of the Opinion

indicates, that court decided that becwuse of the provisions

of section doda, supra, the Congress intended is and did

attempt to provide that where premiums on a National

Service Life Insurance policy are paid for out of the com

munity property, in which, under the laws of ¢ ‘alifornia,

a wife has a vested interest, if miust follow that the widow

of decedent may be divested of her COMUMUTIEY property

right by the action-of the husband in usite such funds for

payment of premiums on such insufance without her know!)

edge or consent, and by naming another than the wife

as beneficiary deprive the surviving widew of: her vested

rights and render it impossible fer her to enforce her rights

against the beneficiaries after their reeexypt of the procecds

of the poliey, then we must respectfully disagree with the

Barton case. Nees ete

Also see Bostrom v. Bostrum (N D.), 286 N. W. 732.

Lewis r. Lewis.4 Cal. App! 2d 422, Baker v. Tulsa Build

tng & Loan Assn. (Okla), 66 Pace. 2d 45: Miller +. MeKenna,

23 Cal. 2d 774, 783. — :

The one remaining point on this appeal is whether the

trial court erred in allowing the plaintiff one-half the

‘alue of the automobile at the timé it-was transferred to

appellants, or whether plainti¥ was entitled to one half

of the $1080.00 received from sale of same after the death

of Leonard Wissne¢. The trialcourt found that the value

of the car at the time it was transferred to defendants was

$1600.00, and awarded plaintiff judgment for one-half of

the value thereof. That the said automobile was community

property cannot be questioned, since it was paid for with

the community earnirys of the spouses after their marriage

in 1930, including: the earnings of plaintiff who made the,

final paymenty out of her own earnings after her husband

entered the service. She testified that she did not know

of the transfer until after the death of her husband, after

which she made demand therefor. The trial court found

that the transfer was without consideration, and the | vi

dence sustains. that finding. It might be questioned, in

view of the evidence, whethér the decedent ever inteneled

to transfer the ownership of the automobile to his parents

at all. However, they assert ownership, and it may be

presdgned that suck | ‘ow whership was acquired when the car

“and pink slip-were delivered to them, as there is nothing

to show ‘a later acquisition of title. The trial court, then,

may well have concluded that it was transferred to them

at that time, and when its value was $1600.00. So deter.

mining, its finding that plaintiff is entitled to one-half of

its value at that time is supported by the record. De.

fendants knew that it was the community property of plain.

tiff and their son, and they may be said to have converted

it to their own use at the time of the transfer. Section

3336 of the-Civil Code thus beeamé applicable as tothe

amount of recovery from the conv ertor, to wit, the value of

the property af. the time of conversion. And if defend.

ants, having notice of plaintiff’ s rights, as they had, chose

to sell the vehicle, they must respond to the ow her for its

value, regardless of the price at which they chose to sell it.

(A. Meister & Sons Co. r, Harrison; 56 Cal. App. 679, 681.)

The judgment is affirmed. ;

eee Adams, P. J

We concur: if

Peek, J.; Thompson, JJ.

APPENDIX B

Memoraxpum Rvurne

_, No. 522,648

‘In the Superior Court of the State of California, in and

for the County of Los: Angeles.

Daisy Edda Johnson, plaintiff, vs. Ada Shelton. Geren!

ant: ‘

The controversy. in this case relates to the relative halite

of a widow and-a mother of a deceased veteran of World

' War Il to the monthly payments being made by the federal

government under a War Service insurance- “policy. The

widow of the veteran contends that while the policy desig-

nates the mother as thé sole beneficiary, it was taken out

during the deceased veteran's s marriage to the widow, the

plaintiff here, and benee, under our comununity laws, she i

entitled to reach one-half of the proceeds of the policy by

. aking the mother actrustee thereof for the plaintiff. The

mother did not answer the —— andshenee her default—

wax duly entered, Under the law of this state the default

operates asian admission by the mother of the truth of the

cause of action as set up in the complaint and of every

. tnaterial and traversible allegation therein which is well “%°

and properly pleaded, but the default does not admit that

the facts alleged are in law sufficient to constitute a, good

cause of-action or to entitle plaintiff to the relief prayed.

