Milica P. WATENPAUGH, Plaintiff and Respondent, v. STATE TEACHERS' RETIREMENT SYSTEM et al., Defendants. Frank Marion Watenpaugh, Jr., et al., Defendants and Appellants.
Plaintiff-respondent filed a declaratory relief action alleging she was entitled to receive, as a beneficiary duly designated by her husband, Frank M. Watenpaugh, the death benefits accruing under the State Teachers' Retirement System as a result of her husband's death on March 23rd, 1956. Defendants, State Teachers' Retirement System and the Teachers' Retirement Board of California (hereinafter referred to as the ‘System’), filed an answer claiming, as do defendants Frank Marion Watenpaugh, Jr., and Nancy V. Watenpaugh Bosley, children of deceased (hereinafter referred to as defendant children), that they were entitled to such death benefits. Frank M. Watenpaugh, Sr., was a teacher in San Diego State College for more than 20 years and was a member of the ‘System’ and had paid contributions to it since its inception.
The claim of defendant children to the death benefits is based on a membership statement executed and filed by him with the System in 1944. Therein he designated his then wife (subsequently deceased) as primary beneficiary, and the defendant children as contingent beneficiaries. There was no subsequent change in beneficiaries filed by deceased prior to his death. He married his present wife, plaintiff herein, about March 12, 1955.
About June 9, 1955, prior to his death, Mr. Watenpaugh apparently obtained printed blank forms entitled ‘Designation of Beneficiary’, and they were filled out, witnessed and signed by him on that date. They revoked any previous nomination and nominated his present wife, plaintiff herein, as principal beneficiary and the defendant children as contingent beneficiaries. Apparently this executed form (unknown to plaintiff) was placed in a cardboard folder by him in a desk located in the home occupied by them and in which folder was contained certain school matters and two unexecuted blank forms of change of beneficiary of a certain life insurance company.
On January 11, 1956, Mr. Watenpaugh suffered a heart attack and was confined in a hospital or bed at home and was cared for by his wife for some time. He recovered to the extent he took rides in the country, walked around his property and did some accounting work.
About two or three weeks after his death, in going over his books and papers, plaintiff discovered this executed form in the folder. She had no prior knowledge of it nor was she aware of its contents. She was never directed by her husband or any one to file it. Upon its discovery she contacted her attorney, who then filed it together with a certificate of death dy enclosing it in a letter directed to the System. It was mailed on April 18, 1956. About April 27, plaintiff's attorney received a letter from the System's executive officer informing him of the receipt of his letter and enclosure and he was informed:
‘* * * In view of the fact this deignation was not filed with the Retirement Office before death occurred, and that a long period elapsed between the execution of the form and the date of filing, I am not able to say that we can act on this delayed designation.
‘Before we attempt to make any determination in this respect, we would appreciate it if you would advise us as to where the designation was found, and if Mr. Watenpaugh had made any indication that he desired to file this form with the Retirement System. It might be in the form of a letter enclosure * * * It is possible that the witness may recall some statement made by Mr. Watenpaugh, which would explain his reason for not filing the designation at the time it was executed.’
On May 16, plaintiff's attorney also received another letter to the effect that the System had reviewed the matter with the Attorney General and they came to the conclusion:
‘that this designation does not meet the requirements of Section 14575 of the Education Code. This section briefly states that
“Upon receipt of proof of a member's death * * * there shall be paid to such beneficiary as he has nominated by written designation duly filed with the Retirement Board:'
‘This designation was not filed with the Board by Mr. Watenpaugh, and the fact that it was completed almost eight months before Mr. Watenpaugh's death, but not filed by the member, could almost be taken as evidence that Mr. Watenpaugh did not intend to change his designation with respect to these beneficiaries.
