On appeal from the Superior Court, Law Division, Union County.
Before Judges Skillman and Kestin.
[276 NJSuper Page 47] The opinion of the court was delivered by
Richard and Lois Della Terza were divorced on August 23, 1983. They had one child, Leah, the plaintiff in this action. The judgment of divorce incorporated an agreement between the parties which provided in part that Richard "shall maintain the child of the marriage as beneficiary on his life insurance policy until she becomes emancipated." Richard's only life insurance policy at the time was one provided through his employment with the Belleville Board of Education.
On June 12, 1985, Richard filed a "designation of beneficiary" form naming Lisa Della Terza, "wife", as "primary beneficiary", along with Leah and Richard II, his son born on May 28, 1985, as "contingent beneficiaries". On June 22, 1987, an order entered in the Family Part following upon Lois's motion required Richard, inter alia, to "provide proof . . . that the minor child of the marriage is named as beneficiary on his life insurance policy, pursuant to the Judgment for Divorce. . . ." Richard never complied with this portion of the order. He died on July 16, 1989.
At the time of Richard's death, Leah was unemancipated. Lisa was paid $80,337.88 as the primary beneficiary under the life insurance policy. Leah sued, claiming a right to the policy proceeds. The trial court granted plaintiff's motion for summary judgment and denied defendants' cross motion. Subsequently, judgment was entered for an amount equal to the policy proceeds plus prejudgment interest. Defendants appeal.
It appears that the only life insurance Richard had on the date of his death was the same type of policy he owned when the judgment of divorce was entered, one provided as a fringe benefit of his employment with the Belleville Board of Education through the Public Employees' Retirement System. The proceeds of such a policy are typically fixed in relation to the employee's salary at the time of death. The record may be taken to suggest that, after the divorce, Richard may have been placed in a new position with the Belleville Board of Education that paid more than the position he held at the time of the divorce, resulting in an increase in the
life insurance benefit, not only incrementally based upon periodic salary adjustments he may have received in his former position, but also by a more substantial amount representing the difference between his former salary and his new, higher pay level.
As to the basic issue presented in this case, i.e., whether an obligation to maintain life insurance with a dependent child as beneficiary, established in a judgment of divorce, translates into a right on the part of the beneficiary to seek the proceeds of the policy paid to another because the obligor failed to comply with the terms of the judgment, we are in substantial agreement with that portion of Judge Whitken's bench decision of May 10, 1991 holding plaintiff to be entitled to insurance proceeds, especially to the extent that decision relied upon the reasoning of Judge Thompson in Travelers Ins. Co. v. Johnson, 579 F. Supp. 1457 (D.N.J. 1984), and the cases cited therein. See also Glover v. Investment Life Co. of America, 439 S.E.2d 297 (S.C. Ct. App. 1993); Aetna Life Ins. Co. v. Bunt, 110 Wash. 2d 368, 754 P.2d 993 (Wash. 1988); Prudential Ins. Co. of America v. Boyd, 781 F.2d 1494 (11th Cir. 1986); cf. Abrego v. Abrego, 812 P.2d 806 (Okla. 1991). In consideration of the State's interest in assuring continued support for unemancipated children, even after the death of a parent, Grotsky v. Grotsky, 58 N.J. 354, 277 A.2d 535 (1971); see also N.J.S.A. 2A:34-25, we agree that a provision such as was contained in the judgment of divorce in this case to maintain the child as beneficiary in a life insurance policy until emancipation creates an equitable assignment where such a designation has not, in fact, occurred. See SMA Life Assurance Co. v. Piller, 846 F.2d 916 (3rd Cir. 1988); Travelers Ins. Co. v. Daniels, 667 F.2d 572 (7th Cir. 1981); Aetna Life & Casualty Co. v. Spain, 556 F.2d 747 (5th Cir. 1977) (applying New Jersey law); Perkins v. Prudential Life Ins. Co. of America, 455 F. Supp. 499 (S.D. W.Va. 1978).
Nevertheless, for the same considerations of policy, we are loathe to reach a result which, through automatic operation, would confer the intended benefit on the child of the first marriage to the total ...