Spiro State Bank v. Bankers' Nat. Life Ins. (69 F.2d 185, 1934)

SANBORN, Circuit Judge.

John McCann, of Le Flore county, Okl., on April 23, 1932, committed suicide. He had three policies of life insurance issued by the Bankers’ National Life Insurance Company, each for the sum of $10,000, and each payable to his minor sons. The policies, which were five-year term policies automatically convertible into ordinary life after five years, had been written in November and December, 1928. They had been applied for and delivered in the state of Arkansas, and were therefore Arkansas contracts. The insured reserved the right to change the .beneficiaries. Two of the policies from their inception were payable to the sons. One, which was originally payable to Mrs. McCann, was, on July 29, 1930, made payable to the insured’s estate, and on February 16, 1931, to the sons. Upon the death of McCann $29,748.-85 became due upon the policies. McCann was at that time indebted to the Spiro State Bank, of Spiro, Okl., to the extent of $17,-357.98, and it made claim to so much of the proceeds of the policies as equaled his indebtedness. Thereupon the company filed a bill of interpleader in the United States District Court for the Eastern District of Arkansas against Constance L. McCann, the wife of the insured, both as an individual and as guardian for her minor sons who were the beneficiaries, the sons, the representatives of Mc-Cann’s estate, and the Spiro State Bank. Mrs. McCann, as guardian, filed her answer asserting that the named beneficiaries were the only persons entitled to the proceeds of the policies and asking that the proceeds be paid to her as their guardian. The bank filed its answer claiming so much of the proceeds as would extinguish the insured’s indebtedness to it. It also filed a reply to Mrs. Mc-Cann’s answer, denying the right of her children to more than so much of the proceeds as exceeded the indebtness of the insured to the bank. Mrs. McCann did not file a reply to the bank’s answer. From a decree in favor of Mrs. McCann, as guardian, finding that the proceeds were payable to the named beneficiaries and that the policies had not been assigned, the bank ha