Insurable interest of wife or children in life of husband-policies for their benefit-not liable for debt-premiums.

1. The wife and children have an insurable interest in the life of the husband and father; and if insurance thereon be taken out by him, payable to the wife or children, or for their benefit, and he pays the premiums, his creditors, upon his death, are not entitled to the insurance moneys. 2. Where contracts of insurance are made for the benefit of a wife or children, or both, upon their insurable interest in the life of the husband or father, the latter, while they are living, can exercise no power of disposition over the same without their consent; nor has he any interest therein of which he can avail himself: nor upon his death have his personal representatives or his creditors any interest in the proceeds of such contracts; but they belong to the beneficiaries, to whom they are payable.

3. A policy, and the money to become due under it, belongs, the moment it is issued, to the person or persons named in it as the beneficiary or beneficiaries; and there is no power in the person procuring the insurance, by any act of his, by deed or by will, to transfer to any other person the interest of the person named.

4. Nor are the creditors of the husband entitled to recover the premiums paid by him on policies issued on his own life but for the benefit of and payable to his wife and children where there is no evidence from which a fraudulent intent on the part of the latter or the insurance companies can

be inferred.

[Nos. 29, 30.] Argued Oct. 17, 18, 1888. Decided Nov. 12, 1888.

A District of

PPEALS from a decree of the Supreme

any woman,

by herself or in her name or in the name of any third person, with his consent, as her trustee, to be caused to be insured in said com

Statement by Mr. Chief Justice Fuller: On the 23d of April, 1872, in consideration of an annual premium of $230.89, the life insurance Company of Virginia issued at Petersburgh, in that Commonwealth, a policy of insurance on the life of Thomas L. Hume, of Washington, D. C., for the term of his natural life, in the sum of $10,000, for the sole use and benefit of his wife, Annie Graham Hume, and his children, payment to be made to them, their heirs, executors, or assigns, at Petersburgh, Virginia.

The charter of the company provided as follows: "Any policy of insurance issued by the Life Insurance Company of Virginia on the life of any person, expressed to be for the benefit of any married woman, whether the same be effected originally by herself or her husband, or by any other person, or whether the premiums thereafter be paid by herself or her husband or any other person as aforesaid, shall enure for her sole and separate use and benefit and that of her or husband's children, if any, as may be expressed in said policy, and shall be held by her free from the control or claim of her husband or his creditors, or of the person effecting the same and his creditors." Sec. 7. The application for this policy was made on behalf of the wife and children by Thomas L. Hume, who signed the same for them.

The premium of $230.89 was reduced by annual dividends of $34.71 to $196.18, which sum was regularly paid on the 23d of April, 1872, and each year thereafter, up to and including the 23d of April, 1881.

for any definite period or for the term of his natural life; and in case of her surviving her husband the sum or net amount of the insurance becoming due and payable by the terms of the insurance shall be payable to her to and for her own use, free from the claims of the representatives of her husband or of any of his creditors. In case of the death of the wife before the decease of the husband, the amount of the insurance may be made payable, after the death of the husband, to her children, or, if under age, to their guardian, for their use; in the event of there being no children, she may have power to devise, and if dying intestate, then to go [to] the next of kin."

The directions printed on the margin of the policy called especial attention to the provisions of the charter upon this subject, an extract from which was printed on the fourth page of the application. The amount of premium paid on this policy was $242.26, a loan having been deducted from the full premium of $337.20.

On the 13th of June, 1881, the Connecticut Mutual Life Insurance Company, of Hartford, in consideration of an annual premium of $350.30, to be paid before the day of its date, issued a policy of insurance upon the life of Thomas L. Hume, in the sum of $10,000, for the term of his natural life, payable at Hartford to Annie G. Hume and her children by him, or their legal representatives. The application for this policy was signed "Annie Ĝ. Hume, by Thomas L. Hume." It was expressly provided as part of the contract, that the policy was issued and delivered at Hartford, in the State of Connecticut, and was "to be in

able amount of real estate, though most of it was heavily encumbered; that he was an active business man, not personally extravagant; and that he was, for two years prior to October, in receipt of moneys from his wife's mother, who had an income from her separate property.