‘Milica Watenpaugh will have the right to file for her community property interest in the portion of the benefit arising from community earnings, and if she wishes to file this application she should furnish us with a certified copy of her marriage license. Upon receipt of such document we shall prepare the proper affidavits which must be signed by Milica and the two children, who were designated as contingent beneficiaries on the designation filed with the office on October 13, 1944.’
On November 7, 1956, plaintiff's attorney received another such letter in reply to one of October 25th regarding action being taken against the System, stating in part:
‘While there has never been any court case involving this same question, it has always been our contention, based on the opinion of the State Attorney General, that a designation is not valid unless it is filed in the retirement office by the member.
‘Probably there are many members who have changed their beneficiaries under the retirement system, either due to sudden changes in temper, but who have not filed the designation after what might be termed a cooling off period. Likewise there are probably cases where members have changed designations under pressure, but who have also intentionally withheld the change in designation from our files.
‘Section 14661 of the Education Code provides that any designation may be revoked at the pleasure of the member or beneficiary making the nomination, and a different beneficiary nominated by a written instrument duly executed and filed with the board. Based on this our contention has been that the instrument must be filed with the board before it will have any validity. As you know Mr. Watenpaugh's designation was certainly not filed with the board by him, and there is some doubt as to whether he ever intended that it be filed.’
The original membership statement and instructions on the printed forms pertaining to designation and revocation of previous nominations provides in part:
‘Should I survive the above named beneficiaries, I understand that such Death Benefit will be paid to my estate or to such other beneficiary or beneficiaries as I may hereafter nominate by written designation duly filed with the State Teachers' Retirement System, all in accordance with the provisions of said statutes.’
As to the latter printed form the instructions are in part:
‘The School Code of California provides, in effect, that, upon the death, before retirement, of a person subject to the retirement law, the contributions, without interest, standing to such person's credit in the teachers' permanent fund * * * be paid to his estate or such person as he shall have nominated by written designation duly filed with the Retirement Salary Board * * *
‘The designation of a beneficiary may be revoked and a new designation made, at the option of designator, the form on the reverse side hereof being used for both the original and changing designations. * * *
‘Acknowledgment of receipt of the first beneficiary designation will not be made, because every person will be followed until a form has been filed in the retirement office. Revocations and designations of new beneficiaries will be acknowledged, to avoid the loss of completed forms in transit, which might not come to light until after death.’
After trial of this action the court found generally in accord with the evidence stated and specifically found that by the actions of Mr. Watenpaugh, prior to his death, in obtaining and filling out the form indicated and leaving it in the desk mentioned, he placed said change of beneficiary designation under the control of plaintiff and intended to make a present effective designation of beneficiary in favor of his present wife, and to do whatever might be necessary to carry out his intentions, including the filing of it with said System either during his life or after his death; that upon its filing with the System it vacated the previous designation of beneficiary; that plaintiff was not aware of the designation or its contents until after the death of her husband; that the System, at the time of his death, held benefits valued at $8,000.18; that $972.94 of said sum was community property of said plaintiff and her husband, and $7,027.24 was his separate property, plus accrued interest on said sums. It then concluded that plaintiff was entitled to the total sum of $8,115.01, and entered judgment accordingly.