Moreover, where the cause of action is predicated: upon a

document the terms of the document control over any con.

trary averments set forth in the complaint. -

The night of the plaintiff to recover is based upon the

fact that the community funds of the decedent afd the plain.

tiff, his widow, were used, to pay the premiums/on the policy

issned by the federal government, and henbe, under the

community laws of ‘this state, of which the decedent was a

resident, ane-half of the proceeds are payabld to the surviy-

ing widow. This, of course, ts the rule with) respect to life

insurance policies issued by private corporafions. We turn

then to consider whether the rule is the same or otherwise

With respect to life insurance policies issued by te federal:

government. ae

That the rule is otherwise is the holding/of Judge Mathes

in Barton v, United States,.75 Fed. Supp./f03; that the rule.

is not otherwise is the holding of Presiding Justice Adams —

in Wissner v, Wissner, 89 A.C. A. 857f) In view of that

conflict of opinion, the question at once id presented whether

‘the Wissner case is a controlling preegdent upon this court

if there are, as appears to be the ease, decisions to the con-

‘trary by the Supreme Court of the United States.

In McCulloch e. beanie 4W manton, 316, « hief Justice

~ Marshall said:

wee People ot the United st fes ‘ks seen fit to

divide sovereignty, and to establish complex system. |

They have conferred certain powers om the state govern-

ments, and certain other powers on the national government:

As it was easy to foresee that questions |must arise between

these governments thus constituted, if be¢ame of great

thoment tomdetermine upon what principle these questions

should be decided, and who shotld decide them. The con

stitution, therefore, declares that the constitution itself, and

Ee the laws passed ink pursuance of its Provisions, shall be the

supreme law of the land, and shall control all-state legisla-

tion and state constitutions which may be incompatible

therewith; and it confides to this court the ultimate power

of deciding all questions arising under the constitution and

laws of the United States. The laws of the United States,

then, made in pursuance, of the constitution, are to be the

supreie law of the lank, anything in the laws of any state

to the contrary notwithstanding.” |

In the case before us the policy of insurance was issued

by the federal government pursuant to a congressional act.

To the extent then that any state law conflicts with this act

of Congress it is of necessity void and of no effect. The aet in

question permitted a veteran to-apply for a poliey of instir-,

ance, but restrieted his designations of beneficiaries to

certain persons, among others a wife or mother. Likewise

the act expressly provides that the proceeds of a policy may

he paid only to the beneficiary designated in the poliey and

that **payments of benefits due or to become due shall not

be assignable, and such payments made to, or on account of,

a beneficiary under any of the laws relating to veterans

shall be exempt from taxation, 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."’

For this court to impress a trust on the funds as they are

recerved by the mother is to run directly into the teeth of the

statute, 3 | 2

t ts said, however, in Wissner-r. Wissner that to deprive

a widow: of her vested right under state law to receive one-

half the proceeds.afa federal life insurance policy where

the premiums are paid out of community funds is contrary |

fo the Fifth Amendment. But this contention appears to be

fully answered by Justice Holmes in speaking for the court

in White «. U.S. 270.U, S.4175, 70 L. Ed. 430, and by Chief

Justice Hughes speaking for the court in Lawrence +. Shaw.

S00 U.S. 245, 81 L. Ed. 623, neither of which cases are cited

in the Wissner case. The White case involved a federal

“a

° cates po! |

service insurance policy issued in 1918. Under the act under

segpsnticge poliey was issued a veteran could not designate

aunt along with his mother as a beneficiary as he w ished

we do. Aveordingty,, he designated his mothe ‘yr the bene

ficiary, but left a will providing that one-half of the sums

paid to his mother sheuld go to his aunt. Under-the statute,

us it existed at the time of the veteran's death, the provision

in favor of the aunt was unenforceable. However, a vear

later Congress passed an act amemding the statute so as to

permit payments to persons in the class of aunts and addi-

tionally made the statute retroactive as of the date of the

enactment of the original statute pdrsuant to a reservation

contained in the original statute. The court held that the

amendment of the statute did not violate any rights of the.

mother under the Fifth Amendment. The court said: '*The

insurance was @ contract, to be sure, for which, a premium

was paid, but it was. not one entered inte By the United

States for gain. All soldiers were given a right to it, and

the relation of the government to them, if not paternal, was

at least avuncular’ . . . The only relations of contract

were between the government and him. White’s mother's

interest at his death was vested only so far as he and the

government had made it so, and was subject to any condi.

tions upon which they might agree.” . :

In Lawrence vr, Shaw, supra, it was held that the federal

government could exempt the proceeds of a veteran's policy

from state taxation despite the state's laws to the contrary.