He seems to have received from Mrs. Pickrell, or the estate of Pickrell, his wife's father, of which Mrs. Hume was the residuary legatee, over six thousand dollars in 1879, over three thousand dollars in 1880, and over seventeen hundred dollars in 1881.

Mrs. Pickrell's fixed income was one thousand dollars a year from rents of her own property, which, after the death of her husband in May, 1879, was regularly paid over to Mr. Hume. She testifies that she told Hume that "he could use all that I [she] had for his own and his family's benefit, and that he could use it for anything he thought best;" that she had out of it herself from $200 to $250 a year from the death of Pickrell, in May, 1879, to that of Hume, in October, 1881, and that before his death Mr. Hume informed his wife and herself that he had insured his life for Mrs. Hume's benefit, but did not state where the premium money came from.

Blackford, agent for the Maryland company, testified, under objection, that Hume told him in February, 1881, that certain means had been placed in his hands, to be invested for his wife and children, and he had concluded to take $10,000 in Blackford's agency, and should, some months later, take $10,000 in the Conpecticut Mutual. He accordingly took $10,000 in the Maryland, and subsequently, during the summer, informed Blackford that he had obtained the insurance in the Connecticut Mutual. Evidence was also adduced that Mr. Hume was largely indebted to Pickrell's estate, by reason of indorsements of his paper by Pickrell, and the use by him in raising money of securities belonging to the latter, and that said estate is involved in litigation and its ultimate value problematical.

The causes were ordered to be heard in the first instance at a general term of the Supreme Court of the District of Columbia, which court, after argument, on the 5th day of January, 1885, decreed that the administrators should recover all sums paid by Thomas L. Hume as premiums on all said policies, including those on the Virginia policy from 1874, and that after deducting said premiums the residue of the money paid into court (being that received from the Maryland and the Connecticut Mutual) be paid to Mrs. Hume individually or as gardian for herself and children, and that the Hartford Life and Annuity Company pay over to her the amount due on the certificates issued by it.

From this decree the said Central National Bank, Benjamin U. Keyser, the Farmers' and Mechanics National Bank of Georgetown, George W. Cochran, and the administrators, as well as Mrs. Hume, appealed to this court; and the cause came on to be heard here upon these cross appeals.

Messrs. Walter D. Davidge, Reginald Fendall and R. Ross Perry, for the Bank and Administrators, and Messrs. Edwards & Barnard, for creditors:

A voluntary settlement of a policy of assurance under the Statute of Elizabeth, taken in connection with the Insolvent Debtors' Act, was held in England to be fraudulent upon the death of the settlor.

Bunyon, Life Assur. 273; Sims v. Thomas, 12 Ad. & Ell. 536; Northcutt v. Dodd, 1 Craig & P. 100.

A transfer of choses in action is liable to investigation on the ground of fraud. A court of equity may reach property which is not liable to legal process at law.

Schondler v. Wace, 1 Campb. 487; Graves v. Dolphin, 1 Sim. 66; Brandon v. Robinson, 18 Ves. 429; Green v. Spicer, 1 Russ. & Myl. 395; Piercy v. Roberts, 1 Myl. & K. 4; Skarf v. Soulby, 1 Macn. & G. 364; Penhall v. Elwin, 1 Smale & G. 267; French v. French, 6 De G., M. & G. 95; Jenkyn v. Vaughan, 3 Drew. 419; Neale v. Day, 28 L. J. Ch. 45; Stokoe v. Cowan, 29 Beav. 637; Freeman v. Pope, L. R 5 Ch. App. Cas. 538; Taylor v. Coenen, L. R 1 Ch. Div. 636.

A policy of insurance upon the life of a person is a chose in action, and as such liable to the payment of the debts of the party in whose favor it is issued, and is therefore within the statute against fraudulent conveyances.

Elliott's App. 50 Pa. 75; Anderson's Est. 85 Pa. 202; Stokes v. Coffey, 8 Bush, 533; Thompson v. Cundiff, 11 Bush, 567; Hathaway v. Sherman, 61 Maine, 475; Anthracite Ins. Co. v. Sears, 109 Mass. 383; Barry v. Eq. Life Assur. Society, 59 N. Y. 593; Pence v. Makepeace, 65 Ind. 360; Stigler v. Stigler, 77 Va. 163; Succession of Hearing, 26 La. Ann. 326.

Proof of fraud in fact is not required in a case like this.

