Opinion
1-16-1957
Harold Edward COOPER, Jr., a minor, and Carolyn Joan Cooper, a minor, by Vera P. Alves, their guardian ad litem, Plaintiffs and Respondents, v. Ida COOPER, individually, and Ida Cooper, as Executrix of the Estate of Harold E. Cooper, deceased, Defendants and Appellants.* Civ. 17125.
Raymond B. Haizlip, San Francisco, for appellants. Sullivan & West, San Mateo, James B. O'Grady, Redwood City, for respondents.
Harold Edward COOPER, Jr., a minor, and Carolyn Joan Cooper, a minor, by Vera P. Alves, their guardian ad litem, Plaintiffs and Respondents,
v.
Ida COOPER, individually, and Ida Cooper, as Executrix of the Estate of Harold E. Cooper, deceased, Defendants and Appellants.*
Jan. 16, 1957.
Rehearing Denied Feb. 15, 1957.
Hearing Granted March 13, 1957.
Raymond B. Haizlip, San Francisco, for appellants.
Sullivan & West, San Mateo, James B. O'Grady, Redwood City, for respondents.
BRAY, Justice.
Defendants appeal from an adverse decision adjudging that plaintiffs were the equitable owners of certain life insurance policies and entitled to the proceeds thereof. Questions Presented.
1. The effect of the property settlement agreement with regard to whether the insurance trusts were created or merely agreed to be created.
2. Statutes of limitation and laches.
3. Was there an abandonment? Record.
Harold E. Cooper, deceased, and Vera Cooper Alves were formerly husband and wife, being married in 1933. They had two children, plaintiffs Harold E. Cooper Jr. and Carolyn J. Cooper. An interlocutory decree of divorce in favor of Vera was entered February 28, 1949, and a final decree, March 6, 1950. Both parties remarried, Vera to her present husband Alves, Harold to defendant Ida Cooper, Harold died September 17, 1954. During the marriage Harold had in force several life insurance policies. May 21, 1948, Harold and Vera entered into an agreement of separation and settlement of property rights (the agreement involved here). Concerning this agreement the interlocutory decree of divorce stated: '* * * said agreement has been fully consummated.' No mention of the agreement appears in the final decree of divorce. After Harold remarried he, in disregard of the agreement, surrendered for cash the three Northwestern policies referred to in paragraph eighth of the agreement, 1 and changed the beneficiary of the Equitable life insurance policy (referred to in paragraph ninth of the agreement) to defendant Ida. 2
Plaintiffs sued to recover from the Equitable the amount of its policy, joining defendants. That company deposited that amount, $12,000, in court. Plaintiffs also sought to recover from defendant Ida as executrix of Harold's state the value of the Northwestern policies which Harold had cashed. The court adjudged that the $12,000 be paid to plaintiffs, less $4,000 attorneys' fees, and that defendant executrix pay during the course of administration $7,500 (the surrendered value of the Northwestern policies) plus interest. Defendants' motion for new trial was denied. Effect of the Agreement.
Defendants' main contention is that the agreement was merely an agreement to enter into a trust agreement in the future and therefore the rule of such cases as Kerr Glass Mfg. Corp v. Elizabeth Arden Sales Corp., 61 Cal.App.2d 55, 141 P.2d 938; Warson v. Talpey-Arnold Syndicate, 202 Cal. 656, 262 P. 716; and Clifford v. Utt, 62 Cal.App., 460, 216 P. 972, applies. We deem it unnecessary to discuss whether the rule of those and the other cases cited by defendants is as broad as defendants contend, namely, that no agreement to enter into an agreement is enforceable, 3 for the reason that this agreement in itself has all the elements of an effective trust. There is a present transfer of the Northwestern policies, and a definite placing of the proceeds to come from the Equitable policy into the trust. The terms of the trust are clearly set forth, namely, that in the event of Harold's death prior to the majority of the youngest child, the proceeds of all policies shall be used for the support and maintenance of Vera and the minor children; upon the attaining of majority by the youngest child by taining of majority by the youngest child any right of the wife in the trust will cease, and Harold has the right thereafter to terminate the trust by designating a new beneficiary or otherwise disposing of the policies. Harold agrees to keep the policies in full force and the trustees are designated. Nothing further was required. The agreement to sign a separate instrument appointing the named trustees added nothing to the declaration of the trust contained in the instrument. 'The mere fact that the settlor contemplates the subsequent execution of a formal trust instrument does not necessarily negative the present creation of a trust, if its terms are sufficiently indicated.' (Scott on Trusts, vol. 1, p. 164, § 26.) Moreover, Harold agreed that he alone would execute the instrument designating the already named trustees. This he failed to do. 'An insured cannot defeat the equitable right of a beneficiary by failing to act. He could not, in equity, be allowed to take advantage of his own wrong in breaching the property settlement agreement, and his estate is in no better position.' Waxman v. Citizens Nat. Trust & Sav. Bank, 123 Cal.App.2d 145, 149, 266 P.2d 48, 50. When Harold changed the beneficiary in one policy and cashed the others he violated the trust which by contract had been created.
In paragraph eighth Harold made a complete assignment to his wife of the Northwestern policies for the benefit of herself and the children, thereby creating in her and them a vested interest subject only to a condition subsequent which never arose.
