STEINERT, C.J., BEALS, MAIN, and GERAGHTY, JJ., dissent. This case was heard on stipulated facts in the lower court and here.
After the trial in the court below, that court rendered the following opinion, summarizing the facts and analyzing the issues and the law relating thereto:
"The salient facts in this action are admitted by the parties vitally interested and may be briefly summarized as follows: That on July 12, 1911, Corinne Leone Powers and Leon Frank Powers were married and continued to be husband and wife until the death of Mr. Powers on August 10th, 1935; that on August 15th, 1931, the American Medical Life Company, (which was afterwards succeeded by the plaintiff, The *Page 477 Occidental Life Insurance Company) executed and delivered to Mr. Powers its policy of life insurance, Exhibit No. 9, whereby it agreed to pay the beneficiary named therein, viz., Corinne Leone Powers, his wife, the sum of $5,000 upon the death of the insured; that the policy contained a clause (10) giving the insured the right to name a new beneficiary at any time during the continuance of the policy; that the policy also contained a provision (11) wherein it was stipulated that the insured could receive every benefit, exercise every right conferred by the policy without the consent of the beneficiary; that the original cost and all the premiums on the policy were paid from community funds; that on December 5th, 1934, the insured in proper form, without the knowledge or consent of his wife, designated new beneficiaries, viz., Minnie Lombard Powers, his mother; and Fern Marie Safford, his private secretary, one-half to each and these were the beneficiaries designated in the policy at the time of Mr. Power's death.
"After his death, Mrs. Powers, the wife; Minnie Lombard Powers, the mother; and Fern Marie Safford, each made claim to the proceeds of the policy and as a result of the conflicting claims the insurance company, under the interpleader statutes, paid the amount due into court and it thereby becomes its duty to determine the rights of the claimants thereto.
"It is the contention of Mrs. Powers, the wife, that the whole sum must be awarded to her for the reason that the policy being community property, her husband could not give it or its proceeds away without her consent. In other words, she contends that without adequate consideration to the community therefor, her husband could not, without her consent, make a change of beneficiary. In addition, it is also her claim that the change of beneficiary on the part of the insured was in effect an attempt to make a testamentary disposition of their community property and not having the legal requirements of a will, it was, therefore, void.
"The community property system and the rights of the spouses in property, both real and personal, acquired during the marital relation have been settled *Page 478 with reasonable certainty in this state. In Marston v. Rue,92 Wn. 129, our supreme court uses this language:
"`Now a wife's rights in family personalty are not of the contingent sort, like dower or survivorship, but a present estate. True, by our statute, the husband is made manager with full power to sell and dispose of this. But it does not follow that he can give it away. He is, so to speak, only the head of a firm. The personal property is just as much hers as his. The very statute that gives him sale power over the whole restricts his testamentary power to a half. Under our law she has helped to create it as much as he. Consequently, the idea is not to be tolerated that a husband can give away stocks and bonds or precious stones out of the family money. No part of those savings can he make gifts of against her consent, even to relatives, though mere trifles to the latter no doubt might be sustained under the rule of de minimis. The law cannot countenance his right to a wilful, premeditated waste of family personal property, which is now so often the bulk of an estate.'
"This decision was later amplified in Schramm v. Steel,97 Wn. 309, where it is said:
"`The husband is made, by statute, the manager, not the owner. His management and control include the power of absolute disposition, but only for the community. Else there is no such thing as a vested property right in the community as to any personal property, since the husband could give away all such property in any manner he pleased, except by will, at any time during the existence of the community. To hold that the whole substance of the term "community property" as applied to personalty consists in a mere contingent expectancy of the wife, would make of the term "community personal property," a palpable misnomer. It would take away every community element except the fact that a wife's labors and sacrifices had helped to earn it. It would destroy that equality which it is the obvious purpose of our community property law to conserve.'
"See, also, Parker v. Parker, 121 Wn. 24, Nimey v.Nimey, 182 Wn. 194, Johnston v. Johnston, *Page 479 182 Wn. 573, In re McGovern's Estate, 181 Wn. 231.
"The substance of these decisions is: 1. That the wife has a vested interest in community personal property. 2. That while the husband has the management and control of the community personal property he is only a statutory agent of the community, and 3. That a husband does not have the power to make substantial gifts of community personal property without the consent of his wife.
"It is self-evident that a policy of life insurance upon the life of either spouse, resident of this state, when their community rights are to be determined, must necessarily be construed by the law of this state affecting such rights. That the policy in question is a community asset cannot be seriously disputed. The marital relation existed; the insurance was upon the life of the husband; the beneficiary was the wife; and the premiums were paid from the community earnings. It is true that the policy is in the form of an endowment, but this feature rather augments than detracts from the holding that it is community personal property.
