No. 3--06--0269

Filed March 23, 2007.

_________________________________________________________________

IN THE

APPELLATE COURT OF ILLINOIS

THIRD DISTRICT

A.D., 2007 

In the Matter of the Estate of ) Appeal from the Circuit Court

RONNIE BECKHART, ) of the 14th Judicial Circuit,

 ) Rock Island County, Illinois,

Deceased )

 )

(JAYNE LAISNER, mother and next )

friend of RYAN BECKHART, a )

minor, )

 )

Petitioner-Appellant, ) No. 04--P--126

)

v. )

)

PATRICIA BECKHART, )

Administrator of Estate of )

Ronnie Beckhart, deceased, ) Honorable

 ) Mark A. VandeWeile,

Respondent-Appellee). ) Judge, Presiding.

_________________________________________________________________

JUSTICE CARTER delivered the opinion of the court:

_________________________________________________________________

The petitioner, Jayne Laisner, mother and next friend of

minor Ryan Beckhart, filed first a probate claim for insurance

proceeds in the deceased's estate, then a motion for constructive

trust, alleging that the respondent, Patricia Beckhart,

improperly used the proceeds from a life insurance policy. The

circuit court found that laches barred the petitioner's claim. 

On appeal, the petitioner argues that the circuit court erred
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when it denied her motion for constructive trust. We reverse and

remand.

FACTS

The parties entered a joint statement of facts, which

revealed the following relevant facts:

On December 7, 2001, the circuit court entered an order in a

separate case that adopted a settlement agreement between the

petitioner and the decedent, Ronnie Beckhart. In relevant part,

the agreement required that "[b]oth parties shall name [their

son, Ryan Beckhart] as a direct or indirect beneficiary on any

life insurance policies provided to them at no cost from the

employer." The decedent's employer provided him a life insurance

policy at no cost, on which the decedent named his estate as

beneficiary. The decedent never changed the beneficiary on this

policy.

The decedent died intestate on March 7, 2004. The circuit

court issued a letter of administration on March 18, 2004, which

named the respondent the administrator of the decedent's estate.

On March 24, 2004, the respondent published a legal notice

of the decedent's death, and stated that any estate claims must

be made on or before October 30, 2004. The advertisement ran

until April 7, 2004.

On April 1, 2004, the petitioner's attorney filed an estate

claim on Ryan's behalf. In relevant part, the claim requested
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"the proceeds of any life insurance policies provided to decedent

by his employer in effect as of the date of the entry of the

court's order of December 7, 2001, in Case No. 01 F 210, for

which the decedent was ordered to name the minor child as a

direct or indirect beneficiary." The claim was filed with the

circuit court on April 7, 2004.

On April 23, 2004, the insurance company paid the proceeds

of the decedent's life insurance policy to his estate.

On May 5, 2004, the respondent filed an inventory of the

decedent's estate, which included real estate valued at

$14,877.74, the life insurance policy valued at $25,000, a

savings account containing $1,584.71, a checking account

containing $1,059.72, and a share account containing $5.

On March 10, 2005, the petitioner's attorney filed a motion

to withdraw, which she made at the petitioner's request. The

court granted the motion to withdraw on March 24, 2005.

On March 30, 2005, the petitioner's new attorney filed his

entry of appearance and filed a motion to establish a

constructive trust. In the motion, the petitioner's attorney

alleged that the respondent had been improperly using the

proceeds from the life insurance policy for estate expenses.

The respondent filed her answer on October 13, 2005. In

relevant part, she asserted the affirmative defense of laches,

alleging that the motion for constructive trust was not filed
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until one year after the insurance policy proceeds were

distributed, and that the delay prejudiced the estate because the

proceeds were used for estate expenses.

The circuit court issued its decision on March 10, 2006. 

The court found that the 12-month delay in filing for a

constructive trust was solely attributable to the petitioner,

which served to bar the petitioner's claim via the doctrine of

laches. Accordingly, the circuit court denied the petitioner's

motion for a constructive trust. The petitioner appealed.

ANALYSIS

On appeal, the petitioner argues that the circuit court

erred when it denied her motion for a constructive trust. 