‘Ghat being true, it would seem to follow that state com:

munity laws cannot fare any better. Moreover, it should

he observed that in the-instant case the insurance premiums

were paid by deducting their amount from the pay of the

veteran. In one aspect such pay represents a gift by the

government rather than earnings, because the government

can compel any person to serve in its armed services without

pay {United States r. Williams, 302 U.S. 46). In the

Williams case the court said:

‘Enlistment is more than a contract, if fects a

change of status. It operates to emancipate minors

at least to ‘the extent that by enlistment they become

hound to serve subject to rules governing enlisted men

and entitled to have and freely to dispose of their pay."’

etiieidieeee aes ee

Ne ee ee

i ee ee

. In view of the foregoing decinlens of the United States

Supreme Court it follows that S pecgeoent must be entered for

the defendant.

Cc LARENCE M. Hanson,

: Judge.

| APPENDIX 0

No. 6061-BH

__ Fixpises or Fact axpv Conciustons or Law

‘In‘the District Court of the United States, in and for

the Southern District of California, Central Division.

Anna M. James, plaintiff, +. United States of America,

William H. James, William H. James and Agnes James, as

eustodians for’ Bobby Ray James, a minor, Doe One, Doe

_ Two and Doe Three, defendants.

The above entitled cause having come on ninulaste for

frial on the Sth day of June, 1947, before the Honorable

Ben Harrison, Judge of the above entitled Court, sitting

= ” F Dias as wwe

ON ee SO eee PT ee An Eee ns) Oe ne Ee

A gl

without a jury, a Jury having been expressly waived by all . |

the testimony iad having examined the doc ‘umentary evi-

dence offered by the parties, and the éause- having been s

_ mitted for decision, and the Court being fully advised i ithe

premises, hereby makes it Findings of Fact and Conclasions

. of Law as follows :

— Do.

a j . cA.

Fixpinos or Fact 3 -~

The Court finds as follows: /

I oe

The plaintiff, dene M. Jame th widow of the insured .

soldier, Robert L. James. The defendant, the United States

of America is the insurer, the defendant, William H. James,

is the father of the deceased insured, Agnes James is the

‘divorced wife of the deceased insured, Robert L. James,

and the mother —_ the legal — of Bobby Ray James.

PSR PR CRE ae eT eT

Rd RA Sid beial ght RMR Cian 8 ge res es

Ap RHE RE

OVS OE

EE PEN EY rere, Cees

Agnes James has had her hame changed to her present name,

Diane C. James. That by stipulation of parties, the minor

Bobby Ray James was made a defendant to said action.

That the plaintiff and the insured, Robert L.. James, were

married in the State of Arkansas on April 8, 1942, and that

at all times thereafter until the death of the insured, they

remained husband and wife.

That subsequent thereto, and on June &, 1942, the insured

Robert L. James, enlisted, or was inducted into active serv-

ice of the United States Army and continued therein until

his death on June 21, 1944.

That on July 8, 1942, the insured applied for and wan

granted a policy of United States government life insurance,

No. N3-101-428 in the sum of $5,000.00, namjng his principal

beneficiary thereof, William H. James, described as father

and as contingent beneficiary, Bobby Ray James, described

as son. Said insurance contract’ became effective on An-

gust 1, 1942, and that the insured paid the premiums thereon

by deductions. from his service pay to and including the

That on the same day, that is to say, on July 8, 1942,

the insured applied for and wax granted an additional con.

tract of National Service Life Insurance in -the sum of

$5,000.00, No, N3-111-499, effective August 1, 1942, naming.

as the principal beneficiary thereof, Anna M. James, de-

_ seribed as wife, and as the contingent beneficiary, Bobby

Ray James, described as son. That the insured paid the

premiums on said policy during the period of ‘service. by

deductions from his service pay to and including the date

of death.

