703 F.2d 1045 | 8th Cir. | 1983
Lead Opinion
Ronald Briece’s death led to this inter-pleader in which his widow and parents make conflicting claims for life insurance proceeds. Shortly before his death, Ronald had removed Bonnie, his wife, as beneficiary on the policy and substituted his parents, William and Gladys Briece. Bonnie had earlier filed for divorce. Four days before Ronald’s death, Bonnie obtained a temporary restraining order directing that Ronald reinstate her as beneficiary. Ronald never knew of the order and did not comply with it. The district court
Ronald Briece was insured under a group term life insurance policy issued to his employer by Connecticut General Life Insurance Company. Bonnie and Ronald had been married for about six and one-half years when Bonnie filed a petition for dissolution of their marriage in the Circuit Court of Cook County, Illinois on January 23, 1981. On April 20, 1981, Ronald removed Bonnie as beneficiary under the insurance policy and designated his parents as the new beneficiaries.
At a hearing in the divorce action on April 28, 1981, Bonnie learned of this change and also learned that Ronald was dying of lung cancer. Bonnie obtained from the circuit court an order directing Ronald to reinstate her as beneficiary. The court further ordered Ronald to maintain Bonnie as beneficiary until further order of the court, or until ten days from the date of the order.
Ronald died four days later without complying with the order. He was never personally aware of the order, although his attorney was present at the time it was entered.
Ronald’s parents filed this action against Connecticut General to recover death benefits under the insurance policy. Upon motion of Connecticut General, the district court added Bonnie as party defendant and ordered interpleader.
The district court, in granting summary judgment in favor of Ronald’s parents, held that under Illinois law the divorce action, and with it the interlocutory order of April 28, abated upon Ronald’s death. The court further found that Ronald lawfully exer
We affirm primarily for the reasons expressed by the district court.
In Illinois, an action for divorce abates upon the death of one of the parties prior to entry of a final decree of divorce. Bushnell v. Cooper, 289 Ill. 260, 124 N.E. 521 (1919); Howard v. Howard, 49 Ill.App.3d 441, 7 Ill.Dec. 303, 364 N.E.2d 464 (1977). The Illinois Supreme Court has reasoned that “death settle[s] the question of separation beyond all controversy,” and deprives the court of jurisdiction over the matter. Bushnell v. Cooper, 289 Ill. at 264,124 N.E. at 522.
During the dissolution proceeding in In re Estate of Chandler, 90 Ill.App.3d 674, 46 Ill.Dec. 46, 413 N.E.2d 486 (1980), the husband withdrew funds from a savings account held jointly with his wife and deposited the funds in a new account held jointly with his brother. The husband also changed the beneficiary under a trust account by crossing out the name of his wife and substituting the name of his brother one day prior to being served with an injunction preventing the transfer or dissipation of marital assets. The husband died before final judgment was entered in the divorce proceeding. The trial court awarded the wife half of the funds in each account as “marital property.” The appellate court held that it was error to award the funds as marital property because the divorce action abated upon the husband’s death, but the court upheld the award of half the joint savings account on another ground.
As in Chandler, the divorce action between Ronald and Bonnie abated upon Ronald’s death. That Chandler involved an injunction preventing transfer of property, and this case involves a temporary restraining order ordering reinstatement of Bonnie as beneficiary is not significant. Following Chandler, we conclude that the temporary restraining order abated along with the divorce action upon Ronald’s death. Cf. Dietz v. Van Speybroeck, 225 Ill.App. 133 (1922) (a docket entry awarding the wife certain real estate in a divorce proceeding had no effect since the wife died before entry of a formal decree awarding her property).
Bonnie argues that the purpose of the temporary restraining order was to preserve the status quo. Under the circumstances of this case, however, with the death of Ronald only four days later, to so recognize the temporary restraining order would be to give it the effect of a final distribution of marital property. By its own terms it was to be in effect only until further order of the court or until ten days from' the date of its entry. Had Ronald lived, disposition of all the marital property would have been determined in the divorce action. The court would have considered the marital residence and, conceivably, the respective rights to the property of Bonnie, who was Ronald’s third wife and had been disabled in an automobile accident, and of the four children surviving Ronald by other marriages, who were grandchildren of appellees. The temporary restraining order should not be recognized as doing what the death of Ronald prevented the Illinois Circuit Court from doing in a final decree.