Specifically, she argues that the estate claim was timely filed,

the delay in bringing the motion for constructive trust was not

prejudicial, and that a constructive trust is the appropriate

remedy for Ryan to receive the policy's proceeds. However,

resolution of this issue requires us to initially determine who

was entitled to the policy's proceeds.

The Probate Act of 1975 (755 ILCS 5/1--1 et seq. (West

2004)) does not govern the rights of a beneficiary to the

proceeds of a life insurance policy. Bergheger v. Boyle, 258

Ill. App. 3d 413, 629 N.E.2d 1168 (1994). Section 1 of the Third

Party Beneficiary Contract Act (755 ILCS 30/1 (West 2004))

provides that "[t]he designation in accordance with the terms of
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any insurance *** contract *** shall not be subject to or

defeated or impaired by any statute or rule of law governing the

transfer of property by *** intestacy."

In this case, the settlement agreement of December 7, 2001,

required that the decedent name Ryan as the beneficiary of the

life insurance policy the decedent had through his employer. The

decedent failed to do so before he died. The petitioner did not

file a claim with the insurance company; rather, the insurance

company paid the proceeds to the decedent's estate, who was the

listed beneficiary. The respondent used the proceeds to pay the

estate's expenses, despite the fact that the petitioner filed an

estate claim asserting that Ryan had a superior right to the

proceeds. It is not unusual in a settlement agreement to impose

an obligation to maintain life insurance to secure a child's

support. See In re Estate of Downey, 293 Ill. App. 3d 234, 687

N.E.2d 339 (1997). It is also not unusual for parents to agree

to secure this type of benefit for a child in discharge of their

moral obligations, and as a token of parental affection. Ryan

obtained a vested, contingent right to those benefits when the

settlement agreement was entered and the judgment became final. 

See Smithberg v. Illinois Municipal Retirement Fund, 192 Ill. 2d

291, 735 N.E.2d 560 (2000).

A settlement agreement that requires an insured to name his

child as the beneficiary of a life insurance policy vests the
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child with an equitable right that can be enforced. Estate of

Comiskey, 125 Ill. App. 3d 30, 465 N.E.2d 653 (1984). If the

insured fails to name his child as the beneficiary, equity

mandates that courts treat the policy as if the child had been

named as the beneficiary. Comiskey, 125 Ill. App. 3d 30, 465

N.E.2d 653. Because equity will regard as done what ought to be

done, we find that Ryan was entitled to the proceeds as the

proper beneficiary of the policy, not the estate, and that the

respondent was without authority to use the proceeds for estate

expenses. See Smithberg, 192 Ill. 2d 291, 735 N.E.2d 560;

Lincoln National Life Insurance Co. v. Watson, 71 Ill. App. 3d

900, 390 N.E.2d 506 (1979).

A constructive trust may be imposed when one party receives

property belonging to another under circumstances in which the

receiver would be unjustly enriched if allowed to retain the

property. In re Estate of Wallen, 262 Ill. App. 3d 61, 633

N.E.2d 1350 (1994); Restatement of Restitution §160 (1937). When

a beneficiary's right to a policy's proceeds vests before the

insured changes the beneficiary, the court should impose a

constructive trust on the policy's proceeds to protect the

intended beneficiary's equitable, vested right. Perkins v.

Stuemke, 223 Ill. App. 3d 839, 585 N.E.2d 1125 (1992). As a

remedy, imposing a constructive trust requires any other party

who receives the insurance proceeds, but who has an inferior
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equitable right to them, to hold the proceeds solely for the

vested beneficiary. Perkins, 223 Ill. App. 3d 839, 585 N.E.2d

1125.

"The remedial character of the constructive trust is

brought out by Chief Judge Cardozo in several cases decided

by the Court of Appeals of New York.

'A constructive trust is the formula through which the

conscience of equity finds expression. When property has

been acquired in such circumstances that the holder of the

legal title may not in good conscience retain the beneficial

interest, equity converts him into a trustee.' Beatty v.

Guggenheim Exploration Co., 225 N.Y. 380, 386, 122 N.E. 378

(1919).

'A constructive trust is then the remedial device

through which preference of self is made subordinate to

loyalty to others.' Meinhard v. Salmon, 249 N.Y. 458, 467,

164 N.E. 545, 62 A.L.R. 1 (1928)." Restatement of

Restitution §160 (Supp. 1937).

