Pierowich v. Metropolitan Life Insurance Co.

After Dan Pierowich and Josephine Pierowich (plaintiff) divorced, Dan removed Josephine as beneficiary of his life-insurance policy with Metropolitan Life Insurance Co. (MetLife) (defendant), naming their two minor sons instead. Dan sent a signed and witnessed letter directing MetLife to retain the amount payable under the policy if Dan died before the boys reached 21. Dan directed MetLife to compound interest on the retained proceeds until each son turned 21, then pay out each son’s share with the accumulated interest in lump sums. The letter also specified that neither son would have a right to withdraw, assign, or encumber the retained funds. Dan died about six months later, when the boys were eight and 10 years old. MetLife sent the boys supplemental contracts providing that MetLife would pay out the policy proceeds exactly as Dan had directed. Josephine filed a bill in equity claiming she did not have enough money to properly raise and educate the children, asking the court to order MetLife to pay out as much of the funds as the court found necessary to support them. Josephine argued that Dan’s letter directing MetLife to retain the life-insurance proceeds until age 21 effectively created a trust to which MetLife assigned the policy proceeds under the supplemental contracts. Given the indigent circumstances of her family, Josephine urged the court to order MetLife to advance trust funds as equitable relief. The trial court dismissed the bill in equity, reasoning Dan had not created a trust. Josephine appealed.