The New York herald., 1873-11-22
BANKRUPTCY.

Policies of Life Insurance Collateral
Security for Debt-Imp portant Ques-
&iOn.
yesterday, In the United States District Court.
dge Blatchiord rendered his decision in the
matter OF Frank f. Newland, bankrupt. Sub
Joined we give the material portions OF it,
On the 10th OF April, 1872, the bankrupt filed his
voluntary petition in bankruptcy, and was on the
esd Of April, 1872, adjudged bankrupt thereon.
Among the debts proved against his estate was one
by Mrs. Lucy Van Antwerp, his mother-in-law, on
two prOmissory notes made by him, without in
ferest for money loaned to him bv her at the dates
OF the notes, neither oil which notes was due. The
proof was for $3.50, the bankrupt having paid
$3.50 upon the debt before his bank
ruptcy. On the 10th OF April 1870, the
bankrupt took out policy of insurance on his life
for $4,000 payable to Mrs. Van Antwerp as col
lateral security for such debt He pald the pre-
mlunis on such policy quarter-yearly to the time OF
ming his petition. Afterwards, ana to and in
Guiding the premium for the quarter year during
which the surrendered value OF the policy was
fixed, as between Mrs: Van Antwerp and the as
Stgnee in bankruptcy, the premiums on the policy
were paid with moneys furnished for the purpose
by Mrs. Van Antwerp. Prior TO the making OF any
and Mrs. Van Antwerp, by agreement, submitted
80 this Court Tor decision the following questions =
Antwerp either to surrender the policy TO him and
take diyidepd on all her claim. or to retain the
Poiicy y and and withdraw ,l her proof proc Of debt !,
Aulred, what shall be taken as the value OF the col
lateral security. to be deducted from the debt,
Antwerp Is to receive a dividend from the estatef
The Court answered the first question IN the
10 be deducted from the debt, must be taken at
313 49, which was the then cash value Of the policy
6n'a surrender OF it to the life insurance com
papy. the $l3 13 was credited on the debt. After
making such credit the debt, less rebate OF in
9 ., sc On t
Che amount oisncn dividend Ss4l a. was paid IL to
Ant hQ N Hanf a1i Inv
paving the premiums which afterwards be-
came due on ii. Alter the dividend was paid, and
Prior 10 declaring second dividend the following
questions nave been certified Tor decsion:-
Antwerp's debt had the assigned any further
estate, right or interest In the policy, or has he
.. In case he mas any such rights is Mrs. Van
Antwerp to be allowed Tor ry any and II yea, which
portion thereof since her notes became due; pre-
NUNS furnished by her before the valuation and
credit OF the s1a 13; premiums paid by her after
that.
8. Can she, in either case, retain the past and
participate in future dividends, or can the assignee
felure her to withdraw from participation in
4. II she is entitled to the whole OF the $4,000 in
the FIRST instance can she be required to return,
or in any way give the assignee the benefit OF, what
has been already credited upon the original debt,
the $3.50 and the $641 64 received by her as div
Among,other points contended for on the part I
thecredfsor was one to the effect that the question
pl t0e Vdluc pOlCY, Ms dSalHSL tHe assignee,
is res adjudlcata and cannot be opened.
For the sgnee IL was urged that the equity OF
the case is with him, and that if the creditor shall
receive the $4,000 and shall retain the $3.50 and ta
$G41 GA, and shall receive further dividends from
fhe estate, she will be more than paid her debt in
full while the other creditors viii not stand In the
same position.
Judge Blatchford, in his decision, says II am OF
not sound. The policy now Is substantially
q pew security. II stands as II Mrs. Van Antwerp
mad never had anything under policy until sue
fcua M r q
was credited y Mrs. Van Antwerp has
substantially taken out a new policy since
the bankruptcy, anu before q second dividend
is made, and ought to credit on the debt
what she realizes on the policy, besides crediting
MI other payments on the debt, and when her debt
IS thus paid she ceases to be creditor. As the
credit Of the $13 13 was based on the surrender OF
the policy that sum ought not to be credited, the
policy not having been surrendered. The debt
Should be charged at It's proper original amount,
with proper interest Then there should be cred.
tied upon 1t the $3.50, with proper interest, and
the 46l1 "a, with proper interest. The amount OF
the policy 80 far as necessary, should be applied
to extinguish the balance due on the debt, Mrs.
Van Antwerp having credit for, and being re-
funded with interest, the amounts paid by her for
premiums after the petition was filed, either
3hrOugh the bankrupt or directly. Out OF the bal
ance II any, then left Of the policy money, the as
0irnoo must be refunded the $3.50, with interest,
and the $6l1 64, with interest. IL Is referred to
che Register to state an account on this basis and
report IL to the Court" Charles NJ. Earle, for the
assignee. John L. Hil for the creditor.