Court Opinion

ID: 9470458
Source: CourtListenerOpinion
Date Created: 2023-08-05 03:06:57.873666+00
Date Added: 2024-06-11T17:41:54.949806
License: Public Domain

OREN HARRIS, Senior District Judge,
dissenting.
I respectfully dissent and would reverse for the reasons set forth herein.
Under the Illinois Marriage and Dissolution of Marriage Act, a life insurance policy is marital property subject to disposition by the divorce court in a divorce proceeding. In Re: Marriage of Smith, 84 Ill.App.3d 446, 39 Ill.Dec. 905, 405 N.E.2d 884 (3d Dist.1980); In Re: Marriage of Hunt, 78 Ill.App.3d 653, 34 Ill.Dec. 55, 397 N.E.2d 511 (1979). Also, under Ill.Rev.Stat. ch. 40, § 501(a) (1979), it is within the rights of a party to a divorce proceeding to petition the court for a temporary injunction to restrain a person from transferring or disposing of marital property, or for other proper injunctive relief. Presumably, pursuant to this statutory authority, Bonnie sought a temporary restraining order against her husband, Ronald. Within the scope of its power under § 501(a), the circuit court properly granted temporary restraining order, requiring that the status quo of the marital property be maintained. As noted by the appellant’s attorney, the temporary restraining order was never intended to distribute property or to determine the title to the insurance policy proceeds. Rather, it was the proper exercise of the Court’s power to maintain the “status quo.”
The appellant argues that the order for temporary relief should be no less enforceable than beneficiary designations embodied in final decrees of divorce. She cites several cases for the proposition that Illinois courts have not hesitated to invoke equitable powers to enforce beneficiary designations incorporated in final judgments for dissolution of marriage. In each of the cases cited the court invoked its equitable powers to enforce its orders when not obeyed. The appellant asserts these cases command the same result when a temporary order is entered without a final decision having been reached as to the divorce. The district court distinguished the present case from those cited by the appellant due to the lack of a final judgment of divorce.
It is my opinion that the decision of the district court is misplaced. Rather, the question should be resolved by the equitable maxim “equity considers as done that which ought to be done.” As the appellant cor*1049rectly states, the real issue is with the effectiveness of the order of the Illinois court. The district court held that the equitable principle had no application in the case because no final decree of divorce had been entered and no property settlement had been made. According to the district court, until this had been done, it could not apply equity to resolve the dispute. It is my opinion that once the Illinois Circuit Court ordered that Bonnie be reinstated as beneficiary of the life insurance policy, the equitable principle of “equity considers as done that which ought to be done” took over. Therefore, from the date of April 28, 1981, the appellant is assumed to be the beneficiary of the life insurance policy. This is true even though Ronald died before entry of a final decree of divorce.
In the case of Travelers Insurance Company v. Daniels, 667 F.2d 572 (7th Cir.1981), the Seventh Circuit applied Illinois law to a similar case and reached a similar result. The appellant, Travelers, brought a statutory interpleader action to determine the beneficiaries of a life insurance policy. Fred Daniels owned the policy. Ruth Daniels (second wife of the deceased) and Hattie Hunter were the named beneficiaries. Kaye Daniels (the first wife of the deceased) and Kendall Daniels (daughter of Fred and Kaye’s marriage) claimed that Kendall was entitled to the proceeds. In the divorce decree of Fred and Kaye Daniels, Fred was ordered to maintain a life insurance policy on his life for Kendall as the irrevocable beneficiary during her minority. The district court in Illinois entered a summary judgment in favor of Ruth Daniels and Hattie Hunter. On appeal, the Seventh Circuit reversed and held that Kendall Daniels was entitled to the proceeds as the beneficiary of the policy.
In Travelers, the final decree of divorce directed Fred Daniels to “maintain in full force and effect, all existing life insurance policies which he has on his life, and designate Kendall Lynnice Daniels, minor child of the parties, as the irrevocable beneficiary during her minority.” When Fred married Ruth Daniels, he attempted to change the beneficiary to Ruth Daniels and Hattie Hunter, who were still the designated beneficiaries when Fred died.
