## Facts

- Ruth M. Lonon (formerly Ruth O’Connor) remarried Charles Lonon after divorcing Dalton O’Connor; her minor son, Lawrence O’Connor, was from the prior marriage.
- During her marriage to Lonon, Ruth worked for an employer that provided group life insurance issued by Travelers Insurance Company.
- The group policies allowed Ruth, as the insured employee, to designate and change beneficiaries.
- Ruth initially named Lonon as beneficiary, then changed the beneficiary designation in 1955 to name her son Lawrence; Lonon knew of and understood the change.
- During the marriage, Ruth and Lonon maintained separate bank accounts; Ruth deposited her wages into an account under her exclusive control.
- Ruth used her earnings for her personal expenses and to support Lawrence; Lonon knew of this practice and did not object or interfere.
- Ruth died in an automobile accident in 1956 while the policies were in force naming Lawrence as beneficiary.
- Lawrence (through a guardian) claimed all proceeds as beneficiary; Lonon claimed a one-half community-property interest on the theory that premiums were paid with community funds.

## Issues

1. Whether the spouses’ financial practices and mutual understanding supported treating Ruth’s earnings (and thus the group life policies funded through her employment compensation) as Ruth’s separate property rather than community property.
2. If the policies were Ruth’s separate property, whether Lawrence, as the designated beneficiary, was entitled to the full proceeds, defeating Lonon’s asserted community-property claim.

## Decision

- The Court of Appeal affirmed the judgment for Lawrence.
- The evidence supported a finding that Ruth’s earnings were treated by the spouses as Ruth’s separate property.
- Because the policies were maintained with funds characterized as separate, the policies and proceeds were properly treated as Ruth’s separate property.
- As owner of separate-property policies, Ruth could designate Lawrence as sole beneficiary, entitling him to all proceeds; Lonon took nothing.

## Legal Principles

- Earnings during marriage are presumptively community property, but spouses may, by agreement or consistent conduct with mutual understanding and acquiescence, treat one spouse’s earnings as that spouse’s separate property.
- Depositing earnings into a separate account under one spouse’s exclusive control, coupled with the other spouse’s knowledge and acceptance and a pattern of separate use, can support a finding that the earnings are separate property.
- The character of life insurance generally follows the character of the funds used to pay premiums or maintain coverage; policies funded with separate property are separate property.
- An insured may freely designate a beneficiary for separate-property life insurance without community-property restrictions that would otherwise protect a spouse’s one-half interest.

## Conclusion

The court upheld an award of all group life insurance proceeds to the insured’s minor son, concluding that the spouses’ course of conduct treated the insured’s wages as her separate property, making the policies separate property and rendering the surviving spouse’s community-property claim unfounded.


O’Connor v. Travelers Ins. Co., 337 P.2d 893 (Cal. Ct. App. 1959)