Wait, Fraud. Conv. §§ 9, 10, 382; Bump, Fraud. Conv. 22-25, 27.

An insolvent debtor cannot make a settlement with his creditors' money, on his wife or children, or on both.

Taylor v. Jones, 2 Atk. 600; Simmonds v. Kinnaird, 4 Ves. 735.

Mrs. Hume was not a purchaser for a valuable consideration.

Seitz v. Mitchell, 94 U. S. 580 (24: 179); Humes v. Scruggs, 94 U. S. 22 (24: 51); Bessen v. Eveland, 26 N. J. Eq. 472; Knowlton v. Mish, 8 Sawy. 625; Palmer v. Merrill, 6 Cush. (Mass.) 282; Basket v. Hassell, 107 U. S. 602 (27: 500).

The administrators represent the creditors. Hagan v. Walker, 55 U. S. 14 How. 34 (14: 315).

An assignment, within the Statute of 13 Eliz., chap. 5, is utterly void against creditors, and the property assigned is assets for the payment of debts.

3 Wms. Exrs. 7th Am. ed. 1781, marg. p. 1679, and authorities cited; Shears v. Rogers, 3 Barn. & Ad. 362; Skarf v. Soulby, 1 Macn. & G. 364.

In equity an executor or administrator may, as the representative of creditors, assail a fraudulent transfer.

Holland v. Cruft, 20 Pick. 321, cited and approved in Hagan v. Walker, supra; Welsh v. Welsh, 105 Mass. 229; Chase v. Redding, 13 Gray, 418; Caswell v. Caswell, 28 Maine, 232; Gibbens v. Peeler, 8 Pick. 254; McLane v. Johnson, 43 Vt. 48.

And also at law.

McLean v. Weeks, 61 Maine, 277; Martin v. Root, 17 Mass. 222; Buehler v. Gloninger, 2 Watts, 226; Stewart v. Kearney, 6 Watts, 453; Minor v. Mead, 3 Conn. 289; Andrus v. Doolittle, 11 Conn. 283.

Such transfers are not good at law and are supported in equity only as contracts to assign. Ryall v. Rowles, 2 White & T. Lead. Cas. Eq. *734; 2 Story, Eq. Jur. 1040; 2 Wms. Exrs. 917. The gifts sought here to be enforced are from husband to wife. Such gifts are at law absolutely void.

2 Kent, Com. 132, 162; Wallingsford v. Allen, 35 U. S. 10 Pet. 583 (9: 542); Babcock v. Eckler, 24 N. Y. 623; Hunt v. Johnson, 44 N. Y. 31; Rev. Stat. D. C. § 727.

The whole transaction was managed exclusively by the husband and without the knowledge of the wife.

Basket v. Hassell, 107 U. S. 602 (27: 500). The proceeds belong to the estate of the decedent who paid the considerations.

Bump, Fraud. Conv. 3d ed. 240, 241, and cases cited (n. 4), also p. 254; Rider v. Kidder, 10 Ves. 360.

Messrs. Enoch Totten and J. Holdsworth Gordon, for Annie G. Hume:

The proceeds of a policy of insurance issued on the life of a husband, payable to the wife, or to the wife and children, cannot be touched by the creditors of the insured. Such policies are not fraudulent as to creditors.

Bank v. Hume, 3 Mackey, 384; Succession of Hearing, 26 La. An. 326; Goodrich v. Treat, 3 Col. 408; Elliott's App. 50 Pa. 75; McCutcheon's App. 99 Pa. 133, 137.

Where the courts have assumed to give creditors any claim upon the proceeds of policies on their face in favor of wife or children, it has only been to the extent of the amount of the premiums paid by the insured,-the balance going to the beneficiaries,-and even then only upon the "clearest proof of fraud, if at all."

Pence v. Makepeace, 65 Ind. 347; Etna Nat. Bank v. U. S. Life Ins. Co. 24 Fed. Rep. 770; Stigler v. Stigler, 77 Va. 163.

The administrators cannot maintain this action. They cannot be heard under our laws to assail the good faith of their intestate.

