Schultz v. Schultz

No. 2--97--0909
_________________________________________________________________

IN THE

APPELLATE COURT OF ILLINOIS

SECOND DISTRICT

_________________________________________________________________

ANNIE L. SCHULTZ, ) Appeal from the Circuit Court
) of Winnebago County.
Plaintiff-Appellant, )
)
v. ) No. 94--MR--225
)
DENNIS SCHULTZ, ERNEST J. )
SCHULTZ, LARRY SCHULTZ, )
LaVONNE HICKS, and CHERYL )
NAVICKIS, )
)
Defendants-Appellees )
)
(State Farm Insurance, Jim )
Truninger, and Keystone ) Honorable
Consolidated Industries, ) J. Todd Kennedy,
Defendants). ) Judge, Presiding.
________________________________________________________________

JUSTICE McLAREN delivered the opinion of the court:
The plaintiff, Annie L. Schultz, filed a complaint against the
defendants, State Farm Insurance (through its agent Jim Truninger)
and the children of the plaintiff's deceased husband Ernest J.
Schultz (Ernest), for declaratory and equitable relief seeking a
court order granting Annie the proceeds from Ernest's life
insurance policy. After a bench trial, the court ruled in the
defendants' favor. We affirm.
On September 3, 1966, the plaintiff and Ernest married. Each
had children from previous marriages. Ernest's five children,
Dennis Schultz, Ernest "John" Schultz, Larry Schultz, LaVonne
Hicks, and Cheryl Navickis, are the defendants and appellees in
this case.
In November 1982, Annie and Ernest executed and placed into
effect the "Ernest J. and Annie L. Schultz Living Trust." In May
1993, State Farm Insurance Company, through its agent James L.
Truninger, issued Annie and Ernest separate universal life
insurance policies. Each policy required a single premium payment
of $50,000. Annie and Ernest paid the premiums with a single
certified check in the amount of $100,000. Ernest's policy had an
initial face value of $81,000 and the plaintiff's policy had an
initial face value of $100,000. The initial designated beneficiary
for Ernest's policy was "Annie L. Schultz of Rockford, Illinois, as
Trustee or her successor or successors in trust, under the Ernest
J. Schultz Living Trust, dated November 24, 1982." The initial
designated beneficiary for the plaintiff's policy was "Ernest J.
Schultz of Rockford, Illinois, as Trustee or his successor or
successors in trust, under the Annie L. Schultz Living Trust, dated
November 24, 1982." The policies stated that an insured may change
the beneficiary of the policy "while the Insured is alive by
sending [State Farm] a request."
In 1993, Ernest was diagnosed with cancer of the esophagus and
lungs. On August 12, 1994, Ernest executed a change of beneficiary
form that changed the beneficiary under his life insurance policy
from the trust to Ernest's children. In October 1994, Ernest moved
out of the marital home and moved in with his daughter, Cheryl. On
October 18, 1994, Ernest filed a petition for dissolution of
marriage. The plaintiff learned of the petition the same day it
was filed and changed the beneficiary of her life insurance policy
to her children. In addition, at trial the plaintiff gave
conflicting testimony regarding when she discovered that Ernest
changed his beneficiary. At one point during the plaintiff's
testimony she stated that she learned of the change on October 18,
1994. However, the plaintiff also testified that she did not learn
of the change until later.
On December 4, 1994, Ernest died. Five days later, the
plaintiff filed a complaint seeking equitable and declaratory
relief requesting that the court award her the proceeds of Ernest's
life insurance policy. The plaintiff amended her petition twice,
and the case went to trial on her third amended petition for
declaratory and equitable relief.
The plaintiff's third amended petition alleged in pertinent
part that (1) Ernest's change of beneficiary designation was void
as against public policy and violated the automatic stay provision
of the Illinois Marriage and Dissolution of Marriage Act (Marriage
Act) (750 ILCS 5/501.1 (West 1994)); (2) "it was unclear whether or
not [Ernest] understood what he was doing" when he changed the
beneficiary designation; (3) the "life insurance policies were used
to protect and secure the welfare of the surviving party upon the
death of the other"; (4) "marital funds were used to purchase
[Ernest's] life insurance policy"; (5) the plaintiff "would suffer
