AETNA LIFE INS. CO. v. WEEKES

Citation Codes

Equivalent Citations

citation codes

Docket Number

33269.

Attorney(S)

Carter, Ansley, Smith McLendon, Tommy T. Holland, for appellant. Carlisle Boortz, William R. Carlisle, Neal A. Boortz, John Wesley Weekes, for appellees.

Judges

HILL, Justice.

See more information ...

Smart Summary

Factual and Procedural Background

Aetna Life Insurance Company filed suit seeking equitable relief against the administrator of the deceased's estate, the deceased's attorney, and the widow. The suit arose after the deceased allegedly obtained over $15,000 in benefits under Aetna's group health insurance policy through false claims. Upon confrontation by Aetna, the deceased irrevocably designated his attorney as beneficiary of $21,000 under a separate life insurance policy. The attorney engaged in settlement discussions with Aetna's agent, proposing a settlement agreement to assign an unspecified portion of the life insurance proceeds to Aetna; however, the agreement was never executed before the deceased's death.

Following the deceased's death, the life insurance proceeds were paid to the widow and the attorney as designated beneficiaries. The probate court, without objection from the attorney, allocated $15,750 of these funds as year's support to the widow. Before disbursement, Aetna filed suit claiming entitlement to a portion of the life insurance proceeds. The trial court dismissed Aetna's complaint as to the attorney and widow, denied injunctive relief, and refused to set aside the probate court's year's support order. This appeal followed.

Legal Issues Presented

Whether Aetna has a valid claim to a portion of the life insurance proceeds under an implied trust theory given the unexecuted settlement agreement and beneficiary designation.
Whether a constructive trust arises in favor of Aetna based on the alleged fraud of the deceased and the proposed but unaccepted settlement.
Whether Aetna can assert a claim based on unjust enrichment regarding the life insurance proceeds paid to the attorney and widow.
Whether the probate court's allocation of year's support should be set aside in favor of Aetna's claim.

Arguments of the Parties

Appellant's Arguments (Aetna Life Insurance Company)

Aetna contends it has a beneficial interest in the life insurance proceeds paid to the attorney under the irrevocable beneficiary designation.
Since the proposed settlement agreement was never executed, Aetna's claim rests on the existence of an implied trust or, alternatively, unjust enrichment.
Aetna argues the correspondence and beneficiary designation raise an issue of implied trust, either resulting or constructive, to protect its interest.
Aetna asserts that the attorney's authority to designate beneficiaries and the proposed settlement indicate an intent to benefit Aetna pending acceptance.
Alternatively, Aetna claims unjust enrichment because the deceased obtained benefits by fraud and the life insurance proceeds should not unjustly enrich the attorney or widow.

Appellees' Arguments (Attorney and Widow)

This information was not available in the provided opinion.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Wilder v. Wilder, 138 Ga. 573 (1912)	Express trusts must be created or declared in writing.	Reinforced that no express trust existed due to absence of written agreement.
Wheeler v. Wheeler, 139 Ga. 604 (1913)	Same as above regarding express trusts.	Supported the requirement of written declaration for express trusts.
Taylor v. Aetna Life Ins. Co., 235 Ga. 630 (1975)	Distinguishes implied trusts and their creation.	Guided the court to limit trust theories to implied trusts due to lack of written agreement.
Loggins v. Daves, 201 Ga. 628 (1946)	Definition and requirements for implied resulting and constructive trusts.	Clarified that intent is essential for resulting trusts and constructive trusts arise from equity.
Hancock v. Hancock, 205 Ga. 684 (1949)	Further explanation of implied trusts.	Supported the legal framework for implied trusts.
Russell v. City of Atlanta, 103 Ga. App. 365 (1961)	Requirement of mutual assent to form binding agreements.	Used to show that no binding agreement existed absent acceptance.
Malone Const. Co. v. Westbrook, 127 Ga. App. 709 (1972)	Contracts require acceptance to be binding.	Supported that the unexecuted settlement was merely an offer, not a contract.
Ga. Chemical Works v. Malcolm, 186 Ga. 275 (1938)	Offers of compromise do not create trusts absent acceptance.	Helped reject the argument that an unaccepted offer created an implied trust.
Hodges v. Hodges, 213 Ga. 689 (1957)	Constructive trust arises from equity to prevent unjust retention of property.	Applied to analyze whether constructive trust existed based on fraud.
Bateman v. Patterson, 212 Ga. 284 (1956)	Principles governing constructive trusts.	Supported court’s analysis on constructive trust doctrine.
Mitchell v. Mitchell, 201 Ga. 621 (1946)	Equity’s role in creating constructive trusts.	Reinforced the equitable basis for constructive trusts.
Larson v. Larson, 226 Ga. 209 (1970)	Fraud affecting property acquisition relevant to trust claims.	Used to reject claim that life insurance proceeds were tainted by fraud.
Bennett v. Rosborough, 155 Ga. 265 (1922)	Creditor’s claim to life insurance proceeds as constructive trust.	Illustrated precedent where creditor’s claim was denied despite alleged fraud.
Minor v. Ozier, 84 Ga. 476 (1889)	Unjust enrichment principles.	Compared to show no unjust enrichment occurred post-death.
Whitehurst v. Mason, 140 Ga. 148 (1913)	Unjust enrichment doctrine.	Supported the court’s conclusion rejecting unjust enrichment claim.

