## Facts

- Metropolitan Life Insurance Company issued a life insurance policy on Dan Pierowich’s life in 1931, initially naming his wife, Josephine, as beneficiary.
- During divorce proceedings, Dan changed the beneficiaries to his minor sons, Alex and James.
- In 1934, Dan delivered a written, witnessed direction to the insurer stating that if he died before either son reached age 21, the insurer should retain the proceeds, credit interest at not less than 3.5% per year, and pay each son’s share in a lump sum at age 21.
- The direction restricted the minors from withdrawing, assigning, or encumbering the retained amounts before the payment date and included survivorship contingencies.
- Dan died in 1935 when the boys were about eight and ten; the insurer issued supplemental contracts implementing the deferred payment and interest terms.
- Josephine, as guardian, filed an equity action seeking an order requiring the insurer to pay amounts from the proceeds as necessary for the minors’ maintenance and education, alleging insufficient personal funds.
- The trial court dismissed the bill, concluding no trust existed and the insurer’s obligations were governed by contract.

## Issues

1. Whether the insured’s written direction and the insurer’s supplemental contracts created a trust in the insurance proceeds, rather than a debtor–creditor obligation.
2. If no trust existed, whether a court of equity could modify the deferred payment terms to require earlier disbursements for the minors’ support and education.

## Decision

- The Michigan Supreme Court affirmed the dismissal.
- The court held the arrangement did not create a trust; the insurer’s relationship to the beneficiaries was debtor–creditor.
- Because the insurer’s duties were contractual, equity could not order payments contrary to the contract’s deferred distribution scheme absent a recognized basis for reformation or similar relief.

## Legal Principles

- An express trust requires a clear intent to create a trust and a separation of legal title in a trustee from beneficial ownership in the beneficiaries.
- Directions that an insurer retain proceeds, credit interest, and pay beneficiaries at a future date, without segregation or transfer of a specific trust res, ordinarily establish a contractual obligation to pay, not a trust.
- Courts of equity generally may not rewrite or vary clear, valid contractual payment terms based solely on beneficiaries’ hardship or financial need.

## Conclusion

The court enforced the deferred-payment settlement option as a contract, not a trust, and refused to compel advances for the minors’ support because equity could not alter the insurer’s contractual obligation to retain and later pay the proceeds with interest.


Pierowich v. Metro. Life Ins. Co., 282 Mich. 118, 275 N.W. 789 (1937)