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TAYLOR v. UNITED STATES

June 12, 1953

TAYLOR
v.
UNITED STATES ET AL.



The opinion of the court was delivered by: John E. Miller, District Judge.

On May 12, 1952, plaintiff filed her complaint against the defendants in which she alleged that she was the widow of Darwin P. Taylor, who died July 28, 1949, while on inactive status as a member of the United States Naval Reserve, and that at his death he was the holder of a valid policy of insurance on his life in the amount of $10,000, issued under the National Life Insurance Act of 1940 and subsequent amendments.

Plaintiff further alleged that on and prior to April 23, 1944, she was the principal beneficiary of the said contract of insurance, but that on said date the decedent, Darwin P. Taylor, attempted to change the beneficiary designation to the defendant, Crawford B. Taylor, as principal beneficiary; that "Such attempted change was ineffectual and a legal nullity for the reason that on April 23, 1944, Darwin P. Taylor did not have clearness of mind and memory sufficient to enable him to know the nature of the property for which he was about to name a beneficiary, the nature of the act he was about to perform, the names and identities of those who were the natural objects of his bounty, his relationship toward them and an appreciation of the consequences of his act uninfluenced by any material delusions, but rather, on said date of said attempted change in designation of beneficiary, decedent was of unsound mind and suffering from a form of insanity known as dementia praecox and was totally and absolutely incompetent to make any lawful change of beneficiary."

"A disagreement concerning validity of plaintiff's claim to the proceeds of said policy of insurance has arisen. The defendant, United States of America, through the Veterans Administration, has denied plaintiff's claim to the proceeds of said policy on the alleged ground that decedent, Darwin P. Taylor, prior to decedent's death and on April 23, 1944, made a valid change of beneficiary, designating defendant, Crawford B. Taylor, as such principal beneficiary, and defendant, United States of America, is now about to pay the proceeds of said insurance contract to the defendant, Crawford B. Taylor."

The plaintiff alleged that she is the beneficiary of the said insurance contract and prays judgment against the United States of America for the sum of $10,000, interest, costs and attorney's fees.

On June 4, 1952, the defendant, Crawford B. Taylor, filed his answer in which he admitted the allegations of plaintiff's complaint, except the allegations that the decedent, Darwin P. Taylor, was mentally incompetent to effect the change of beneficiary, that the plaintiff is the present beneficiary of the policy, and that the plaintiff is entitled to recover the said sum of $10,000 or to any other relief, which allegations said defendant denied. Included in the said defendant's answer was a cross-claim against the defendant, United States of America, in which the defendant, Crawford B. Taylor, alleged that he was the legal beneficiary of the said policy and prayed judgment against the United States of America for $10,000, interest, costs and attorney's fees.

On July 29, 1952, the defendant, United States of America, filed its answer in which it denied that the decedent, Darwin P. Taylor, was mentally incompetent to effect the change of beneficiary, denied that it was about to pay the proceeds of the insurance contract to the defendant, Crawford B. Taylor, denied that plaintiff was the beneficiary, denied that plaintiff was entitled to the judgment and relief prayed, and specifically denied that the plaintiff would be entitled to interest and costs in any event. The said defendant admitted the remaining allegations of the plaintiff's complaint.

The defendant, United States of America, admitted the allegations of the defendant, Crawford B. Taylor's cross-claim, but denied that he was entitled to recover interest and costs against the United States in any event.

Along with its answer the defendant, United States of America, filed its counterclaim for interpleader in which it admitted liability under the policy to the person or persons lawfully entitled to the benefits and alleged that it stood ready and willing to pay the proceeds to the legal beneficiary, but could not safely make payment because of the conflicting claims. The said defendant prayed that the Court adjudge which, if either, of the claimants are entitled to the proceeds and to direct payment of the money to the person or persons entitled thereto; that the Court discharge the said defendant from any and all liability under said policy except to the person or persons adjudged to be entitled to the proceeds; and that the Court award the said defendant its costs and such other relief to which it is entitled.

On March 12, 1953, the case was tried to the Court without a jury.

At the trial of the case the parties agreed that prior to April 23, 1944, Opal Lee Taylor was the principal beneficiary and her daughter, Mary Alice Taylor, contingent beneficiary of National Service Life Insurance Policy No. N-4 465 528 which was issued upon the life of Darwin P. Taylor, husband of the said Opal Lee Taylor and father of the said Mary Alice Taylor, in the sum of $10,000; that on April 23, 1944, the decedent, Darwin P. Taylor, in due form made a change of beneficiary designation to Crawford B. Taylor, father of the decedent, as principal beneficiary, and Ambrose N. Taylor, brother, as contingent beneficiary; that the sole question for determination by the Court was whether the decedent, Darwin P. Taylor, had sufficient mental capacity on April 23, 1944, to effect a valid and legal change of beneficiary.

At the conclusion of the trial the case was submitted subject to the taking and filing of depositions of non-resident witnesses and the filing of briefs in support of their respective contentions. This has now been done, and the Court, after considering the pleadings, the ore tenus testimony of the witnesses, the depositions, the exhibits and the briefs of the parties, has filed with the Clerk its formal findings of fact and conclusions of law, separately stated.

It is not necessary to incorporate herein the full findings of fact, and only such reference to the facts as is necessary to a clear understanding of the issues will be made.

