Tompkins v. Levy & Brother

SOMERVILLE, J. The purpose of the bill is to subject the proceeds of a policy of insurance on the life of Milton J. Brasfield, deceased, to the payment of certain debts of the decedent. The policy was made payable to his wife, “Sallie A. Brasfield, her heirs, executors, or assigns.” The premiums were paid by the assured out of his own funds. He died in the year 1887, having survived his wife about eight years, she having deceased in the year 1879, leaving two minor children. It is claimed that these children are entitled to [267] the fund, under the provisions of sections 2733 and 2734 of the Code of 1876, authorizing married women to insure the lives of them husbands free from the claims of creditors, or the claims of the husband’s personal representatives. The word “heirs,” it is contended, must be construed to mean “children;” and such a construction is asserted, to entitle the two children to the fund under the statute. It is manifest that the fund is liable to the claims of the husband’s creditors, unless it is rescued from such liability by the terms of the statute, which we have held to be in the nature of an exemption law, and, for this reason, to be liberally construed to effect the purpose of its enactment —Fearn v. Ward, 65 Ala. 33: s. c., 80 Ala. 555; Felrath v. Schonfield, 76 Ala. 199; s. c., 52 Amer. Rep. 319; Continental Life Ins. Co. v. Webb, 54 Ala. 688; Appeal of Elliott's Ex'rs, 88 Amer. Dec. 525, 531, note. The statute provides, that a policy of insurance taken out under its provisions, on the husband’s life, for the benefit of the wife, shall be payable to her, “in case of her surviving her husband." — Code, 1876, § 2733. It is further declared, in the following section, that “in case of the death of the wife, before the decease of the husband, the amount of the insurance may be made payable after death to her children, for their use, and to their guardian, if under age.” — Code, 1876, § 2734. The wife here has not survived her husband, and there is no clause in the policy making the amount of the insurance payable to the children in case of her death before his decease. It is too plain to admit of argument, that the statute does not, proprio vigore, make such policies payable to the children, bn the death of the wife before the husband, irrespective of the contract, but it only authorizes such a provision to be incorporated in the contract of insurance, so as to rescue such contract from the taint of fraud, and exempt the proceeds of the policy from liability to creditors or administration. It is equally obvious, that by the terms of the statute the wife’s interest is contingent on her surviving her husband, and in event of her death before his it. is gone. The New York statute of 1840, from which our own is substantially copied, has been construed by the Court of Appeals of that State to be enabling, and not declaratory of the common law. In Eadie v. Slimmon, 26 N. Y. 9; s. c., 82 Amer. Rep. 395, after holding that a policy upon the life of the husband, [268] for tbe benefit of tbe wife, could not be assigned so as to destroy the right of tbe wife — a point as to wbicb we intimate no opinion — tbe following language was used by Denio, C. J.: “By the general rules of law, a policy on tbe life of one sustaining only a domestic relationship to tbe insured would become inoperative by tbe death of such insured in the life-time of tbe cestui que vie; or, if it could be considered as existing for any purpose after that event, it would be for tbe benefit of tbe personal representatives of tbe insured; but, by this act, tbe contract may be continued in favor of tbe children of tbe insured wife, after her death.” . The Connecticut statute is substantially like that of New York and Alabama. In Connecticut Mut. Life Ins. Co. v. Burroughs, 34 Conn. 305; s. c., 91 Amer. Dec. 725, it was said, that while tbe doctrine of Eadie v. Slimmon, 26 N. Y. 9, supra, as to tbe non-assignability of such policies, seemed reasonable and just, where tbe husband paid tbe premiums; yet, where tbe wife paid them from her own separate estate, it was difficult to suggest a reason why she should not have tbe same power to assign her interest in tbe policy that she has to assign any other chose in action belonging to her. Nevertheless, it was decided, where she attempted to make such assignment, her interest being contingent on her surviving her husband, and she having died before be did, her interest terminated, and her assignee acquired nothing under tbe assignment. To tbe same purport is tbe reasoning upon which the decision of this court rests in Continental Life Ins. Co. v. Webb, 54 