Allen v. Central Wisconsin Trust Co.

ViNJE, J. 1. Counsel for plaintiff contends that when the1 plaintiff became the beneficiary of the policy she thereby became vested with the sole, absolute, and indefeasible title thereto by virtue of the provisions of sec. 2347, Stats. (1898),, notwithstanding the reservation in the policy of the right of the insured to change beneficiary at any time during the life-of the policy. In the view the court has taken of this case it. does not become necessary to decide that question, and it is-expressly reserved for consideration and decision when the occasion therefor shall arise. The policy, after the surplus was withdrawn at the end of' the tontine period, and the wife made the beneficiary, was and remained strictly a life insurance policy payable to the wife-of the insured. As such it was exempt from the claims of the-creditors of the husband. Subd. 19, sec. 2982, Stats. (1898),, and sec. 2347. Sec. 6 of the bankruptcy law (Act July 1,. 1898, 30 U. S. Stats, at Large, ch. 541) adopts, for purposes, of bankruptcy proceedings, the exemptions allowed by the laws: of the several states. 1 Remington, Bankruptcy, sec. 1003; Holden v. Stratton, 198 U. S. 202, 25 Sup. Ct. 656. The [385] policy was, therefore, exempt from the creditors of the husband in the bankruptcy proceedings and did not pass to the trustee. But it is claimed by counsel for defendant that, inasmuch as the insured reserved to himself the right or power to change the beneficiary, such right or power passed to the trustee, and the cases of In re Welling, 113 Fed. 189; In re Holden, 114 Fed. 650; In re Hettling, 175 Fed. 65; In re Wolff, 21 Am. Bankr. Rep. 452; Matter of White, 23 Am. Bankr. Rep. 90, and In re Schofield, 147 Fed. 862, are cited to sustain the claim. Reference to those cases will show that the policy in each of them was in the nature of an endowment policy, and provided for the payment to the insured, at the end of a stated period, of a fixed, definite sum, and it was held that the insured had property rights in the policy that passed to the trustee notwithstanding it was made payable to the wife in the event of her surviving the husband. We have no such case here. The investment feature of the policy in behalf of the insured was entirely eliminated when the surplus was paid him. Moreover, the bankruptcy act itself specifically declares that such a policy does not pass to the trustee. Sec. 70(a) of the bankruptcy law provides that the trustee of a bankrupt shall “be vested by operation of law with the title of the bankrupt, as of the date he was adjudged a bankrupt, except in so far as it is to property which is exempt” and then specifies different classes of property that pass to the trustee. The federal courts have repeatedly held that the bankruptcy act does not affect ordinary life insurance policies payable to the wife of the bankrupt. In In re Scheld, 104 Fed. 870, 871, the court says: “It will be seen that the clause of sec. 70 above quoted does not include policies of insurance payable to the wife, children, or other kin of the bankrupt, but is limited to policies the proceeds of which are payable to the bankrupt himself, his estate, or personal representatives. The enactment does not deprive [386] tlie family of a debtor of the protection which be may have secured to them in taking out policies for tbeir benefit payable at bis death, but it does prevent debtors from availing themselves of the opportunity of making investments for tbeir own benefit in the form of endowment policies, or policies payable to themselves, and holding the same while seeking a discharge from their debts through the bankrupt act.” This language is quoted with approval in In re Holden, 114 Fed. 650, 52 C. C. A. 348. It is further claimed that, inasmuch as the insured reserved the right to change the beneficiary, he may yet do so, and convert the policy into property that may pass to the trustee. Conceding, but not deciding, that he still has the right to change the beneficiary, and assuming that he may do so, yet it is not easy to perceive upon what ground it can be claimed that the trustee is at all concerned with what may afterward become of exempt property. The trustee is vested with the title to the property of the bankrupt, if at all, as of the date he was adjudged a bankrupt. At that time this policy was exempt and did not pass to the trustee. It cannot pass later, no matter what the bankrupt may do. 2. It may be said that, inasmuch as this paid-up policy shares in the annual dividends, it is not purely a life insurance policy. Its value at the time of the commencement of the action was $1,159.83 and the annual dividend for 1910 was $11.40. The amount of the dividend is likely to vary from year to year, depending upon interest rates and the cost of conducting the business. It is deemed, therefore, that the dividend is a mere incident of the policy and that it does not destroy its essential character as a purely life insurance contract. Ellison v. Straw, 119 Wis. 502, 508, 97 N. W. 68. The right to receive such dividend is in the beneficiary. It follows from what has been said that the plaintiff is entitled to judgment awarding the possession of the policy to her. [387] By the Court. — Judgment reversed, and cause remanded with directions to enter -judgment in accordance with this opinion. Eaenes, J., took no part.