Dorland v. Whitmer

During the World War one Ralph Dorland joined the United States Army and went to France. While there, he took out a $10,000 insurance policy with the federal government, making Carl Dorland, the plaintiff in error, the sole beneficiary. The said Carl Dorland was a brother of Ralph Dorland. While in France, the said Ralph Dorland wrote a letter to the plaintiff in error saying that if he (Ralph) should be killed in action, Carl should take care of the kid sisters, of which there were three in number.

Said Ralph Dorland returned to this country after the war and lived in Canton for several years, never making any attempt to change the beneficiary in the war risk policy. On March 15, 1921, Ralph Dorland died, leaving Carl Dorland the sole beneficiary under the government insurance. Thereupon the government began making monthly payments of $57.50 to the said Carl A. Dorland, plaintiff in error.

On January 6, 1925, the said three sisters, the defendants in error in this action, filed a petition in the common pleas court of Stark county, Ohio, asking that this money be declared a trust and that the said Carl Dorland be made a trustee; further, that he should pay over to each of the sisters one-fourth of all moneys received and to be received. Said request was granted by the court of common pleas and that decision was upheld by the Court of Appeals.

In the early part of 1931 the plaintiff in error consulted with his attorney, who advised him that the local courts had no jurisdiction of this case and that therefore he should withhold further payments as trustee until the determination of this matter in the proper court. Shortly thereafter the sisters brought an action in common pleas court in contempt proceedings against the said Carl A. Dorland. Upon hearing of this matter in the common pleas court, the said Carl A. Dorland was adjudged guilty of contempt of court, as charged, and ordered to pay over a certain sum of money at that time, and it was further ordered that after the final determination of this matter, if he did not pay over the balance, he should be sentenced to jail.

As hereinbefore stated, the action was first brought in the court of common pleas of Stark county, Ohio, to declare a trust. Motion to certify record was filed in the Supreme Court of Ohio, in which plaintiff in error contended that said cause involved the question whether or not the state courts have jurisdiction to decide questions of dispute between different claimants to government insurance payments, claiming that the act creating federal insurance for the benefit of soldiers in the World War had provided for a method of settling such disputes in said federal courts; the plaintiff in error representing to the Supreme Court that the Court of Appeals had erred in its judgment in these particulars, and in other matters, for which said judgment ought to be reversed, and claiming that said matters were of great general and public interest. The Supreme Court, after due consideration thereof, overruled plaintiff in error's motion and refused an order requiring the Court of Appeals of Stark county, Ohio, to certify its record for review.

The claim is made by plaintiff in error that all war risk insurance actions must be filed in the federal courts, and the further claim is made that the common pleas court of Stark county, Ohio, had no jurisdiction of the subject-matter, and that the plaintiff in error cannot be held and bound by such action. With this contention we do not agree.

In the case of Wolcott v. Wolcott, Sr., 17 Ohio App., at page 48, a Clark county case, decided December 8, 1920, the Court of Appeals held: "Where a father has been made a beneficiary in war risk insurance by a soldier, a valid trust therein may be ingrafted by a letter of instructions forwarded to the father and consented to by him at a time substantially contemporaneous with the designation of the father as beneficiary."

In Duncan v. Linton, Admx., 38 Ohio App., at page 57,175 N.E. 621, the Court of Appeals of Franklin county, under date of April 16, 1929, held: "The Court of Appeals has jurisdiction to declare a trust in the undistributed proceeds of war-risk insurance paid by the United States government to the administratrix of a deceased soldier, for distribution among the beneficiaries entitled thereto." That court further held that where the evidence establishes an intent on the part of a soldier to make a certain member of his family the second beneficiary under his war risk insurance policy, such intent will be carried out, even though notice of the designation of the second beneficiary was not received by the Bureau of War Risk Insurance prior to the death of the insured.

We further find in Cyclopedia of Insurance Law by Couch, volume 8, Section 2299, upon the matter of jurisdiction: "Section 13 of the War Risk Insurance Act, as amended May 20, 1918, providing that, in the event of a disagreement as to a claim under a contract of insurance between the Bureau and any beneficiaries thereunder, an action on the claim may be brought against the United States in the district court of the United States in and for the district in which such beneficiaries, or any one of them, reside."

And this section is to be read in conjunction with Section 5 of the Tucker Act (Title 28, Section 762, U.S. Code) providing, among other things, the right to bring such action and how service shall be made in order to obtain jurisdiction in an action by beneficiaries to recover on a policy of war insurance.

"Under the Act of June 7th, 1924, the district courts of the United States have jurisdiction of suits at law to recover on a contract of war risk insurance. The federal district courts, however, do not have exclusive jurisdiction of an action to establish a trust in proceeds of war risk insurance, and such an action may be maintained in the state courts." 8 Cyclopedia of Insurance Law by Couch, 7484, Section 2299, citing the case ofMueller v. Mueller, 222 Ill. App. 435, wherein it was held that the United States was neither a necessary nor a proper party to a suit to establish and enforce a trust in war insurance payments against the beneficiary named in the policy. The Mueller case further held: "The State courts have jurisdiction of a suit to establish and enforce a trust in the funds being paid by the government under a war insurance policy on the life of a soldier."

From the foregoing it will be noted that the state courts have jurisdiction in such matters as are involved in the instant case, that the court below had the right to declare a trust, as it did, and that the court below had the right to make an order such as was made. The court below having found plaintiff in error guilty of contempt, the court below had the right to enforce the order so made.

It therefore follows that the finding and judgment of the court below will be, and the same hereby is, affirmed.

Judgment affirmed.

SHERICK, P.J., and MONTGOMERY, J., concur.