McCutcheon's Appeal

Mr. Justice Green delivered the opinion of the court, November 21st 1881. In Elliott’s Executors’ Appeal, 14 Wr. 75, it was carefully [137] said that we did not intend the doctrine of that case to apply to the case of policies effected directly to the wife. Head, J., on p. 83, used the following language, “ We are to be understood in thus deciding this case that we do not mean to extend it to policies effected without fraud directly and on their face for the benefit of the wife and payable to her; such policies are not fraudulent as to creditors, and! are not touched by this decision.” The policies in that case were effected in the name of the husband and by him assigned to a trustee for his wife at a time when he was totally insolvent. They were held to be valuable dioses in action, the property of the assured, liable to the payment of his debts, and hence their voluntary assignment operated in fraud of creditors, and was void, as against them, under the statute of 13th Elizabeth. Here, however, the policy was effected in the name of the wife, and in point of fact, was given under an agreement for the surrender of a previous policy for the same amount, also issued in the wife’s name. Now the Act of 15th xlpril 1868, Purd. Dig. p. 802, expressly provides that, “ All policies of life insurance, or annuities on the life of any person, which may hereafter mature, and which have been or shall be taken out for the benefit of, or bona fide assigned to, the wife, or children, or any relative dependent upon such person, shall be vested in such wife or children, or other relative, free and clear from all claims of the creditors of such person.” The plain meaning of this language is that protection shall be given to the wife, children, or dependent relative of the assured in two distinct classes of cases. First, those in which the policy was originally issued, or taken out, for the benefit of the persons named: and, second, those in which policies previously issued shall be, in good faith, assigned to those persons. The question of good faith, or fraud, only arises in the latter class: that is, when the title of the beneficiary arises by assignment. When it exists by force of an original issue, in the name, or for the benefit, of the beneficiary, the title is good notwithstanding the claims of creditors. In other words, the very object and purpose of the act was, to enable insolvent persons to make provision in this way for their families or dependent relatives, which should be good and effective as against, and free and clear of, all claims of creditors. There is no anomaly in this, nor any conflict with the letter or spirit of the statute of Elizabeth, because in such cases the policy would be at no time the property of the assured, and hence no question of fraud in its transfer could arise, as to his creditors. It is only in case of the assignment of a policy that once belonged to the assured that the question of fraud can arise under this act. If the assign [138] ment was made in good faith and without fraud it would prevail, even against creditors, but if not, they could avoid it. It was just here, in failing to observe this distinction, that the learned master and court below fell into error. The master inferred the fraud from the mere fact of insolvency, but that inference, as we have seen, is not warranted in such a case as this. In all other respects, the findings and conclusions of the master were in favor of the appellant, and we concur in their correctness. No appeal has been taken from the finding that the assignment by the appellant to Wilson was obtained by undue influence and coercion of her husband, and, therefore, that fact must be now considered as conclusively determined. Nor do we see any reason to doubt the correctness of the master’s finding on this subject, even if it were an open question. We consider that he is equally correct in his conclusion that Wilson cannot be regarded as an innocent purchaser for value. He merely took the assignment as collateral security for a pre-existing debt or liability. He paid the maturing premiums voluntarily, and is of course entitled to have them returned with interest from the time of their payment. The master also rightly determined that as none of McCutcheon’s creditors were impugning the validity of the assignment to Wilson, it was not affected by the circumstance that he concealed the fact of his holding it from them, when the composition was effected. It follows that the decree of the court below must be reversed and modified. Decree reversed, and record remitted for further proceedings, and it is ordered that the fund in the coiu’t below be distributed by awarding to Sarah Ann Wilson, executrix of John Wilson, deceased, the full amount of all premiums paid by him and by his said executrix, together with interest on such payments from the time they were respectively made, and the remainder of the fund to (Jlarissa McCutclieon, the appellant, the costs of this appeal to be paid by the appellee.