Opinion ID: 547255
Heading Depth: 2
Heading Rank: 2

Heading: The Children's Claims

Text: 12 Applying these principles of equity to this case, it is apparent that the children have met their initial burden of proof. The divorce decree entered by the Indiana Circuit Court demanded that Rollins maintain life insurance policies with his children as beneficiaries. Despite this order, Rollins failed to maintain this insurance. Although a parent-child relationship alone will not create the confidential or fiduciary duty necessary to impose a constructive trust, see Hunter v. Hunter, 283 N.E.2d 775 (Ind.App.1972), the parental relationship in conjunction with the obligation imposed by the divorce decree will create such a duty. Here, the children have presented uncontradicted evidence that their father breached this fiduciary duty by allowing his insurance policy to lapse. In response, the defendant has raised no affirmative defenses to this conduct. Therefore, we agree with the district court's finding that the children had demonstrated the breach of a fiduciary duty by clear and convincing evidence. 13 The children complain that the court improperly shifted the burden of proof back upon them by requiring a second hearing on the question of the amount of the trust. This argument misreads the nature of these shifting burdens. The children must present clear and convincing evidence that an equitable remedy is appropriate. Nancy is then given the opportunity to rebut this presumption by clear and convincing evidence or an affirmative defense. The children, however, at all times carry the burden of proving the facts of their case by a preponderance of the evidence. The district court, therefore, did not err in concluding that the burden of proving the amount of the constructive trust remained with the children. 14 Once this relationship and breach of duty have been established there must exist particular property upon which the constructive trust may be imposed. See Duran v. Komyatte, 490 N.E.2d 388, 392-93 (Ind.App.1986) (equity would not create constructive trust despite breach of fiduciary duty where no property was affected by breach). Here, the divorce decree created the equitable duty from which the constructive trust stems. Thus, we must interpret this decree in order to determine the property encompassed by the trust. This is not an easy task. The section of the decree addressing insurance is narrow and vague. Donald Rollins was ordered to maintain life insurance. No specific policies are mentioned in the decree. No minimum amount of coverage is imposed. Therefore, the reach of the trust turns on the construction of the word maintain. 15 The children contend this word was used to require Rollins to secure or obtain life insurance, with the children as beneficiaries, and continue payments. Thus, they argue, whatever policy existed at the time of Rollins' death must equitably pass to them. Nancy argues that maintain was used in its more typical context to mean that existing insurance could not be allowed to lapse. The district court accepted this latter construction. We agree. 16 There is no evidence indicating that, by using the word maintain in the divorce decree, the Indiana court meant to include any and all after-acquired life insurance policies. Rollins had insurance at the time of the divorce and the court decree ordered him to continue making payments. The children point out that Rollins apparently misled the court about what insurance he carried at the time of the divorce. However, the record from the divorce is lost and we cannot know precisely what information the court had before it at the time of the decree. In such an ambiguous state of affairs, we must use the most common construction of the word maintain--to continue payments on existing insurance. Our construction of the operative language comports with the general principle that, absent any evidence to the contrary, courts must construe words according to their plain and ordinary meaning. Cf. Romain v. A. Howard Wholesale Co., 506 N.E.2d 1124, 1126 (Ind.App.1987) (As a general rule, language in a contract is given its plain and ordinary meaning, that is, that meaning given by the community and ordinary reader.); Nimet Industries, Inc. v. Joy Manufacturing Co., 419 N.E.2d 779, 781 (Ind.App.1981) (Absent some indication that a word ... should be afforded special meaning in light the parties' relationship, words or phrases of a contract are to be given their ordinary and popular accepted meaning.); In the Matter of Middlefork Watershed Conservancy Dist., 508 N.E.2d 574, 577 (Ind.App.1987) (Words in a statute are given their plain, ordinary, and usual meanings, absent legislative expression to the contrary.). This construction of the word maintain--to continue payments on existing policies--is also commonly accepted throughout most jurisdictions. See Annotation, Divorce: Provision in Decree That One Party Obtain or Maintain Life Insurance For Benefit of Other Party or Child, 59 A.L.R.3d 9, Secs. 13, 14 (citing construction of maintain as meaning to keep in force.). 17 This does not end our inquiry, however. At the time of his divorce from Kellen, Rollins held two life insurance policies: one from Western and Southern Life Insurance Company for $10,000, naming his first wife, Kellen Rollins, as the beneficiary; the other a $24,000 policy from his employer, RCA, naming Nancy Rollins as the beneficiary. The district court determined that only the first policy was covered by the divorce decree and therefore by the constructive trust. The court reasoned that, because the RCA policy was part of an employee benefit package, Rollins could not maintain this when he was no longer employed by that company. Further, because the policy named Nancy as the beneficiary at all times and never named the children, the policy could not now create any equitable rights in the children. Thus, only the $10,000 policy was covered by the equitable trust. 18 We agree. Rollins had intended the RCA policy for his second wife, Nancy, the only beneficiary ever named there. The policy, however, lapsed when he stopped working at RCA. The only policy which ever named the children was the Bankers' Trust policy for $10,000, taken out to replace the lapsed Western and Southern policy. There is no indication that the divorce decree covered anything but this single policy. The decree imposed child support payments of $60 a week. These were later raised to $75 a week. The $10,000 policy, if invested as a lump sum and paid out at this rate to the children, would roughly approximate the amount due to the children up to their majority. Although this appears to have occurred more by coincidence than through any design of the Indiana divorce court, a construction which awards the children $10,000 is consistent with the provisions of the decree itself. 19 Indiana courts have yet to consider the issue of a constructive trust on life insurance benefits ordered through a divorce proceeding. Several other jurisdictions have done so, however, and our approach here is consistent with these other cases. See Simonds v. Simonds, 45 N.Y.2d 233, 408 N.Y.S.2d 359, 380 N.E.2d 189 (1978); IDS Life Insurance Co. v. Sellards, 173 Ill.App.3d 174, 122 Ill.Dec. 928, 527 N.E.2d 426 (1988). In Simonds, for instance, a husband was ordered by the divorce court to maintain his current life insurance policy of $7,000 which named his first wife as the beneficiary. Upon his death, it was discovered that he had allowed his original policy to lapse and named his second wife the beneficiary of a succeeding policy in the amount of $55,000. The first wife was allowed to collect benefits under a constructive trust, but only the initial $7,000 to which she was expressly entitled under the divorce decree. Simonds, 408 N.Y.S.2d at 362-64, 380 N.E.2d at 193-94. 20 We are well aware that awarding the children only $10,000 when viewed as 10% of their father's FEGLIA life insurance policy may appear to be a harsh result. Were we free to respond to conscience rather than law, our actions might be different. We are not so free. Equity will only support the recovery of property fairly traceable to the breach of a confidential or fiduciary relationship. Here, Rollins' breach of his fiduciary duty to his children only extends to the initial $10,000 policy, which he was obligated to maintain under his divorce decree. However unpalatable this result, Nancy Rollins is legally entitled to the remainder of the FEGLIA policy.