T. L. James & Co., Inc. v. Montgomery, 56138

Citation332 So.2d 834
Decision Date08 December 1975
Docket NumberNo. 56138,56138
CourtSupreme Court of Louisiana
PartiesT. L. JAMES & CO., INC., et al. v. Mrs. Goldie Greig MONTGOMERY et al. Mrs. Goldie Greig MONTGOMERY, Administratrix of the Succession of Thomas William Montgomery, Jr. v. Thomas William MONTGOMERY.

Pittman and Matheny, Hammond, by Iddo Pittman, Jr., James D. Johnson, Jr., and Eric L. Pittman, for Mrs. Goldie Greig Montgomery and Monty George Montgomery, applicants.

M. Truman Woodward, Jr., Kennedy J. Gilly, David Conroy, Hilton S. Bell, David L. Sigler, Milling, Benson, Woodward, Hillyer & Pierson, New Orleans, for amici curiae.

Charles O. Dupont, Allen M. Edwards, Plaquemine, William L. Kimball, Port Allen, for Thomas Wm. Montgomery, III, and Mrs. Sybil C. Montgomery, respondents.

Gerald Le Van, Baton Rouge, for amicus curiae.

SUMMERS, Justice.

Certiorari was granted, La., 310 So.2d 850, in these consolidated cases to review a decision of the trial court and Court of Appeal, First Circuit, 308 So.2d 481, holding that employee retirement and profitsharing plans with a named beneficiary are payable at death of the employee to the named beneficiary, and the value of the employee's interest in the plans at the time of his death are not subject to the claims of the surviving widow in community or the claims of forced heirs. The writ was also granted to review the decisions of this Court, holding that proceeds of a group term insurance policy payable to the beneficiary named by the insured are neither a part of the community property of the insured nor are its proceeds subject to the claims of forced heirs.

I.

Thomas W. Montgomery, Jr., was married to Sybil Chauvin on October 12, 1935. One child was born of this union on March 5, 1940, a son named Thomas W., III. Montgomery was employed by T. L. James & Company, Inc., on September 15, 1946. As an employee of the company, Montgomery became a participant in the company retirement plan for employees on December 31, 1949 and in the profit-sharing plan for employees on January 1, 1950. A group term life insurance policy insuring his life with Aetna Life Insurance Co. as an employee of T. L. James & Co. was issued on May 1, 1950. The marriage to Sybil Chauvin was dissolved by divorce on May 27, 1958, after which a partition and settlement of the community property was entered into between the parties on December 10, 1958.

Montgomery was married a second time to Goldie Greig on June 6, 1958, and one child was born of this marriage on March 25, 1960, a boy named Monty George. This second marriage was marked by several separations, one of which resulted in suit and a judgment of separation from bed and board on October 25, 1968. A reconciliation was brought about, however, and on September 3, 1969 the parties reestablished the community.

Thereafter the parties separated again. During this last separation, on August 28, 1970, Montgomery delivered $11,940 in cash to his son Thomas III. The funds were deposited in a safety deposit box rented in the son's name. In quick succession, on August 31, 1970 Montgomery designated his son as beneficiary of the group term life insurance policy on his life which was issued to him by Aetna Life Insurance Co. as an employee of T. L. James & Company, Inc. He then designated Thomas III as beneficiary of the company retirement plan on September 2, 1970, and as beneficiary of the profit-sharing plan on September 24, 1970. Each of these latter designations superseded prior designations of Thomas III as beneficiary of the retirement and profit-sharing plans, which had been executed on August 26, 1968 and September 2, 1970, respectively. He then executed an act of donation to Thomas III of the insurance policy, his interest in the employee's profit-sharing plan and the retirement plan. This donation, executed before a Notary Public and two witnesses was never accepted by Thomas as donee. While Montgomery was bringing about these designations, suit was again instituted against him by Goldie Greig seeking a separation from bed and board. The matter was never brought to judgment, however, for on January 23, 1971 Montgomery committed suicide.

On April 19, 1971 T. L. James & Company, Inc., as administrator of the group term life insurance policy insuring the life of Montgomery, paid Thomas III $22,500 as named beneficiary, that amount being the policy's value at the time of Montgomery's death.

