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08/25/94 FEDERAL KEMPER LIFE ASSURANCE COMPANY v.

August 25, 1994

FEDERAL KEMPER LIFE ASSURANCE COMPANY, PLAINTIFF-APPELLEE,
v.
PAUL N. EICHWEDEL AND OLD REPUBLIC SURETY COMPANY, DEFENDANTS. ALBERT A. ANDRIN, INDEPENDENT SUCCESSOR ADMINISTRATOR OF THE ESTATE OF DAVID B. SCHULTZ, JR., DECEASED, PLAINTIFF-APPELLANT, V. OLD REPUBLIC SURETY COMPANY, DEFENDANT-APPELLEE.



Appeal from the Circuit Court of Cook County. Honorable Richard L. Curry, Aaron Jaffe, Judges Presiding.

Released for Publication September 27, 1994.

Theis, Johnson, Cahill

The opinion of the court was delivered by: Theis

JUSTICE THEIS delivered the opinion of the court:

This case involves a murder-for-insurance scheme. While harboring the intent to secure the murder of his brother-in-law, David Schultz, Paul Eichwedel procured an insurance policy on Schultz's life worth $250,000 from Federal Kemper Life Assurance Company. Eight months later, Schultz was murdered and Eichwedel collected the insurance money. Eichwedel was subsequently implicated in the murder.

Simply put, the issue now is who, if anybody, is entitled to the life insurance proceeds. We conclude that the insurance policy was void from the inception and, therefore, Federal Kemper is entitled to the return of the $250,000 life insurance proceeds.

This matter has generated a procedurally complex case. In thisappeal, Albert Andrin, independent successor administrator of the estate of David Schultz, deceased, appeals the November 19, 1992, order entered by Judge Curry in Federal Kemper Life Assurance Co. v. Eichwedel and Old Republic Surety Co. and the July 27, 1992, order entered by Judge Jaffe in Andrin v. Old Republic Surety Co. In the first case, Federal Kemper alleged that the insurance policy it issued on the life of David Schultz was void from the inception. Judge Curry eventually entered judgment against Paul Eichwedel and granted Federal Kemper's motion for summary judgment against the heirs of David Schultz, Andrin and Old Republic, finding that there were no genuine issues of material fact in dispute, that Eichwedel had a preexisting intent to secure the murder of Schultz and that the policy was void from the inception. In the second case, Andrin alleged that the Schultz estate was entitled to the proceeds from the surety bond issued by Old Republic Surety Company. Judge Jaffe originally entered a decision for Andrin and against Old Republic Surety Company in the amount of $250,000. Later, Judge Jaffe vacated this judgment and consolidated this case with the first action.

Pursuant to Supreme Court Rule 23(a)(1), we now affirm the decisions of Judge Curry and Judge Jaffe.

FACTS

It is important to establish the relationships existing between the parties making up our cast of characters. The deceased, David Schultz, was married to Cheryl Schultz and the couple had four children. Cheryl's brother is Paul Eichwedel.

In 1985, David Schultz and Paul Eichwedel visited Federal Kemper Life Assurance Company and applied for a life insurance policy on Schultz's life. The application for the policy designated Paul N. Eichwedel "as executor" as the sole beneficiary. The policy was also signed by Eichwedel as applicant and owner of the policy. Federal Kemper issued the policy in November 1985, in the amount of $250,000.

Federal Kemper's amended complaint alleges that on July 5, 1986, Schultz was found shot to death in his car in Chicago. An employee of Eichwedel identified an individual named Charlie Hill as the murderer. Therefore, initially, Eichwedel was not implicated in the murder. Because of Eichwedel's designation in the insurance policy "as executor" and because there was no will, Federal Kemper advised that it would "pay the proceeds only to the Court Appointed Administrator of the Estate of David Schultz, deceased." Eichwedel was subsequently appointed administrator of the estate.

Eichwedel posted a surety bond in the amount of $375,000, issued by Old Republic Surety Company. In checks dated November 7, 1986, and December 8, 1986, Federal Kemper then paid Eichwedel the $250,000 of life insurance proceeds plus interest.

On November 16, 1987, Eichwedel confessed that he had been plotting to take Schultz's life for months before he procured the Federal Kemper life insurance policy. Eichwedel was then indicted and convicted for murdering Schultz and for conspiracy to murder Schultz. This court later reversed the conviction and ordered a new trial, on the basis that the defendant's right to have counsel present during questioning was violated and the confession should have been suppressed. People v. Eichwedel (1993), 247 Ill. App. 3d 393, 617 N.E.2d 345, 187 Ill. Dec. 137.

FEDERAL KEMPER LIFE ASSURANCE COMPANY v. EICHWEDEL and OLD REPUBLIC SURETY COMPANY (THE CHANCERY SUIT FILED BEFORE JUDGE CURRY)

On April 14, 1988, Federal Kemper filed a complaint against Eichwedel in the chancery division of the circuit court of Cook County. Federal Kemper later amended the complaint to include Old Republic as a defendant. In this complaint, Federal Kemper alleged that it sought to "have the policy in question declared void from its inception" because Eichwedel fraudulently procured the policy, with the intention to murder Schultz.

Judge Curry ruled on this complaint on August 8, 1989. Judge Curry dismissed the count against Old Republic, ruling that Federal Kemper did not have standing to sue Old Republic. Federal Kemper appealed from the order dismissing the action against Old Republic. However, the circuit court retained jurisdiction over Federal Kemper's action against Eichwedel.

Cheryl Schultz, acting on behalf of herself and as mother and next friend of David's children, filed a petition to intervene in Federal Kemper's lawsuit against Eichwedel and Old Republic. At some point in the proceedings, counsel for the Schultz heirs drafted an order which provided, "Cheryl L. Schultz et al are granted leave to intervene * * *." This order was entered by the chancery court on August 25, 1989.

Despite obtaining leave to intervene, the Schultz heirs did not file any pleadings in the case. Instead, their counsel appeared in probate court and secured the appointment of Albert A. Andrin as successor administrator of the Schultz estate. Andrin is the appellant in this case.

On September 27, 1990, this court reversed the decision regardingFederal Kemper's standing to bring an action against Old Republic. ( Federal Kemper Life Assurance Co. v. Old Republic Surety Co. (1990), 204 Ill. App. 3d 387, 561 N.E.2d 1208, 149 Ill. Dec. 512.) The case was remanded to the chancery court.

ANDRIN v. OLD REPUBLIC SURETY COMPANY (THE LAW DIVISION ACTION FILED BEFORE JUDGE JAFFE)

On November 1, 1990, Andrin, as independent successor administrator of the estate, filed an action against Old Republic in the law division of the circuit court. Old Republic moved to consolidate the law division matter with the action already progressing ...


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