Massachusetts Mut. Life Ins. Co. v. Weinress
| Decision Date | 08 October 1942 |
| Docket Number | No. 3677.,3677. |
| Parties | MASSACHUSETTS MUT. LIFE INS. CO. v. WEINRESS et al. |
| Court | U.S. District Court — Northern District of Illinois |
Eckert & Peterson, of Chicago, Ill., for plaintiff.
Malkin, Glick & Malkin, of Chicago, Ill., for defendants.
Martin S. Gerber, of Chicago, Ill., for guardian ad litem.
This is an interpleader suit filed under the Federal Interpleader Statute (U.S.C.A. Title 28, Section 41(26)) by Massachusetts Mutual Life Insurance Company against William Weinress, individually and as guardian of the estates of Shirley Springer (sometimes in the pleadings and exhibits her name is spelled Shirle) and William J. Springer, Jr., minors, Ernest John Springer, individually and as trustee under Trust Agreement dated February 4, 1941, Shirley G. Springer, William J. Springer, Jr., and Ocean County National Bank, successor trustee under said Trust Agreement, and unborn child or children of Shirley G. Springer and William J. Springer, Jr., minors. The res is $41,831.39, being the proceeds of two insurance policies, and has been paid into the registry of the court. Answer has been filed by William Weinress as guardian of the estates of Shirley G. Springer and William J. Springer, Jr., minors. On motion of attorneys for plaintiff, a guardian ad litem was appointed by the court for Shirley G. Springer and William J. Springer, Jr., minors and the unborn children, if any, of said Shirley G. Springer and William J. Springer, Jr.; this guardian ad litem has filed an amended answer and counter-claim herein.
The case has come on for trial before me on the preliminary issue as to whether or not the bill of interpleader would lie. A hearing has been held on this issue, and a transcript of the evidence filed in the case. At the conclusion of the hearing, I took the matter under advisement on briefs, filed by the respective parties.
The essential facts are not in dispute. On September 7, 1922, Massachusetts Mutual Life Insurance Company issued to William J. Springer its policy upon his life in the sum of $25,000; on September 25, 1922, it issued a second policy for $15,000. The beneficiary in each instance was Marie Springer (who was then the wife of William J. Springer). On October 18, 1937, the insured executed a change of beneficiary under the terms of which the insurance company was directed upon insured's death to divide the proceeds of the two policies in equal shares, one for the benefit of his daughter Shirley, and one for the benefit of his son William (or their lawful issue if they should not be living); the funds were to be retained by the company under its option D, which provided that the company would pay interest on funds left with it at not less than 3% per annum. The change of beneficiary further provided that the shares payable to the children should accumulate until each child attained the age of 21, at which time his (or her) share, with interest accumulations, should be payable in monthly installments of $150 each until the proceeds, together with interest, were exhausted. On February 4, 1941, the insured executed another change of beneficiary whereby his brother, Ernest J. Springer, was made beneficiary of both policies. This latter change of beneficiary had a typewritten clause providing that the company was to retain the proceeds as provided in its option D, and pay the interest quarterly to the brother, subject to his right to withdraw the whole or any part of the funds retained; and with a further proviso that upon the death of the insured and the brother, the proceeds (or net balance thereof) were to be divided in equal shares among the insured's children, Shirley and William J. (or the lawful issue of any child deceased). There was a further proviso that any child after attaining the age of 21 might withdraw from the principal, subject to the limitation that not more than four withdrawals may be made by the child in one installment year, and that the total amount withdrawable in any installment year should not exceed $2,000. The insured and Ernest J. Springer entered into a written trust agreement dated February 4, 1941, whereby Ernest J. Springer acknowledged receipt of the two insurance policies (inter alia) and agreed that the property was to be divided into three equal shares, one share to become the property of Shirley G. Springer, and one share the property of William J. Springer, Jr., and one share the property of Alys Springer, wife of William J. Springer. (Alys Springer died shortly after the death of William J. Springer, the insured, and may be disregarded for the purpose of the present controversy.) This Trust Agreement was not prepared by an attorney, and was loosely worded; it went on to provide as follows:
William J. Springer died February 11, 1941, seven days after the date of the above agreement. Alys Springer, his widow, died June 23, 1941. At the time of the filing of this suit, Shirley Springer and William J. Springer, Jr., were minors, Shirley Springer having been born September 12, 1924, and William J. Springer, Jr., having been born on April 15, 1928.
On February 12, 1941, Ernest J. Springer furnished plaintiff with his proof of claim and elected to leave the proceeds of the policies on deposit with the company and to receive interest thereon quarterly. Pursuant to this arrangement, plaintiff issued and delivered to him its installment checks as follows:
(a) February 21, 1941 $ 28.78
(b) May 17, 1941 371.50
(c) August 17, 1941 361.31
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Total: $761.59
The remaining proceeds of the policies, being the funds now in dispute, amount to $41,831.19.
The fact that Ernest J. Springer had acquired his interest in the insurance policies, as trustee, was unknown to the insurance company until October 29, 1941. On that day Sol R. Malkin, attorney for William Weinress, guardian in the Probate Court of Cook County, of the estates of Shirley Springer and William J. Springer, Jr., minors, gave written notice to the insurance company of the existence of the Trust Agreement dated February 4, 1941, which notice claimed that any sums due Springer under the policy were payable to him as trustee and not individually. This notice quoted from the above Trust Agreement and recited that same had been made upon the advice of the insurance company's representative in Chicago, but that, inadvertently, the change of beneficiary was prepared in such a manner that it permitted E. J. Springer to withdraw the funds for his own use and benefit, without in any way making any accounting. The notice went on to say that on request E. J. Springer had returned to the custody of the Probate Court of Cook County all of the jewelry, the cash, and the Liberty Bonds which were also mentioned in the Agreement of February 4, 1941, and continued as follows, referring to E. J. Springer: "He has, however, steadfastly refused not only to turn over the funds as represented by the proceeds of the insurance policies in your company, but has definitely stated that it is his intention to retain the benefits of these insurance policies for his own use without in any way accounting either to the minor children or to William Weinress, Guardian of the person and estate of the two minor children."
This letter went on to say that the Probate Court of Cook County (on petition of the guardian) had given the guardian authority to take such action as seemed fit and proper; that the guardian finds it necessary to institute legal action to recover the proceeds of the policies, and concluded: "This letter is for the purpose of advising you to disregard any request on the part of E. J. Springer to withdraw any of the principle or interest of the moneys on deposit with you by virtue of the policies afore mentioned until the matter has been definitely concluded in a court of law." On the same day on which the letter was received by the insurance company, Mr. Malkin called personally on the proper officer of the insurance company at the home office in Massachusetts and there was discussion with Mr. Malkin in which the latter said that Mr. Springer had refused to be bound by his agreement with his brother and in which Mr. Malkin delivered to the insurance company a photostatic copy of the Trust Agreement.
On October 31, 1941, Weinress as guardian (through his attorney, being one of the attorneys of record in this...
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