Court Opinion

ID: 8634947
Source: CourtListenerOpinion
Date Created: 2022-11-24 19:43:41.881336+00
Date Added: 2024-06-11T16:55:53.905911
License: Public Domain

DILLON, Circuit Judge.
The wife of the petitioner being possessed of a separate estate, secured to her by an antenuptial marriage settlement, applied in the spring of 1869 for two policies of insurance of $5,000 each, upon her life, payable upon her death to her husband. They were issued accordingly, and she paid the premiums for one year, one-half in cash, and one-half by note. Before the year expired her husband was adjudicated a bankrupt. Out of her own estate she paid the premiums for the two following years, 1870 and 1871, and before the next premium fell due she died. The question is. whether the assignee as against the bankrupt, is en*1064titled, for the benefit of the estate, to the proceeds of the policies. -The assignee does not claim that his right is strengthened by reason of having obtained, in the manner stated, the actual possession of the proceeds, and the only contest is as to the respective legal or equitable right of the assignee and bankrupt thereto.
Counsel on both sides, in their well considered briefs, have argued many points which, though pertaining to,the general subject of life policies for the benefit of others, are, nevertheless, not necessarily involved in the decision of the case.
The counsel for the assignee claims that at the date of the bankruptcy of the husband, November 30, 1869, the husband had a light of property in the policy (which it is contended is a chose in action) of'such a nature that it vested in the assignee by virtue of the adjudication in bankruptcy. Bankrupt Act, 8 14 [14 Stat. 522], Under this section, .property and rights which are acquired. by the bankrupt after the commencement of the proceedings in bankruptcy do not vest in the as-signee; and to make good' his claim the as-signee must show that the right to the benefit of the policy was one which not only existed in the husband at the timé he was .proceeded against in bankruptcy, but is one of such a nature as to vest in the' assignee as of that time, by virtue of the provisions .of the bankrupt act. This act should receive such a construction as accords with .its well known purpose, which is, that if an insolvent debtor will surrender all his property. (not exempt) for distribution among his .creditors, he may, on the terms provided in the act, have his discharge. If the wife’s death had happened before the bankruptcy, "there being no statute protecting the husbands rights under the policy, the right to collect and hold the money would, it may be admitted, pass to the as-signee. But her death did not happen until over two years afterward, during which time the wife continued to pay the premiums. It is admitted that she could not have been compelled to pay them, either by the husband, or by the assignee. Her payment of them proceeded purely from her bounty. It is certain, to a practical intent, that if she had not paid the subsequent premiums, the first payment, made before the bankruptcy, would have been of no benefit, either to the assignee or to the husband, for she did not die during the year. It is also certain, to a practical intent, that, had the last premium not been paid,' there would have been no proceeds here about which to litigate. Her intention, her object, in making these payments, in virtue of which the policy was kept in esse, must have been to make provision for her husband; and what equity, let me ask, have creditors, or the as-signee representing them, to thwart the purpose which she had in view, and for which she paid her money — money to which they had no claim? The assignee, if it be conceded that he could have done so for the benefit of the estate, which I do not admit nor decide, took no steps to pay the premiums, but asks the benefit of those paid by the wife. It is inconceivable that she made, or intended to make, the payments for the benefit of the assignee, and she doubtless died in the confident belief that she had made provision for her husband.
■ Without discussing the questions which have been argued at the bar as to the nature and extent, before the death occurs, of the interest of a person designated by the bounty of another as the one to whom a policy is ultimately to be paid, I am quite confident that the husband, at the time of his bankruptcy, had no such interest in these policies as to give the assignee the right to retain their proceeds against the manifest intention and purpose of the wife.
Could the assignee, as against the wish of the wife, have said, “I demand the policy, and intend to keep up the premiums for the benefit of the estate?” If it were necessary to answer this question, it would seem that he had no such right, and that she could properly say, “This is a matter of my own, a provision originating in my bounty, one upon which my husband’s creditors have no claim, and with which they have no right to interfere.” But the assignee took no such steps; on the contrary, he allowed, or did not prevent the wife from making the payments which kept the policy alive; and I rest my judgment against him on the broad ground, that, under the circumstances of the case, the creditors, for whose benefit the money is sought, have not the shadow of a shade of equity to it, nor to defeat the provident and just provision which the wife intended to secure for her husband,' not for -them. The policy was kept up- by. her for the benefit of her husband after her death, not for the benefit of his creditors before his bankruptcy. The district judge, in, deciding the case, seized the considerations which control it, when he remarked : “Looking at the nature of the contract for the insurance as being a provision by one married party for the benefit of another, and kept in force- by the .wife out of her separate estate without any 'step being taken by the assignee, her-equities should be carefully regarded. The policy was for the benefit of the husband, and'was kept alive by the wife after the bankruptcy, and it would be inequitable that a sum becoming payable after the bankruptcy under such a contract, should, by relation-back to-tiie time of commencement of proceedings: in bankruptcy, be held to belong to the assignee. The design of such charitable acts for the benefit of a third party was not intended to be defeated by the bankrupt law, in a ease like the present, where such a result would be against all equity.”