Head v. Metropolitan Life Insurance Co.

RANDALL, Judge,

dissenting.

I respectfully dissent. I would distribute the life insurance proceeds of $280,000 equally to the co-beneficiaries, as I find that division most closely resembles the letter and spirit of the divorce decree, and letter of the controlling life insurance contract between decedent Carlton Head and Metropolitan Life Insurance Company. The trial court, in the original dissolution proceeding, ordered Carlton to pay Dianne:

as and for spousal maintenance, the sum of $1,000 per month, * * * commencing January 1, 1987, until [Dianne’s] death or remarriage, whichever occurs first.

To secure these maintenance payments, the trial court made the following provision:

Life Insurance to Secure Spousal Maintenance. That the Petitioner shall keep and maintain in full force and effect the policy or policies of life insurance available through his employment on himself, naming the Respondent beneficiary thereof, until the Petitioner is no longer obligated to provide spousal maintenance. Should Petitioner fail to maintain Respondent as beneficiary, then Respondent shall have a claim against Petitioner’s estate for said amount.

The purpose for this requirement is clear. The trial court intended to ensure that Dianne would continue to receive maintenance payments upon Carlton’s death. The trial court had authority to require security for the spousal maintenance payments. See Arundel v. Arundel, 281 N.W.2d 663, 667 (Minn.1979) (trial court may order purchase of life insurance to secure permanent alimony).

The facts of this case make clear that the trial court left open the question of future adjustment to the amount of maintenance. As pointed out by the majority, the trial court expressly provided that either party could move “for a re-evaluation one year from the date of the judgment * * * and no change of circumstances need be shown * * Dianne filed a motion for re-evaluation. However, Carlton died unexpectedly, and the motion was never heard.

Upon Carlton’s death, the trial court’s original spousal maintenance order became final and not subject to modification or amendment. Witt v. Witt, 350 N.W.2d 380, 382 (Minn.Ct.App.1984). Thus, the amount of maintenance Dianne is to receive until she dies or remarries is fixed at $1000 per month.

The trial court’s subsequent “interpretation” of its order requiring life insurance to secure maintenance as mandating that Dianne receive the entire proceeds of the policy, regardless of how much the policy is worth, became an improper post-death amendment to the original decree. Witt holds that an amendment to a decree made after the death of the obligor is invalid. Id. The “interpretation” also conflicts with the purpose for which Carlton was required to maintain life insurance — to secure spousal maintenance.

Courts in other jurisdictions when faced with similar situations have held that an obligee spouse is entitled to receive only as much of the proceeds of an insurance policy as is necessary to properly secure the future maintenance or support obligations in issue. See Serrano v. Hendricks, 400 N.W.2d 77, 79 (Iowa Ct.App.1986); Johnson v. Sporalsky, 55 Or.App. 193, 197, 637 P.2d 638, 640 (1981). These courts reason that the purpose for which the obligor is required to maintain insurance governs the determination of how much of the proceeds the obligee receives. This is a logical, common-sense approach. I do not find Trimble v. Trimble, 218 Neb. 118, 352 N.W.2d 599 (1984), a case cited by the majority, giving us any guidance on our facts. I do not dispute that if the original decree had specified a particular amount of insurance, that amount, whether mathematically less, equal to, or more than would be needed to produce $1000 a month, could be required. However, here the trial court did not specify a particular amount, but made a general provision for life insurance to secure spousal maintenance. That is precisely what appellant did. Even though the obligee spouse was named as a co-beneficiary rath*457er than a sole beneficiary, no injustice was done to either the terms of the court order or to respondent, as 50% of the net proceeds was plainly sufficient to fulfill all of appellant’s monetary obligation.

Carlton was required to maintain insurance to guarantee that Dianne would receive monthly spousal maintenance payments. The trial court set the amount of these payments at $1000 per month. One-half of the proceeds of Carlton’s life insurance policy, $140,000, will either purchase Dianne an annuity that will pay her approximately $1000 per month for the rest of her life or, if invested in a safe, secure interest or dividend bearing instrument, would pay her approximately that amount and she would retain full access and use of the principal if needed, something a court ordered promise to pay via a dissolution decree never provides.

Ironically, Carlton provided Dianne with more security by dying than he could have by living. Any number of contingencies could have affected Carlton’s ability to continue to pay maintenance during his lifetime. Carlton could have lost his job, gotten a lower paying job, suffered an injury and become disabled, or Dianne could remarry. In any of these situations, his maintenance obligation to Dianne would have been reduced or eliminated. Now, with 50% of the life insurance proceeds as co-beneficiary, Dianne can unconditionally guarantee herself that $1000 per month for life with no contingencies, and she even preserves the right to remarry. Dianne no longer has to worry about Carlton’s future earning capacity or life expectancy. These unconditional funds are worth far more to Dianne than the decedent’s legal obligation to make maintenance payments. The $140,000 that Carlton intended to leave Diane unconditionally will provide her about $1000 a month for the rest of her life. There is no just or equitable reason to make an issue of what to do with the remaining $140,000, nor is there any legal or equitable reason to set aside Carlton’s valid insurance contract which designates Steele as co-beneficiary with Dianne. There is a complete absence of inequity if Dianne is awarded $140,000 of life insur-anee proceeds rather than the $280,000. See In re Estate of Eriksen, 337 N.W.2d 671, 674 (Minn.1983) (constructive trust may be imposed when necessary to prevent unjust enrichment).

I would have reversed the trial court’s decision to award Dianne the entire $280,-000. The trial court’s subsequent interpretation of its original decree directly conflicts with the purpose for which Carlton was required to maintain life insurance — to secure the $1000 per month spousal maintenance. One-half of the proceeds is sufficient to secure Dianne $1000 per month for life. Since Dianne is not prejudiced by Carlton's designation of her as co-beneficiary under the policy with Steele, I would not set aside an otherwise valid insurance contract and impose a constructive trust on Steele’s share of the proceeds of the insurance contract. I dissent.