Forrester v. Gill

Thomson, P. J., delivered the opinion of the court. The appellant brought suit against William T. Craft, and summoned the Mechanics’ Insurance Company of Pennsylvania as garnishee. The garnishee answered that there was due on a policy of insurance against loss by fire an adjustment of $550 to Lizzie A. Craft, provided she owned the property. The plaintiff traversed the garnishee’s answer, claiming that the money was really due' to the defendant. Anna L. Gill filed her petition of intervention in the cause, alleging that on September 1, 1891, Lizzie A. Craft was the owner of certain household furniture and personal property in Denver, and on that day insured the property with the garnishee company against loss or damage by fire ; that the property, on November 2, 1894, sustained loss by fire; that the loss was adjusted by the company at $550, which the company agreed to pay Lizzie A. Craft; that on November 29, 1895, Lizzie A. Craft sold and assigned her claim against the company to the intervenor for $650, payable in one year, with interest at eight per cent per annum, and that the company was notified of the assignment before it made its answer. The intervenor prayed judgment awarding the insurance money to her. The plaintiff answered the petition in intervention, denying that Lizzie A. Craft was the owner of the property as against the creditors of the defendant, William T. Craft; averring that the insurance was procured by the defendant in the name of Lizzie A. Craft for his own benefit; that the adjustment was really made between the defendant and the garnishee, and for the defendant’s benefit, although in the [412] name of Lizzie A. Craft; and denying knowledge or information sufficient to form a belief concerning tbe alleged assignment to the intervenor. Tbe plaintiff alleged further tbat on January 29,1894, tbe defendant made his promissory note to tbe plaintiff for $820; tbat tbe defendant then owned tbe property mentioned in tbe intervenor’s petition, but after-wards, and before tbe insurance was effected, attempted to transfer it to Lizzie A. Craft; that tbe sale was not accompanied by immediate delivery, or followed by actual or continued change of possession, and was made without consideration, and for the purpose of hindering, delaying and defrauding tbe creditors of tbe defendant; and tbat tbe intervenor at tbe time of tbe assignment to her bad notice of tbe fraudulent character of tbe transfer. Tbe intervenor replied, denying the allegations of tbe answer. Judgment went for the intervenor, and tbe plaintiff appealed. Tbe intervenor supported her claim by evidence which, prima fade, entitled her to judgment. Tbe plaintiff then offered to prove that the property insured belonged to tbe defendant, who was tbe husband of Lizzie A. Craft, prior to bis marriage with her, and at the time of tbe marriage was still in his possession; tbat she paid no consideration for tbe property; tbat tbe premium for the policy was paid by tbe defendant; tbat at the time of tbe transfer tbe defendant waá insolvent; and'tbat there never had been any open, notorious or exclusive change of possession of tbe property. Tbe plaintiff further offered to prove tbat tbe intervenor paid no consideration for tbe assignment to her. Tbe court refused to receive tbe evidence. For tbe plaintiff it was conceded below, and it is conceded here, tbat tbe transfer was sufficient to vest in Mrs. Craft an insurable interest; but it is contended tbat tbe plaintiff was entitled to show tbe fraudulent character of tbe transfer of tbe property, and its invalidity as against him; and tbat therefore, tbe evidence offered was erroneously excluded. A transfer of property made with tbe intent to defraud creditors is void as to them, and their right to follow the property [413] extends to its proceeds, or other form of property into which the fraudulent grantee may have converted it. If the fund which the plaintiff seeks to subject to the payment of his debt was the proceeds of the property, the evidence was admissible, and its exclusion error. The main question in the case therefore is, “Was the money due from the insurance company the proceeds of the property ? ” We think this question must be answered in the negative. Insurance is a contract of indemnity. The insurer agrees, for a consideration, to pay to the insured a stipulated amount in case the latter shall sustain loss or damage in consequence of the happening of some event or contingency contemplated by the contract. It is a personal contract and does not run with the title to the property. Cummings v. Ins. Co., 55 N. H. 477; May on Insurance, §§ 1, 6. The money which the insurance company agreed to pay to Mrs. Craft was not payable as a price for the property, and its payment would not operate to convert the property into a fund. It was her personal interest in the property which was insured, and the agreement was to pay to her personally a certain amount in ease of injury to her interest from a specified cause. That she had an insurable interest is conceded, and, even if it were not conceded, is settled by the adjudications. The fund which the plaintiff seeks to reach does not in any sense represent the property. Therefore it cannot be taken for the husband’s debt as the property itself might have been. The fact that the transaction by which her interest was created might have been avoided by her husband’s creditors, gives them no claim to money payable to her as compensation for the destruction of that interest, upon a contract which she had the right to make, which in no manner affected the interest of her husband, and in consequence of which no injury could result to those creditors. Lerow v. Wilmarth, 91 Mass. 382; Bernheim v. Beer, 56 Miss. 149; McLean v. Hess, 106 Ind. 555; Nippe's Appeal, 75 Pa. St. 472. In McLean v. Hess, the court said: “The insurance was taken in plaintiff’s name. However fraudulent the purpose was in having the property conveyed [414] to her, that policy belonged to her. However fraudulent the conveyance to plaintiff may have been, she had an insurable interest in the property. The insurance was taken in her name; the policy was hers; and the proceeds thereof cannot be taken from her by the husband’s creditors.” The case of Boot & Shoe Company v. Ladd, 32 Minn. 381, to which we are referred, is not in point. Ladd was insured upon a stock of goods against loss by fire. By an indorsement on the policy the loss was made payable to James A. Lovejoy, a mortgagee of the goods, as his interest might appear. The property was destroyed by fire. It was held that a creditor of Ladd could garnish the insurance money and attack the mortgage as fraudulent. But the policy belonged to Ladd. The loss was payable to him less such interest as Lovejoy might have under his mortgage, and' if he had no interest, the whole belonged to Ladd. The creditor had the right to show that as to him, Lovejoy had no interest, and that, therefore, the entire fund was within the reach of his process, as belonging to Ladd. See Carpenter v. Ins. Co., 16 Pet. 495. Nor is the situation altered by the fact, if it was a fact, that the premium was paid by the husband. The insurance money does not represent the premium. The premium is not part of it. The premium was the consideration for the agreement of the company to pay the money, but the money represents the loss she sustained after the premium was paid, and nothing else. The question whether the intervenor paid a consideration for the claim, is unimportant. As between creditors of Mrs. Craft and the intervenor, the consideration might be inquired into; but the rights of the plaintiff were not affected by the assignment. He could not have touched the fund if there had been no assignment. The question of the consideration of the assignment is therefore one in which he has no concern, and which he cannot raise. The court committed no error in refusing to receive the offered evidence, and the judgment must be affirmed. Affirmed.