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MUTUAL LIFE INS. CO. v. GINSBURG

June 11, 1954

MUTUAL LIFE INS. CO. OF NEW YORK
v.
GINSBURG et al.



The opinion of the court was delivered by: MARSH

This action arises out of a dispute over the proceeds of certain policies of insurance on the life of Samuel A. Ginsburg, deceased. The guardian ad litem for the two minor sons of the deceased claims that the beneficial ownership of the fund is in the minor children and that Paul Ginsburg, a brother of the deceased, and the assignee of the policies and the beneficiary named therein, is merely a trustee of the proceeds for their benefit. Paul Ginsburg denies the existence of a trust and claims the fund in his own right.

On June 16, 1953, the Mutual Life Insurance Company of New York filed a complaint in interpleader pursuant to the Act of June 25, 1948, 28 U.S.C.A. §§ 1335, 1397 and 2361, and paid the fund into court. Neither the guardian nor Paul Ginsburg resisted the interpleader action, and on August 19, 1953, an order was entered discharging the insurance company from any and all liability on the policies of insurance involved in this litigation, and subsequently, on December 23, 1953, an order was entered framing an issue between the guardian as plaintiff, and Paul Ginsburg as defendant.

 The complaint of the guardian and the answer thereto have since been filed and the case is now before the court on two motions: (1) plaintiff's motion for change of venue, and (2) defendant's motion for summary judgment. We will consider the latter motion first.

 When the insurance policies in dispute were issued, Betty K. Ginsburg, wife of the insured, was named as beneficiary. About five months before the insured's death, because Betty was proceeding to obtain a divorce, the insured assigned the policies to Paul Ginsburg and made him the beneficiary.

 The complaint alleges that:

 
'* * * at the time the aforesaid change of beneficiaries was made, the said late Samuel A. Ginsburg established a parol trust of the proceeds of said life insurance policies in favor of his minor children, and as consideration therefor and as an inducement for said change of beneficiary, * * * the said Paul Ginsburg agreed orally with the said Samuel A. Ginsburg to hold the proceeds of said policies * * * in trust for the benefit of the children of Samuel A. Ginsburg * * *.'

 In his answer the defendant denies that any such parol trust was established and agreed to by him. Accompanying his motion for summary judgment is a deposition of Emil O. Anderson, the attesting witness to the execution of the change of beneficiary forms, in which the witness states that at the time the forms were executed, no mention of a trust agreement was made by either Paul or Samuel Ginsburg.

 It is the defendant's position that, since no mention was made of a parol trust at the time the complaint alleges that it was established, ipso facto, there is no genuine issue of material fact in the case, and therefore, summary judgment should be entered in favor of the defendant under Rule 56, Fed.Rules Civ.Proc. 28 U.S.C.A.

 In opposition to the motion, the plaintiff has filed counter-affidavits by the insured's former wife and by Samuel Langerman, Esquire, the lawyer who represented her in her divorce proceeding. The substance of these affidavits is that on numerous occasions, Samuel Ginsburg stated that he had arranged that his children would receive the beneficial interest in the proceeds of his life insurance. It is the position of the plaintiff that these counter-affidavits disclose that there is a genuine issue of material fact for a jury to decide which precludes a summary disposition of the case under the rule.

 The fact that there was no discussion concerning a trust agreement in the presence of Emil Anderson does not establish that no such agreement was made. In his motion and in his brief, the defendant emphasizes the fact that the complaint avers that the alleged trust was established 'at the time the aforesaid change of beneficiaries was made.' Defendant's position seems to be that, since no words of trust were spoken at that time, no trust could have been established. But it is conceivable, as the plaintiff's affidavits show, that a trust agreement could have been made prior to the date of the change of beneficiary forms and contingent upon their execution. If this were proved, then, upon execution of the forms, the trust would have been 'established' as plaintiff avers.

 Defendant contends that the evidence which plaintiff expects to introduce at the trial, as outlined in plaintiff's affidavits, would not be admissible because it violates the statute of frauds, the Act of 1887, May 23, P.L. 158, § 5, cl. [e] 28 P.S.Pa. § 322, and the parol evidence rule. We do not agree.

 The Act of 1856, April 22, P.L. 532, § 4, 33 P.S.Pa. § 2, requires that trusts of real estate be in writing, but it has no application to trusts of personal property. In Pennsylvania trusts of personalty may be established by parol. Gritz v. Gritz, 1939, 336 Pa. 161, 7 A.2d 1, 122 A.L.R. 1297; Donithen v. Independent Order of Foresters, 1904, 209 Pa. 170, 58 A. 142. Likewise, it seems to be the law of the State of Arizona, where the alleged trust was created, that parol trusts are enforceable. See Cashion v. Bank of Arizona, 1926, 30 Ariz. 172, 245 P. 360.

 In view of these decisions it is clear that the statute of frauds has no application to the instant case. It follows that, if trusts of personalty may be established by parol, the parol evidence rule does not apply.

 The Act of 1887, above referred to, sometimes called the Dead Man's Act, 28 P.S.Pa. § 322, provides that if a party to a thing or contract has died and his interest is represented by a party on the record, any witness with an adverse interest is incompetent to testify as to any matter occurring prior to the death. But in the case sub judice, neither of the affiants, Betty K. ...


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