Defendant children appealed and claim that there is no substantial evidence to support the findings of the court to the effect that Frank M. Watenpaugh intended to make a presently effective designation of beneficiary in favor of plaintiff or that he permitted or authorized plaintiff to file a designation of beneficiary statement with the California State Teachers' Retirement System, or that he placed said written designation in the possession or under the control of plaintiff, or that he intended to effectively revoke the previous nomination of beneficiaries made by him; that the law contemplates the execution and filing with the System by the member thereof, prior to his death, of any change in beneficiary previously executed and filed; and that the problems here presented relating to change of beneficiaries of such benefits are governed by principles applicable to life insurance contracts, citing such authorities as Wicktor v. County of Los Angeles, 141 Cal.App.2d 592, 297 P.2d 115, and Johnston v. Kearns, 107 Cal.App. 557, 290 P. 640. Further, it is claimed that strict compliance was not waived by the System since it appeared, as alleged and that the change of beneficiary was not filed with it in the manner contemplated by law, citing 19 A.L.R. 115, and Cook v. Cook, 17 Cal.2d 639, 111 P.2d 322. It is therefore argued that the trial court's finding that the defendant System did not have a ‘real interest’ and was merely a stockholder in the proceedings could not be supported and the System, as a governmental agency had a right to insist on strict compliance regarding change of beneficiary requirements; that even if it be assumed that the System waived its right of strict compliance, the first beneficiaries had the right to insist on strict compliance; that in the instant case there were no equitable exceptions to the strict compliance rule; and that such rule does apply if the insured has neither filed the change of beneficiary statement nor expressly directed some one else to file it on behalf of the insured, citing such authority as Supreme Lodge v. Price, 27 Cal.App. 607, 150 P. 803; Pacific Mutual Life Ins. Co. v. Rotondo, D.C., 96 F.Supp. 197; Cook v. Cook, 17 Cal.2d 639, 111 P.2d 322; and cases cited in 19 A.L.R.2d 14 and 56.
It is understandable that the System should be desirous of having some fixed date on which it could safely pay the retirement benefits to the authorized beneficiary and avoid possible claim in the same amount by a beneficiary subsequently nominated by the member prior to his death, but not filed with said System until some future date. Gerstenlauer v. United States, D.C., 108 F.Supp. 654, 657. Had the legislature intended that such subsequent nomination be filed by the member and prior to his death as a condition precedent to the payment of such funds to the new beneficiary it should have been definite in so providing.
As we construe the law in this respect, it only provides that the nomination of a beneficiary under the Retirement System may be revoked at the pleasure of the member or beneficiary making the nomination and a different beneficiary nominated by a written instrument duly executed and duly filed with the board. That such filing must be before death, or that it must be filed by the member before the member's death is not indicated. There is nothing stated therein which would preclude an authorized agent to file it after his death. Section 14575, supra, provides generally that ‘Upon receipt of proof of a member's death which occurred before the effective date of his retirement * * * there shall be paid to such beneficiary as he has nominated by written designation duly filed with the Retirement Board * * *’. In the instant case he did nominate plaintiff by written designation, which was duly filed with the Retirement Board, but subsequent to his death. Again it is not indicated that such filing must be by the member prior to his death. The term ‘duly filed’ appears to have some significance. It has been interpreted as meaning more than the mere act of filing, i. e. ‘seasonably’, ‘regularly’ and ‘properly’ filed in compliance with the requirement of law. Citizens' State Bank v. Morse, 60 Kan. 526, 57 P. 115; Dunning v. Coleman, 27 La.Ann. 47, 48; Elbee Chocolate Co. v. United States, 2 Cir., 63 F.2d 773, 775; 13 Words and Phrases, Duly Filed, p. 618. It is true that the administrative interpretation or construction of the act which is administered by the State Teachers' Retirement Board is entitled to be considered. Riley v. Thompson, 193 Cal. 773, 227 P. 772; Bodinson Mfg. Co. v. California E. Comm., 17 Cal.2d 321, 109 P.2d 935. There are exceptions to this rule. County of Los Angeles v. State Dept. of Public Health, 158 Cal.App.2d 425, 322 P.2d 968. It was there held that an administrative officer may not make a rule or regulation that alters or enlarges the terms of a legislative enactment. In the instant case, while it is indicated the System and the Attorney General concluded that the member did not comply with section 14575, supra, in respect to the filing of the nomination, it also appears from the System's letter of April 27th that if plaintiff's attorney could furnish a statement of the witness to the execution of the nomination and an explanation for not filing the designation at the time it was executed, such showing would be received in making its determination as to whether it could act upon the designation which was delayed in its filing, and that there was some doubt as to whether the member ever intended that it be filed.