Ala., supra. See, also, May on Insurance (2d Ed.), § 391; and Appeal of Elliott's Ex'rs, 88 Amer. Dec. 532, note. We bold that, upon tbe death of Mrs. Brasfield, her interest in tbe policy of insurance on her husband’s life ceased. Was it continued by tbe terms of tbe statute, for tbe benefit of her children? Under tbe most liberal construction of tbe statute wbicb we feel authorized to give it, we can not bold that it was. It could lawfully have been made payable to tbe children upon tbe death of tbe wife, but it is sufficient to say that it was not so made. Tbe word “heirs,” as used in tbe policy, must, under all tbe authorities, be construed with reference to tbe species of property wbicb is tbe subject of disposition, whether real or personal; and when used with reference to personal property, it must be held to mean distributees, or next of kin. This is especially so, when associated with tbe words “executors,” and “assigns.” [269] Soudder v. Van Arsdale, 13 N. J. Eq. 109; Hodges' Appeal, Pa. 9 Ins. L. J. 709; Kaiser v. Kaiser, 13 Daly, 522; Cushman v. Horton, 1 Hnn, N. Y. 601; Gauch v. St. Louis Mut. Life Ins. Co., 88 Ill. 251. And while it is true that the children might be distributees of their mother’s estate, they could only be so in the event that her interest in the fund did not terminate on her death. But, having terminated, it could not pass to her estate, or distributees, in the order of usual succession. The interest of the distributees, being derived through her, was also contingent on the wife’s surviving the husband, which, as we have seen, never happened. Fuller v. Linzee, 135 Mass. 468. We might or might not construe the statute in like manner, if the premiums on the policy had been paid with funds belonging to the wife’s separate estate. But, in this case, they were paid with the husband’s funds, and we confine the construction to the case before us. The phraseology of the new Code, it will be noticed, has been materially changed in several particulars touching this matter. — Code, 1886, § 2356. There is another feature about this policy, which stamps it as fraudulent against creditors, and takes it out of the protection of the statute. It is the interest which Milton Brasfield reserved to himself, in the event of his surviving for fifteen years after its issue. It is expressly provided, that after the expiration of this number of years, on surrender of the policy, none of its conditions having been violated, the company would pay to Brasfield himself, “his heirs, executors, or assigns,” the equitable value of the policy, “as an endowment in cash.” It is obvious that the interest of Mrs. Brasfield in this policy was contingent upon her husband’s dying before the expiration of fifteen years from date, and, had he survived for this length of time, the cash value of the policy could have been claimed by him, free from any trust in favor of the wife. — Levy v. Van Hagen, 69 Ala. 17. That a reservation of this kind would be such a locking up of the debtor’s property from creditors, for his own beneficial use, as to evince an intent to hinder, delay, or defraud creditors, has never been doubted since the doctrine settled in Tioyne's Case, decided near three centuries ago. — Benedict v. Renfro, 75 Ala. 121; s c , 51 Amer. Rep. 429; Murray v. McNealy, 86 Ala. 234; s. c., 5 So. Rep. 565; Woodall v. Kelly, 85 Ala. 368. The personal representative was not a necessary, although [270] be may bave been a proper paity defendant to tbe bill. Coffey v. Norwood, 81 Ala. 512. There is nothing in tbe suggestion, that tbe bill was improperly filed in tbe name of tbe partnership which bad been dissolved. It is described as a late partnership, and tbe names of tbe individual members of the firm are set out. This was clearly sufficient. • Tbe second ground of demurrer suggests tbe point, that tbe premiums paid by Milton Brasfield to keep tbe policy in force were paid with tbe knowledge and assent of complainants, and such payment was not, therefore, a fraud on them. Tbe allegations of tbe seventh paragraph of tbe bill, bearing on this point, refer for explanation to those set out in tbe tenth paragraph; and tbe latter having been stricken out by amendment, the remaining averments are not sufficiently clear and specific to raise the question. We do not, therefore, consider it. It can be raised by plea or answer to tbe bill. Tbe extent to which the proceeds of tbe policy in question are liable to tbe demand of tbe complainants, is not raised by tbe demurrer. If any portion of tbe fund is liable, as we bave held it is, tbe demurrer raising this question was properly overruled. Tbe decree of tbe chancellor so ruling is affirmed.