As to the competency, as evidence, of Hume's declaration, see Darling v. Bryant, 17 Ala. 10; Bell v. Ansley, 16 East, 141, 143; Deming v Carrington, 12 Conn. 1; Norton v. Pettibone, 7 Conn. 319; Bradley v. Spofford, 23 N. H. 444; Nelson v. Iverson, 24 Ala. 9; 1 Greenl. Ev. §§ 147, 148; 2 Sm. Lead. Cas. pt. 2, 1010; Holladay v. Littlepage, 2 Munf. 318.

The Central National Bank was in no way injured, even if there was a fraud; and not being injured, it cannot be heard to complain.

Sexton v. Wheaton, 1 Am. Lead. Cas. Eq. 37; Clarke v. White, 37 U. S. 12 Pet. 178, 195 (9: 1046, 1053); Bispham, Eq. 310.

Here was a total indebtedness actually and equitably due from Hume to his wife, amounting to about $54,000. Her equity was as good as that of any other creditor, and he could se cure her as well as he could the Bank.

Hitz v. Nat. Met. Bank, 111 U. S. 722 (28: 577); Woodworth v. Sweet, 51 N. Y. 9; Syracuse Chilled Plow Co. v. Wing, 85 N. Y. 421; 1 Bishop, Mar. Women, S 119; Hyde v. Powell, 47 Mich. 156; Smith v. Seiberling, 35 Fed. Rep. 677.

Fraud had not been satisfactorily proven. Sexton v. Wheaton, 21 U. S. 8 Wheat. 229 (5: 603); Hinde v. Longworth, 24 U. S. 11 Wheat. 213 (6: 457); Seward v. Jackson, 8 Cow. 407.

A husband may take insurance policies on his own life for the benefit of his family; and in the absence of a statute his creditors cannot reach it.

May, Ins. 599, note; Succession of Hearing, 26 La. Ann. 326; Elliott's App. 50 Pa. 75; Anderson's Est. 85 Pa. 202; McCutcheon's App. 99 Pa. 133; Pence v. Makepeace, 65 Ind. 345; Thompson v. Cundiff, 11 Bush, 569.

A life policy issued on the life of a husband for the sole benefit of the wife, immediately vests in the beneficiary and cannot be devested.

Ellison v. Ellison, 1 White & T. Lead. Cas. Eq. 421; Bliss, Life Ins. SS 318, 345; Glanz v. Gloeckler, 104 Ill. 573; North Am. Life Ins. Co. v. Wilson, 111 Mass. 542; Hutson v. Merrifield, 51 Ind. 24.

The Statute of 13 Eliz., chap. 5, relates to antecedent and not to subsequent creditors.

Sexton v. Wheaton, supra; Mattingly v. Nye, 75 U. S. 8 Wall. 370 (19: 380); Smith v. Vodges, 92 U. S. 183 (23: 481).

The policy is not the contract, but only the evidence of it.

Glanz v. Gloeckler, 104 Ill. 573; Succession of Hearing, 26 La. Ann, 326; Hathaway v. Sherman, 61 Maine, 473.

is valid.

Bump, Fraud. Conv. 444, note; Daris v. Swanson, Dorsey v. Smithson, Goodrich v. Treat, Burton v. Farinholt, and Choteau v. Jones, supra; Coltraine v. Causey, 3 Ired. Eq. 246; Sturdivant v. Davis, 9 Ired. Law, 365.

Hume received money from Mrs. Pickrell and used the money thus acquired for the procurement of the policies in dispute.

Mr. Chief Justice Fuller delivered the opinion of the court:

for her own benefit and as guardian of her children, nor is any error now assigned to the action of the court in that regard. Indeed, it is conceded by counsel for the complainants that this contract was perfectly valid as against the world; but it is insisted that, assuming the proof to establish the insolvency of Hume in 1874 and thenceforward, the premiums paid in that and the subsequent years on this policy belonged in equity to the creditors, and that they were en

titled to a decree therefor as well as for the amount of the Maryland and Connecticut policies and the premiums paid thereon.

It is not denied that the contract of the Maryland Insurance Company was directly between that company and Mrs. Hume, and this is, in our judgment, true of that of the Connecticut Mutual, while the Hartford company's certificates were payable to her, if living.

