Court Opinion

ID: 5769822
Source: CourtListenerOpinion
Date Created: 2022-01-12 17:29:55.317865+00
Date Added: 2024-06-11T08:41:44.633235
License: Public Domain

Steueb, J. (.dissenting).
In this a creditor seeks the surrender value of four insurance policies. The judgment debtors are David and Sylvia Tuckerman, husband and wife. All of the policies in question were on the life of David. Three of them were taken out by him and later assigned to Sylvia. The fourth was taken out by Sylvia. Exemption from execution of rights in life insurance policies is governed by section 166 of the Insurance Law. The provisions of the section are admirably clear. They provide, first, that if any person effects life insurance on his own life, which insurance is payable to a third person, that third person is entitled to the proceeds free of claims by the creditors of the person effecting the insurance. Secondly, if one person effects insurance on the life of another person in favor of the person effecting the insurance and made payable to the person effecting it as beneficiary or assignee, it is exempt from execution as against the creditors of the person insured, and if the person effecting the insurance is the wife of the insured, it is exempt as against her own creditors also.
As to the three policies effected by David, while it is quite clear that they are exempt from David’s creditors, it is equally clear that no exemption is provided as against Sylvia’s creditors. The intervener respondents advance two arguments why the exemption should include her creditors — one based on general considerations, the second on the peculiar facts of this case. Taking these in reverse order, the claim is that the assignment to Sylvia was made at a time when neither was in financial difficulty, and it was done solely in the interest of planning David’s estate; and that if David had not made the assignments, Sylvia’s creditors could not reach the policies because she then would have no interest against which their claims could have been executed. The conclusion postulated is that the making of the assignments, having been done for a legitimate purpose, should not change this. The answer is that it does. Had the policies never been assigned, and the proceeds became payable to Sylvia upon the death of David, the fund, according to the statute, would carry no exemption against Sylvia’s creditors. The assignment precipitated that contingency. Instead of the interest in the policies passing to Sylvia upon maturity, by the assignments those interests passed to her when the assignments were made. There being no exemption in the one situation, there should be none in the other.
The second argument is based on what is supposed to be the general policy of the statute, to enable a man by insurance to provide for his beneficiary and for a wife to provide for herself *84by the same means and to free the fund so created from the claims of creditors. The eases relied on for this proposition serve the interveners’ purpose only to the extent that random expressions taken out of context superficially support the interveners ’ contentions. But the holdings themselves demolish their position.
Of the three cases, Fried v. United States (150 F. Supp. 486) involves the question of the priority of the insured to disability payments over a tax lien. It obviously has no bearing on this question. The second case denigrates the intervenors ’ first argument. In Dellefield v. Block (40 F. Supp. 616) Judge Rifkiud’s able opinion deals with a situation where, as here, both husband and wife were judgment debtors. However, the policy was effected by the husband and it was still in his hands. The contention was that as he had borrowed on the policy up to its full loan value, any interest in it passed to his wife and was not exempt as to her creditors. The decision is directed tc this proposition and rejects it. As pointed out above, short of a transfer of the policy to the wife there is nothing for her creditors to levy on and the facts relied on did not constitute a transfer. The most interesting of the three cases is (Chatham Phenix Nat. Bank v. Crosney (251 N. Y. 189). There, a wife purportedly effected insurance on her husband’s life. The then section 52 of the Domestic Relations Law gave her a limited exemption as against the husband’s creditors. The subsequently enacted section 55 of the Insurance Law gave a much wider exemption to a person effecting insurance on his own life in favor of any beneficiary. The court held that the person applying for the policy is not necessarily the person effecting the insurance, and in this case it was the husband. Moreover, the broader exemption granted in the Insurance Law applied, even though the section does not specifically repeal any contrary intent that might be implied from the Domestic Relations Law section. No question of the wife’s creditors was involved.
Where a statute, as the instant one, makes a specific provision for exemption in one situation and a wider exemption in another situation, it is beyond the function of judicial interpretation to read into it a legislative intent to have both situations governed by the wider exemption. When it is considered that the applicable provisions have been law for over 40 years, with amendments to the section in other respects but not in this, the assumption, based on expressions of a liberal interpretation, rests on grounds too tenuous to sustain it.
*85As to the fourth policy, it is exempt by the terms of the statute. Petitioner’s attempt to exclude it by questioning the underlying facts was properly disposed of at Special Term.
The order should be modified on the law to grant the petition as to the policies issued to David Tuckerman and thereafter assigned to Sylvia Tuckerman and, as so modified, affirmed.
Stevens, P. J., Markewich and Nunez, JJ., concur in Per Curiam opinion; Steuer, J., dissents in opinion.
Judgment affirmed, with $30 costs and disbursements to the respondents.