Simonds v. Simonds - 58 A.D.2d 305, 396 N.Y.S.2d 547 (App. Div. 4th Dept. 1977)

Rule:

A constructive trust may be imposed upon property transferred by mistake or even in a case in which it has been received by an innocent donee, if the donee is unjustly enriched. Unless the recipient of the property is a bona fide purchaser, she may not retain property which decedent has transferred to her in violation of plaintiff's equitable rights.

Facts:

Plaintiff and decedent were divorced on March 31, 1960 and decedent subsequently married defendant Reva B. Simonds on May 26, 1960. In the divorce decree, the decedent agreed to maintain certain life insurance policies with the plaintiff as the beneficiary. These policies lapsed and new policies were secured naming the defendant as the beneficiary. The decedent died, the proceeds were paid to the defendant, and the plaintiff brought suit to establish a constructive trust. The trial court granted partial summary judgment to the plaintiff and the defendant sought review. 

Issue:

Was a constructive trust properly imposed upon the proceeds of policies of life insurance payable to defendant? 

Answer:

Yes.

Conclusion:

The court affirmed the decision of the trial court, holding that a constructive trust was properly imposed upon the proceeds of policies of life insurance payable to decedent's wife. The court noted that the decedent and plaintiff, his former wife, had executed a separation agreement which obligated decedent to maintain certain insurance policies or substitute policies in a specified amount for the benefit of plaintiff. The court held that the decedent breached his promise and failed to maintain the insurance, and as such, the decedent’s estate was unjustly enriched because the premium expenses which he incurred were limited to satisfying his financial responsibilities to his child and the defendant. According to the court, a constructive trust may reach the proceeds of a policy still held by the insurance company and, by extension, may reach the proceeds of a policy paid to the wrong beneficiary. The court held that the imposition of a trust was not precluded by the lapse of the original policies, since, as a remedial device, a constructive trust required no res and such res might, in any event, be found by tracing into the hands of defendant.