"The policy represents the investments of community funds for the benefit of the wife and family, effective when and if the community is deprived of the earnings and support of the husband and father. But if the husband shall be living at the end of the endowment period and the policy is in force, the proceeds of its investment will be returned to the community. In other words, while this policy did not have all the attributes of an investment in stocks or bonds it did represent value in cash, present and future.
"Holding that a policy is property see May v. Rudell,149 Wn. 393 at 398.
"What power, then, has the husband as statutory agent of the community over the policy? While the policy grants him the right to name a new beneficiary and `freedom of control' yet this power can only be exercised for the benefit of the community. The law becomes a part of the contract and the provisions of the policy must be harmonized and interpreted so that there is no conflict between them and the law. *Page 480 When this is done, we find that the husband as agent for the community may assign a life insurance policy as collateral security for a community debt without the consent of the wife; and, likewise, for an adequate consideration he may change the beneficiary without the consent of his wife.
"Seattle Assn. of Credit Men v. Bank of Cal., 177 Wn. 130,Johnston v. Johnston, 182 Wn. 575.
"If a husband's right to change the beneficiary be not limited to transactions for the benefit of the community, a wife could easily be deprived of the bulk of a community estate. It is common knowledge that in many families a large portion of community savings are invested in various forms and types of insurance. If a husband could secretly substitute another beneficiary for his wife, she could be left penniless. A wife would certainly hesitate to lend her consent to the investment of community funds in life insurance if she could be so easily deprived of its benefits.
"I am not unmindful of the contractual relationship between the insurance company and the insured. As agent of the community, he obtained a policy on his life which gave him the right to substitute a new beneficiary at any time and it may be urged that the wife is estopped from contesting his exercise of that right. But, as is said in Marston v. Rue, supra,
"`The burden of proof, to be sure, must be on the wife when she seeks to interfere. The presumptions are against her. She cannot act upon whim or take things into her own hands every time he goes out of town or snatch back an asset where there can be two minds on the question. But that in a plain case she must have redress either by damages or recovery of the thing itself from his fraudulent donees is undeniable, or we should be taking the statute away from her. On this we said that, while in a common law jurisdiction a court had been compelled to acknowledge that the husband could beggar the wife by giving away the personal property, he could not do it here.'
"Under the stipulated facts, the wife has sustained her burden of proof. It appears that without any consideration *Page 481 to the community, and without her knowledge and consent, her husband transferred a community asset, which constitutes in law a fraud upon her rights.
"I have examined many cases which may be considered as throwing light upon this question. In Schade v. Western UnionLife Insurance Co., 125 Wn. 208, the change of the beneficiary from the wife to the Spokane Eastern Trust Co. without her knowledge and consent was sustained as valid for the reason that the community received a valuable consideration of an extension of time in which to pay a community debt and that the proceeds were applied in payment of such debt. In other words, it was held she derived a benefit.
"In Mutual Benefit Life Insurance Co. v. Lundquist,140 Wn. 345, there was no change of beneficiary involved but the wife was seeking the proceeds of life insurance policies payable to her husband's sister and mother. The right of the beneficiaries to recover was sustained because it was held that the premiums were paid from the separate funds of the husband.
"The case of Koch v. Aetna Life Insurance Co. involved the right of a single man to change the beneficiary under a group insurance policy issued to his employer.
"The case of Cade v. Head Camp W.O.W., 27 Wn. 218, apparently upholds the right of the insured to change the beneficiary. The gist of the decision is that husband who, as a member of the benefit society, procures a policy of insurance on his life in which his wife is named as a beneficiary, paying dues thereon with community funds, may, without the knowledge or consent of the wife, lawfully substitute another beneficiary. This, on the ground that she acquired no vested interest in the policy. But this decision is not controlling and must be considered in the light of later developments and the clarification of our community property laws whereby it has been definitely settled that the wife has a vested interest in all community personal property.
"Counsel for the substituted beneficiaries has cited *Page 482 a case from California almost squarely in point on the facts. This is the case of New York Life Insurance Co. v. Bank ofItaly, 214 P. 61. It has been followed in a number of California cases.
"See Dixon Lumber Co. v. Peacock, 19 P.2d 233; TravelersIns. Co. v. Fancher, 20 P.2d 1004; 26 P.2d 482; McBridev. McBride, 54 P.2d 480.
