320 F. 2d 778 - Smith v. Metropolitan Life Insurance Company Metropolitan Life Insurance Company

Appellant on April 11, 1958 was named administrator of the estate of his aunt, Dorothy E. Saunders, who died on March 21, 1958. He here attacks a judgment1 in favor of the appellee permitting recovery of an overpayment in the sum of $1,000 from the appellant Smith as administrator and the National Surety Corporation as his surety. It is here argued that the appellee's claim 'was never probated against the estate, and the administrator was not notified of said claim until long after the expiration of the oublication against creditors2 and several months after he had filed3 the final account on the 20th day of February, 1959.'Dorothy E. Saunders had been a federal employee, who at the time of her death was insured under a group policy issued by the appellee. According to the schedule of payments fixed by statute4 the amount of life insurance available to Dorothy E. Saunders was $4,000. On July 30, 1958, the appellant as administrator filed a sworn inventory of money and debts due, listing unpaid compensation, $373.94, Civil Service retirement fund $1,571.78, and specifically, 'Federal Employees' Group Life Insurance-- $4,000.'

The Immigration and Naturalization Service, employing agent of the appellant's decedent, issued an erroneous certificate in proper reliance upon which the appellee, on December 19, 1958, paid to the appellant as administrator the sum of $5,000. The Civil Service Commission's audit having disclosed the overpayment, the correcting certificate having been issued as of April 13, 1959, the appellee sought reimbursement of the sum of $1,000.5

As of July 1, 1959, appellant's counsel transmitted to the Probate Court the 1958 proof of publication against creditors, followed by a deposit of the cancelled vouchers, all dated August 6, 1958, and reflecting payment to the creditors of the deceased and a funeral bill of $1,053.70. Despite the various requests previously made by the appellee for reimbursement, the appellee's claim was not then or thereafter listed by the appellant or his counsel. The appellee was given no notice that the administrator had lodged a purported 'final account' on which no action had yet been taken by the court. Instead, as late as September 17, 1959, the appellee again requested information 'immediately' as to when 'we may expect to receive the reimbursement of the sum of $1,000.' Appellant's counsel replied under date of October 13, 1959 that he had taken up the matter with his client, the administrator, and would meet with him on October 22, 1959 to discuss 'this matter.' Counsel concluded 'After I have had an opportunity to talk to him, I will advise you.'6

The record contains no evidence of any such advices. On November 4, 1959, appellant filed a Finance Office nontaxable certificate dated October 29, 1959. Thereupon, on November 5, 1959, the administrator's 'first and final account,' the order recited, 'being now presented for approval, the same is, after examination by the Court, approved and passed.'

For more than six months, the appellant as administrator had known of the error7 which led to the overpayment. He had ignored the repeated requests of appellee's counsel that appellee be reimbursed in the sum of $1,000. As late as the morning of November 5, 1959, on the face of his sworn account he was representing to the court that there was a 'Balance for Distribution to Howard Jerome Smith, nephew' $5,069.57.8

It is obvious that when the District Court 'approved' the final account, it had no notice of the overpayment. Even if we were to treat the amount in question as a debt or account 'due to the deceased,' as the original inventory had set forth, no supplemental inventory had been filed 'promptly,' as is required by D.C.Code 18-405 (1961), to reflect receipt of assets not included in the original inventory. Nor had the administrator sought, as one entitled to the residue of the estate, to proceed under the special bond provisions of D.C.Code 20-203 (1961). The allowance of the 'final' account does not conclude the matter because of the circumstances shown and because the basis upon which the administrator received the proceeds of the insurance was already fixed by law.

Title 5 U.S.C. 2093 (1958) provides in pertinent part:

'Any amount of group life insurance * * * in force on any employee at the date of his death shall be paid, upon the establishment of a ualid claim therefor, to the person or persons surviving * * * in the following order of precedence:

'Fifth, if none of the above, to the duly appointed * * * administrator of the estate of such employee.'

The Government's own interest in the Federal Employees' Group Life Insurance program and in the maintenance of its integrity is clearly evident from the provisions running throughout Title 5 U.S.C., Chapter 24.

This appellant could not have received the proceeds of the decedent's insurance except upon his establishment of a 'valid claim.' He could not lawfully receive an amount greater than the $4,000 explicitly prescribed by the statute. 5 U.S.C. 2092 (1958).

When, after prolonged frustration, the appellee finally went to court and filed its motion for judgment against the administrator and his surety, the appellee rested its claim on the ground that the administrator had breached the duties of his office. The appellant in his answer admitted that he had accepted the sum of $5,000 'as administrator of said estate,' although he had sworn in his inventory that he was entitled to receive only $4,000. He sought to persuade the District Court, sitting as a probate court, that he had acted in good faith.9

Judgment was awarded to the appellee against the appellant as administrator of the Saunders estate and against National Surety Corporation as the surety on his administrator's bond authorizing recovery by the appellee of the sum of $1,000 with interest thereon at 6% Per annum from May 1, 1959. Since the administrator here had unlawfully received $1,000 which had been paid to him solely in his capacity as administrator, he was not entitled officially to retain that sum. Other contentions advanced by the appellant do not affect the result.

Affirmed.