Wechsler v. Aetna Life Ins. Co., Docket No. 77-1563

• Decision Date: 10 May 1978
• Docket Number: Docket No. 77-1563
• Parties: Louis WECHSLER, Administrator of the Estate of Frances Gentile, Deceased, Plaintiff-Appellant, v. AETNA LIFE INSURANCE COMPANY, a Foreign Insurance Corporation, Philip Ozrovitz and William Bobrin, a/k/a William Bobren, jointly and severally, Defendants- Appellees. 83 Mich.App. 320, 268 N.W.2d 394
• Court: Court of Appeal of Michigan — District of US

Page 394

268 N.W.2d 394

Louis WECHSLER, Administrator of the Estate of Frances

Gentile, Deceased, Plaintiff-Appellant, v. AETNA LIFE INSURANCE COMPANY, a Foreign Insurance

Corporation, Philip Ozrovitz and William Bobrin,

a/k/a William Bobren, jointly and

severally,

Defendants-

Appellees.

Docket No. 77-1563.

83 Mich.App. 320, 268 N.W.2d 394

Court of Appeals of Michigan.

May 10, 1978.

Rehearing Denied June 19, 1978.

Released for Publication Aug. 3, 1978.

[83 MICHAPP 321] Saul Levin, Southfield, for plaintiff-appellant.

James A. Samborn, Detroit, for Aetna.

A. Albert Sugar, Southfield, for Ozrovitz and Bobrin.

Before BEASLEY, P. J., and BASHARA and RILEY, JJ.

PER CURIAM.

During her lifetime, plaintiff's decedent, Frances Gentile, was employed by Fairlane Drugs, Inc., a Michigan corporation, which was solely owned by defendant William Bobrin, who was president and secretary, and by defendant Philip Ozrovitz, who was vice president and treasurer.

On March 19, 1974, plaintiff's decedent designated defendants Bobrin and Ozrovitz as beneficiaries of a group life insurance policy in the sum of $15,000 on her life issued by Aetna Life Insurance Company covering employees of Fairlane Drugs, Inc. After she died on December 23, 1974, defendant Aetna paid the proceeds to defendants [83 MICHAPP 322] Bobrin and Ozrovitz who were described in the life insurance policy as "friends".

On February 18, 1976, plaintiff started suit against all three defendants, claiming that the Michigan Insurance Code prohibits an employer from being designated as beneficiary of a group life insurance policy on the life of an employee and that defendants Bobrin and Ozrovitz were, in fact, her employer, that the corporation was a mere sham, and therefore, the proceeds of the policy should be paid to plaintiff's decedent's estate. Plaintiff claimed defendant Aetna paid with full knowledge of the facts, and, therefore, was liable for paying contrary to the statute which prohibited naming an employer as beneficiary of a group policy on their employees.

All parties moved for summary judgment. The trial court granted summary judgment in favor of defendants Bobrin, Ozrovitz and Aetna Life, and denied plaintiff's petition for summary judgment.

Plaintiff appeals as of right.

Plaintiff claims that under Section 4439 of the Michigan Insurance Code, defendants Bobrin and Ozrovitz are, for purposes of the statute, employers of plaintiff's decedent, and as such, not permitted to be beneficiaries. Section 4404 provides:

"Group life insurance may be issued covering not less than 10 employees with or without medical examination, written under a policy issued to the employer, the premium on which is to be paid by the employer or by the employer and the employees jointly, and insuring only all of his employees, or all of any class or classes thereof determined by conditions pertaining to the employment, for amounts of insurance based upon some plan which will preclude individual selection, for the benefit of persons other than the employer: Provided, however, That when the premium is to be paid by the employer and employee jointly and the benefits of the [83 MICHAPP 323] policy are offered to all eligible employees, not less than 75% of such employees may be so insured." M.C.L. § 500.4404; M.S.A. § 24.14404.

Plaintiff also refers to Section 4439 in support of his interpretation of the statute, which provides:

"A person whose life is insured under a group insurance policy may, subject and pursuant to the terms of the policy, or pursuant to an arrangement between the insured, the employer and the company, assign (other than to the employer) all or any part of his incidents of ownership, rights, title and interests, both present and future, under such policy including specifically, but not by way of limitation, the right to designate and redesignate a beneficiary or beneficiaries thereunder, the right to make any requisite contributions to maintain the insurance in force, and the right to have an individual policy issued to him in case of termination of employment. Such an assignment by the insured, made either before or after the effective date hereof, is valid for the purpose of vesting in the assignee, in accordance with any provisions included therein as to the time at which it is to be effective, all of such incidents of ownership, rights, title and interests so assigned, but...