Court Opinion

ID: 6453179
Source: CourtListenerOpinion
Date Created: 2022-06-25 12:36:20.877037+00
Date Added: 2024-06-11T15:53:06.769928
License: Public Domain

Greaney, J.
(dissenting in part, with whom Ireland and Cowin, JJ., join). This case is about a deceased mother (Janice M. Hurley) who violated her written promise in a separation agreement and a subsequent court decree (as the promise was incorporated into the divorce decree and became part of the final judgment) to provide support for her children in the event of her death, and what we should do about it. At issue are life insurance proceeds left to the deceased’s late husband, the defendant. The ownership of the proceeds of the Unum policy is correctly decided by the court (as it was by the trial judge) — the proceeds are to be held by the plaintiff, the deceased’s former husband, in trust for the benefit of the children. I disagree, however, with the court’s decision to give the proceeds of the Prudential policy to the defendant. I would order these proceeds to be held by the plaintiff in trust for the benefit of the children.
I begin by emphasizing, as the court acknowledges, ante at 162, that the disputed provision in the separation agreement pertaining to life insurance obligations, section 12, was meant to secure support for the children, and not for the surviving spouse. Under section 12, the life insurance obligations apply for a fixed duration: “until the children are emancipated as defined in this Agreement.” Emancipation of the children would be irrelevant if the obligation was for the benefit of the surviving spouse. Further, section 12 must be read together with the remaining provisions of the separation agreement. In addition to the language appearing in section 2 of the separation agreement, see ante at 161 n.7, that section also makes clear that one of the main purposes behind the agreement is to determine “the support and maintenance of the children.”
*171It is also fairly obvious from the provision and the facts existing when the separation agreement was signed, that the parties contemplated an increase in the deceased’s life insurance coverage to the level of $200,000. At the time, the existing Unum policy had a value of approximately $100,000. To meet her commitment under the separation agreement, the deceased either had to increase the value of the Unum policy to $200,0001 or purchase an additional policy or policies on her own to reach the agreed-on level. Thus, when the deceased later obtained the Prudential policy, she knew (or can be deemed to have known) that she was obtaining insurance that should have been dedicated to compliance with the provision (at least to the extent she satisfied her obligation to provide coverage to the plaintiff in the amount of $200,000). The deceased’s failure to satisfy the agreed-on level of $200,000, naming the defendant as the beneficiary on the Prudential policy was a violation of the separation agreement and one that invested the plaintiff with equitable rights of enforcement to obtain the proceeds of the policy for the benefit of the children.
There is, therefore, considerable wrongdoing on the part of the deceased and strong equities favoring the plaintiff and the children. The Appeals Court was correct in holding for the plaintiff as to the Prudential policy. See Foster v. Hurley, 61 Mass. App. Ct. 414, 421-422 (2004). In balancing the equities, the Appeals Court recognized that, while the defendant personally may not have acted improperly, in retaining the proceeds of the Prudential policy he would be receiving a gratuitous benefit and would be unjustly enriched. Id. at 421. While the defendant claimed that he “may not be able” to keep and maintain the home that he and the deceased had purchased together without the life insurance proceeds, the countervailing equities in this case are stronger. Parents have long had a duty to support their children, see Commonwealth v. Brasher, 359 Mass. 550, 556 (1971); G. L. c. 209C, and dependent children should be maintained from the resources of their parents, and not by the taxpayers, see T.F. v. B.L., 442 Mass. 522, 536 (2004) (Greaney, *172J., concurring in part and dissenting in part), and cases cited. Further, the deceased violated not only a contractual obligation, but also a court decree.2 Other courts have drawn similar conclusions as acknowledged by the cotut. See Travelers Ins. Co. v. Johnson, 579 F. Supp. 1457, 1463 (D.N.J. 1984); Equitable Life Assur. Soc’y v. Flaherty, 568 F. Supp. 610, 616 (S.D. Ala. 1983) (applying Florida law); Pernick v. Brandt, 201 Mich. App. 293, 297 (1993); McKissick v. McKissick, 93 Nev. 139, 144-145 (1977); Rogers v. Rogers, 63 N.Y.2d 582, 584 (1984); Holt v. Holt, 995 S.W.2d 68, 77-78 (Tenn. 1999).
As for the possible argument that the plaintiff should not be able to take assets given as a “gift” by the deceased to the defendant, this may be said: If she had given the defendant anything but the “encumbered” proceeds of an insurance policy — say an automobile, stock certificates, cash, or even proceeds of an insurance policy to the extent the amount of proceeds exceeded the $200,000 obligation in the separation agreement — equitable substitution would be unavailable. But, by choosing the precise form of asset covered by the separation agreement — insurance policy proceeds — when the deceased had not first satisfied her life insurance obligation under the separation agreement, her intent to avoid the obligation coupled with the specific asset selected combine to bring the policy within the well-established authority of a court acting in equity to protect children from the connivances of a divorced parent. “An old legal maxim is applicable here: You must be just before you are generous.” Bentley v. New York Life Ins. Co., 488 N.W.2d 77, 81 (S.D. 1992) (Henderson, J„ dissenting) (would conclude, in dispute over life insurance proceeds in face of life insurance obligation in divorce stipulation, that “[bjefore father was generous to his girlfriend, he should have been just with his children”).
Also disturbing is the fact that, in reaching its conclusion as to the Prudential policy, the court misconstrues Handrahan v. Moore, 332 Mass. 300 (1955) (curiously cited by the court *173abundantly in upholding the decision on the Unum policy, see ante at 163-165), and silently overrules Handrahan’s application to the Prudential policy. Handrahan is virtually dispositive.