"The substance of the rule there announced is as follows: Where premiums of an insurance policy on the life of the husband after marriage are paid from community funds, the policy becomes a community asset; the designation of a beneficiary initiates in a beneficiary's favor an inchoate gift of the policy proceeds, which if not revoked by the insured prior to death, vests in the beneficiary at the time of insured's death; the husband may not make a gift of the entire community property without the consent of the wife; if the husband without knowledge and consent of the wife, without consideration, substitutes a new beneficiary, the designation is a gift and as respects the wife's share or one-half of the policy proceeds, is invalid; and her community share belongs to her in her own right and not as executrix of the estate. In other words, it is held that if the right is given to the husband to, and he does, change the beneficiary, without the latter's consent, his act in so doing constitutes a gift to the new beneficiary to the extent of the husband's community interest in the policy, but the husband cannot in this matter, without the consent of the wife, bestow upon the new beneficiary the community interest of the wife. I would be inclined to follow these cases as an authority in deciding the issue presented were it not for the fact that in California the settled property rule is that the wife, while living with her husband, has a mere expectancy and not a genuine interest, in community property.
"Roberts v. Wehmeyer, 218 P. 22.
"In this connection, see the cases of United States v.Robbins, 269 U.S. 315; 46 S.Ct. Rep., 148; and Poe v. Seaborn,282 U.S. 101; 51 S.Ct. R., 58, in which the community property laws of the State of Washington and the State of California are compared and distinguished. It is clearly pointed out that in *Page 483 California the wife has no vested future interest in half of the community property, but has only a possible interest in whatever remains on dissolution of the community, otherwise than by her own death. And that the property rights of the husband during the life of the community were so complete that he was in fact the owner. In Washington the husband's power of control over community property does not amount to ownership of the entire property, the wife having equal vested interest therein.
"It seems to me that this difference of the interest which the wife has in community personal property is the vital distinguishing feature. The mere expectancy of the wife and the extent of the control of the husband sustain the reasoning of the California decisions in holding his act in changing the beneficiary constitutes a gift to the new beneficiary of his community interest in the policy effective upon his death. But in this state, the wife having an absolute vested interest in the community personal property, such vested interest prevents the husband from making a substantial gift thereof without the consent of the wife. In other words, in Washington such a gift is void as to the whole of the property; in California the entire gift is not a nullity, but is subject only to the wife's right to have it revoked as to the half to which she would be entitled upon his death.
"My determination of the main issue renders it unnecessary to pass upon the question of whether or not the attempted disposition of the proceeds of the policy by a change of beneficiary was a testamentary disposition of such property.
"I feel compelled to hold that Corinne Leone Powers, the wife, in her own right is entitled to all of the proceeds of the policy. Judgment accordingly."
On appeal, the sole question presented by appellants is whether, when the premiums on a life insurance policy originally payable to the wife, insuring the husband's life, are paid with community funds and the policy contract in express terms gives the insured the right to change the beneficiary without notice to *Page 484 or consent by the original beneficiary, and the insured carries more than an equal amount of other insurance naming his wife as beneficiary, and by his will leaves all the community property to his wife, can the designation by the insured of a person other than his wife as the new beneficiary be set aside and held for naught?
[1] We concur with the opinion of the trial judge and his analysis of our cases, including Cade v. Head Camp, W.O.W.,27 Wn. 218, 67 P. 603, and Koch v. Aetna Life Ins. Co.,165 Wn. 329, 5 P.2d 313, strongly relied upon by appellants. To these may now be added Massachusetts Mutual Life Ins. Co. v.Bank of California, 187 Wn. 565, 60 P.2d 675, a case not published when the trial judge rendered his opinion, in which we reiterate our pronouncement that life insurance during the life of the insured forms a reserve to be drawn upon in times of stress and is in a true sense property.
In the Koch case, supra, the wife was dead. The decisions in the Cade and Koch cases, supra, must be limited to the kind of contract and issues involved in those cases. In this state, insurance or the proceeds of insurance are not mere expectancies or choses in action, but are property; and if the premiums are paid by the assets of the community, they constitute community property.
The rights of the spouses in this state in and to community property are different than those in California and other community property states, as shown by the cases cited, in the opinion of the trial judge, from the United States supreme court. In this state, as stated in those cases, and as has always been stated by this court, the wife has a vested property right in the community property equal with that of her husband and in the income of the community, including *Page 485 salaries or wages of either husband or wife, or both. In California and some other states, the wife does not have such vested right, but has only a secured right to a moiety until dissolution of the community. That has been the uniform rule in this state from Holyoke v. Jackson, 3 Wn. Terr. 235, 3 P. 841, to Bortle v. Osborne, 155 Wn. 585, 285 P. 425, 67 A.L.R. 1152.
In Marston v. Rue, 92 Wn. 129, 159 P. 111, we stated that
"The idea is not to be tolerated that a husband can give a mistress stocks and bonds or precious stones out of the family money. No part of those savings can he make gifts of against her consent, even to his own relatives, . . ."
See, also, Parker v. Parker, 121 Wn. 24, 207 P. 1062.
[2] Appellants also contend, as they did in the court below, that the changing of the beneficiary in a life insurance policy amounts to a testamentary disposition within the meaning of Rem. Rev. Stat., § 1342 [P.C. § 9848]. That contention is untenable.
