Pullis v. Robison

Norton, J. This is a proceeding in the nature of a creditor’s bill, instituted by certain creditors of James P. Robison, deceased, whose claims had been allowed by the probate court against, his estate, to subject to the payment of said debts the proceeds of certain policies of insurance taken out on the life of said Robison, and made payable to his wife. The creditors suing are three in number, and [207] each having brought a separate action, the three suits were consolidated and tried together. Three of the policies, the proceeds of which constitute the subject matter of controversy, were issúed by the Mutual Benefit Life Insurance Company, each of them being for $5,000, and dated respectively February 26th, 1867, February 21st, 1868 and May 12th, 1870. The amount of annual premiums was as follows-: $283 on the one dated in 1867-, $263 on the one dated in 1868, and $289 on the one issued in 1870. The plaintiffs claim and allege in their bill that Robison was in embarrassed circumstances, and at the time the premiums were paid he was insolvent, and that said policies were donated to his wife, and were procured for the purpose of hindering, delaying and defrauding creditors. Defendant, Mrs. Henrietta Robison, to whom said policies were made payable, denies all the allegations of the bill, and asserts her right to the proceeds of the same. Upon the trial of the issues thus tendered, the court found that said Robison was solvent at the time said policies were taken out, and remained solvent till about the year 1876 ; that the payment of the two last premiums on two of said policies amounting to $342.05, dated respectively in 1867 and 1868, which payment occurred in 1876, was made by Robison while he was insolvent, and that all payments of premiums anterior to 1876 were made by him when he was solvent. Upon this finding the court decreed that Mrs. Robison -was entitled to the proceeds of the policies, less the amount of premiums paid by Robison when insolvent, with the interest thereon, and also decreed that Mr. Pullis, the plaintiff who first brought suit, was entitled to the whole amount of the premium paid in 1876 with its interest. From this judgment plaintiffs appealed to the St. Louis court of appeals, where the judgment was affirmed, and from this judgment they appealed to this court. The evidence adduced on the trial, we think, was sufficient to justify the trial court in finding the facts above set forth, and we will, therefore accept its finding as cor [208] rect, and thus accepting it, the question presented for our determination is, whether, on the facts, the court in its decree properly disposed of the funds in dispute. Plaintiffs insist that error was committed in this respect, and contend that the premiums paid by Robison in 1876, being in excess of the sum of $300, and having been paid while he was insolvent, out of funds which ought to have been appropriated to the payment of his debts, entitles th'em to so much of the proceeds of the policies as may be necessary to satisfy in full their claims as creditors, even though it should consume it all. We think it settled that the wife has such an interest in the life of her hushand as to make valid an insurance effected on his.life for her benefit. This has been so held in the case of Gambs v. Covenant Mutual Life Ins. Co., 50 Mo. 44. We think it also settled that when such a policy issues and expressly designates a person who is to receive the insurance money, such designation is conclusive unless some question arises as to the right of creditors of the person who paid the premiums. “The receipt of the designated person will discharge the company, and such person will be entitled to maintain an action against the company.” Eliss Life Ins., § 317. We think it also settled that a husband who is solvent has the right to effect an insurance on his life for the benefit of his wife, and to pay the annual premiums thereon so long as he remains solvent and can do so without prejudice to, or in fraud of, the rights of creditors. Larkin v. McMullin, 49 Pa. St. 29. To what extent, if to any extent, the husband can affect the rights of the wife in such a policy, by an assignment or other disposition of it, is a question which does not arise in this case, and we have, therefore, deemed it unnecessary to notice the numerous authorities cited by counsel bearing oh that point. [209] 1 band^°Jin?oiTenl rfystatuteWU0t1011 [208] The interest of the wife in a policy of insurance on the life of her husband, effected for her benefit by the husband [209] while in unembarrassed circumstances, and íNUy able f° discharge all his indebtedness, is n°t affected, as plaintiffs contend it is, by •section 15, Wagner’s Statutes, 936, if the husband remain solvent during the time the policy'is kept alive by his paying the annual premiums. That section provides that a married woman may cause to be issued for her sole use a policy of insurance on the life of her husband, and in case she survives him, that the insurance money shall be payable to her, free from the claims of the representatives of her husband, or of any of his creditors, but such exemption shall not apply when the amount of premiums annually paid shall exceed $300. We do not think this statute can be so interpreted as to curtail or restrict the right of a solvent husband to apply only $300 of his means annually to the payment of premiums on his life policy procured for the benefit of his wife. It is insisted that this interpretation has been put upon it in the case of Charter Oak Life Ins. Co. v. Brant, 47 Mo. 425. We do not think the opinion goes to that extent, and if it did, we would be unwilling to follow it, and thus give it our sanction. , In that case the point in judgment was as to the validity of an assignment of a policy on which the annual premium was $343, and which had been taken out on the life of Mrs. Brant’s husband payable to her sole and separate use after her husband’s death. This policy was assigned by Brant and his wife to secure the payment of a debt which Brant owed one Stagg for borrowed money. The court held the assignment to be valid, because the annual premium being in excess of $300 prescribed by the ¿statute took it