Bonnie argues that the equitable maxim “equity considers as done that which ought to be done” applies. We cannot conclude that the district court erred when it held that the maxim was inapplicable. When Ronald changed the beneficiary designation on his life insurance policy, he did so pursuant to the terms of the policy, and he was not violating any order of the court when he did so. Ronald never personally knew about the temporary restraining order which abated upon his death four days after it was entered.
Bonnie claims the proceeds because of her status as prior beneficiary, but this does not confer upon her a vested property interest or right. When the insured reserves the right to change a beneficiary, as Ronald did, the beneficiary has a mere expectancy during the insured’s lifetime. O’Toole v. Central Laborers’ Pension & Welfare Funds, 12 Ill.App.3d 995, 299 N.E.2d 392 (1973).
The judgment of the district court is affirmed.
. The Honorable Scott O. Wright, United States District Judge for the Western District of Missouri.
. On appeal, this panel reversed the judgment of the district court. Briece v. Briece, No. 82-1104 (8th Cir. Nov. 2, 1982). On February 22, 1983, we granted the parents’ petition for rehearing and vacated the earlier panel decision. After reconsideration, we now affirm the district court judgment.
. The presumption that either party to a joint savings account can withdraw the funds with-' out liability to the other party was rebutted by evidence that both spouses contributed to the account and intended to share the property equally during the marriage. 413 N.E.2d at 490.
Dissenting Opinion
dissenting.
I respectfully dissent and would reverse for the reasons set forth herein.
Under the Illinois Marriage and Dissolution of Marriage Act, a life insurance policy is marital property subject to disposition by the divorce court in a divorce proceeding. In Re: Marriage of Smith, 84 Ill.App.3d 446, 39 Ill.Dec. 905, 405 N.E.2d 884 (3d Dist.1980); In Re: Marriage of Hunt, 78 Ill.App.3d 653, 34 Ill.Dec. 55, 397 N.E.2d 511 (1979). Also, under Ill.Rev.Stat. ch. 40, § 501(a) (1979), it is within the rights of a party to a divorce proceeding to petition the court for a temporary injunction to restrain a person from transferring or disposing of marital property, or for other proper injunctive relief. Presumably, pursuant to this statutory authority, Bonnie sought a temporary restraining order against her husband, Ronald. Within the scope of its power under § 501(a), the circuit court properly granted temporary restraining order, requiring that the status quo of the marital property be maintained. As noted by the appellant’s attorney, the temporary restraining order was never intended to distribute property or to determine the title to the insurance policy proceeds. Rather, it was the proper exercise of the Court’s power to maintain the “status quo.”
The appellant argues that the order for temporary relief should be no less enforceable than beneficiary designations embodied in final decrees of divorce. She cites several cases for the proposition that Illinois courts have not hesitated to invoke equitable powers to enforce beneficiary designations incorporated in final judgments for dissolution of marriage. In each of the cases cited the court invoked its equitable powers to enforce its orders when not obeyed. The appellant asserts these cases command the same result when a temporary order is entered without a final decision having been reached as to the divorce. The district court distinguished the present case from those cited by the appellant due to the lack of a final judgment of divorce.
It is my opinion that the decision of the district court is misplaced. Rather, the question should be resolved by the equitable maxim “equity considers as done that which ought to be done.” As the appellant cor
In the case of Travelers Insurance Company v. Daniels, 667 F.2d 572 (7th Cir.1981), the Seventh Circuit applied Illinois law to a similar case and reached a similar result. The appellant, Travelers, brought a statutory interpleader action to determine the beneficiaries of a life insurance policy. Fred Daniels owned the policy. Ruth Daniels (second wife of the deceased) and Hattie Hunter were the named beneficiaries. Kaye Daniels (the first wife of the deceased) and Kendall Daniels (daughter of Fred and Kaye’s marriage) claimed that Kendall was entitled to the proceeds. In the divorce decree of Fred and Kaye Daniels, Fred was ordered to maintain a life insurance policy on his life for Kendall as the irrevocable beneficiary during her minority. The district court in Illinois entered a summary judgment in favor of Ruth Daniels and Hattie Hunter. On appeal, the Seventh Circuit reversed and held that Kendall Daniels was entitled to the proceeds as the beneficiary of the policy.
