Oglesby-Barnitz Bank & Trust Co. v. Clark

• Decision Date: 29 July 1959
• Docket Number: OGLESBY-BARNITZ
• Citation: 83 A.L.R.2d 1337,112 Ohio App. 31,175 N.E.2d 98
• Parties: , 83 A.L.R.2d 1337, 15 O.O.2d 415 BANK AND TRUST CO., Exr., Appellee, v. CLARK, Appellant.
• Court: Ohio Court of Appeals

Page 31

112 Ohio App. 31

175 N.E.2d 98, 83 A.L.R.2d 1337, 15 O.O.2d 415

OGLESBY-BARNITZ BANK AND TRUST CO., Exr., Appellee, v. CLARK, Appellant.

Court of Appeals of Ohio, First District, Butler County.

July 29, 1959.

Syllabus by the Court

Where a partnership agreement provides, inter alia, 'that the life of each party shall * * * be separately insured in the sum of * * * $10,000 * * *, and the cost thereof, and all premiums thereon, shall be charged as a part of the expense of the partnership,' and that 'each party shall * * * designate the other party as beneficiary * * *, and in event of death of either party, the surviving party shall use the proceeds of said insurance to purchase the deceased party's interest in the firm'; and where later each partner is issued a $10,000 life policy and a $10,000 policy 'for accidental death and dismemberment,' the beneficiary in each policy being designated as the 'partner of the insured' and which policy amounts are subsequently increased to $20,000; the partners in their agreement did not contemplate the issuance of the accidental death and dismemberment policies or the increases in the amounts of the policies, and, upon the accidental death of one of the partners, the other partner must pay to the estate of the deceased partner the sum of $10,000 for his interest in the partnership, regardless of the actual value of such interest, and is entitled to retain the proceeds of such policies in excess of such $10,000.

Timothy S. Hogan, Cincinnati, and Finkleman & Ross, Middletown, for appellant.

Walter R. Bender, Middletown, and Fitton, Pierce & Black, Hamilton, for appellee.

DOYLE, Presiding Judge.

This case concerns the disposition of money received on policies of life insurance and accidental death insurance under the terms of an agreement entered into between two partners, each of whom had taken out life insurance and accidental death insurance on his life and designated the other as beneficiary.

The suit was instituted in the Court of Common Pleas of Butler County by The Oglesby-Barnitz Bank and Trust Company, Middletown, Ohio, as executor of the estate of Harlan D Helsel, deceased, and was directed against the surviving partner, Virgil T. Clark.

The second amended petition alleged, in substance, that:

1. Harlan D. Helsel (the deceased) and Virgil T. Clark became partners in the business of public accounting, pursuant to a written partnership agreement bearing execution date of January 1, 1948.

2. The partnership continued until Helsel died on July 20, 1955, as the result of an automobile collision.

3. The partnership agreement provides that the life of each partner should be separately insured in the sum of $10,000, naming the associate partner as beneficiary; and, in the event of the death of one, the survivor should use the proceeds to purchase the deceased party's interest. The premiums and costs of the insurance were to be charged as a partnership expense.

4. In compliance with the agreement, each partner insured his life for $10,000, and named the other beneficiary. They also each procured an accidental death policy in the amount of $10,000, and designated the other as the beneficiary, with the designation 'partner of the insured.' Later, each of the partners increased each policy from the amount of $10,000 to the amount of $20,000.

5. Following the accidental death of Helsel, the surviving partner presented to the insurance company proofs of loss and received the sum of $40,000, as the named beneficiary in the policies.

6. On January 26, 1956, the bank tendered conveyance of its 'right, title and interest in and to the assets, including good will,' of the partnership, in its fiduciary capacity as executor of the Helsel estate, and requested the surviving partner to pay over all of the insurance proceeds which he had received--to wit, $40,000.

7. The defendant survivor 'refused and does still refuse' to accept a continuing tender and to pay the insurance proceeds to the bank for the benefit of the deceased's estate.

8. 'Wherefore, plaintiff prays that the court will find and declare the defendant to be a trustee of said insurance proceeds and will order and direct the defendant to do and perform the acts required of him by said partnership agreement, and upon his failure so to do will render judgment against the defendant and in favor of the plaintiff in the amount of forty thousand dollars ($40,000), with interest thereon from January 26, 1956, at six per cent (6%) per annum, and for all other proper relief.'

