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Ziarko v. Ziarko

SEPTEMBER 3, 1974.




APPEAL from the Circuit Court of Cook County; the Hon. CHARLES E. BARRETT, Judge, presiding.


This is an appeal from an order establishing a constructive trust in certain life insurance benefits and pension funds. Plaintiffs are heirs at law of the deceased, Stanley Ziarko, who claimed in the court below that they were entitled to the proceeds of the insurance and pension funds, which had allegedly been wrongfully converted by their uncle, the brother of the deceased, John Ziarko, one of the defendants below. *fn1 John Ziarko had been designated beneficiary of the insurance policies and pension funds in question. The trial court, sitting without a jury, entered judgment for plaintiffs, and this appeal follows.

The amended complaint to declare a trust and for an accounting alleged, in pertinent part, that plaintiffs were the children and heirs at law of the deceased, who died intestate on January 31, 1971; that plaintiffs had lived with and had been supported by the deceased, who had been employed as a bus driver for approximately 25 years by the Chicago Transit Authority (hereinafter CTA); that, upon the the death of their father, certain benefits under a retirement plan of the CTA, accrued salary, and certain life insurance benefits were to accrue to the family of the deceased; that, in 1963, the deceased and plaintiffs' mother, Dolores Ziarko Valenta, had been divorced; and that the decree of divorce provided, among other things, that: 1) plaintiffs' mother was to maintain custody of plaintiffs, who were minor children at the time; 2) Stanley Ziarko was to provide school tuition, books, and uniforms for plaintiffs, pay all of their medical and dental expenses, and continue in full force and effect certain life insurance policies written on each of the lives of the plaintiffs *fn2; and 3) Stanley Ziarko was to maintain in full force and effect life insurance in the amount of $1,600 written on his own life, under which insurance plaintiffs were to be named primary beneficiaries.

The amended complaint further alleged that John Ziarko (hereinafter defendant) was a successful businessman, that Stanley Ziarko was unacquainted with business matters, and, in such matters, placed implicit confidence and trust in the defendant; that, based upon such trust and confidence, Stanley placed the defendant's name, as beneficiary, upon all insurance policies covering his life and those of the plaintiffs, as well as upon documents securing Stanley's pension and retirement funds; that Stanley designated the defendant as beneficiary based upon his confidence that defendant, upon Stanley's death, would hold said funds and proceeds in trust for the use and benefit of plaintiffs and would distribute same to plaintiffs; that their father informed plaintiffs, before his death, that when he died, defendant would collect for them all monies due upon such insurance, pension funds, and the retirement plan and that defendant had promised them further that he would turn over said proceeds to plaintiffs; and that their father informed them that, because plaintiffs were minors, an adult had to be named as beneficiary of said proceeds, but that defendant could be trusted to turn over all of the money to them.

Continuing, plaintiffs further alleged that, subsequent to their father's death, defendant and his wife, Lillian, procured the above-described insurance policies and proceeded to collect certain life insurance benefits and the pension and retirement funds, all of which totaled $14,467.95; that, thereafter, they were informed by defendant that plaintiffs had no interest in any of the proceeds, that defendant was the only person entitled to the proceeds, as the named beneficiary, and that plaintiffs would receive none of the proceeds; and that defendant and Lillian Ziarko had knowingly and wilfully violated the trust and confidence placed in them by their father, Stanley Ziarko.

As part of their prayer for relief in the court below, plaintiffs requested that the court order an accounting to the plaintiffs by the defendant and Lillian Ziarko for all of the proceeds described and that the court decree the existence of a trust for the use and benefit of plaintiffs in said proceeds.

