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In Re Estate of Mcgee

OPINION FILED DECEMBER 22, 1978.

IN RE ESTATE OF LINDA VIRGINIA MCGEE. — (DORIS

v.

OSBORNE, ADM'R OF THE ESTATE OF LINDA VIRGINIA MCGEE, DECEASED, PETITIONER-APPELLEE,

v.

NATHANIEL JOHN MCGEE, RESPONDENT-APPELLANT.)



APPEAL from the Circuit Court of Greene County; the Hon. HOWARD LEE WHITE, Judge, presiding. MR. JUSTICE MILLS DELIVERED THE OPINION OF THE COURT:

"A man's dying is more the survivor's affair than his own."

— Thomas Mann "The Magic Mountain"

A benchmark question in Illinois.

Can the doctrine of equitable conversion apply to insurance proceeds?

Yes.

The sequence of events: Nathaniel McGee and Linda McGee were married and moved into Nathaniel's house in Roodhouse, Illinois. Later, he executed a deed to Linda and himself placing the house in joint tenancy with the right of survivorship. In the spring of 1976, he purchased a comprehensive liability insurance policy (in his own name) which insured the house and its contents. Linda had told Nathaniel to "take care of the insurance" and he had paid the premiums from the couple's joint funds.

In early 1977, Nathaniel and Linda were divorced. The divorce decree awarded all household furniture and furnishings to Linda, but made no disposition of the real estate owned by the parties. However, shortly after the divorce, Nathaniel and Linda resumed living together at their home, and Nathaniel testified that the couple planned to remarry.

On July 5, 1977, a fire completely destroyed the McGee home and its contents. Nathaniel filed an insurance claim and was subsequently paid $24,000 compensation for the loss of the dwelling and $12,000 as remuneration for the destruction of the personal property within the house. The insurance company issued a check to respondent on or about July 15, 1977, and Nathaniel placed the money in his personal bank account.

On July 27, 1977, Linda McGee died intestate and her administratrix subsequently filed a petition in the Circuit Court of Greene County to recover assets (a portion of the insurance proceeds) from Nathaniel. After hearing the evidence, the trial court found that, although the insurance policy was in the respondent's name alone, joint funds were used in the procurement of the insurance. Furthermore — so said the trial judge — the decedent was cognizant of Nathaniel's actions in obtaining the coverage and had placed her confidence in him to accomplish the task. Accordingly, since joint funds were used and the decedent and respondent enjoyed a fiduciary relationship, the trial court decreed that either a resulting or constructive trust had arisen by the parties' actions. Consequently, the insurance policy was not controlling and one-half of the insurance proceeds from the destruction of the home inured to the estate of Linda McGee at her death. The trial court further stated that the proceeds from the loss of the contents of the dwelling belonged entirely to Linda McGee, less personal items that belonged to respondent and to the children.

On appeal, respondent argues that the insurance contract should control and therefore he should receive all the proceeds from the destruction of the house and its contents. In the alternative, he argues that the doctrine of equitable conversion should apply and the insurance proceeds from the destruction of the dwelling should be treated as real estate; accordingly, the proceeds should vest in the respondent as the surviving joint tenant.

We are confronted by insurance proceeds from two different types of property owned by separate entities. The dwelling house was owned in joint tenancy by Nathaniel and Linda McGee. The personal property inside the house, on the other hand, was owned individually by the McGees and their children, except for the household furnishings and goods which had been specifically decreed to the deceased by the terms of the couple's divorce decree. Therefore, because of the differing nature and ownership of the property involved, we will address each type of property separately.

I. THE DWELLING HOUSE

• 1, 2 Respondent argues that the insurance agreement, naming him as the insured, is determinative of this case. We do not agree. Instead, we concur with the trial court and the petitioner that equitable principles should be invoked. In equity, the substance of a transaction controls, not its form. (Metcalf v. Altenritter (1977), 53 Ill. App.3d 904, 369 N.E.2d 498.) Equity carries into effect the real intention of the parties, gleaned not only from the written instrument they executed but from the subsequent acts and conducts with reference thereto. Trapp v. Gordon (1937), 366 Ill. 102, 7 N.E.2d 869; see Metcalf.

• 3 The intent of the parties is paramount and in the instant case that intent is clear. Linda and Nathaniel owned the property in joint tenancy and, in order to accomplish this type of ownership in Illinois, the parties had to execute a deed expressly placing the property in joint tenancy with the right of survivorship. (See Ill. Rev. Stat. 1977, ch. 76, par. 1.) This action by the parties clearly indicates that the parties intended that the surviving tenant was to have the house and this is exactly what would have transpired had the house not ...


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