Plaintiff is the widow of Darwin P. Taylor and a citizen and resident of Searcy County, Arkansas, which is within the Harrison Division of the Western District of Arkansas.

Defendant, Crawford B. Taylor, is a citizen and resident of the State of Arkansas and resides in Boone County, Arkansas.

A disagreement has arisen between the plaintiff and the defendant, Crawford B. Taylor, as to which of the said parties is entitled to the proceeds of National Service Life Insurance Policy No. N-4 465 528 which was issued upon the life of Darwin P. Taylor, husband of the plaintiff and son of the defendant, Crawford B. Taylor, in the sum of $10,000.

Darwin P. Taylor died on July 28, 1949, while on inactive status as a member of the United States Naval Reserve, and at the time of his death was the holder of Policy No. N-4 465 528 insuring his life in the sum of $10,000, which policy was issued under the National Life Insurance Act of 1940 and subsequent amendments, and was in full force and effect at the time of his death.

On and prior to April 23, 1944, plaintiff was the designated principal beneficiary and Mary Alice Taylor, daughter of the plaintiff and the insured, was the contingent beneficiary. On April 23, 1944, the insured in due form made a change of beneficiary designation to Crawford B. Taylor, his father, as principal beneficiary, and Ambrose N. Taylor, his brother, as contingent beneficiary. The Board of Veterans' Appeals held that the change was valid and that Crawford B. Taylor was entitled to the proceeds of the policy, and the plaintiff thereafter filed this suit.

At the trial the plaintiff introduced the ore tenus testimony of four witnesses, and before final submission of the case the deposition of Dr. Philip H. Moore was introduced. The defendant introduced the ore tenus testimony of two witnesses and the depositions of three witnesses, and both parties introduced and called the Court's attention to substantial portions of the decedent's Navy medical record.

The Court has weighed and studied carefully all the evidence and considered the demeanor and credibility of the witnesses, and the totality of the evidence convinces the Court that on April 23, 1944, Darwin P. Taylor did not have sufficient mental capacity to comprehend the nature and consequence of his act in attempting to change the beneficiaries of his National Service Life Insurance Policy. Both the decedent's medical records and the testimony of Dr. Moore disclose that during the period from October, 1943, to July, 1944, decedent was laboring under various delusions to such an extent that he was unable to perform his duties. Although there had been no marital difficulty between decedent and the plaintiff, decedent acquired an insane delusion of such difficulty at the same time he acquired delusions of various physical ailments. The insane delusion of marital discord, initiated during this period when decedent was under extraordinary stress, persisted until decedent's death.

Viewing the evidence as a whole, the Court is convinced that Dr. Fletcher correctly analyzed decedent's medical record and that he was afflicted with a paranoid type of dementia praecox which was manifested by the various delusions entertained by decedent on different occasions and particularly during the period when he attempted to change the beneficiary of his policy. The attempted change was purely a product of decedent's insane delusion of marital difficulty, which was based upon no facts whatsoever. The effect of decedent's mental disorder and delusion was such as to prevent the decedent from comprehending the nature and consequence of his act in attempting to change the beneficiaries of his policy.

Discussion

Title 38 U.S.C.A. § 802(g) provides:

    "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), parent, 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 shall, subject 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: Provided, That the provisions of this
  subsection as to the restricted permitted class of
  beneficiaries shall not apply to any national service
  life-insurance policy maturing on or after August 1,
  1946."

By virtue of the authority vested in him by 38 U.S.C.A. § 808, the Administrator of Veterans' Affairs promulgated the following rule which may be found in Volume 38, Code of Federal Regulations, Section 8.47, Page 230:

    "The insured shall have the right at any time, and
  from time to time, and without the knowledge or
  consent of the beneficiary to cancel the beneficiary
  designation, or to change the beneficiary, but a
  change of beneficiary to a person not within the
  permitted class of beneficiaries set forth in §
  8.46 shall not be effective as to insurance which
  matured prior to August 1, 1946. A change of
  beneficiary to be effective must be made by notice in
  writing signed by the insured and forwarded to the
  Veterans' Administration by the insured or his agent,
  and must contain sufficient information to identify
  the insured. Whenever practicable such notices shall
  be given on blanks prescribed by the Veterans'
  Administration. Upon receipt by the Veterans'
  Administration, a valid designation or change of
  beneficiary shall be deemed to be effective as of the
  date of execution: Provided, that any payment made
  before proper notice of designation or change of
  beneficiary has been received in the Veterans'
  Administration shall be deemed to have been properly
  made and to satisfy fully the obligations of the
  United States under such insurance policy to the
  extent of such payments."

In the instant case the plaintiff makes no contention that the insured failed to comply with the statute or the regulation insofar as the mechanics of effecting the change of beneficiary are concerned, and the Court must assume that the change of beneficiary executed by the insured on April 23, 1944, was valid, unless the plaintiff has established by a preponderance of the evidence that the insured as of that date was mentally incompetent to effect the change.

In determining the requirement of mental capacity the Court is confronted with the preliminary question of whether federal or state law governs.

The general rule is well settled that as to the validity and construction of National Service Life Insurance policies federal law governs. Lembcke v. United States, 2 Cir., 181 F.2d 703 (meaning of word "widow"); Pack v. United States, 9 Cir., 176 F.2d 770 (inapplicability of California community property law); Barton v. United States, D.C.Cal., 75 F. Supp. ...


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