"The only way in which a deceased person can dispose of property in this state is by will. The term `testamentary disposition' is used in both the law of the property rights of married persons (Code of 1881, § 2411), and the law of descent of real property (Id., § 3303; Gen. Stat., § 1481), but the meaning is `disposition by will.' The very same statute, which used the words `testamentary disposition,' also used the word `will' in a negative way to convey the same meaning. Code 1881, § 2409. But, without this, the common usage the world over is to employ the words `will,' `testament,' and `last will and testament,' as exactly synonymous." Hill v. Hill, 7 Wn. 409,35 P. 360.
To the same effect in principle are Rhines v. Young,97 Wn. 437, 166 P. 642; Buckner v. Ridgely Protective Ass'n,131 Wn. 174, 229 P. 313; Bartlett v. *Page 486 Bartlett, 183 Wn. 278, 48 P.2d 560; In re Chambers'Estate, 187 Wn. 417, 60 P.2d 41.
A case quoted in full and much relied upon by appellants,Shields v. Barton, 60 F.2d 351 (C.C.A., 7th Circuit), does not correctly determine the law of this state as stated in the foregoing citations. That case did not have the benefit of any counsel except from Chicago, who were unfamiliar with our law governing community estates, wills and testamentary disposition. The writer of that opinion lamented that there was no decision of the Washington supreme court to aid them. There were, but they were not cited there. Young v. O'Donnell, 129 Wn. 219,224 P. 682, does not aid appellants. Nor does New York Life Ins.Co. v. Bank of Italy, 60 Cal.App. 602, 214 P. 61, a decision upon different issues or statutes and concerning a different status of the community property law of California affecting the spouses.
Two other questions, not presented to the lower court, but suggested from the bench here at the oral argument, require some further discussion.
[3] The first question suggested was whether a segregation might be made of the rights acquired under a policy of life insurance along the lines of segregation for inheritance tax purposes set forth in the act of 1935 (Laws of 1935, chapter 180, pp. 784, 785; Rem. Rev. Stat. (Sup.), § 11211-b [P.C. § 7030-175]). The general provision of that act makes life insurance in excess of forty thousand dollars a part of the estate for purposes of computing inheritance tax. Under policies upon the life of a decedent officer or employee of a corporation or partner in a business enterprise where the premiums are paid exclusively by the beneficiary, the statute excepts from such tax the amount of the "cash surrender value" of the policy immediately prior to the death of the decedent. It *Page 487 was suggested that the legislature has by statute differentiated between "cash surrender value" and "proceeds of life insurance" payable at the death of the insured; in other words, that where, as here, the premiums on life insurance policies have been paid from community funds, then the "cash surrender value" at the date of the death of the insured husband constituted "tangible personal property," and that the proceeds payable in excess of "cash surrender value" are subject to the rule announced in theCade case, supra. Whether it be considered that the "cash surrender value" is different from the proceeds at the time of the death of the policy holder of the life insurance, the result is the same. Both have been paid for with community funds.
The "cash surrender value" always represents an amount less than the premiums paid. The benefits and proceeds of life insurance policies were paid for by community funds. Since we hold that they are property and, being paid for by community funds, are community property, no sound distinction can be made between the two terms under that statute.
[4] The other question made from the bench was as to the effect of the pauper statute, Rem. Rev. Stat., § 9982 [P.C. § 1694], which, so far as material, reads:
"Every poor person who shall be unable to earn a livelihood in consequence of bodily infirmity, idiocy, lunacy, or other cause shall be supported by the father, grandfather, mother, grandmother, children, grandchildren, brothers, or sisters of such poor person, if they or either of them be of sufficient ability; . . ."
The suggestion thus made tentatively was that the law might impose the duty on the son to support the mother which would be a community obligation which would legally justify the son in naming the mother as beneficiary in an insurance policy belonging to the community. *Page 488
On due reflection, there is no force in that suggestion. The statute by its terms imposes the obligation to support an indigent mother only on the son. Nowhere is evidenced any intent to charge such liability against the community created by the marriage of the son. However strong the moral duty may be, there was no such obligation at common law. It is purely a statutory obligation, and the procedure provided for its enforcement by statute is exclusive. Moss v. Moss, 163 Wn. 444,1 P.2d 916.
"The statutory liability of one relative to support another exists only during the former's lifetime and does not deprive him of the right to dispose of his property by will without providing a maintenance for the latter, and such liability does not continue as a claim upon his executor or against his estate." 48 C.J. 509.
The husband in his capacity as manager of the community is manager essentially of a business concern and must be controlled by his statutory authority. Sun Life Assurance Co. v. Outler,172 Wn. 540, 20 P.2d 1110.
We conclude that the judgment of the trial court was right and is affirmed.
BLAKE, ROBINSON, and SIMPSON, JJ., concur.