## Facts

- A. Wayne Thompson worked as accountant for G & M Motor Company from January 1, 1968, until his death on August 2, 1970.
- During that employment, Thompson embezzled $78,856.45 from the motor company.
- Thompson used a portion of the embezzled funds to pay premiums on multiple life-insurance policies on his life.
- After Thompson’s death, life-insurance proceeds were paid to beneficiaries including his widow, Shirley Thompson, and a child.
- The motor company sued to impose a constructive trust on certain real and personal property and on a share of the insurance proceeds held by the beneficiaries.
- The trial court found embezzlement and tracing into premium payments, and imposed a constructive trust on various property and on a portion of the insurance proceeds.
- The Court of Appeals affirmed as to real and personal property but limited recovery from insurance proceeds to the amount of misappropriated premiums plus 10% interest from judgment.
- The Supreme Court of Oklahoma reviewed only the modification limiting the constructive trust as to the insurance proceeds.

## Issues

1. Whether a court may impose a constructive trust on life-insurance proceeds when some premiums were paid with wrongfully obtained funds.
2. Whether the equitable remedy is limited to repayment of the wrongfully paid premiums plus interest, or may extend to a pro rata share of the insurance proceeds traceable to those payments.

## Decision

- The Supreme Court of Oklahoma held that a constructive trust may be imposed on life-insurance proceeds when premiums were paid in part with embezzled funds.
- The Court rejected limiting relief to the amount of misappropriated premiums plus interest.
- The Court approved a pro rata constructive trust on the insurance proceeds, measured by the ratio of wrongfully paid premiums to total premiums.
- The Court vacated the Court of Appeals’ opinion in part and affirmed the trial court’s judgment imposing a constructive trust on a proportionate share of the insurance proceeds.

## Legal Principles

- A constructive trust is an equitable remedy imposed by operation of law to prevent unjust enrichment from property acquired or increased in value through wrongful conduct.
- Misappropriated funds may be traced into insurance premium payments and into the resulting insurance proceeds.
- When both legitimate and illegitimate funds contribute to acquisition of a single asset, equity may allocate interests proportionally in the resulting property rather than confining relief to reimbursement of the wrongfully used cash.
- In this setting, the victim’s remedy may reach a proportional share of insurance proceeds attributable to wrongfully paid premiums, not merely a money award equal to premiums plus interest.

## Conclusion

The court affirmed that where embezzled funds are traced into life-insurance premium payments, equity may impose a pro rata constructive trust on the insurance proceeds to reflect the wrongfully funded portion, preventing beneficiaries from retaining gains attributable to the embezzlement while preserving the share supported by legitimate premiums.


G & M Motor Co. v. Thompson, 567 P.2d 80 (Okla. 1977)