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Court of Appeal, Second District, Division 4, California.

Irene E. CARLSON, Plaintiff and Appellant, v. Gary Lee CARLSON and Brent Earl Carlson, Defendants and Respondents.

Civ. 41018.

Decided: October 01, 1973

Robert B. Maxwell, Oxnard, for plaintiff and appellant. Milton Posnick, San Jose, for defendants and respondents, Gary Lee Carlson and Brent Earl Carlson.

This is an appeal1 by plaintiff, spouse of Carl Carlson, against defendant Metropolitan Life Insurance Company, and Gary Lee Carlson and Brent Earl Carlson, sons of plaintiff and Carl Carlson. A dispute arose over certain proceeds of a Civil Service Life Insurance Policy issued by Metropolitan Life Insurance Company as a group policy covering the lives of certain civilian employees at Point Mugu Naval Missle Center. Metropolitan paid the proceeds of the policy into court and was thereafter pursuant to stipulation of all parties, dismissed from the case. The order dismissing Metropolitan is final and is not involved in this appeal.

Plaintiff alleged that she and Carl G. Carlson were husband and wife from their marriage on January 22, 1949, until his death on July 14, 1971. Plaintiff alleged that the premiums on the policy were paid with community property, and that decedent's designation of their sons as beneficiaries under the policy was without the wife's knowledge or consent and was without consideration. The plaintiff wife sued for one-half of the proceeds of the policy, i.e., $12,000, plus 7 per cent. Respondents' demurrer was sustained on the ground that no cause of action was stated. Plaintiff amended. Defendants' motion for summary judgment thereafter was granted.

The policy, which was a group Civil Service Life Insurance Policy, was issued on November 24, 1954, and the premiums were paid entirely out of community earnings. In 1971, while he was ill, decedent changed the beneficiary without knowledge or consent of the plaintiff wife.

Plaintiff's contention is that the trial court erred in finding that the plaintiff wife is not entitled to recover one-half of the proceeds of a life insurance policy where those premiums were paid out of community property. Generally, under California law, where the beneficiary is other than the wife and the premiums for insurance policies are paid out of community property, without the consent of the wife, the wife may recover one-half the proceeds of the policy. (Grimm v. Grimm (1945) 26 Cal.2d 173, 157 P.2d 841; Cooke v. Cooke (1944) 65 Cal.App.2d 260, 150 P.2d 514.) This is true even though the insurance contract provides that the insured husband has the right to change the beneficiary without the wife's consent. (Tyre v. Aetna Life Ins. Co. (1960) 54 Cal.2d 399, 6 Cal.Rptr. 13, 353 P.2d 725; Polk v. Polk (1964) 228 Cal.App.2d 763, 39 Cal.Rptr. 824.) However, the group policy in the case at bench was issued pursuant to Federal Employees Group Life Insurance Act as contained in Title 5 of the United States Code (sections 8701 through 8716). Title 5 sets forth comprehensive scheme covering the purchase of life insurance, and section 8705(a) permits the insured to designate his beneficiary or beneficiaries. Title 5 also allows the insured to change the beneficiary at any time without the knowledge or consent of the previous beneficiary.

For reasons set forth below, we must agree with respondents' contention that the federal policies set out in Title 5 must prevail over the California community property laws, such that the plaintiff wife is not entitled to one-half the proceeds of the policy.

The case of Wissner v. Wissner (1950) 338 U.S. 655, 70 S.Ct. 398, 94 L.Ed. 424 held that the proceeds of a National Service Life Insurance Policy must be paid to the beneficiary designated by the insured, rather than to decedent's widow, even though under state community property law, the widow was entitled to one-half of the proceeds of the policy. The United States Supreme Court said therein that ‘Congress has spoken with force and clarity in directing that the proceeds belong to the named beneficiary and no other’ and the Supreme Court went on to hole that a lower court judgment which gave one-half the proceeds to the widow ‘nullifies the soldier's choice and frustrates the deliberate purpose of Congress' and ‘cannot stand.’ (Wissner v. Wissner, supra, at pp. 658 and 659, 70 S.Ct. at p. 400.) Similarly, in the case at bench, Congress has spoken with force and clarity and the deliberate purpose of Congress in allowing decedent to choose a beneficiary cannot be frustrated by California state community property laws.2

