Johnson v. Bacon

Mates, J., delivered the opinion of the court. Where a life insurance policy is taken out for the benefit of named beneficiaries, it vests in the beneficiaries the absolute ownei’ship, and it cannot he assigned; transferred, deposited as collateral security, or made in any way liable for the debts of the insured without the consent of the beneficiary expressly given. If there be any attempt to .assign, transfer, or in any way dispose of the proceeds of the policy by the insured, or any attempt to make same liable for his debts, and it is done without the coxxsexit and authority of the beneficiary expressly given, it is as void as if the insured' undertook to dispose of property belonging to an entire stranger; and this is true, whether the,premiums are paid by a solvent or insolvent insurer. Jones v. Patty, 73 Miss., 179, 18 South., 794; Bishop v. Curphy, 60 Miss., 23; Cozine [164] v. Grimes, 76 Miss., 300, 24 South., 197; Central Bank v. Hume, 128 U. S., 196, 9 Sup. Ct., 41, 32 L. Ed., 370; Pence Adm’r v. Makepeace, 65 Ind., 345; Hendrie & Blotfoff Mfg. Co. v. Platt, 13 Colo. App., 15, 56 Pac., 209; Stiglers Ex’x v. Stigler, 77 Va., 163; Bank v. Williams, 77 Miss., 398, 26 South., 965. The further allegations of the bill in this case show that at the time of the death of the insured, W. O. Bacon, he had in force an aggregate insurance of $25,000 upon his life. $18,-500 of this insurance was made payable to the wife as beneficiary, and $4,000 was made payable to the children as beneficiaries. It is further alleged that at the time these policies were taken out, and up to the time of the death of the insured, both himself and his wife were insolvent, and all the premiums on account of the insurance were paid by Bacon with intent to hinder, delay, and defraud his creditors, and it is sought to subject these premiums to the payments of the debts due the creditors. . It is contenedd on the part of appellees that the insurance in excess of the $10,000 exempt by law cannot be liable for any premiums paid, except for the premiums paid on the excess of the amount exempt. The law exempts proceeds of insurance policies to the amount of $10,000 payable to any special beneficiary. To this extent, and up to the amount of $10,000, the proceeds cannot be made liable for any debt, even for premiums paid by the insured while he was insolvent, and though paid with intent to hinder, delay, and defraud his creditors. This amount is made sacred and secure from the grasp of the law, and cannot be made liable in any way for any debt, except it be by consent of the beneficiaries. But, where an insurance policy is taken out for the benefit of a named beneficiary, the proceeds of the insurance policy are liable for the premiums paid by the insured in fraud of the creditor’s rights and while he was insolvent, if the proceeds amount to more than the exemptions allowed. The sum in excess of the $10,000 ex [165] empt by tbe statute is liable, not only for tbe premiums paid to keep up the policy on the excess, but it is also liable for the premiums paid by the insolvent debtor in order to maintain the policy for the amount that is exempt under the law.' If an insolvent debtor dispose of his property in fraud of the rights of his creditors by procuring a life insurance policy, the proceeds of which are exempt by law, the proceeds of the policy cannot be subjected to the payment of the premium so long as the proceeds do not exceed the exemption law. The excess insurance is not alone liable for whatever premiums were paid in order to keep it up, but, not being protected by the statute, and not being exempt from liability for the premiums paid to maintain this entire insurance, is also liable for whatever premiums were paid in order to maintain the whole insurance, the exempt as well as the nonexempt. “The procurement of a policy of life insurance as a provision for the family of the assured in the event of his death, and the payment of premiums thereon by a person insolvent or of limited means, whose wife and family may be dependent upon him and his labor for the comforts and necessaries of life, are acts to be fostered and encouraged by the law. These acts are not hostile to, but in full accordance with, those provisions of the law which bear upon the rights and duties incident to the family relation. A necessary provision for his own household is a duty enjoined upon every man by divine as well as human law.” Where creditors are deprived of property which they had a right to resort to for the collection of their debts, because the debtor uses property which they have a right to resort to in paying premiums on policies of insurance taken out for the benefit of those who have claims upon him, it is right that the proceeds of those policies in excess of the sum exempt by laws should be used to pay back to those creditors that sum which has been diverted from them in the payment of the premiums, if their claims are living claims at the time the proceeds are collected. A demurrer to the bill having been sustained by the chancel [166] lor, and the bill'dismissed, except as to that part of the bill which seeks to recover the premiums, the decree is affirmed, and cause remanded to be proceeded with, in accordance with this opinion. Affirmed. Whitfield, O. J., took no part in the decision of this case.