In Travelers, the final decree of divorce directed Fred Daniels to “maintain in full force and effect, all existing life insurance policies which he has on his life, and designate Kendall Lynnice Daniels, minor child of the parties, as the irrevocable beneficiary during her minority.” When Fred married Ruth Daniels, he attempted to change the beneficiary to Ruth Daniels and Hattie Hunter, who were still the designated beneficiaries when Fred died.
The Seventh Circuit, citing Illinois case law, held, as a general rule, that the named beneficiary of a life insurance policy obtains a vested interest to the proceeds upon the death of the insured. Bank of Lyons v. Schultz, 22 Ill.App.3d 410, 318 N.E.2d 52, 57. There is an exception, however, created by Illinois courts to the named beneficiary rule when someone else has acquired an equitable right to be treated as the beneficiary. The Seventh Circuit cited Lincoln National Life Insurance Company v. Watson, 71 Ill.App.3d 900, 28 Ill.Dec. 339, 390 N.E.2d 506 (1979), and others, for the proposition “that when a divorce decree orders a party to name his children as beneficiaries of a life insurance policy, those children are entitled to receive the proceeds even if they were not the named beneficiary at the time of that party’s death.” 667 F.2d at 573. In Travelers and Lincoln, it made no difference that the court-ordered beneficiary was never named by the insured as beneficiary. Both cases applied the equitable maxim “equity considers as done that which ought to be done.” Application of this maxim led to the finding that beneficiaries designated by court decrees were held to be the proper beneficiaries by the courts.
It is true that the above cited eases dealt with final decrees of divorce, while in this case death intervened before a final decree could be entered. I find no decision by an Illinois court on this precise issue, and am of the opinion that the principle and rules enunciated in Travelers and Lincoln should apply in this case.
The Illinois Circuit Court for Cook County entered an order for the purpose of preserving the marital property and protecting the rights of the spouse during the pending divorce proceeding. The trial courts in Travelers and Lincoln entered similar orders to protect minor children and their interests. In all cases, the divorce courts exercised their proper authority to protect interested parties to a divorce proceeding and preserve the marital property. I do not
Although Illinois law is applicable and Ill.Rev.Stat., Ch. 40 (1979), provides for protection of spouses and their children, other jurisdictions have established such procedures for the protection of spouses and minor children.
In Candler v. Donaldson, 272 F.2d 374, 377, the Sixth Circuit, construing Michigan law on same circumstances and conditions as in the instant case, reversed the district court and held: “We are of the opinion that the order restraining the insured from ‘otherwise disposing of the property herein-above mentioned ’ (emphasis added) prohibited the insured from changing the beneficiary from his wife until such final order was made.” “Equity considers that as done which ought to be done.” Thomson v. Thomson, 8 Cir., 156 F.2d 581, 586, certiorari denied 329 U.S. 793, 67 S.Ct. 370, 91 L.Ed. 679, rehearing denied 329 U.S. 833, 67 S.Ct. 501, 91 L.Ed. 706.
In Thomson, supra, the Eighth Circuit applied the same equitable rule in the case identical to the facts in the instant case. There the insured obtained an insurance policy from John Hancock Mutual Life Insurance Company and named Caroline Thomson, the then wife of the insured, as beneficiary. The policy contained a provision that the right to change beneficiary was reserved to the insured. However, she had acquired a vested interest in the proceeds. Subsequently, there was a separation and a divorce proceeding. Thomson proposed to change the beneficiary to his estate. The divorce proceeding was brought in Waukeegan, Illinois. There was a contract and settlement entered into in connection with the proceeding.
Before final decree in the case, Thomson died. In the meantime he had proposed to change the beneficiary to the estate in order to obtain a loan from a bank. An interpleader was filed similar to the inter-pleader in this case. The district court held that the insured had a right to change the beneficiary. The Eighth Circuit reversed the district court and applied the rule that “equity will consider as done that which should have been done.” Crowell v. Northwestern Nat. Life Insurance Co., 140 Iowa 258, 118 N.W. 412; Jordan v. Roden, 6 Cir., 292 F. 573.