No. 15-­--3446 SAMARON CORP., doing business as Troyer Products v. United of Omaha Life Insurance Company

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 15-­‐‑3446
SAMARON CORP., doing business as Troyer Products,
Plaintiff-­‐‑Appellant,
v.
UNITED OF OMAHA LIFE INSURANCE COMPANY,
Defendant-­‐‑Appellee.
____________________
Appeal from the United States District Court for the
Northern District of Indiana, South Bend Division.
No. 3:12-­‐‑CV-­‐‑397 — Rudy Lozano, Judge.
____________________
ARGUED APRIL 1, 2016 — DECIDED MAY 17, 2016
____________________
Before POSNER, EASTERBROOK, and WILLIAMS, Circuit
Judges.
EASTERBROOK, Circuit Judge. In 2003 Troyer Products
(formally Samaron Corp.), a closely held corporation, pur-­‐‑
chased a policy of insurance on the life of Ron Clark, then its
President. Dave Buck, its COO, was the beneficiary. Clark,
who approved the transaction, thought that the death benefit
of $1 million would enable Buck to buy out his stock, so that
the money would end up in the hands of Clark’s family

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2 No. 15-­‐‑3446
while Buck would come to control the company. United of
Omaha Life Insurance Company initially wrote the policy
that way, but it was soon amended so that the death benefit
would go to Troyer. (One side says that United’s underwrit-­‐‑
ing department insisted on this change, the other that tax
considerations dominated; the reason does not matter now.)
Troyer did not undertake by contract to turn the death bene-­‐‑
fit over to Buck, but both Buck and Ron Clark’s wife Darlene
recall that this was the plan.
In 2005 Clark retired and sold a controlling interest to
Dan Holtz, who became the firm’s new President. Buck re-­‐‑
mained as COO. After this transaction Holtz owned 61% of
the stock and Buck the rest. As part of his purchase, Holtz
received a copy of the policy, including the amendment
naming Troyer as the beneficiary. Another copy was in
Troyer’s files. Clark died in November 2011. Buck told Holtz
that Troyer was the beneficiary, but when Holtz called Unit-­‐‑
ed he was told that the money would be paid to Buck—and
it was. When Buck tried to use the proceeds to buy Holtz’s
stock, he was removed from the board and soon quit as
COO. Troyer filed this suit under the diversity jurisdiction,
contending that the benefits should have been paid to it.
United, not wanting to pay $2 million on a $1 million policy,
has resisted despite conceding that Troyer was indeed the
policy’s beneficiary.
What had gone wrong came out during discovery. Unit-­‐‑
ed makes electronic copies of its policies. Once policies have
been issued, its staff normally works from the electronic file.
Each document receives a code, making it easier for the staff
to know what to look for. As we have mentioned, the first
version of the policy named Buck as the beneficiary, but that

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No. 15-­‐‑3446 3
was changed by amendment. Whoever added the amend-­‐‑
ment to the electronic file misclassified it as a “Post-­‐‑Issue
Requirement” rather than as a change of beneficiary. When
Holtz called after Clark’s death, one of United’s employees
looked at the electronic copy of the policy, saw Buck as the
beneficiary, and looked for the code denoting an amendment
changing the beneficiary. Not finding one, he told Holtz that
the death benefit would be paid to Buck. In discovery, this
employee testified that it had not occurred to him to look at
a document tagged as a “Post-­‐‑Issue Requirement.” But
someone eventually went through the whole file and found
the amendment, which led to this suit.
United acknowledges its error in paying Buck. But it
does not acknowledge liability. It maintains that Troyer
knew the truth and allowed Buck to claim the money, carry-­‐‑
ing out the plan that Clark and Buck had devised in 2003.
United observes that Troyer’s corporate files contain a copy
of the amendment, and Holtz’s personal files contain anoth-­‐‑
er. It’s their own fault for not looking, United maintains.
And United adds that, at a meeting of Troyer’s board soon
after Clark’s death, the company chose to allow Buck to re-­‐‑
ceive the death benefit. After naming new members to the
board, however, Holtz caused it to adopt new minutes recit-­‐‑
ing that no such decision had been made.
Believing the recording of the meeting to have been lost,
the district court denied United’s motion for summary
judgment and set the case for trial. 2014 U.S. Dist. LEXIS
137656 (N.D. Ind. Sept. 29, 2014). Shortly after the court is-­‐‑
sued this opinion, however, Troyer admitted that it had
found the recording a month earlier and turned it over to
United’s lawyers. The judge listened to the recording and

