Opinion ID: 1180377
Heading Depth: 1
Heading Rank: 3

Heading: The insurance policies for which premiums were paid by the corporation were assets of the corporation.

Text: It is well established that although the officer of a corporation may take title to property in his own individual name, if funds of the corporation are used to pay for such property it will ordinarily be considered to be an asset of the corporation, under the theory of an implied trust for its benefit. 3 Fletcher, Cyclopedia Corporations (perm ed) 212, § 853; Lattin, Corporations (2d ed) 282-85, § 79; 1 P-H Corp. 1731, § 1725. See also 1 Hornstein, Corporation Law and Practice 566, § 447; 2 Oleck, Modern Corporation Law 769-70, §§ 976-7; and Note, Corporate Opportunity in the Close Corporation  A Different Result?, 56 Geo.L.J. 381, 383 (1967). In our view, this rule is applicable to a policy of insurance on the life of the officer of a corporation for which the premiums are paid by the corporation, with the result that such an insurance policy is an asset of the corporation, at least in the absence of satisfactory evidence that the directors or trustees of the corporation authorized or approved of some arrangement to the contrary. Our decision in Jansen v. Tyler, 151 Or. 268, 47 P.2d 969, 49 P.2d 372 (1935), although distinguishable on the facts, is in accord with this view. (See 151 Or. at 288 and 49 P.2d at 372.) Although this case involves a Washington corporation, no Washington case in point has been called to our attention. In this case, although we do not question the complete good faith of Mr. Newbern, we find no such evidence. It also appears, as previously stated, that the premium payments made after these policies were converted from term to straight life insurance, so as to acquire a cash value, were made by the corporation or with funds for which defendant charged the corporation. [4] Under these facts, we hold that despite the complete good faith of Mr. Newbern these policies of life insurance, although originally purchased by him in his individual name, became corporate assets and were impressed with a trust under which defendant held them as a fiduciary for the benefit of the corporation. [5] We also hold that this result is not changed by the fact that the policies provide that the name of the beneficiary could be changed without consent of the corporation as the original named beneficiary where, as in this case, the premiums for the policies were paid by the corporation. Thus, we need not decide plaintiff's contention that any such authorization or ratification must be recorded in the corporate minute book and that, in any event, and as a matter of law, the directors or trustees of a corporation have no authority to authorize or approve such an agreement. [6] As for defendant's contention that plaintiff's claim is barred by laches, we hold that there was no wrongful appropriation by defendant of these policies until 1968, when he changed the beneficiary of the policies, if not until he subsequently removed them from the office of the corporation. Thus, regardless of whether or not a claim by the corporation for reimbursement of premiums paid by it for more than twenty years may have been barred by laches, its claim that the policies were assets of the corporation and had been wrongfully appropriated by defendant was clearly not barred by laches. In considering the nature of the remedy most appropriate on this issue and under the facts of this case, we note that plaintiff's complaint prayed that defendant be ordered to reconvey to plaintiff the insurance policies or, in the alternative, that defendant be deemed to hold such policies as constructive trustee for the benefit of plaintiff. For all of these reasons, and under all of the facts and circumstances of this case, we hold that this case must be remanded to the trial court with directions to enter a further judgment and decree under which defendant shall be ordered to pay to plaintiff the cash value of the two insurance policies as of the date of the appropriation of such policies by him, less the amount of the judgment already paid by defendant for the 1967 premiums paid by plaintiff, unless defendant shall elect to return the policies to plaintiff and to restore it as the beneficiary of such policies. In that event, however, plaintiff shall be required to reimburse defendant for the amount of any premiums paid by him subsequent to 1967, as well as for the amount of the judgment already paid by defendant to plaintiff for the 1967 premiums, as previously paid by plaintiff. In all other respects the judgment and decree of the trial court is affirmed. Affirmed, as modified. Costs to neither party.