That on March 16, ‘1944, the insured filed a change of

beneficiary on the official form provided by the War Depart-

ment for that purpose, wherein he made his father, William

H. James, as. principal beneficiary, on a policy No. N3-101-

428, and his son, Bobby Ray James, as the contingent bene-

ficiary thereof! and on the second policy No. N3-111-499 he

named as principal beneficiary, his son, Bobby Ray James,

- date of his death, therefore, said insurance contract was_in—

full force and effect at said time,

and as contingent beneficiary, his -wife, Mrs. “Anna ess

James, the plaintiff herein; both policies were in full force

and effect at the date of death. The numbers on said policies

have apparently been transposed or used interchangeably,

but the same does not affect them in any manner whatsoever.

That the insured was reported missing in action June

21, 1944, evidence of his death was received by the War De-

partment and date of death was established as of June 21,

1944. See War Department.Form No. 52-1, dated May 29,

1945. 7

av.

The Court further finds that prior to the date of deced-

ent’s marriage to the plaintiff, Anna M. James, the said

decedent was, and had held his legal residence in the County

of Dallas, State of Texas, and that said residence continued

to be the residence of the decedent and plaintiff to the date

of his death. That plaintiff is now a resident of the County

of Los Angeles, State of California.

V : i

The Court further finds that, except as hereinafter quali-

fied, the Community Property Laws of the State of Texas

govern as to the management, contro! and disposition of

‘the communify property of the plaintiff and the decedent

and that no fraud is alleged or proven to have been practiced

either by the decedent against the plaintiff or by the plain-

tiff against the decedent. 1

& : Waar

That the contracts of insurance sued upon herein were

issued pursuant te the provisions of the National Service

Life Insurance Act of 1940, as amended, and that the laws

of the United States of America relating to such contracts

of insurance are pararaount in the naming of or changing

of beneficiaries by an insured thereunder, and with respect

to the disposition of th® proceeds of said contracts of insur-

ance, and that said National Service Life Insurance Act of.

140, as amended, and all reculations promalgated pursuant

to the authority granted by said statute are not affected,

riedified or controlled by any state laws or r regulations to the

contrary.

‘The C ourt makes the folinwine Cone haciak ee of Law from

‘the foregoing facts: Le:

. s Se.) ° ; * * Si5.

a a

"That the residence oft the plaintitt and her deceased

husband was, prior to bis death, in the County of Dallas,

State of Texas.

Wl =

That under the contracts of insurance sued upon herein

issued pursuant to the provisions of the National Service

Life Insurance Act of 1940, as amended, the insured had

the absolute right to make a designation or change of

__ designation of henefictary within the pernitted _— with.

out the consent of the plaintiff wife,

> eee

That the right to name or change the beneficiary thus

conferred by federal statute is not subject to and cannot be

affected, modified or controlled by any state community

property laws,

That the disposition of the proceeds or benefits of any

contracts of insurance issued pursuant to the provisions of

the National Service Life Insurance Act of 1940, as'amended,

is not subject to and cannot be controlled or governed by

the community property laws of any state. a

That under the Community Property Laws of the State

of Texas, where there is no intention on the part of the.

if SS

Carte

hushand to defraud a wife, the proceeds of a policy on the —

life of the husband vested in the beneficiary named in the

policy upen the death of the insured husband even though

the policy was taken out during coverture, by the hushand,

‘and the premiums were paid out of community funds.

That the plaintift is not entitled to any relief either as

prayed for in the Complaint or as shown by the facts

proven. bets

Vill

That neither the plaintiff's Complaint ner the facts

proven state er prove a claim against any of the defend

ants herein upon which relief can be granted.

RES i ae -

That the plaintiff has no right or claim in or to either

of the insurance policies sued on herein or ‘un or to any of

the proceeds thereof, sav: e and except asthe samemay tere 265

after accrue to her as-the contingent beneficiary where so

named, : )

7 . ° @ 4- . . .

Dated: June 16th, 1947.

| {S.] Ben Harrison,

United States District Judae.

(3415)

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.