Mr. Hume having been insolvent at the time the insurance was effected, and having paid the premiums himself, it is argued that these policics were within the provisions of 13 Elizabeth, c. 5, and inure to the benefit of his creditors as equivalent to transfers of property with intent to hinder, delay, and defraud. The object of the Statute of Elizabeth was to prevent debtors from dealing with their property in any way to the prejudice of their creditors; but dealing with that which creditors, irrespective of such dealing, could not have touched, is within neither the letter nor the spirit of the statute. In the view of the law, credit is extended in reliance upon the evidence of the ability of the debtor to pay, and in confidence that his possessions will not be diminished to the prejudice of those who trust him. This reliance is disappointed, and this confidence abused, if he divests himself of his property by giving it away after he has obtained credit. And where a person has taken out policies of insurance upon his life for the benefit of his estate, it has been frequently held that, as against creditors, his assignment, when insolvent, of such policies, to or for the benefit of wife and children, or either, constitutes a fraudulent transfer of assets with in the statute, and this, even though the debtor may have had no deliberate intention of depriving his creditors of a fund to which they were entitled, because his act has in point of fact withdrawn such a fund from them, and dealt with it by way of bounty. Freeman v. Pope, L. R. 9 Eq. Cas. 206; S. C. L. R. 5 Ch. App. Cas. 538. The rule stands upon precisely the same ground as any other disposition of his | property by the debtor. The defect of the disposition is that it removes the property of the debtor out of the reach of his creditors. Cornish v. Clark, L. R. 14 Eq. Cas. 189.

But the rule applies only to that which the debtor could have made available for payment of his debts. For instance, the exercise of a general power of appointment might be fraudulent and void under the statute, but not the exercise of a limited or exclusive power, because, in the latter case, the debtor never had any interest in the property himself which could have been available to a creditor, or by which he could have obtained credit. May on Fraud. Conv. p. 33. It is true that creditors can obtain relief in respect to a fraudulent conveyance where the grantor cannot; but that relief only restores the subjection of the debtor's property to the payment of his indebtedness as it existed prior to the conveyance.

surance, which is simply a contract, so far as the company is concerned, to pay a certain sum of money upon the occurrence of an event which is sure at some time to happen, in consideration of the payment of the premiums as stipulated, nevertheless the contract is also a contract of indemnity. If the creditor insures the life of his debtor, he is thereby indemnified against the loss of his debt by the death of the debtor before payment; yet, if the creditor keeps up the premiums, and his debt is paid before the debtor's death, he may still recover upon the contract, which was valid when made, and which the insurance company is bound to pay according to its terms;, but if the debtor obtains the insurance on the insurable interest of the creditor, and pays the premiums himself, and the debt is extinguished before the insurance fails in, then the proceeds would go to the estate of the debtor. Knox v. Turner, L. R. 9 Eq. Cas. 155.

The wife and children have an insurable interest in the life of the husband and father; and if insurance thereon be taken out by him and he pays the premiums and survives them, it might be reasonably claimed, in the absence of a statutory provision to the contrary, that the policy would inure to his estate.

In Continental Life Ins. Co. v. Palmer, 42 Conn. 60, the wife insured the life of the husband, the amount insured to be payable to her if she survived him, if not, to her children. The wife and one son died prior to the husband, the son leaving a son surviving. The court held that, under the provisions of the statute of that State, the policy being made payable to the wife and children, the children immediately took such a vested interest in the policy, that the grandson was entitled to his father's share, the wife having died before the husband; but that, in the absence of the statute, "It would have been a fund in the hands of his representatives for the benefit of the creditors, provided the premiums had been paid by him." So in the case of Anderson's Estate, Hay's and Kerr's Appeal, 85 Pa. St. 202, A. insured his life in favor of his wife, who died intestate in his lifetime, leaving an only child. A. died intestate and insolvent, the child surviving; and the court held that the proceeds of the policy belonged to the wife's estate, and, under the intestate laws, was to be distributed share and share alike between her child and her husband's estate, notwithstanding, under a prior statute, life insurance taken out for the wife vested in her free from the claims of the husband's creditors. But if the wife had survived she would have taken the entire proceeds.

We think it cannot be doubted that in the instance of contracts of insurance with a wife or children, or both, upon their insurable interest in the life of the husband or father, the latter, while they are living, can exercise no power of disposition over the same without their consent, nor has he any interest therein of which he can avail himself; nor upon his death have his personal representatives or his creditors any interest in the proceeds of such contracts, which belong to the beneficiaries to whom they are payable.