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31 March 2000
                                                                        No. 3--99-0387

IN THE

APPELLATE COURT OF ILLINOIS

THIRD DISTRICT

A.D., 2000

JUSTICE BRESLIN delivered the opinion of the court:

FACTS

The plaintiffs furnished Evelyn G. McVietty with nursing homecare and, upon her death, each filed a contract claim against theestate for services rendered. Seminary Manor sought $1,790 andRosewood sought $2,774.

At McVietty's death, her estate was reimbursed for the nursinghome services through an insurance policy. The policy paid thefull $1,790 for the Seminary Manor services and paid $805 for theRosewood services. McVietty had not assigned her rights to theinsurance proceeds to the nursing homes. The sums were paiddirectly to the estate, which treated the proceeds as assets of theestate. The estate was insolvent, however. Eight contract claimstotaling approximately $16,868 were filed against it while itstotal reported assets were approximately $11,140.

At a hearing on the claims, the parties stipulated to theamounts owed to the plaintiffs. The estate argued that theinsurance proceeds were part of the estate and that the plaintiffs'claims should not be given priority. The nursing homes argued thatthe insurance resulted from services rendered by them and should beheld by the estate in a constructive trust for their benefit.

The trial court found in favor of the plaintiffs, holding thatSeminary Manor's claims were to be paid in full and that $805 ofthe Rosewood claim was to be paid, with the balance of $1,369 to betreated as a seventh-class claim under the Act. In other words,the court directed the estate to pay the exact amounts of theinsurance reimbursement to the nursing homes. The court statedthat to treat the claims in any other fashion would be an unjustenrichment to the estate. The estate now appeals.

ANALYSIS

The estate argues that the insurance proceeds are part of theestate assets and, under the Act, the plaintiffs' claims should nothave been given priority to those assets. We agree.

Section 18-10 of the Act provides that all claims against theestate of a decedent are divided into classes in the followingmanner:

"1st:Funeral and burial expenses ***.

2nd: The surviving spouse's or child's award.

3rd: Debts due the United States.

4th: Money due the employees of the decedent *** andexpenses attending the last illness.

5th: Money and property received or held in trust by thedecedent which cannot be identified or traced.

6th: Debts due this State ***.

7th: All other claims." 755 ILCS 5/18-10 (West 1998).The Act further directs the representative of the estate to pay allclaims in the order of their classification. 755 ILCS 5/18-13 (West1998). Accordingly, giving a plain reading to the language of theAct, the estate is correct that the trial court should not haveprioritized the nursing homes' claims. The nursing homes' claimsare plainly seventh-class claims under the Act.

Nevertheless, the plaintiffs maintain that the trial courtcorrectly determined that they are entitled to the insuranceproceeds. In essence, they asked for and received an equitableremedy from the court which stated that "to accept the funds andnot pay the bills for which the money was provided is a breach ofethics and creates an unjust enrichment to the estate."

To support their position, the plaintiffs rely solely on dictafrom In re Estate of Garawany, 80 Ill. App. 3d 401, 399 N.E.2d 1024(1980). In that case like this one, the decedent's medicalinsurance paid the estate for services rendered by medicalproviders prior to the decedent's death. Unlike this case,however, the providers did not timely file claims against theestate and the court denied the providers' claims for this reason. Nevertheless, the court stated, "[t]his is not to say that [theproviders] are lacking in equity. Indeed, they correctly arguethat 'but for' the medical care they provided and their forwardingof medical bills, the insurance proceeds would not have become anasset of the estate." Garawany, 80 Ill. App. 3d at 404, 399 N.E.2dat 1027. The court concluded that when "'a legal claim should havebeen, but was not, filed against the estate within a statutoryperiod, relief will not be accorded by the application of equitableprinciples.'" Garawany, 80 Ill. App. 3d at 404, 399 N.E.2d at 1027quoting In re Estate of Ito, 50 Ill. App. 3d 817, 820 (1977).

We recognize that there is some merit in the Garnaway dictacited by the plaintiffs. However, we are unpersuaded by it becausethe Act dictates the outcome here, and we believe that the trialcourt erred by drawing on its equitable powers in the face of suchclear statutory direction. See Rockford Drop Forge Co. v. PollutionControl Board, 221 Ill. Ap. 3d 505, 582 N.E.2d 253 (1991)(court maynot simply dispense with plain requirements of a statute by drawingon its equitable powers); see also Evangelical Hospital Ass'n v.Novak, 125 Ill. App. 3d 439, 465 N.E.2d 986 (1984)(any powerexisting in equity may not dispense with the plain requirements ofa statute). The insurance contract was owned by the decedent. Theinsurance proceeds were rightfully paid to the decedent's estateand thus became part of the estate's assets. The Act furnishesclear instruction that such assets are to be distributed in accordwith the structure of claims as prioritized therein. There can beno other conclusion than that the plaintiffs' claims in this caseare seventh-class claims under the Act. Thus, the court erred bygiving them super priority.

For the reasons stated above, the judgment of the circuitcourt of Henry County is reversed the cause is remanded for furtherproceedings consistent with this order.

Reversed and remanded.

SLATER, P.J., and HOLDRIDGE, J., concur.