irreparable harm and injury if she did not receive [the] funds";
and (6) Ernest "was under the undue influence, domination and
control of his children, which deprived him of the freedom of will"
when he changed his beneficiary designation. In the prayer for
relief, the plaintiff sought a declaration that the change in
beneficiary designation was void as against public policy and
violative of the automatic stay provision of the Marriage Act, a
declaration in law and equity that the plaintiff is the rightful
recipient of the proceeds of the State Farm life insurance policy,
and "such other and further relief as the court may deem
necessary." The complaint also sought the same declaration
regarding a life insurance policy issued by Keystone Consolidated
Industries through Ernest's employer. Because the plaintiff failed
to present any evidence at trail regarding this policy, the trial
court granted the defendant's motion for a directed finding
regarding this issue.
At the close of the plaintiff's case, the defendants moved for
a directed finding. At this point the words "constructive trust"
were first mentioned in a case cited by the plaintiff's attorney.
After the defendants rested, the trial court asked the parties to
address the constructive trust issue during closing arguments.
After hearing closing arguments, the trial court found that the
allegation regarding undue influence was without merit. After
reviewing the parties briefs, the trial court found that Ernest
did not violate the automatic stay provision pursuant to section
501.1 of the Marriage Act (750 ILCS 5/501.1 (West 1994)). The
trial court stated that he had not come to a decision regarding the
constructive trust issue. Then, in a memorandum of decision, the
trial court ruled that "there had been no unjust enrichment
requiring the Court to impose a constructive trust[.]" During the
hearing on the plaintiff's motion to reconsider, the trial court
noted that it doubted whether the constructive trust issue was
sufficiently raised by the pleadings. The plaintiff filed this
timely appeal.
On appeal, the plaintiff challenges only the trial court's
decision regarding the State Farm Insurance policy. The plaintiff
first argues that the trial court erred by refusing to create a
constructive trust. The defendants argue that the plaintiff waived
the constructive trust argument because the plaintiff failed to
allege sufficient facts to support the imposition of a constructive
trust. We agree with the defendants.
Initially, we address the plaintiff s claim that the
defendants may not raise the insufficiency of her complaint because
they failed to raise it in the trial court and failed to file a
cross-appeal. The plaintiff fails to recognize that, although
issues not raised by appellants in their briefs are generally
considered waived (155 Ill. 2d R. 341(e)(7)), appellees may urge
any point in support of the judgment on appeal that is supported by
the record regardless of whether the point was raised in the trial
court. Mayfield v. ACME Barrel Co., 258 Ill. App. 3d 32, 37
(1994). Thus, we now address the sufficiency of the plaintiff s
complaint.
It is well established that a plaintiff may not recover on a
theory that is not contained in her complaint. Lempa v. Finkel,
278 Ill. App. 3d 417, 424 (1996). As this court previously stated,
" 'Proof without pleadings is as defective as pleadings without
proof.' " Keno & Sons Construction Co. v. La Salle National Bank,
214 Ill. App. 3d 310, 312 (1991), quoting Greene v. Rogers, 147
Ill. App. 3d 1009, 1021 (1986). It is irrelevant that the
constructive trust issue was briefed before the bench trial began
in May 1996 and the trial court proceeded as if the constructive
trust issue was properly before the court. See Lempa, 278 Ill.
App. 3d at 424. "It is axiomatic that a party must recover, if at
all, on and according to the case he has made for himself by his
pleadings." Lempa, 278 Ill. App. 3d at 424. It is well settled
that a reviewing court is not bound by the reasons given for a
trial court's judgment and may affirm on any basis supported by the
record regardless of whether the trial court relied on the same
basis. Messenger v. Edgar, 157 Ill. 2d 162, 177 (1993). Thus, we
will review only the pleadings to determine whether the