Then, on September 24, 1971, T. L. James & Company, Inc., having been informed that a disagreement had arisen between Thomas III, Sybil Chauvin, Goldie Greig and Monty George over the right to the benefits due under Montgomery's accounts in the employees' profit-sharing and retirement plans, provoked a concursus proceeding and deposited the sum of $63,875.44 in the registry of the court--$26,330.14 of this amount represented proceeds from the profit-sharing trust, and $37,545.30 represented proceeds from the retirement plan for employees.

Subsequently Goldie Greig, as administratrix of the succession of the deceased Thomas William Montgomery, Jr., instituted suit on January 11, 1972 against Thomas III to recover the sum of $11,940, the cash given by the decedent to his son Thomas III; and for the sum of $22,500, the proceeds of the group term life insurance paid to Thomas III as beneficiary on account of the death of his father. In the alternative, she prayed for judgment in the amount of the premiums paid by the community of acquets and gains between herself and decedent, or, in the further alternative, that decedent's interest in these funds be decreed to belong to his estate.

The controversy involving the $11,940 in cash given to Thomas III has been resolved by a final judgment decreeing that those funds belonged to decedent's estate. The other issues are presented for decision.

II. The Profit-sharing Plan

T. L. James & Company, Inc., first established a profit-sharing plan for its employees on January 1, 1945. The plan was restated in its entirety on December 31, 1955. It is designated as the T. L. James & Company, Inc., Employees' Profit-Sharing Plan.

The plan, insofar as it is pertinent here, was established and maintained for the purpose of enabling employees of the company, who are eligible to participate, to share in the profits of the company through the distribution to them or their beneficiaries of the corpus and income of a trust fund established and maintained in conjunction with the plan.

Only those persons whose customary employment with the company calls for not less than 20 hours of work in any one week for not less than six months in any calendar year are eligible. They are referred to as participants.

Based upon a schedule established in the plan, the company obligated itself to contribute to the trust from the net profit a percentage progressing from 5% Not in excess of $100,000 to 30% In excess of $500,000. The plan was amended in 1966 to provide for a company contribution of 20% Of net profits after deducting 5% After taxes of the net worth of the company under conditions set forth in the amendment. The employee makes no contribution to the plan.

An advisory committee established by the plan is charged with maintaining a separate account for each participant. Each account is periodically adjusted on the basis of the fair market value of assets in the trust fund. The method of accounting is set forth.

Retirement or death brings about a determination of the percentage of the participant's account which is then vested. A schedule for this calculation graduates until after 20 years or more 100% Of the account is vested in the participant. The funds are, in effect, dedicated to the employee, but are held in trust by the trustee. However, the funds cannot be withdrawn until resignation, retirement or death.

In conjunction with the establishment of the plan, the company entered into a trust agreement with a Shreveport bank, the trust to be administered in accordance with the trust agreement which is subject to amendment. Under the terms of the trust agreement the company may remove the trustee and appoint a successor. All contributions made by the company under the plan are paid into the trust fund established under the trust agreement, and all benefits payable under the plan are paid from the trust fund. The company has no right, title or interest in the trust fund or in any part thereof, and no part reverts to the company.

Company officers and employees are appointed as the advisory committee and administer the trust. They may direct the trustee to make loans to the employee participants under uniform terms to the value of the participants vested interest in his account. Loans may be made to participants to enable them to meet emergency conditions in their finances, on account of illness, disability, to preserve their home, or for the schooling of their children.

A participant may designate, revoke or change a beneficiary or beneficiaries. If a participant dies without designating a beneficiary, the committee may distribute the credit balance of his account to the next of kin or the legal representative or representatives of the estate of the last to die of the participant or the beneficiary.

No participant or other person shall have any interest in, or right to, any part of the trust fund, or in any of the assets thereof, except as provided in the plan.

No account in the fund is subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, and any attempt to do so shall be null and void; nor shall any such account be liable for, or subject to, the debts, contracts, liabilities, engagements or torts of the person entitled to the account.

The plan is subject to termination by the company at any time, and it may amend the plan in...

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