Trenholm v. Klinker

Cook, J., delivered the opinion of the court. The original bill in this case was filed by E. L. Trenholm, trustee in bankruptcy, for the purpose of having the court set aside certain conveyances of real estate made by the bankrupt, C. E. Klinker, to his sister, Mrs. Tanner, and tó L. M. McLaurin. It is alleged that Klinker, before he was adjudicated a bankrupt, conveyed this property to the parties named, “without consideration, and for the purpose of defrauding his creditors.” The defendants answered this bill with a general denial. The original bill was filed October 29, 1912, and the answers thereto were filed December 5,1912. The trustee in bankruptcy filed an amended bill of complaint May 9, 1913. In this amended bill the original bill was adopted in this allegation: “That he (complainant) here and now reiterates all that is in said original bill of complaint as it is therein stated.” Then follows the allegations, viz.: “That he is informed and believes that C. E. Klinker, acting for himself or for his sister, Mrs. May Tanner, or L. M. McLaurin, defendants in this case, obtained fire insurance policies on the houses which were situated on lots 6, 7, 8, 9, and 14, of block A, of Roache’s Survey, an addition to the city of Jackson, which lots are described in the original bill in this case, and are in controversy as to the ownership thereof in this suit. ‘ ‘ That he does not know the date of said fire insurance policies, but he is informed and beleives that they aggregate the amount of nine thousand dollars, of which sum forty-five hundred dollars is in the American Fire Insurance Company of Newark, New Jersey, and forty-five [270] hundred dollars in either the Atlas Fire Insurance Company of New York City, or the German Fire Insurance Company of Peoria, Illinois, or both. “Complainant further states that on or about the 1st day of May, 1913, the said houses so insured on said lots were destroyed by fire, by reason of which the money on said policies became due and payable; that said houses were totally destroyed by fire. “Complainant further states to the court that he is informed and believes that he is entitled as such trustee in bankruptcy to receive as a part of the assets of said bankrupt estate the said insurance money, whatever amount that may be; that said May Tanner holds said property in trust for the said C. E. Klinker, and the same was his property at the time he was adjudicated a bankrupt, so that complainant says that said money ought to be paid to him as such trustee. ’ ’ To this amended bill defendants interposed a demurrer, assigning the following grounds: “ (1) There is no equity on the face of said amended bill, nor does it charge facts necessary to be answered. “(2) It is not shown that the pretended insurance was taken out or effected before the institution of the alleged bankruptcy proceeding, or that the creditors of the bankrupt have or can have any interest therein; and it is shown that the buildings were burned after the beginning of the suit. “ (3) It is not shown that defendant May Tanner has any interest in the insurance. “(1). It is not shown that defendant McLaurin has any interest in the insurance. “ (5) The proceeds of a fire insurance policy are not the property alleged to have been destroyed by fire, nor are the creditors of the alleged bankrupt interested therein. “(6) The defendant C. E. Klinker, the alleged bankrupt and debtor, is shown by the amended bill and the [271] pleadings to be a citizen and resident of this state, and it is not charged that he is absent from the state, or that he absconds, and no predicate is laid as a basis for an attachment in chancery. “ (7) There is no pretense that there has been a fraudulent conveyance of the insurance policies, or the debts due on them by the insurance company. “(8) The policies of insurance mentioned in the amended bill necessarily insured only the intérest of the beneficiary in the policies; it is not shown, who is the beneficiary, and if he had no interest, as the amended bill seems to show, there is no insurance. “(9) That said amended bill is in divers other respects uncertain, imperfect, and insufficient.” The court sustained the demurrer, and complainant appeals. We will notice only the fifth ground of demurrer, because it is determinative of this appeal. The insurance company and Mrs. Tanner are the only parties to this contract of insurance. Conceding that the conveyance of the land, upon which the buildings were located, was in fraud of the creditors of the bankrupt, it does not follow that the trustee is entitled to the proceeds of the insurance policy. The amended bill proceeds upon the theory that the insurance takes the place of the property insured after its destruction by fire. This point has been decided against appelant’s contention in two cases, viz., Smith v. Ratliff, 66 Miss. 683, 6 So. 460, 14 Am. St. Rep. 606, and Bernheim v. Beer, 56 Miss. 149. It is claimed that these cases were practically overruled by this court in Simmons v. Ingram, 60 Miss. 886. This ease, in our opinion, does not overrule or weaken Bernheim v. Beer, in so far as the question here is involved. That part of the opinion in Bernheim v. Beer which announces the law applicable to this case was not questioned by the court in Simons v. Ingram. The conrt decided in Bernheim v. Beer that: [272] “Money due on a policy of insurance procured by a married woman on buildings situated on property tbe title to wbicli bas been conveyed to ber in fraud of her husband’s creditors is not the proceeds of the property, and cannot be subjected by the husband’s creditors to the payment of his debts. She can, in such circumstances, make a valid contract of insurance, which, being between the insurer and the insured, exclusively for the indemnity of the latter, cannot be defeated by third persons.’” And this, was the only question before the court. The judge rendering the opinion of the court went further, and used this language: “The extent of the complainants’ rights is to reach the money of the debtor invested in the lot and the improvements, and to pursue it beyond that into any proceeds or other property in which Mrs. Beer has put it.” Referring to the language just quoted, the court, in Simmons v. Ingram, 60 Miss. 899, said: “In Carlisle v. Tindall, 49 Miss. 229, and Bernheim v. Beer, 56 Miss. 149, it was said that where a debtor purchased property,, the title of which he caused to be invested in another for the purpose of defrauding his creditors, the creditor could proceed to subject it to the payment of his demand to the extent only of the funds of the debtor which had been invested in it. In neither of these cases was the point presented for adjudication, and we do not concur in the views indicated in the opinion of the judge who delivered the opinions.” It will be observed that in Carlisle v. Tindall no criticism is made of the real point decided in Bernheim v. Beer, but the court does repudiate that part of the opinion which undertook to decide a question not presented by the record. Affirmed.