Since plaintiff did present the revocation and her nomination, together with the first proof of death, and made first claim to the proceeds by virtue of such revocation and nomination within a reasonable time and in accordance with the provisions of laws and the regulations, it must be held that it was ‘duly filed’ within the meaning of that term. Smith v. Metropolitan Life Insurance Company, D.C., 142 F.Supp. 320; Schwerdtfeger v. American United Life Ins. Co., 6 Cir., 165 P.2d 928; Mildren v. Mildren, 9 Cir., 239 F.2d 515; Kit v. Stecker, 3 Cir., 109 F.2d 281; John Hancock Mut. Life Ins. Co. v. Douglass, 7 Cir., 156 F.2d 367; Aetna Life Insurance Company v. Parker, D.C., 130 F.Supp. 97; Moore v. United States, D.C., 129 F.Supp. 456; Kendig v. Dendig, 9 Cir., 170 F.2d 750. The case of Pimentel v. Conselho Supremo, 6 Cal.2d 182, 57 P.2d 131, is somewhat factually similar to the instant case. There, there was a change of beneficiary form on the policy. The rules of the society require that this be signed, endorsed and surrendered to the society for verification by the signature of the secretary, and the seal. This form was signed by the decedent, notarized and delivered to an attorney who delivered it to the person named as the new beneficiary, and he put it in a safety deposit box. The decedent, prior to signing, stated to a friend that he wanted his brother to be made beneficiary, and after he had signed and turned the policy over to the attorney for decedent, he inquired if the necessary steps had been taken to change the beneficiary. The court, on appeal, ruled in favor of the brother, the newly designated beneficiary. It cited Johnston v. Kearns, 107 Cal.App. 557, at pages 563–564, 290 P. 640, at page 643, where the notice was mailed after the death of the insured, and this court said that ‘depends, not merely upon the records in the office of the company at the moment of the death of the insured, but also upon what steps have been taken by the insured prior to his death’ and, that ‘[The] right depends upon the acts of the insured himself, as measured by equitable rules.’
The Supreme Court, in the Pimentel case, supra, in citing Johnston v. Kearns, supra, said it is settled in this jurisdiction that interpleader and payment in court did not operate as a waiver of the insured's failure to comply with the policy provisions concerning change of beneficiary, and that such filing can only be construed as a recognition of liability to the rightful claimant and as a measure taken to protect the insurer against a double liability; that such payment into court does, however, relax the rule since the insurer waived its own right to insist upon a rigid adherence to the regulations. But the more liberal rule does not obtain where the insurer is disputing the rights of the second beneficiary (Citing cases). At first the System expressed some doubt as to whether it could recognize the change of beneficiary filed after the death of the member unless the delayed filing was sufficiently explained. It did appear in the action and claimed the necessity of such prior filing by the member himself. It submitted to the finding and judgment of the trial court that the delay in filing the change of beneficiary was immaterial and did not appeal from this judgment. Whether its action, under the circumstances, could be considered a waiver of strict performance as to the second beneficiary may be questioned. Under either theory, we are convinced that neither the law nor the regulations, as a condition precedent to the payment of the funds claimed, required that such change of beneficiary be filed by the member with the system, and prior to his death. Accordingly, the determination that a waiver of strict compliance resulted under the facts related is not necessary.
A more serious question arises as to the sufficiency of the evidence to support the court's finding that the member intended to make a presently effective designation of beneficiary in favor of plaintiff; that he permitted or authorized her to file a designation of change of beneficiary with the System; that he placed said designation in the possession and under the control of plaintiff; or that he intended to effectively revoke the previous nomination of the beneficiary made by him.