By court order, Ryan had a vested interest in the proceeds of the

insurance policy superior to others.

Once the administrator was put on notice of the claim, and

so indicated had an inferior equitable right to the insurance

proceeds, the administrator had an obligation to hold the

proceeds solely for Ryan, the vested beneficiary. None of the
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facts in this case make the estate administrator's equitable

intent superior to the equitable intent of the claim. In a

probate proceeding, a claim founded upon an equitable theory,

such as constructive trust, is within the jurisdiction of the

court. Hobin v. O'Donnell, 115 Ill. App. 3d 940, 451 N.E.2d 30

(1983); see also Wallen, 262 Ill. App. 3d 61, 633 N.E.2d 1350. 

No formal pleading need be set forth as long as the claim states

sufficient information to describe the nature of the claim or the

relief sought. Sheetz v. Morgan, 98 Ill. App. 3d 794, 424 N.E.2d

867 (1981); see also In re Estate of Engel, 87 Ill. App. 3d 273,

408 N.E.2d 1134 (1980). The duty of the constructive trustee is

to transfer the insurance proceeds to the proper beneficiary. 

See Smithberg, 192 Ill. 2d 291.

The petitioner argues that the circuit court erred when it

found that laches operated to bar her claim and motion for

constructive trust. We agree.

The defense of laches requires a showing that (1) a party

has exhibited an unreasonable delay in asserting a claim; and (2)

the opposing party has suffered prejudice as a result of the

delay. Tully v. State, 143 Ill. 2d 425, 574 N.E.2d 659 (1991);

see Restatement of Restitution §148 (1937). The doctrine of

laches is grounded in the principle that courts are reluctant to

come to the aid of a party who knowingly slept on rights to the

detriment of the other party. Tarin v. Pellonari, 253 Ill. App.
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3d 542, 625 N.E.2d 739 (1993). We review the circuit court's

application of laches for an abuse of discretion. Kurtz v.

Solomon, 275 Ill. App. 3d 643, 656 N.E.2d 184 (1995).

In this case, the circuit court abused its discretion when

it applied laches for several reasons. First, laches does not

apply to minors. Kurtz, 275 Ill. App. 3d 643, 656 N.E.2d 184. 

Second, the respondent knew that Ryan was asserting his right to

the policy's proceeds when the petitioner timely filed the estate

claim. Accordingly, the respondent cannot now argue that the

one-year delay in filing the motion was prejudicial. See Tully,

143 Ill. 2d 425, 574 N.E.2d 659. Third, actions for a

constructive trust are subject to a five-year statute of

limitations. 735 ILCS 5/13--205 (West 2004); Frederickson v.

Blumenthal, 271 Ill. App. 3d 738, 648 N.E.2d 1060 (1995). For

these reasons, we find that the circuit court erred when it found

that laches applied to bar the petitioner's motion for a

constructive trust. We find nothing unreasonable about the

actions of the child's mother in filing a claim within a month

against the estate for the insurance proceeds, and then a year

later filing a constructive trust motion.

In this case, it is clear that the circuit court should have

granted the petitioner's motion for a constructive trust. See 

Wallen, 262 Ill. App. 3d 61, 633 N.E.2d 1350; Perkins, 223 Ill.

App. 3d 839, 585 N.E.2d 1125. Because the claimant ought to be
10

able to enforce his claim, the claimant made a sufficient showing

to require the administrator to sort out and account for the

insurance proceeds. See Wallen, 262 Ill. App. 3d 61, 633 N.E.2d

1350. On appeal, the respondent has indicated that the policy's

proceeds have been spent, possibly in whole. On remand, the

circuit court must determine what is left in the estate and what

must be done about Ryan's right to immediate possession and

ownership of the res, and to fashion an appropriate and just

remedy. See Wallen, 262 Ill. App. 3d 61, 633 N.E.2d 1350; see

also Sadacci v. Monhart, 128 Ill. App. 3d 250, 470 N.E.2d 589

(1981).

The judgment of the circuit court of Rock Island County is

reversed, and the cause is remanded for proceedings consistent

with this decision.

Reversed and remanded.

LYTTON, P. J. and HOLDRIDGE, J. concur.