Court's Reasoning and Analysis

The court first distinguished between express and implied trusts, noting that no express trust existed due to the absence of a written agreement. It then analyzed whether an implied trust could arise from the irrevocable beneficiary designation combined with the attorney's correspondence and the proposed settlement agreement. The court concluded that these documents only evidenced an intent to negotiate a settlement, not to create a trust, because the settlement offer was unaccepted and unspecified in amount, and the offer was terminated by the insured's death.

Regarding constructive trust, the court explained that such trusts arise in equity to prevent unjust retention of property acquired by fraud or under inequitable circumstances. However, since the life insurance policy was not acquired by fraud and the offer of compromise was unaccepted, no constructive trust arose. The court rejected Aetna's argument that a defrauded creditor has priority over the widow's year's support claim based on an unaccepted settlement offer, citing precedent and policy concerns about burdening settlement negotiations.

Finally, the court addressed the unjust enrichment claim, holding that while the deceased may have been unjustly enriched before death, the payment of life insurance proceeds to the attorney and widow did not unjustly enrich them at Aetna's expense. Consequently, the court affirmed the trial court's denial of Aetna's request to set aside the probate court's year's support order.

Holding and Implications

The Supreme Court of Georgia affirmed the trial court’s judgment dismissing Aetna’s complaint as to the attorney and widow, denying injunctive relief, and refusing to set aside the probate court’s order allocating year's support.

The direct effect of this decision is that Aetna does not obtain any portion of the life insurance proceeds paid to the widow and attorney despite its claim of fraud and proposed settlement. The probate court’s allocation of year's support stands. The court did not establish any new precedent altering the principles governing implied or constructive trusts, unjust enrichment, or the effect of unaccepted settlement offers in this context.

Show full summary ...

AETNA LIFE INSURANCE COMPANY v. WEEKES et al.

HILL, Justice.

Aetna Life Insurance Co. filed this suit seeking equitable relief and naming as defendants the administrator of the estate of the deceased, the attorney for the deceased, and the widow. This appeal is from the trial court's order dismissing Aetna's complaint as to the attorney and the widow, denying injunctive relief, and denying Aetna's prayer to set aside a probate court order as to year's support.

Aetna had insured the deceased under a group health insurance policy. Aetna alleges that prior to his death, the deceased obtained in excess of $15,000 on its group health policy through the submission of false claims. After being confronted by Aetna, the deceased executed in favor of his attorney an irrevocable designation of beneficiary for $21,000 of a life insurance policy then in force with a different insurance company. This designation empowered the attorney to make further changes of beneficiary but did not refer to Aetna by name or implication. The attorney contacted Aetna's agent to discuss possible settlement of any claims Aetna might assert against its insured and this resulted in correspondence between the attorney and Aetna's agent. The attorney wrote Aetna's agent, enclosing a copy of the signed change of beneficiary and a draft of a proposed settlement agreement between the deceased and Aetna. The unsigned release and settlement agreement proposed that Aetna's claim against the deceased be settled by the assignment of an unspecified portion of the life insurance policy to Aetna, provided the procedure for acceptance of the proposal by Aetna, and specified that the proposal would be revoked by the death of the second party (the deceased) prior to Aetna's acceptance. Death occurred within three weeks and before any further action was taken by either party.

Payment under the life insurance policy was made to the widow and to the attorney as designated beneficiaries. Pursuant to the widow's application for a year's support and without objection by the attorney, the probate court allocated ". . . $15,750.00 being the property of the estate of the decedent and being held by (the attorney) pursuant to contract between said attorney and decedent" as year's support. The attorney notified Aetna and prior to disbursement of these funds to the widow, Aetna filed this suit.

Aetna contends it has stated a claim to a portion of the life insurance proceeds paid the attorney under the irrevocable designation of beneficiary. Because the proposed agreement between Aetna and the deceased for the assignment of those funds was never executed, Aetna's claim of beneficial interest must rest on a trust theory, or in the alternative, unjust enrichment.

1. Trusts are either express or implied. Code Ann. § 108-104. For a discussion of the kinds and classes of trusts, see 28 EGL, Trusts and Trustees, §§ 6-9. An express trust must be created or declared in writing. Code Ann. § 108-105; Wilder v. Wilder, 138 Ga. 573 (2) ( 75 S.E. 654) (1912); Wheeler v. Wheeler, 139 Ga. 604 (1) ( 77 S.E. 875) (1913). Because there was no written agreement between Aetna and the deceased or his attorney, and no written agreement by the deceased designating the attorney as trustee for the benefit of Aetna, the questions presented as to creation of a trust are limited to implied trust theories. Taylor v. Aetna Life Ins. Co., 235 Ga. 630 (2) ( 221 S.E.2d 45) (1975).