It must be conceded that he did, about one month after their marriage, obtain, fill out and sign, in the presence of a witness, a proper form which, if then filed by him or his authorized agent, would have effected the change indicated. There was no evidence that plaintiff knew of the execution of such a document until she discovered it, as indicated, after the member's death. There is no evidence that the member intended, at the time it was signed, that it was to then or subsequently effectively operate as a change of beneficiary or that he authorized plaintiff to file it with the System either then or after his death, to accomplish the purpose of such a change. It appears that he was an educated man and should have known, from the law and printed instructions on the form, that it would be necessary for him or his authorized agent to file it with the System at sometime before the change in beneficiary could be accomplished. Instead of mailing it, he brought it home and placed it in a folder with the other papers indicated, where it would not likely come to plaintiff's attention, and never told her about it. Had he intended her to file it, either before or after his death, it would seem only natural that he would have shown it to her or have told her about it at the time, or prior to his death. He had a warning of death in January, 1956, but recovered sufficiently to attend to its filing himself. Even assuming he originally had the intention of making the change, his lack of action thereafter might well negate the continuance of that intention.
Plaintiff claims in her brief that the defendant System's attorney stipulated that the designation of beneficiary had been delivered to the plaintiff. The full effect of the record does not support this conclusion. The court asked its counsel if he was willing to take the position that the designation of change of beneficiary was just as valid, whether or not it was delivered to her. In reply he said: ‘I am willing to stipulate then * * * I guess I would have to * * * that it was delivered to her.’ In reviewing the stipulation the court remarked: ‘As I remember, it has been stipulated that this document of June 9, 1955, was executed and delivered; right?’ Mr. Workman: ‘We did not stipulate it was delivered * * * I have no knowledge as to what Mrs. Watenpaugh did with it. All I am willing to stipulate to is that he executed the document and that it was found after his death in an accordian-type paper folder by the plaintiff, because that is the only information we have.’ The Court: ‘With that limitation, I think oral evidence as to the delivery of the document to her, if it was delivered, would be admissible. I will sustain the objection but permit you to put on oral evidence as to whether or not it was in fact delivered to her.’ Counsel for defendants refused to make any stipulation in reference to delivery to plaintiff.
In this connection, plaintiff had just offered to prove, by her own testimony, that her husband, in March or April, 1955, told her that in the event of his death she would be the beneficiary of the State Teachers' Retirement Fund, and told her that he had no pension but that there was a State Teachers' Retirement Fund; that several months later, in September or October, the deceased told her that in the event of his death she would have to sell the house because she could not keep up the payments; but that if she were careful she would be able to get along with the Teachers' Retirement Fund. Both the attorneys for the System and for defendants objected to this offer of proof and the court said it was inclined to sustain the objection; that as he remembered, it had been stipulated that the document was executed and delivered, to which counsel for the System replied: ‘We do not stipulate it was delivered.’
The proffered testimony of plaintiff, to which the court sustained the objection, might have had some bearing on the question of the delivery of the revocation and nomination of a new beneficiary, and the husband's intention or authorization for plaintiff to file it. Whitlow v. Durst, 20 Cal.2d 523, 525, 127 P.2d 530. In respect to the delivery or nondelivery of a deed, it has been uniformly held that it is a question of fact to be determined by the circumstances of the transaction and the sufficiency of the facts relied on to establish delivery. Accordingly, it is recognized that until the instrument is delivered, the grantor may do as he pleases with it. He has not only the right to change the character of the delivery originally contemplated by him, but also the right to destroy the instrument itself. 15 Cal.Jur.2d 477, Sec. 79 et seq. Proper evidence in support of these intentions is admissible. 15 Cal.Jur.2d 499, Sec. 99, and cases cited. At least the court should hear such evidence as plaintiff or defendants may properly offer, which would bear on the subject. This court could not, at this time, consider the offer of proof in support of the finding since, as defendants rightfully contend, the witness would be subject to cross-examination, and defendants would be entitled to produce other evidence in this respect. After hearing all the evidence the court will then be authorized to make proper findings based thereon. Accordingly, the judgment should be reversed and the respective parties be afforded the opportunity to present further evidence.
MUSSELL, Acting P. J., and McCABE, Justice pro tem., concur.