constructive trust issue was properly raised by the plaintiff.
In Illinois, a fact-pleading state, a plaintiff must set out
ultimate facts which support her cause of action. Lempa, 278 Ill.
App. 3d at 424. However, courts must construe pleadings liberally
with the ultimate goal of doing substantial justice between the
parties. 735 ILCS 5/2-603(c) (West 1996).
A constructive trust is an equitable remedy imposed against
one who, by some form of wrongdoing such as actual or constructive
fraud, breach of a fiduciary duty, duress, coercion, or mistake,
has been unjustly enriched. In re Estate of Vogel, 291 Ill. App.
3d 1044, 1046-47 (1997). A court may not impose a constructive
trust unless the complaint contains specific allegations of
wrongdoing or unconscionable conduct and the grounds for imposing
the trust are so clear, convincing, strong, and unequivocal as to
lead to one conclusion. Suttles v. Vogel, 126 Ill. 2d 186, 194
(1988); Estate of Vogel, 291 Ill. App. 3d at 1047.
On appeal, the plaintiff contends that she obtained equitable
rights as a beneficiary of Ernest's insurance policy which were
wrongfully taken from her when Ernest changed the beneficiary
designation. However, the plaintiff s complaint does not allege
any specific wrongful act by Ernest. It alleges only that the
"life insurance policies were used to protect and secure the
welfare of the surviving party upon the death of the other,"
"marital funds were used to purchase [Ernest's] life insurance
policy," and the plaintiff will "suffer irreparable harm and injury
if she does not receive [the] funds." The plaintiff's complaint
does not allege that Ernest agreed to retain the plaintiff as the
beneficiary of his life insurance policy, breached a duty owed to
the plaintiff, or committed an act of fraud. In light of the
principles expressed above, we conclude that the plaintiff failed
to sufficiently allege facts to support the imposition of a
constructive trust. Further, because the plaintiff never amended
her third amended complaint to include facts which would support
the imposition of a constructive trust, we will not reverse the
trial court s decision regarding this issue. See Keno, 214 Ill.
App. 3d at 312-13.
The cases cited by the plaintiff to support her argument
(Johnson v. North American Life & Casualty Co., 100 Ill. App. 2d
212 (1968); Appelman v. Appelman, 87 Ill. App. 3d 749 (1980)) are
factually distinguishable. The plaintiffs in these cases alleged
that the insureds either expressly or impliedly agreed to maintain
the plaintiffs as beneficiaries of their life insurance policies.
In Johnson, the wife of a deceased insured sufficiently pleaded
breach of an implied agreement where the wife alleged that she
signed a promissory note for a substantial sum, becoming personally
liable for her husband s debt the day after he named the wife
beneficiary of his life insurance policy. Johnson, 100 Ill. App.
2d at 215, 219. In Appelman, a marital settlement agreement
expressly provided that the insured/husband would maintain the wife
as beneficiary of his life insurance policy. Appelman, 87 Ill.
App. 3d at 751.
In the case at bar, the plaintiff did not sufficiently allege
either an implied or express agreement. Rather, she alleged that
she and Ernest purchased two life insurance policies, one in each
of their names. She further alleged that the policies were
purchased with marital funds. However, the plaintiff did not
allege, like the plaintiffs in Johnson, that she detrimentally
relied on an implied promise by Ernest. Nor did the plaintiff
allege, like the plaintiff in Appelman, that she and Ernest
expressly agreed to retain each other as the beneficiaries of their
life insurance policies. Thus, the cases cited by the plaintiff
are inapplicable to the case at bar.
The plaintiff also argues "[a]bsolutely no principle of law
has been advanced in this case which would entitle Ernest s
children to the benefit of the life insurance proceeds[.]" The
plaintiff fails to recognize that, unless an initial beneficiary's
rights have already vested, an insured may change the beneficiary
on his life insurance policy on his own whim if he reserved the
right to do so. Perkins v. Stuemke, 223 Ill. App. 3d 839, 842
(1992). By the terms of their policies, both Ernest and the
plaintiff reserved the right to change their beneficiaries, and