Plaintiff argues that Wissner is distinguishable because in Wissner there was a code section exempting national service life insurance proceeds from attachment, levy, or seizure before or after receipt. Plaintiff argues that here there is nothing to prevent recovery of the proceeds of the insurance from the designated beneficiaries after receipt of those proceeds by them from the insurance company. While it is true that there is no express provision in the policy or in the underlying statute that deals with such a recovery, we do not regard that fact as a significant distinction between the case at bench and Wissner. As we read Wissner and the cases hereinafter discussed, we conclude that the inapplicability of state community property rules to insurance provided under the kind of statute involved in those cases and in the instant case, rests on a federal policy to allow certain types of employees a personal right to designate the beneficiaries of the insurance which the government makes available to such insureds.3

Plaintiff also argues that the Wissner case is distinguishable because Wissner was upheld on the ground of ‘broad Congressional powers over national defense’ and plaintiff argues that matters of national defense and servicemen are not involved in federal employees life insurance policies. The rule of Wissner is not as narrow as plaintiff would wish us to believe and its holding is not limited to cases involving insurance policies for servicemen. Although Wissner does not establish ‘the broad rule that every benefit or property right arising from Federal law must invariably be separate property’ (In re Marriage of Karlin (1972) 24 Cal.App.3d 25, 31, 101 Cal.Rptr. 240, 244), neither is the rule so narrow that it applies only to Congress' power over national defense and servicemen. The rule of Wissner is that where Congress makes clear its intent or choice of beneficiary, that intent or choice must prevail over contrary state community property laws. The California court explained the test in Karlin, where the court said at page 31, 101 Cal.Rptr. at page 244: ‘Each case must be determined by the expression of Congress manifested in statutes pertaining to the particular problem at hand.’ In the case at bench Congress manifested its intent clearly and forcefully by statute (U.S. Code 5) and so the contrary California community property law must fall.

The case of In re Marriage of Karlin, supra, 24 Cal.App.3d 25, 101 Cal.Rptr. 240 while reaching a result contrary to the result we reach, is entirely consistent with our holding and our reasoning. In that case the court held that the husband's air force retirement pay was community property, where the husband submitted no specific provision or statute to indicate that his air force retirement pay was separate property, and where there was no overriding federal purpose to require the conclusion that the retirement pay was separate property. In the case before us there is a specific provision and statute entitling the government employee to change his beneficiary and Congress has therein expressed an overriding federal purpose in this matter of choosing and changing a beneficiary.

The case of Free v. Bland (1962) 369 U.S. 663, 82 S.Ct. 1089, 8 L.Ed.2d 180 is in point. That case dealt with the issue of whether, under the Supremacy Clause of the Constitution, the Treasury Regulations creating a right of survivorship in United States Savings Bonds preempted any inconsistent provisions of the Texas community property law. The United States Supreme Court held (369 U.S. at p. 670, 82 S.Ct. at p. 1094): ‘[T]he state law which prohibits a married couple from taking advantage of the survivorship provisions of United States Savings Bonds merely because the purchase price is paid out of community property must fall under the Supremacy Clause.’

In accord is the California case of Estate of Mahorney (1963) 214 Cal.App.2d 334, 336, 29 Cal.Rptr. 457. That court said that, in determining who is the beneficiary of the proceeds of a federal employees' group life insurance policy, the federal law, and not California law, must be applied.4

There was no error in granting a summary judgment.

The judgment is affirmed.


1.  The notice of appeal purports to be from the order granting summary judgment. However, the record shows that the ‘order’ was, in fact and in form, a judgment against appellant. We disregard the misnomer in the notice. (Calif. Rules of Court, rule 1(a).)

2.  Also Thoen v. Thoen (1967) 248 Cal.App.2d 354, 56 Cal.Rptr. 614, holds that Congress' intent to allow a serviceman to select a beneficiary prevails, regardless of state law.

3.  Since the action was against the named beneficiaries in their individual capacities as such, we do not reach, in the case at bench, the question of the right of the plaintiff to secure relief against her husband's estate. (Cf. Fields v. Michael (1949) 91 Cal.App.2d 443, 205 P.2d 402.)

4.  In Mahorney, the decedent did not designate a beneficiary. Decedent's intention on choice of a beneficiary was found to control, rather than California community property law.

KINGSLEY, Associate Justice.

JEFFERSON, Acting P. J., and DUNN, J., concur.