Court Opinion

ID: 8801219
Source: CourtListenerOpinion
Date Created: 2022-11-26 14:32:57.114623+00
Date Added: 2024-06-11T17:03:54.674333
License: Public Domain

HOUGH, Circuit Judge
(dissenting). The rule on this subject is set forth in one sentence from Burlingham v. Crouse, 228 U. S. at page 473, 33 Sup. Ct. 568, 57 L. Ed. 920, 46 L. R. A. (N. S.) 148, viz.:
“As we have construed the statute, its purpose was to vest the surrender value in the trustee for the benefit of the creditors, and not otherwise to limit the bankrupt in dealing with his policy.”
In that case there was at the time of bankruptcy no surrender value. Therefore there was nothing for the trustee to get. In Everett v. Judson, 228 U. S. 474, 33 Sup. Ct. 568, 57 L. Ed. 927, 46 L. R. A. (N. S.) 154, there was a surrender value, and the trustee received it. In Re L. Hammel & Co., 221 Fed. 56, 57, 137 C. C. A. 80, 81, the policy possessed “no ‘cash surrender value/ either provided for on its face, or established by concession and practice of the company.” What we refused in that litigation was to compel the bankrupt to get the policy back from his wife and borrow upon it for the benefit of his estate. No other point was involved.
All of the policies in this case have a cash surrender value, and the only reason why. that value is thought not to flow into the bankrupt’s estate is the fact that the bankrupt prefers to keep the policies payable to beneficiaries chosen by himself, but whose rights he can cancel at will. This bankrupt is the assured; he is the only person who can obtain the surrender value; he can get it when he wants it, and no one else can. Samuel’s property in these policies was transferable by him, was subject to be applied to the satisfaction of his debts under the laws of the state, and possessed (in the language of the Bankruptcy Act) “a cash surrender value payable to himself.” It is so payable in equity, because he can get it—and bankruptcy is equity.
Therefore the order should be reversed, under the construction of the act as above quoted. For these reasons, I dissent from the judgment of the court.