both Ernest and the plaintiff exercised that right. Because the
plaintiff has failed to allege facts which establish that her
rights to the insurance proceeds vested before Ernest changed the
beneficiary, Ernest s children are entitled to the proceeds of
Ernest s life insurance policy.
Next, the plaintiff argues that the trial court erred by
finding that Ernest's change of beneficiary did not violate the
automatic stay provision of the Marriage Act (750 ILCS 5/501.1
(West 1994)). The defendants argue that the automatic stay
provision of the Marriage Act was not in effect at the time of
Ernest's change of beneficiary because our supreme court held the
provision unconstitutional (Messenger, 157 Ill. 2d 162). The
defendants also argue that, even if the automatic stay provision
was in effect, Ernest did not violate it by changing the
beneficiary because he took that action over two months before he
filed his petition for dissolution of marriage.
Section 501.1 provides in relevant part as follows:
"(a) Upon service of a summons and petition or praecipe
filed under the Illinois Marriage and Dissolution of Marriage
Act or upon the filing of the respondent's appearance in the
proceeding, whichever first occurs, a dissolution action stay
shall be in effect against both parties and their agents and
employees, without bond or further notice, until a final
judgment is entered, the proceeding is dismissed, or until
further order of the court:
(1) restraining both parties from transferring,
encumbering, concealing, destroying, spending, damaging,
or in any way disposing of any property, without the
consent of the other party or an order of the court,
except in the usual course of business, for the
necessities of life, or for reasonable costs, expenses,
and attorney's fees arising from the proceeding, as well
as requiring each party to provide written notice to the
other party and his or her attorney of any proposed
extraordinary expenditure or transaction[.]" 750 ILCS
5/501.1(a)(1) (West 1994).
The record reveals that Ernest changed the beneficiary on his
life insurance policy on August 12, 1994, and, over two months
later on October 18, 1994, he filed a petition for dissolution of
marriage. Section 501.1 of the Marriage Act prohibits the transfer
of property "[u]pon service of a summons and petition." 750 ILCS
5/501.1(a) (West 1994). Because Ernest changed the beneficiary
more than two months before he filed his petition, the trial
court s finding that Ernest did not violate the automatic stay
pursuant to section 501.1 of the Marriage Act was not against the
manifest weight of the evidence. Since we have determined that the
trial court s finding was not against the manifest weight of the
evidence, we need not address the defendants argument that section
501.1 of the Marriage Act is unconstitutional.
The plaintiff cites In re Marriage of Isaacs, 260 Ill. App. 3d
423 (1994) and In re Marriage of Smith, 114 Ill. App. 3d 47 (1983),
to support her argument. These cases do not address the automatic
stay provision contained in section 501.1 of the Marriage Act.
These cases only address when the transfer of property can
constitute dissipation of marital assets under section 503(d) of
the Marriage Act (750 ILCS 5/503(d)(West 1994)). Accordingly, the
cases cited by the plaintiff are inapplicable to the case at bar.
Because we affirm the trial court s decision on other grounds,
we need not address the plaintiff s argument that the trial court
improperly compared its decision to that of a property division in
a divorce proceeding.
Finally, we address the defendants motion for sanctions
pursuant to Supreme Court Rule 375(b) (155 Ill. 2d R. 375(b)) based
on the plaintiff s argument that "Ernest's actions in executing the
Change in Beneficiary Form was violative of the automatic stay, and
therefore, invalid as a matter of law." The defendants claim that
this argument is frivolous because it is not grounded in fact and
the automatic stay provision of the Marriage Act was held
unconstitutional. Although we find no merit in the plaintiff's
argument, it is not so "lacking in foundation as to warrant the
imposition of sanctions." Swanson v. Cater, 258 Ill. App. 3d 157,
163 (1994). Thus, we deny the defendants' motion.
The judgment of the circuit court of Winnebago County is
affirmed.
Affirmed.
GEIGER, P.J., and INGLIS, J., concur.