Court Opinion

ID: 8199262
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:22:56.142786+00
Date Added: 2024-06-11T16:40:51.889550
License: Public Domain

The following opinion was filed April 7, 1937:
Wickhem, J.
(on motion for rehearing). In its brief upon motion for rehearing, plaintiff calls attention to the *330fact that this court was in error in stating that the cash surrender value of the policy in question was fully hypothecated. The trial court found, and the fact is, that the surrender value exceeded the loan for which it was security by $1,656. Hence, the statement in the opinion that the case is fully disposed of by the rule that a change of beneficiary could only constitute a fraudulent conveyance to the extent of the cash surrender value of the policy is withdrawn. A complete restudy of the record, however, satisfies us that the findings of the trial court, (a) that insured was not insolvent at the time of the change of beneficiary or rendered so by it, and (b) that there was no actual intent on his part to defraud creditors, are not against the great weight or clear preponderance of the evidence.
We are strongly urged by plaintiff to reconsider and repudiate the rule of law announced in the opinion which limits the scope of fraudulent conveyances upon a change of beneficiary by the insured to the cash surrender value of the policy at the time of the change. It is urged, (a) that “conveyance” as the term is defined in the act is broad enough to include every manner of transferring property, and (b) that an insurance policy, being a chose in action, does constitute property. In substance, it was held in the opinion that a change of beneficiary is not literally within the definition of “conveyance,” and that an insurance policy, while in a sense constituting property, merely represents “an expectancy dependent upon the performance of conditions and the happening of contingencies.” It was pointed out that there was nothing aside from the cash surrender value which the creditors could reach at the time of the change, and that the operation of the Fraudulent Conveyance Act should be limited to property that was at the time of the alleged fraudulent conveyance within the reach of the creditors.
After careful reconsideration of the whole question, we adhere to our determination. It has always been the rule in *331this state that a conveyance of property which is exempt cannot be deemed fraudulent as against creditors. Bond v. Seymour, 1 Chand. 40, 2 Pin. 105; Bank of Commerce v. Fowler, 93 Wis. 241, 67 N. W. 423; Shawano County Bank v. Koeppen, 78 Wis. 533, 47 N. W. 723; Rozek v. Redzinski, 87 Wis. 525, 58 N. W. 262; Hibben v. Soyer, 33 Wis. 319; Pike v. Miles, 23 Wis. 164; Goodell v. Blumer, 41 Wis. 436. The reason for this is that the exempt property was not within the reach of the creditors at the time of the act challenged and consequently was not put beyond their reach by it. Dreutzer v. Bell, 11 Wis. *114; Pike v. Miles, supra. It seems to us that the same principle applies here. Except for the cash surrender -value, no part of the insurance policy could be reached by the creditors at the time of the change or during the lifetime of the insured. It is our conclusion that the rule as announced in Equitable Life Assur. Society v. Hitchcock, 270 Mich. 72, 258 N. W. 214, is sound. For other cases, to the same effect, see note, 106 A. L. R. 599.
The brief of plaintiff and that of amici curies express concern as to the effect of this doctrine upon the credit structure of the state. It is pointed out that financial statements required of borrowers by banks call for the disclosures of insurance policies and their beneficiaries; that where the beneficiary is stated to be the estate of the borrower, that is a factor entitled to be considered by the bank as favorable to the loan; that if the rule announced is adhered to, it will be necessary to secure an assignment or at least to discount the favorable aspects of the debtor’s showing with respect to his insurance. We cannot regard such' considerations as effective to change the rules of law announced. Further than this, even in cases where a loan is fully covered by collateral, all such factors as income, exempt property, life insurance, etc., bear principally upon the personal and business character of the borrower and the consequent likelihood that the loan will be repaid. Considered in this light, they are un*332affected by the decision. To consider them in any other would create a species of security where none had been asked for by the lender or consciously given by the borrower.
By the Court. — Motion for rehearing denied with $25 costs.