As said in Waxman v. Citizens Nat. Trust & Sav. Bank, supra, 123 Cal.App.2d at page 148, 266 P.2d at page 50: 'An insured by contract may waive the right to change a beneficiary and may convert what is usually the contingent interest of a beneficiary of a policy of life insurance into a vested equitable interest.' While Harold did not assign the Equitable policy he did agree to maintain it in full force for the wife and children, again subject to the condition subsequent. This agreement, being accepted by the wife, gave her and the children thenceforth an equitable interest in the policy of which she and they could not be divested by the mere act of the insured in changing the name of the beneficiary. See Shoudy v. Shoudy, 55 Cal.App. 344, 345, 203 P. 433; Mutual Life Ins. Co. of New York v. Franck, 9 Cal.App.2d 528, 534, 50 P.2d 480; Chilwell v. Chilwell, 40 Cal.App.2d 550, 553, 105 P.2d 122.
Cook v. Cook, 17 Cal.2d 639, 644, 111 P.2d 322 holding that where the insured reserves the right to change the beneficiary in an ordinary life insurance policy the beneficiary has no vested right therein prior to the insured's death as will prevent a change of beneficiary by the insured, has no application here. As hereinbefore pointed out, an insured may by contract waive the right to change the beneficiary and convert what is usually the contingent interest of a beneficiary into a vested equitable interest. Waxman v. Citizens Nat. Trust & Sav. Bank, supra, 123 Cal.App.2d at page 148, 266 P.2d at page 49. This Harold did here.
Defendant Ida individually objects to the denial of her motion for nonsuit. She had filed with Equitable a claim for the proceeds of that policy. Plaintiffs' complaint alleged that Harold in violation of his agreement had made her the beneficiary of the policies and that the companies were going to pay her the proceeds. In her answer Ida claimed to be the owner of the $12,000 deposited in court by Equitable. The motion was properly denied as the court found and adjudged that she personally had no interest in the trust property. There is no money judgment against her.
Defendants claim that the second amended complaint (the complaint upon which the case was tried) did not plead the violation of a trust, and merely pleaded a violation of a contract. It did, however, set forth the agreement in haec verba and alleged a change of beneficiary by Harold in violation thereof and in the prayer asked that the policies and their proceeds be impressed with a trust in favor of plaintiffs. Thus it pleaded the facts and the trust theory was definitely before the court. 2. Statutes of Limitation and Laches.
Neither apply. Defendants' contention that the time when the cause of action accrued was when Harold broke his promise to enter into an agreement appointing the trustee, is unfounded. In cases of this kind the cause of action accrues and the statute first commences to run when the decedent dies without the policies' being left in effect. Waxman v. Citizens Nat. Trust & Sav. Bank, supra, 123 Cal.App.2d 145, 266 P.2d 48; Mutual Life Ins. Co. of New York v. Franck, 9 Cal.App.2d 528, 50 P.2d 480. For the same reason laches would not apply as the action was filed within 12 days after Harold's death. 3. Abandonment.
After the execution of the agreement and before Vera obtained the interlocutory decree of divorce, some other trust agreement was shown to her and she apparently signed it. However, it was not signed by Harold. Thereafter the interlocutory decree was obtained. It provided support of $100 per month for the two children, whereas the agreement in question here provided for only $90 per month, which sum plaintiff Vera had been receiving prior to obtaining the decree. No action was taken thereafter by Vera to get Harold to execute the instrument mentioned in the trust agreement. From these circumstances plus the language in that decree that the 'agreement has been fully consummated,' defendants contend that the agreement was abandoned. The trial court found that there was no abandonment. The circumstances mentioned do not compel a finding that there was. Particularly is this so in view of a letter from Harold's attorney to Vera's attorney written January 4, 1949, suggesting that the latter immediately file a complaint for divorce on behalf of Vera and stating, 'Since they have worked out their property settlement agreement, it would appear that the complaint need only provide for a divorce and custody of the children.'
The judgment is affirmed.
PETERS, P. J., and FRED B. WOOD, J., concur. --------------- * Opinion vacated 314 P.2d 1. 1 Paragraph eighth provided: 'Eighth: The husband shall and does hereby release, transfer, sell, assign and set over to the wife, all right, title and interest in and to three certain life insurance policies written in the Northwestern Mutual Life Insurance Company of Milwaukee, Wisconsin, in the total principal sum of $7,500, wherein the wife now appears as beneficiary and the husband as insured; the husband shall execute appropriate instrument as required by said insurance company and the American Trust Company, to provide that the wife and said American Trust Company shall act as joint trustees to administer the proceeds of said life insurance policies for the support and maintenance of the wife and said minor children, in the event of husband's death.' It further provided that Harold shall pay all premiums on said policies as they became due and maintain the policies in force and not do anything to diminish the cash surrender value. 'When the youngest of the said two minor children shall have reached majority, the wife's rights in and to said life insurance policies shall cease, and the husband shall have the right to designate a new beneficiary or cancel or otherwise dispose of said policies as he may desire.' 2 Paragraph ninth provided: 'Ninth: The husband agrees to pay all premiums and to keep and maintain in full force and effect until the younger of the two minor children shall have reached majority, group life insurance in the present approximate principal amount of $7,500 written in the Equitable Life Assurance Society, which the husband now carries as an employee of the American Trust Company and in which the wife is named as beneficiary. It is understood and agreed that such group insurance is mandatory so long as husband is employed by said American Trust Company, and that the principal amount and premiums vary from time to time depending on loss experience of the insuring company. 'The husband shall execute appropriate instrument to provide that the wife and said American Trust Company shall act as joint trustees, to administer the proceeds of said life insurance policy for the support and maintenance of the wife and said minor children, in the event of husband's death. When the younger of said two minor children shall have reached majority, the wife's rights in and to said policy shall cease, and the husband shall have the right to designate a new beneficiary or cancel or otherwise dispose of said policy as he may desire.' 3 The cases cited all involved contracts to make a contract, the essential terms of which were yet to be agreed.