from under the operation of the statute. The remark made in the opinion “ that the law did not intend that the husband should withdraw any greater amount from his means, to be expended for such a purposeif it is understood as referring to a withdrawal of the means of an insolvent husband and the expenditure made thereof by him for such a purpose, (and such we take [210] to be its meaning,) is entirely correct. It was certainly not intended, as counsel insist, to assert that if a husband who is perfectly solvent, with no intent to defraud creditors, either prior or subsequent, applies more than $300 annually of his means in the payment of premiums on an insurance of his life to be paid to and for the benefit of the wife, although after such payments are made, sufficient of his property is left to answer the demands of his creditors, that such creditors can subject the insurance money to the payment of their debt, and thus deprive the wife of the benefit intended to be secured to her. We think it was the purpose of the statute to allow a husband who might be in an embarrassed and even in an insolvent condition to secure to the wife the benefit of an insurance on his life free from the claims of creditors when the annual premium on such policy does not exceed the .sum of $300; or in other words, that he might annually withdraw for such a purpose that sum without subjecting the amount insured to the payment of creditors. Previous to the enactment of the statute, an insolvent husband could not apply any portion of his means to such a purpose, and deprive creditors of the right of asserting their-claims to all the benefits resulting from such application. The object of the statute, in our opinion, was to change this rule to the extent indicated in the act. It follows from the view we have taken that inasmuch as all the premiums paid by Robison, except the sum of $343 paid in Eebruary, 1876, were paid while he was solvent, Mrs. Robison is entitled to the benefits resulting therefrom, and that the last payment being in excess of $300, and made while Robison was insolvent, should go to the benefit of plaintiffs. It is insisted, by counsel, that inasmuch as the payment made in 1876 kept the policies on foot and gave them vitality, the whole amount of the insurance money, or so much thereof as will be sufficient to satisfy their debts, should be so applied. We have not been cited to, nor have we been able to find any authority that goes to that [211] extent, nor are we acquainted with any equitable principle on which the claim can be founded. ITow the insurance money, under the facts and circumstances of this case, should be apportioned, presents a question of some difficulty, especially so as the authorities we have been able to examine are conflicting in the rules laid down. The case of Landrum v. Knowles, 22 N. J. Eq. 594, goes farther in support of plaintiffs’ position than any which has fallen under our observation, and it falls far short of what is contended for by them. 'In that case the.wife insured the life of her husband for the benefit of her children, and after paying the annual premiums for about ten years assigned the policy, in conjunction with her husband, to one of the husband’s creditors in payment of the debt. After said assignment the wife ceased to pay the premiums, but they were paid for about nine years by the creditors. Upon the death bf the husband the insurance money was claimed by the children on the one hand, and the assignee on the other, and the chancellor decided that the children were entitled to the cash value of the policy at the time it ceased to be kept alive by the mother, and that the residue of the money due on the policy should be paid over to the assignee. On the other hand, in the case of Trough's Estate, 8 Phila. 215, where Trough, having taken out k policy on his life, assigned the same, while solvent, to a trustee for the benefit of. his children, and becoming insolvent thereafter, still continued to pay the premiums, in a contest for the insurance money between the children and Trough’s creditors, the rule was laid down that the only claim the creditors could sustain would be the amount of the premiums paid by Trough to keep the policy alive after he became insolvent. [212] 2.-:-: distribution of Insuraneemoney, as affected bv hus■baud'sinsolvency [211] The object of such rules being to do exact justice between the contending parties and to distribute the fund [212] according to tlieir l’ights, it appears to us that , x * neither oí the above rules accomplishes the ■L object; and inasmuch as the insurance money in contest in this case was the product of all the premiums paid, we think a just distribution of it would be obtained by declaring that Mrs. Robison should be decreed to have so much' of the fund as was produced by the payment of the premiums by her husband when solvent, and plaintiffs so much as the premiums paid by Robison -when insolvent contributed to produce; that is, that plaintiffs are entitled to recover the same proportional part of the whole insurance money that the premiums paid by Robison when insolvent bear to the premiums paid by him when solvent. Giving effect to this rule in the disposition of the case, and accepting the fact found by the court that Robison, after his insolvency, paid $342.05 as being correctly found, and the further fact, as shown by the record, that Robison had paid on two of said policies during his solvency premiums amounting to $4,650, plaintiffs would be entitled to recover the sum of $686.84, and Mrs. Robison the residue. 3.„ „ t diligence. As plaintiff’ Pullis in the race of diligence was the first to file his bill, asking an appropriation of the fund tq the payment of his demand, he has obtained a priority over the other creditors, and the said sum of $686.84 should be applied on his debt. George v. Williamson, 26 Mo. 193. The judgment will be reversed and canse remanded, with directions to the circuit court to enter up a decree in conformity with this opinion, directing the receiver in whose hands the fund has been placed, to pay first the costs of the suit, next the sum of $686.84 to plaintiff Pullis, and next the residue to defendant, Mrs. Robison. All the judges concur.