The Seventh Circuit, citing Illinois case law, held, as a general rule, that the named beneficiary of a life insurance policy obtains a vested interest to the proceeds upon the death of the insured. Bank of Lyons v. Schultz, 22 Ill.App.3d 410, 318 N.E.2d 52, 57. There is an exception, however, created by Illinois courts to the named beneficiary rule when someone else has acquired an equitable right to be treated as the beneficiary. The Seventh Circuit cited Lincoln National Life Insurance Company v. Watson, 71 Ill.App.3d 900, 28 Ill.Dec. 339, 390 N.E.2d 506 (1979), and others, for the proposition “that when a divorce decree orders a party to name his children as beneficiaries of a life insurance policy, those children are entitled to receive the proceeds even if they were not the named beneficiary at the time of that party’s death.” 667 F.2d at 573. In Travelers and Lincoln, it made no difference that the court-ordered beneficiary was never named by the insured as beneficiary. Both cases applied the equitable maxim “equity considers as done that which ought to be done.” Application of this maxim led to the finding that beneficiaries designated by court decrees were held to be the proper beneficiaries by the courts.
It is true that the above cited eases dealt with final decrees of divorce, while in this case death intervened before a final decree could be entered. I find no decision by an Illinois court on this precise issue, and am of the opinion that the principle and rules enunciated in Travelers and Lincoln should apply in this case.
The Illinois Circuit Court for Cook County entered an order for the purpose of preserving the marital property and protecting the rights of the spouse during the pending divorce proceeding. The trial courts in Travelers and Lincoln entered similar orders to protect minor children and their interests. In all cases, the divorce courts exercised their proper authority to protect interested parties to a divorce proceeding and preserve the marital property. I do not *1050find the absence of a final decree to be important; a valid court order was entered and it is entitled to enforcement. During the pendency of the divorce proceeding, and before Ronald Briece’s death, the court entered an order designed to preserve the marital property for the protection of Bonnie Briece. This was proper.
Although Illinois law is applicable and Ill.Rev.Stat., Ch. 40 (1979), provides for protection of spouses and their children, other jurisdictions have established such procedures for the protection of spouses and minor children.
In Candler v. Donaldson, 272 F.2d 374, 377, the Sixth Circuit, construing Michigan law on same circumstances and conditions as in the instant case, reversed the district court and held: “We are of the opinion that the order restraining the insured from ‘otherwise disposing of the property herein-above mentioned ’ (emphasis added) prohibited the insured from changing the beneficiary from his wife until such final order was made.” “Equity considers that as done which ought to be done.” Thomson v. Thomson, 8 Cir., 156 F.2d 581, 586, certiorari denied 329 U.S. 793, 67 S.Ct. 370, 91 L.Ed. 679, rehearing denied 329 U.S. 833, 67 S.Ct. 501, 91 L.Ed. 706.
In Thomson, supra, the Eighth Circuit applied the same equitable rule in the case identical to the facts in the instant case. There the insured obtained an insurance policy from John Hancock Mutual Life Insurance Company and named Caroline Thomson, the then wife of the insured, as beneficiary. The policy contained a provision that the right to change beneficiary was reserved to the insured. However, she had acquired a vested interest in the proceeds. Subsequently, there was a separation and a divorce proceeding. Thomson proposed to change the beneficiary to his estate. The divorce proceeding was brought in Waukeegan, Illinois. There was a contract and settlement entered into in connection with the proceeding.
Before final decree in the case, Thomson died. In the meantime he had proposed to change the beneficiary to the estate in order to obtain a loan from a bank. An interpleader was filed similar to the inter-pleader in this case. The district court held that the insured had a right to change the beneficiary. The Eighth Circuit reversed the district court and applied the rule that “equity will consider as done that which should have been done.” Crowell v. Northwestern Nat. Life Insurance Co., 140 Iowa 258, 118 N.W. 412; Jordan v. Roden, 6 Cir., 292 F. 573.