Hirsch v. Travelers Ins. Co.

• Decision Date: 17 June 1975
• Citation: 134 N.J.Super. 466,341 A.2d 691
• Parties: Janis E. HIRSCH and Carol E. Hirsch Bidwell, Plaintiffs-Appellants, v. TRAVELERS INSURANCE COMPANY et al., Defendants-Respondents.
• Court: New Jersey Superior Court — Appellate Division

Page 466

134 N.J.Super. 466

341 A.2d 691

Janis E. HIRSCH and Carol E. Hirsch Bidwell, Plaintiffs-Appellants, v. TRAVELERS INSURANCE COMPANY et al., Defendants-Respondents.

Superior Court of New Jersey Appellate Division.

Submitted June 9, 1975.

Decided June 17, 1975.

Samuel Leventhal, Trenton, for plaintiffs-appellants.

Markowitz & Zindler, Trenton, for defendant-respondent Doris Hirsch (Joseph Markowitz, Trenton, on the brief).

Before Judges LEONARD, SEIDMAN and BISCHOFF.

PER CURIAM.

Plaintiffs appeal from a judgment dismissing their complaint as to defendant Doris Hirsch, upon whose property they attempt to impose a constructive trust.

Jack M. Hirsch and Shirley Hirsch, the natural parents of plaintiffs, were divorced on March 10, 1967. The property settlement agreement, incorporated into a judgment Nisi, provided that Jack Hirsch would designate plaintiffs as irrevocable beneficiaries of seven life insurance policies having a total face value of $98,000, pay the premiums thereon and direct the insurance companies to notify plaintiffs if any premiums were in default. The agreement further provided that Jack Hirsch would place certain securities in trust for plaintiffs' education, and an appropriate trust instrument was executed.

After his divorce from Shirley Hirsch, Jack Hirsch married defendant Doris Hirsch. He died testate on January 18, 1973. Plaintiffs allege that shortly thereafter they discovered that Jack Hirsch violated the property settlement agreement by (1) depriving plaintiffs, by various means, ¹ of their rights as beneficiaries under the insurance policies, and (2) selling the securities held in trust for plaintiffs and converting the proceeds to another use. Plaintiffs allege that Jack Hirsch used the proceeds of these wrongful acts to finance the purchase of land and the construction of a $200,000 house on it, title of the land and property being placed in the names of decedent and Doris Hirsch as tenants by the entireties.

Plaintiffs filed a complaint naming as defendants: (1) the insurance campanies (2) the executors of Jack Hirsch's estate and (3) Doris Hirsch. As to defendant Doris Hirsch, plaintiffs sought to impose a constructive trust on the above-mentioned real property for their benefit.

Doris Hirsch filed a motion to dismiss the complaint as to her for failure to state a claim upon which relief could be granted. The trial judge held that Doris Hirsch had not been unjustly enriched by Jack Hirsch's wrongful actions and that a constructive trust was not available to plaintiffs. The motion of Doris Hirsch to dismiss was accordingly granted.

We reverse.

On a motion to dismiss a complaint for failure to state a claim upon which relief can be granted, all facts alleged in the complaint and legitimate inferences drawn therefrom are deemed admitted. See Heavner v. Uniroyal, Inc., 63 N.J. 130, 133, 305 A.2d 412 (1973); J. H. Becker, Inc. v. Marlboro Tp., 82 N.J.Super. 519, 524, 198 A.2d 463 (App.Div.1964).

The following facts and legitimate inferences appear from an examination of the complaint: (1) funds were wrongfully diverted from the insurance policies and from trust funds by decedent; (2) monies thus diverted were used in the purchase of land and construction of the home in question and (3) Doris Hirsch paid no consideration for her tenancy by the entirety which has now, by the death of her husband resulted in her sole ownership of the property.

It is fundamental that a constructive trust should be impressed in any case where failure to do so would result in unjust enrichment. D'Ippolito v. Castoro, 51 N.J. 584, 588, 242 A.2d 617 (1968). All that is required to establish a constructive trust is a finding that there was a wrongful act resulting in the transfer of property and consequent unjust enrichment of another. Id. at 589, 242 A.2d 617. See also In re Mid-Center Redevelopment Corp., 383 F.Supp. 954, 971--973 (D.N.J.1974); Restatement, Restitution, § 160 at 640 (1937).

The complaint alleges a wrongful diversion of trust funds resulting in the unjust enrichment of Doris Hirsch. It is clear that the facts alleged, if proven, establish her enrichment. The troublesome issue is whether this enrichment may be considered unjust so as to give rise to a cause of action against her.

One receiving a benefit is liable to make restitution only if the circumstances of its receipt or retention are such that, as between two contestants, it would be unjust for the recipient to retain the benefit. Restatement, Restitution, § 1 at 12 (1937); Cf. Brick Tp. v. Vannell, 55 N.J.Super. 583, 595, 151 A.2d 404 (App.Div.1959).

Where two innocent parties are involved and the recipient of a wrongful transfer is a Bona fide purchaser for value, the recipient will prevail over one seeking to impose a constructive trust. Restatement, Restitution, § 172 at 691 (1937); 5 Scott, Trusts (3 ed. 1967) § 474 at 3454; Cf. Bajek v. Polack, 120 N.J.Eq....