Delta Ins. & Realty v. Benjamin

Smith, C. J., delivered the opinion of the court. C. M. Benjamin, Jr., died intestate, leaving surviving him as his sole heirs at law, his father, C. M. Benjamin, Sr., to whom letters of administration on his estate were issued, and Mrs. R. B. Everett, a sister. The estate Wa9 found to be and was decreed insolvent. The decedent left a life insurance policy for one thousand dollars -payable to his executor, administrator or assigns which was collected by the administrator, and, by order of the court made on the administrator’s, ex parte application, was by him paid over to himself and his daughter, Mrs. Everett under section 2141, Code of 1906 (section 1814, Hemingway’s Code), which provides: [286] ‘ ‘ The proceeds of a life insurance policy not exceeding five thousand dollars payable to the executor or administrator, of the insured, shall inure to the heirs or legatees, freed from all liability for the debts of the decedent, except premiums paid on the policy by any one other than the insured for debts due for expenses of last illness and for burial.’ ’ "When the cause came on for a final decree adjudicating all claims against decedent’s estate, and directing the distribution of the assets thereof, the appellants excepted to the order previously made by the court directing the administrator to pay the proceeds of the insurance policy to the heirs of the decedent and by agreement of counsel the questions thereby raised were reserved in the final decree for determination later on a petition to be thereafter filed by the appellants for that purpose. Some time thereafter the appellants, the Delta Insurance & Realty Company andi the Greenwood Savings Bank filed their petition, pursuant to the agreement of counsel, reciting the foregoing facts and alleging in detail the payment by the administrator out of the decedent’s estate, other than the proceeds of the insurance policy, of the costs of the administration, taxes due by the estate, and the expense of the decedent’s last illness and burial, amounting to one thousand fourteen dollars and sixty eight cents, these being preference claims under section 2113, Code of 1906 (section 1781, Hemingway’s Code), resulting in the general creditors, among whom are the appellants, receiving less than was due them, the balance due to the Delta Insurance So Realty Agency being twenty three dollars and twelve cents, and to the Greenwood Savings Bank being one hundred eleven dollars and! seventy one cents. The defendants to this petition are the administrator, the surety company in which his bond was executed, and Mrs. Everett. A demurrer to the petition was sustained, and the petitioners appeal. [287] The two questions presented to us for decision as state-ed by counsel for the appellants are: (a) Is the order of the lower court directing the administrator to pay over to the heirs of the decedent the proceeds of the policy for one thousand dollars res adjudicaba in this proceeding by the appellants'? (b) Was it proper to wholly éxclude the proceeds of the policy from the assets of the estate and turn the money over to the heirs of the decedent free from the payment of any and all claims % Our answer to the second of these,questions will render it unnecessary for us to consider the first. Section 2141, Code of 1906 (section 1814, Hemingway’s Code), does not expressly provide that the debts excepted from the exemption created by the statute, and which are preference claims under secton 2113, Code of 190G section 1781, Hemingway’s Code), shall be paid out of the decedent’s state other than the proceeds of an insurance policy when so to do would result in the general creditors receiving less than is due them; neither does it provide that such expenses shall, in that event, be paid either in whole or in part out of the proceeds of the insurance policy, but the two manifest purposes of the statute are: First, to exclude all of the general creditors of a decedent from participating in the proceeds of a life insurance policy not exceeding five thousand dollars, payable to. his executor or administrator, and to-cause the proceeds of such a policy to inure to the benefit of the heirs or legatees of the insured in event he should die leaving debts, to the same extent that it would have inured to their benefit had he died leaving no- debts other than those excepted from the exemption created by the statute; and, second, to insure the payment of the debts excepted from the exemption to the extent ,of the proceeds of the policy. Both of these purposes can be accomplished only by permitting the creditors of the classes excepted from the exemption to share (in the proceeds- of such an insurance [288] policy only when, and then only to the extent, necessary to enable them to collect their claims against the decedent’s estate. To hold that the debts excepted from the exemption must be paid out of the proceeds of such a policy before the decedent’s general estate can be resorted to for that purpose would practically destroy the statute; for it is of material beneát to the heirs of a decedent only when the decedent’s estate, other than the proceeds of an insurance ¡policy, is insufficient to pay all of the debts of the estate. If it is sufficient for that purpose, the amount distributed to the heirs will be the same(whether the debts excepted from the exemption are paid out of the proceeds of the policy or out of the proceeds of other property. Affirmed.