The answer filed in response to plaintiffs' amended complaint may be characterized, for our purposes here, as a general denial of the material allegations contained therein. *fn3

The testimony and evidence presented below established, in pertinent part, that plaintiffs are the children of Stanley Ziarko, who died intestate on January 31, 1971, at the age of 50. On December 20, 1963, Stanley was divorced from Dolores Ziarko Valenta, plaintiffs' mother, and Dolores was awarded sole custody of plaintiffs, who were minor children at the time. Sometime in 1962, Stanley, alone, moved into a basement apartment in a building owned by his brother, the defendant, where he lived rent-free for a period of from 3 to 4 years; during that period, defendant provided Stanley with food and did not charge him for the use of utilities in the apartment.

As to the CTA retirement plan, the record indicates that on April 20, 1950, Stanley designated his mother as the primary beneficiary and his father as the secondary beneficiary and that that designation was changed by Stanley on December 2, 1964, whereupon the defendant was named primary beneficiary and the three children (Pamela, Nancy and Joseph) secondary beneficiaries, share and share alike. On the date of the change, the ages of the children of Stanley were: Pamela 12, Nancy 9 and Joseph 8.

Regarding the CTA employees group policy with Travelers Insurance Company and the policy upon the life of Stanley with Prudential Insurance Company of America, the record does not clearly indicate the date of the beneficiary change. However, the record is abundantly clear that the matter was tried on the theory that a beneficiary change had been made, designated the defendant as the primary beneficiary, and that the defendant collected and retained the proceeds upon the death of Stanley.

In 1967, Stanley took a different apartment in defendant's building and began paying defendant a monthly rental of $70. The same year, Stanley's oldest daughter, Pamela, a plaintiff herein, came to live with her father; at the time she was 15 or 16 years of age. Stanley's youngest child, Joseph, a plaintiff herein (then age 13), began living with his father sometime during 1969, and, approximately 2 or 3 months prior to her father's death, Stanley's other daughter, Nancy (then a minor), also a plaintiff herein, took up residence with her father.

Pamela testified, in part, that her father had been capable of handling his own business affairs and that defendant had controlled none of her father's funds. She stated that her father handled his own checking account, maintained a bank account for several years prior to his death, and owned bonds, some of them in his own name, others in his and Pamela's names. Pamela shared some of the household expenses while living with her father, and she testified that, prior to his death, her father paid all debts for which he was responsible to defendant.

Over objection, Pamela further testified regarding a conversation which allegedly took place on or about December 22, 1970; present during the conversation were her father, herself, Nancy Ziarko, and Joseph Ziarko. Pamela testified that, at that time, her father had told the children that "if anything should ever happen to him [Stanley] that he's [defendant] got plenty of money and my uncle John [defendant] should take care of us and we wouldn't have to worry about it." Continuing, she testified further that her father said on the occasion in question that "Your uncle will take care of you, I put the policy in his name because you aren't old enough to be on them."

Nancy Ziarko also testified with respect to the December, 1970, conversation, and stated that her father had said that "he [Stanley] had insurance policies and pension and everything from C.T.A. signed over to my Uncle John [defendant] because Pam wasn't twenty-one, and he felt that she couldn't take care of herself and two kids younger than her and tuitions. He said that my uncle would take care of us and make sure our tuition was paid and everything else."

Joseph Ziarko also testified regarding the December, 1970 conversation, and he stated that his father had said that the insurance would "cover us and we get the money for the insurance if he died * * *."

Pamela characterized her relationship with defendant as a "short hello," and she stated that plaintiffs and defendant only visited on certain holidays and only when their father was present. She stated that she never conversed with defendant prior to her father's death concerning the fact that defendant was the beneficiary of her father's insurance, and, further, that she and her father had physical possession of the insurance policies until after her father's death.

Pamela further testified that she had a conversation with Lillian Ziarko, in the presence of her sister, Nancy, just after her father's death, in which Lillian allegedly assured her that defendant would give her the insurance proceeds. Nancy Ziarko also testified to the same conversation, stating that Lillian had said that defendant would "make sure he takes care of you children" with the proceeds of the insurance. Lillian Ziarko, when called to testify, denied the substance of this conversation as ...

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