Court Opinion

ID: 6897253
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:51:07.394475+00
Date Added: 2024-06-11T16:06:02.552525
License: Public Domain

LINDLEY, District Judge
(dissenting).
I think it well to remember the provisions of each policy. Each provides that the company “insures the life of” the insured and “promises to pay” him $1,000 on maturity date, if the insured and his son are then living. Each further provides that if the child dies during the lifetime of the insured, upon surrender of the policy, the company will pay to the insured the. total amount of premiums paid plus compound interest until the death of the child. If the insured dies before the date of maturity and the child survives, it is entitled, if it lives to the maturity date, to the maturity amount. If it dies before the maturity date, its executors will receive the present cash value of the maturity value at the time of the child’s death computed according to an expressed formula. The insured, after paying premiums for three years, has the right to receive the surrender value named in the policy or to convert the policy into an adjusted amount as participating paid-up endowment insurance payable to the insured at the maturity date. Should the insured die prior to the maturity date, the child, if living, has the same right and, if not living, his executors, to participating paid-up endowment insurance. It should be observed further that the insured could assign the policies. They expressly speak of assignment and provide merely that any assignment must be made on blanks prepared by the company. Obviously, this was stipulated because the insurer desired uniform assignments.
The two questions involved in this proceeding are, as stated by the majority, (1) Were the contracts life insurance policies within the meaning of the Indiana exemption statute; (2) Were they taken out for the benefit of the insured’s child?
I pass the dubious first question and proceed to the second. The majority reasons that the policies were for the benefit of the child because, though the insured stood to recover all sums due if he lived, the benefit conferred upon the son was as substantial as that conferred upon the father. I think the opinion fails to give proper significance to the cash surrender value, loan value, and the provision for paid-up endowment insurance, all valuable rights belonging to the insured alone, if he lives. The following cases may be of some value in considering this question.
*219In Re Rose, D.C., 24 F.2d 253, the court said: “I am of the opinion that the policies referred to in the Pennsylvania exemption statutes are policies in which the wife or children or dependent relative of the insured has been made the beneficiary and remains such. In other words, the phrase ‘made for the benefit of * * * the wife’ is equivalent to ‘in which the wife is the beneficiary.’ ” In In Re Kenin’s Trust Estate, 343 Pa. 549, 23 A.2d 837, 841, the court said: “ * * * the purpose (of the statute exempting from claims of insured’s creditors proceeds of policies made for the benefit of or assigned to the wife or children or dependent relatives of the insured) is to exempt the proceeds of life insurance policies made for the benefit of certain designated persons and not payable to the estate of the insured.”
In re Loveland, D.C., 192 F. 1005, 1008, where the statute exempted the proceeds of policies made payable to or for the benefit of a married woman, the court held that a policy payable to the insured at the end of 20 years if living, and in case of his pri- or death to his wife if living, otherwise to his legal representatives or assigns, was not exempt, but, on the bankruptcy of the insured, passed to his trustee. The court said: “The mere fact that a policy contains a provision making it payable to a married woman, however that provision may be limited or to whatever conditions it may be subjected, I am unable to regard as all that the statute requires for the purpose of exempting the policy. The statute is obviously intended to secure the result of preserving the benefit of the policy to her (the wife) or her children, independently of the insured or his representatives. If the provision for payment to her is not adapted to secure this result, it can hardly be such a provision as the statute contemplates. If the insured has retained rights in the policy at the time of his bankruptcy available to him or his representatives, these are rights which he could have transferred, and therefore rights passing to his trustee in bankruptcy, under section 70a (5) [11 U.S.C. A. § 110, sub.- a(5)j. In Blinn v. Dame, 207 Mass. 159, 93 N.E. 601 [20 Ann.Cas. 1184], the Massachusetts Supreme Court held that the insured under a 20-year endowment policy, payable to him at the expiration of that period, or if he should die before its expiration, then to his children if they survived him, and which reserved to him the right to surrender the policy to the company at any time or to assign it, had rights under the policy which would pass under a general assignment by him of all his property, notwithstanding the provisions of the Massachusetts statutes which have been quoted, entitling the lawful beneficiary to the proceeds of a policy in favor of a person other than the insured himself.”
It seems to me that neither policy can properly be said to be for the benefit of the son. Many contingencies lie in the latter’s path before he can become entitled to the face value of the policy; the insured must die before the maturity date, without having surrendered the policy or taken advantage of the provisions for a paid-up policy or assigned it or taken the cash surrender value; he, the child, must live until the maturity date of the policy. I approve the language of the Loveland case: “The statute is obviously intended to secure the result of preserving the benefit of the policy to her (the wife) or her children, independently of the insured or his representatives. If the provision for payment to her is not adapted to secure this result, it can hardly be such a provision as the statute contemplates.” The policy in question does not seem reasonably adapted to give anything to the child; in all probability he will receive no direct benefit. Surely the legislature must have intended to exempt only those directly benefited.
I would affirm the judgment.