ILLINOIS APPELLATE COURT FIRST DISTRICT, FOURTH DIVISION.
SEPTEMBER 10, 1969.
MARGARET L. CLEMENS, PLAINTIFF-APPELLEE,
SANDEE MANUFACTURING COMPANY, DEFENDANT-APPELLANT.
Appeal from the Circuit Court of Cook County; the Hon. DONALD
J. O'BRIEN, Judge, presiding. Judgment affirmed.
MR. JUSTICE STAMOS DELIVERED THE OPINION OF THE COURT.
Defendant, Sandee Manufacturing Company, appeals from a decree wherein the court approved the findings of the Master and entered judgment in favor of plaintiff, Margaret Clemens, in the sum of $29,330.70. Plaintiff cross-appeals from that part of the decree excepting from the Master's report interest on the sum awarded by the decree.
The principal issue presented for review is whether plaintiff is the owner of the proceeds of a certain life insurance policy issued upon the life of plaintiff's husband, James J. Clemens, deceased employee of defendant. The issue in the cross-appeal is whether the court erred in denying interest.
Plaintiff's amended complaint in substance averred that plaintiff was the wife of James J. Clemens who had been employed by defendant; that defendant provided insurance on the life of James J. Clemens as terms of his employment; that because of economics it was orally agreed between James J. Clemens and defendant that defendant would retain the incidents of ownership and be named as beneficiary; that defendant orally agreed that in the event of James J. Clemens' death it would pay the proceeds to plaintiff; that James J. Clemens has died and defendant has refused to deliver the proceeds to plaintiff. Plaintiff prayed that the defendant be declared to hold the proceeds in trust for plaintiff and to deliver the proceeds with interest to plaintiff from the date that defendant received the proceeds. Defendant's answer denied all the agreements alleged in the complaint, denied that it held the proceeds in trust for plaintiff, and alleged that it was the owner of the policy and proceeds thereof.
Defendant is an Illinois corporation engaged in the business of manufacturing plastics. Its sole stockholder was Elmer Szantay, who was president of the company and a director from the date of the corporate organization to the date of his death on April 1, 1962. Prior to April 1, 1962, Hellmuth Lange and M.G. Kaufman were the other directors. Kaufman was also attorney for defendant. Lange was also Secretary and Assistant Treasurer.
Subsequent to April 1962, the board of directors consisted of M.G. Kaufman, Hellmuth Lange and Robert Wehrheim. The latter succeeded Szantay as President, and Lange became Treasurer and Secretary of the company.
James J. Clemens was sales manager for defendant, and had been so employed for about 11 years at the time of his death. Defendant paid Clemens a salary, bonus, paid vacations, expense-free car and insurance.
Through interrogatories and stipulation it was established that Szantay in September 1959 as president of defendant, negotiated the purchase of Security Benefit Life Insurance Company policy No. 4080659, insuring the life of James J. Clemens for $15,000 and $15,000 and $15,000 accidental death.
At the same time, Szantay took out a policy on his own life for $100,000 without double indemnity, and policies on the lives of Robert Wehrheim and Charles McGuinness, employees of defendant, for the sum of $15,000 with double indemnity. These policies were taken out through Bernard E. Lindquist of Lindquist-Burns Company.
The premium on the policy insuring the life of James J. Clemens was paid by defendant by borrowing against the cash surrender value of the policy and applying any accrued dividends on the policy toward the premium, and paying the difference between the premium and the total of the amount borrowed and the dividends. The beneficiary of the policy was defendant.
On January 10, 1961, James J. Clemens received the following letter from defendant; received in evidence as plaintiff's Exhibit No. 1 and hereinafter referred to as the letter. Policy No. 4 referred to in the letter is the subject-matter of this litigation.
"January 10, 1961
"We wish to confirm the insurance carried on you by your company.
"Policy #1 The Sandee Mfg. Co. has obtained $10,000.00 Group Life Insurance for you with $10,000.00 Accidental Death or Dismemberment benefits, as shown on your policy issued by Mutual Benefit Life Insurance Co. Your company is paying the full premiums on this insurance. (Plaintiff was the stated beneficiary under this policy.)
"Policy #2 Your company issued you also with a Group Accident Policy for $25,000.00 Accidental Death or Dismemberment benefits.
"No individual policies are issued for policy #2, inasmuch as the names of all executives are listed on the policy. You are covered for this insurance by Group Policy #9A BN 2817, by Indemnity Insurance Company of North America, your company is paying the full premiums on this insurance.
"Your beneficiary on this Policy #2 is the same as shown on Life Insurance Policy of Mutual Benefit Life Insurance Policy #1, a copy of which is in your possession. The accidental Policy of Indemnity Insurance Co. (Policy No. 2) is in possession of Sandee Mfg. Co.
"Policy #3 You are also covered for $3,000.00 Life and Group Insurance by Aetna Life Insurance Co. Your contribution is .50 cents per week on this insurance. Your company pays the balance.
"Policy #4 You are insured for $15,000.00 Life Insurance and $15,000.00 Accidental Death or Dismemberment benefits with Security Benefit Life Insurance Co., Topeka, Kansas, policy #4080659. This policy is kept in force with two objectives:
"(1) Greatest maximum protection.
"(2) Lowest annual payout cost to Sandee Mfg. Co.
"Lowest annual payout cost is achieved by Company borrowing against cash value of policy to assist in premium payments. This payment method will be continued. Accordingly, in the event of payout on this policy, the payout would be reduced by the amount of loan outstanding.
"RECAP OF INSURANCE
LIFE "POLICY BENEFIT ACCIDENTAL
"#1 Mutual Life $10,000.00 $10,000.00 "#2 Indemnity __ 25,000.00 "#3 Aetna Life 3,000.00 3,000.00 "#4 Security Benefit 15,000.00 15,000.00 *fn1 28,000.00 53,000.00
"Total payout in event of accidental death at the present time would be approximately $80,000.00.