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This section contains the nature of the case and procedural background.

H and W divorced in 1961. As part of the divorce, H entered into a contract with W for the benefit of their minor children such that all life insurance policies that he held would be changed so that H’s children were the beneficiaries. Even after the contract was made, H did nothing to change the beneficiaries on his policies. The named beneficiary was Mary, H’s mother. One of the policy premiums was paid by Mary. H died in 1965, and the proceeds were paid to Mary. At trial, Mary admitted that she was aware of the contract on H’s divorce and that she nevertheless continued to pay the premiums on one of the policies. Mary collected all the funds and rejected the children’s demand for them. W filed suit on behalf of her children for a constructive trust. Meanwhile, Mary spent all the money in the payment of debts and living expenses, and there was no possibility of tracing the funds. At trial, Mary argued that the fact that she could not return the money was good enough reason for judgment in her favor and that the only recourse for the children would be to treat Mary as a common creditor and seek a general judgment against her. The judge did not buy that twisted logic. The trial court entered a decree in favor of the children for the sum of the two group policies and declared that the policy Mary had paid the premiums on gave her a superior right. No trust was impressed on the remaining funds in Mary’s commingled account. Both sides appealed.

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