The Handrahan case involved a dispute over “the ownership of the proceeds of two insurance policies” insuring the life of Bennett Moore. Id. at 300. Both Moore’s daughter (Patricia Handrahan, the plaintiff trustee acting for the benefit of Moore’s first wife who was Handrahan’s mother), and his second wife, claimed entitlement to the proceeds. Id. at 300-301. In connection with Moore’s divorce from his first wife, he executed a trust agreement under which he was required “to deliver to the trustee ... all his right, title, and interest in policies of insurance upon his life to the amount of $10,000 in which his wife should be designated as beneficiary, to pay all premiums during his lifetime, and to do whatever was necessary to keep the policies in full force and effect” (emphasis added). Id. at 301. (As can be seen by the emphasized language, no specific policy was ever identified.) In the event that Moore predeceased his first wife, “the trustee agreed to collect this life insurance and pay it over to her mother.” Id.
At the time he executed the trust agreement, Moore was covered by a group life insurance policy offered by his employer, and was immediately able to satisfy his life insurance obligation in the trust agreement. Id. However, Moore’s employment situation changed leaving him uninsured by that policy. Id. Moore later obtained coverage, under the two policies in dispute, for a total of $7,027, with a different insurer, and after remarrying, replaced his former wife’s name with name of his second wife as the sole beneficiary. Id. at 302 & n.l. What is significant is that these two policies were not policies specified in the trust agreement (nor was the first policy obtained through Moore’s employer specified in the trust agreement). Although Moore’s second wife claimed entitlement to the proceeds of the two policies as the named beneficiary, we found, relying on the life insurance provision in the trust agreement, that Moore had “waived his right to change the beneficiary in these two policies outstanding at the time of his death,” and that the plaintiff trustee “acquired an equitable interest in the policies by virtue of the [trust agreement].” Id. at 303. We concluded that Moore *174had not complied with the trust agreement “to keep his life insured for the benefit of his wife in the stated amount during his lifetime.” Id. at 303. Thus, the Handrahan case is direct support for permitting equitable substitution as to later-acquired policies, here, the Prudential policy.
The distinction the court attempts to draw in the Handrahan case is one without difference, and is premised on a selective reading of the facts. While the after-acquired policies in that case were intended to substitute for the prior group life insurance coverage that had become valueless, the prior group life insurance policy was not a policy specified in the trust agreement. Id. at 301, 303 (again, no policy was specified in trust agreement). While Moore had communicated to his first wife that he would maintain her as the beneficiary of his life insurance policies, he also communicated that such was his intent only if he did not remarry. Id. at 301-302. It was after his marriage to his second wife that Moore revoked the designation of his first wife as beneficiary of his then existing fife insurance policies, and substituted his second wife as the beneficiary of those policies. Id. at 302. Thus, it cannot be said on the full presentment of the facts in the Handrahan case that there was a mutual understanding concerning who would be named the beneficiary of Moore’s later-acquired policies in the event that Moore remarried. What is significant is that we concluded that “the inference is plain that Moore recognized his obligation to maintain insurance for [his first wife’s] benefit.” Id. at 303.
While there were no subsequent communications in this case between the deceased and the plaintiff, the deceased, as has been stated, never satisfied her initial insurance obligation in the separation agreement. Communications or not, this deficiency was apparent and thus it can be inferred that the later-acquired policy (the Prudential policy) should have been used to satisfy that obligation, to supplement the initial deficiency, especially where the obligation, unlike that in the Handrahan case, was intended for child support and was a court order. Under the court’s reading of the Handrahan case, if the Unum policy for some reason had lapsed (say, if the deceased had left her employ with the employer that offered the Unum policy), then the plaintiff may have an equitable claim as *175to the Prudential policy because it would then transfer into a “substituted” policy. The court’s interpretation permits an unjust result. Further, under the court’s interpretation, a former spouse who recognizes his obligation but chooses to ignore it is not successful in evading the obligation, but a former spouse who arguably does not recognize the obligation, is able to evade the obligation.
One final observation is in order. The court references, ante at 164 n.10, a “model life insurance provision” in a particular text intended for practitioners. See 2A C.P. Kindregan & M.L. Inker, Family Law and Practice § 51.64 (3d ed. 2002). Certainly, this provision may be useful depending on the circumstances. However, where one breaches the obligation in the cited provision, the remedy therein is a claim against the estate. Id. As occurred here, the assets of the decedent’s estate may be insufficient to satisfy the obligation, thus underscoring the need for an equitable remedy. Indeed, the estate may be insolvent.
The obligation to provide life insurance coverage in a separation agreement raises many complex issues that cannot easily be resolved by a standard provision. There are many options for divorcing spouses to consider. For example, where group life insurance often limits coverage and will terminate on the end of the insured’s employment, individual policies do not have these same restrictions and are often assignable, which can protect against future changes of beneficiary. Of course, such an option may not be cost feasible, or may be undesirable for other reasons. What can be said is that the issue requires careful consideration and this court should not endorse any form provision for universal use. In the meantime, the plaintiff is entitled to the proceeds of the Prudential policy so that innocent children may be protected. I, therefore, respectfully dissent.

Under the Unum policy, the deceased could have obtained $200,000 of life insurance coverage by electing for coverage in the amount of four times her salary.

The court’s decision invites further noncompliance with separation agreements and court decrees. Where a party may be held in contempt if her noncompliance is discovered while she is alive, if she dies, her mischief may be accomplished.