G & M Motor Co. v. Thompson

• Decision Date: 19 July 1977
• Docket Number: No. 47957,47957
• Citation: 567 P.2d 80,1977 OK 142
• Parties: G & M MOTOR COMPANY, Appellee, v. Shirley THOMPSON, Appellant.
• Court: Oklahoma Supreme Court

Page 80

567 P.2d 80

G & M MOTOR COMPANY, Appellee, v. Shirley THOMPSON, Appellant.

No. 47957.

Supreme Court of Oklahoma.

July 19, 1977.

Certiorari to the Court of Appeals, Division 1.

Carle & Douthit by John R. Carle, Claremore, Paul R. Hodgson, Tulsa, for appellee.

Ferguson, Fisher & Swank, Inc., by Paul Ferguson and John G. Johnson, W. Rogers Abbott, II and John C. McMurry, Oklahoma City, for appellant.

BERRY, Justice.

The question to be decided has not heretofore been decided in Oklahoma. Specifically, may a trial court impress a constructive trust upon proceeds of life insurance policies where a portion of the premiums were paid with wrongfully obtained funds? We hold sound reason and interest of justice require an affirmative answer.

The facts, for the purpose of deciding this question, are simple. A. Wayne Thompson was an accountant for G & M Motor Company (motor company) from January 1, 1968, until his death on August 2, 1970. During this period decedent embezzled $78,856.45 from motor company; a portion of which was used to pay premiums on various insurance policies insuring the life of decedent. The trial court impressed a constructive trust upon various items of real and personal property and a portion of the insurance proceeds in possession of decedent's surviving wife, Shirley Thompson, and child.

Court of Appeals, Division 1, upon wife's appeal, affirmed trial court's impressment of a constructive trust on the real and personal property, but modified the trust on insurance proceeds. The court, relying on American National Bank of Okmulgee v. King, 158 Okl. 278, 13 P.2d 164, said "only that part of the funds that the trial court found was used to pay for the payments of the policies while deceased was employed for appellee . . . together with interest at the rate of 10% per annum from date of judgment . . . until paid" are subject to a constructive trust in favor of motor company.

Motor company, after motion for rehearing was denied, sought certiorari. Appellant concomitantly sought writ of certiorari to review evidence supporting trial court's finding on condition motor company's writ was granted. By order dated January 31, 1977, this Court granted certiorari to both parties; however, upon further consideration appellant's petition for certiorari is denied. Rule 3.16, 12 O.S.Supp. 1976, App. 3

Court of Appeals relied upon American National Bank of Okmulgee v. King, supra; however, its reliance is inapposite. In American National Bank, decedent King was a bank officer and embezzled a considerable amount from Bank. Upon discovery of his embezzlement, King committed suicide. King's wife and two minor children were beneficiaries on two insurance policies on decedent's life. Bank sought to share in insurance proceeds, but trial court found "all premium money was honestly acquired by the deceased" and denied Bank relief. This Court affirmed saying, "We have examined this entire record. It was incumbent upon the plaintiff, to have any equity at all in the proceeds of the life insurance policy, to establish by a fair preponderance of the evidence that its money had been used in paying some part of the premiums. The lower court found otherwise . . . We cannot say on this evidence that we would have found different from what the lower court did." Thus, there being no Bank money used to pay premiums, American National Bank is not authority for the proposition that a constructive trust can be impressed upon proceeds to extent of premiums paid with wrongfully acquired funds.

Notwithstanding no necessity to comment, American National Bank offered extensive discussion suggesting the direction the court might take in the future. The Court said:

" . . . (A)ll parties appear to have overlooked the fact that what made the fund here was the death of the insured by the force of a self-directed pistol shot. Prior to that time he had taken out some life insurance based on his own death, and matured thereby; the proceeds being the subject-matter of controversy here . . . The theory of the plaintiff bank is that if it can establish that the bank's money paid the premiums, it gets the insurance, overlooking the fact that it took the death of King to mature the contract of insurance and create the fund. Applying a term ordinarily used in personal injury cases, the 'proximate cause' of converting the policy into an actual liability was the act of the deceased in firing the shot that caused his death. It also overlooks the fact that the first call upon King's life was a natural call of the wife and minor children, whose claims antedated the claims of the bank. The claim is that the bank is entitled to the proportion of the fund that the amount of premium money, paid with the funds of the bank, bears to the total premiums paid. Had the bank sought to recover the money actually embezzled, a good deal of the testimony dealing in details would have been highly essential. But that was not the theory. The theory was that its money paid the premiums, and therefore it was entitled to the fund derived from the death, though premature and self-inflicted.

". . . The proceeds of the Bank's money . . . if any it had in premium payments, went into what is known as the reserve or surrender value, which in policies of two year old age would amount to a very small amount of the premium, increasing relatively as the years increase. Had the plaintiff bank elected to proceed on that theory and had established such a payment, there would have been justice in letting them have the portions of premiums reserved. There would have been justice in letting the bank have out of the fund the money that was taken from the bank to pay the life insurance premiums,...