Aetna argues that the designation of beneficiary, construed in light of correspondence with the deceased's attorney, is sufficient to raise an issue as to an implied trust. Implied trusts are such as are inferred by law from the nature of the transaction or the conduct of the parties (Code Ann. § 108-104), and are either resulting or constructive. Loggins v. Daves, 201 Ga. 628 (3) ( 40 S.E.2d 520) (1946); Hancock v. Hancock, 205 Ga. 684, 689-690 ( 54 S.E.2d 385) (1949); Code Ann. § 108-106. "In an implied resulting trust the intention of the parties is an essential element, although no valid agreement setting up such an intention is shown, but such mutual intent is implied only from proven facts and circumstances." Loggins v. Daves, supra, at 628. (Italics revised.)

The change of beneficiary construed with the correspondence and the proposed agreement indicates only an intention that the attorney had authority to designate Aetna as beneficiary if a settlement were reached. No agreement had been reached as to the amount of the settlement. See Russell v. City of Atlanta, 103 Ga. App. 365 ( 119 S.E.2d 143) (1961). These writings indicate an intent to negotiate a settlement to be evidenced by a written release by Aetna of the deceased's alleged liability to it. See Malone Const. Co. v. Westbrook, 127 Ga. App. 709 ( 194 S.E.2d 619) (1972); 17 CJS 695, Contracts, § 49; 17 AmJur2d 363, Contracts, § 28. Moreover, as shown by the terms of the proposed agreement, the death of the insured terminated the offer of compromise.

The intent associated with the making of an offer of compromise generally is to obtain a release from liability, and an unaccepted offer to enter into a written settlement by payment of an unspecified amount, without more, does not show the necessary intent to create an implied trust pending acceptance of the offer even where the settlement is to be paid from a specified fund. Cf. Taylor v. Aetna Life Ins. Co., supra; Ga. Chemical Works v. Malcolm, 186 Ga. 275, 286 ( 197 S.E. 763) (1938).

We also conclude that Aetna has failed to establish a claim based on a constructive trust theory. A constructive trust arises not from the intent of the parties, but by equity with respect to property acquired by fraud, or although acquired without fraud where it is against equity that the property should be retained by the one who holds it. Loggins v. Daves, supra; Hodges v. Hodges, 213 Ga. 689 ( 100 S.E.2d 888) (1957); Bateman v. Patterson, 212 Ga. 284 (2) ( 92 S.E.2d 8) (1956); Mitchell v. Mitchell, 201 Ga. 621 ( 40 S.E.2d 738) (1946); Code Ann. §§ 108-106, 108-107.

Aetna does not contend that the life insurance policy was acquired by or infected with the alleged fraud of the deceased. See Larson v. Larson, 226 Ga. 209, 211 ( 173 S.E.2d 700) (1970); Code Ann. § 108-425. Rather Aetna asserts that it has shown the existence of a constructive trust by virtue of the alleged fraud of the deceased in obtaining health insurance benefits and the corrective, albeit unaccepted, steps undertaken by the deceased and his attorney to settle the fraud claim. The making of an offer of compromise followed by death does not amount to fraud. So, in essence, Aetna is arguing that where a defrauded creditor is considering a proposed settlement of the fraud claim at the time of death of the offeror, a trust exists in favor of the creditor as to sums set aside to fund the settlement (even though the creditor is not bound by the proposed settlement), and the creditor has priority over the widow's right to year's support. No case so holding has been cited or found and we decline to so rule because, among other reasons, such ruling would unduly burden the making of offers of compromise in fraud cases. In Bennett v. Rosborough, 155 Ga. 265 ( 116 S.E. 788) (1922), the deceased by letter to his wife unconditionally requested that she pay certain of his specified debts from life insurance policies in which she was named beneficiary. The creditor's claim was not allowed by a majority of the court as a constructive trust even though it was alleged that a large portion of the money paid as insurance premiums had been stolen by the deceased from the creditor.

We conclude that an unaccepted offer made by a fraud-feasor to enter into a written settlement of an unspecified amount, without more, does not give rise to an implied trust, resulting or constructive, pending acceptance of the offer even where the settlement is to be paid from a specified fund.

2. The above rationale precludes Aetna's claim based upon unjust enrichment. While there may be an issue that the deceased, prior to his death, was unjustly enriched at the expense of Aetna, it cannot be said that the payment of life insurance proceeds following his death enriched the attorney or the widow at the expense of Aetna. Compare Minor v. Ozier, 84 Ga. 476 ( 10 S.E. 1088) (1889); Whitehurst v. Mason, 140 Ga. 148 (3) ( 78 S.E. 938) (1913).

3. It follows that the trial court did not err in denying Aetna's prayer to set aside the probate court order as to year's support.

Judgment affirmed. All the Justices concur.