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4 No. 15-­‐‑3446
found it dispositive. At the meeting Buck repeatedly told
Holtz that Troyer was the policy’s beneficiary, yet with this
knowledge the board unanimously opted to allow Buck to
receive the money. The judge found that the minutes of this
meeting had been falsified by Holtz’s new appointees and
that Holtz’s fervent denial that he knew the policy’s true
beneficiary is conclusively refuted by the recording. The
judge granted United’s motion to reconsider and entered
summary judgment in its favor.
Troyer’s appellate brief insists that Holtz was misled by
United’s error and had no reason to think that Troyer was
the policy’s beneficiary. We agree with the district court that
this proposition is untenable in light of the statements Buck
made at the board meeting. Buck told Holtz to his face that
Troyer was the policy’s beneficiary. He even pulled out a
copy of the policy: “Um, beneficiary is on page 8. [Flipping
through papers.] Um, let me oh, right here. [Reading] ‘This
policy is issued with the owner and primary beneficiary as
Troyer Products, employer.’”
And if that were not enough, Troyer’s files contained a
copy, as did Holtz’s personal files. Let us suppose, as Holtz
asserts, that he refused to believe what Buck was saying and
thought it unnecessary to look at the policy, in light of what
United’s staff had said. Still Troyer (the corporation) knew
the truth, because its principal officers in 2003 (Clark and
Buck) had negotiated the policy and were well aware of its
contents. What the President and COO knew, Troyer knew.
There is no such thing as corporate amnesia. Prime Eagle
Group Ltd. v. Steel Dynamics, Inc., 614 F.3d 375 (7th Cir. 2010).
Turnover in a corporation’s management does not wipe out
the corporation’s fund of knowledge. That Holtz did not

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No. 15-­‐‑3446 5
know something does not mean that Troyer the corporation
was ignorant.
The fact remains that United paid the death benefit to the
wrong party. United contends that Troyer waived its right to
the money, and the district judge agreed. There are at least
two potential ways to contest that conclusion—and Troyer
does not pursue either of them.
The first would be to emphasize that, although the board
discussed the issue, it did not adopt a resolution. In Indiana,
whose law controls this litigation, boards act by majority
vote. Ind. Code §23-­‐‑1-­‐‑34-­‐‑5(c) (vote at meeting); cf. Ind. Code
§23-­‐‑1-­‐‑34-­‐‑2 (decision without a meeting based on written
consent of all directors). Apparently Troyer conducted busi-­‐‑
ness informally; it operated by consensus (at least until
Holtz used his 61% interest to get rid of Buck). The district
judge wrote that Indiana allows corporate boards to make
binding decisions by consensus, without voting on resolu-­‐‑
tions. The judge did not cite anything for this proposition,
and our own search did not turn anything up. But Troyer
does not contest this aspect of the district court’s analysis.
Pages 27–28 of Troyer’s brief mention in passing that the
board did not adopt a resolution waiving the firm’s right to
the money, but the brief does not contain any legal argument
about the subject. Any potential challenge to this aspect of
the district court’s disposition has been forfeited.
The second way would start with the observation that
the board did not choose between allowing the money to go
directly to Buck and having it paid to the firm and then
passed on to Buck (provided that it stayed off the books and
did not cause heartburn for the firm’s accountant). But Troy-­‐‑
er does not make anything of this either. It does not contend

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6 No. 15-­‐‑3446
that direct payment to Buck had adverse tax consequences
for the firm. Nor has a tax collector or creditor appeared to
argue that, had the money passed through the firm’s coffers,
it would have had first dibs. So the board’s failure to decide
exactly how the money would end up in Buck’s hands does
not matter.
From beginning to end, Troyer’s brief rests on the asser-­‐‑
tions that Holtz was misled by United and did not know that
Troyer was the policy’s beneficiary. That approach commits
the legal error of confusing Holtz with Troyer; the corpora-­‐‑
tion’s knowledge, not Holtz’s, is what matters. And it com-­‐‑
mits the factual error of ignoring what happened at the
board meeting, where Buck made sure that everyone present
knew that Troyer was legally entitled to the proceeds. If this
left Troyer the corporation, or Holtz personally, in a state of
confusion, either could have had a lawyer investigate and
clear things up. Instead the board elected to let the money go
to Buck, and we have explained why the route it took to get
there does not matter.
AFFIRMED

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