The surviving partner, Clark, in answer to this petition, pleaded:

'* * * that after the date of death of said decedent, Harlan D. Helsel, the interest of said decedent in the partnership * * * was determined to be in the sum of twenty-eight hundred forty-six and 00/100($2,846) dollars, and that this defendant has offered to pay same to the plaintiff as executor of the estate * * * and that this defendant has been at all times ready, willing and able to pay to the plaintiff * * * the said sum of $2,846, as and for the full interest of the decedent Harlan D. Helsel in said partnership, and as and for the purchase of same out of the proceeds of insurance as aforesaid, which insurance proceeds were duly paid to this defendant as provided by the terms of said policy.'

Further answering, the defendant said:

'* * * that * * * he will at any time pay to the plaintiff as executor * * * the said sum of $2,846 as and for the purchase of the interest in full of the decedent, Harlan D. Helsel, in said partnership as aforesaid.'

The defendant continued his answer by praying:

'* * * that this court find that this defendant is obligated to pay to the estate of said decedent as and for the purchase in full of the interest of said decedent in said partnership the said sum of $2,846; and further that this court find that, upon the payment of the said sum of $2.846 by the defendant to said plaintiff as executor, the interest of said decedent be transferred to and become the property of the defendant herein; and that the defendant be discharged in full from any further obligation of any kind or nature whatsoever to the said plaintiff as executor of the estate of said decedent * * *.'

The plaintiff executor, by way of reply, denied the value of the deceased's interest as pleaded by the defendant, but stated that that element 'is immaterial and inconsequential * * * for the reason that the contract * * * fixes the value and the purchase price required to be paid by the defendant to the plaintiff for the interest of said Harlan D. Helsel, deceased, in said partnership.'

Pursuant to trial without a jury, the court found in its judgment that:

'By virtue and by reason of the provisions of said partnership agreement, the defensant is legally obligated and required to purchase the interest of the plaintiff's decedent in said partnership upon tender of the same to him by plaintiff and that plaintiff, making such tender, is entitled to have said contract specifically performed by the defendant and to require the defendant to pay to the plaintiff said amount of forty thousand dollars ($40,000) with interest thereon from the date of tender of performance by the plaintiff--to wit, January 26, 1956.'

Subsequent to the entering of this order, the court entered, on February 21, 1959, the following judgment:

'It appearing to this court that the plaintiff herein did on February 17, 1959, deliver to the clerk of this court an executed and proper bill of sale and conveyance of all the right, title and interest of Harlan D. Helsel, deceased, and of his estate, in and to all of the assets, including good will, of the former partnership existing between the plaintiff's decedent and the defendant, as heretofore ordered herein, and it further appearing to the court that the defendant has failed to pay to the plaintiff the amount of forty thousand dollars ($40,000) with interest thereon at six per cent per annum from January 26, 1956, as heretofore ordered herein, and that more than three days have elapsed from the deposit or delivery of said bill of sale by the plaintiff to the clerk of this court, it is now considered, adjudged and ordered that the plaintiff recover from the defendant the amount of forty-seven thousand three hundred sixty-four and 38/100 dollars ($47,364.38) and costs herein * * *. To all of which the defendant hereby reserves his exceptions.'

In the appeal to this court from the orders of the trial court, the appellant, Virgil T. Clark, claims error of the judgments of the court in the following respects:

'1. The trial court erred in holding that the mere payment of premiums by partnership funds on either life or accident insurance in and of itself impresses a trust on the proceeds of that insurance, and further in holding that such a trust was for the benefit, not of the partnership payor, but of the estate of a decedent partner.

'2. The trial court erred in holding that the description of a named beneficiary as being a 'partner of the insured' constituted not a description, but words implying a trust.

'3. The trial court erred in holding, in the face of a clear contract between the partners that $10,000 of insurance was to be obtained and used for a given purpose, that this $10,000 meant 'any amount which might be obtained' and not $10,000.

'4. The trial court erred in holding that the words 'life insurance' as used in a parnership by-and-sell agreement meant 'life insurance and accident insurance.'

'5. The trial court erred in holding that the words 'use the proceeds of $10,000 of life insurance' meant 'use the proceeds of $20,000 of life insurance' and $20,000 of 'accidental death and dismemberment insurance'-the aggregate being, not $10,000 as used by the parties, but $40,000 as rewritten by the trial court.

'6. The trial court erred in holding that under the terms of the partnership agreement 'interest in the firm' included, not...