In re Hirsch

Decision Date25 April 1933
Citation4 F. Supp. 708
PartiesIn re HIRSCH.
CourtU.S. District Court — Southern District of New York

Frackman & Robins (by Joseph H. Robins), of New York City, for bankrupt.

Mathias Naphtali, of New York City, for objecting creditors.

GODDARD, District Judge.

This is a motion to confirm the report of the special master overruling the specifications of objecting creditors and confirming a composition.

Samuel Hirsch, the bankrupt, was engaged in the retail dry goods business in this city. On August 1, 1932, he executed an assignment for the benefit of his creditors which was filed the following day, and on September 1, 1932, an involuntary petition in bankruptcy was filed against Hirsch by three creditors. No application was made for the appointment of a receiver, and the sale of Hirsch's property was conducted by the assignee on September 12; the net proceeds of this sale amounting to $1,900. The schedules list forty-six general creditors having claims of a total of $6,336.77 and priority claims totaling $164. On September 9, 1932, Hirsch was adjudicated a bankrupt; on September 30, 1932, the bankrupt made an offer of composition to his creditors of 20 per cent. payable in cash; also to pay the priority claims amounting to $164, and to pay the statutory commissions of the assignee and the fees of the attorney for the petitioning creditors, and the attorney for the assignee amounting to $400, and the fees of the Referee. The total amount which has been deposited for the purpose of the composition was $1,850, this $1,850 being part of the $1,900 which the assignee obtained as the proceeds from the sale of the bankrupt's property. Hirsch's offer of composition was accepted by the majority of creditors in number and amount of the general allowed claims. One of three objecting creditors conducted an examination of the bankrupt for the purpose of framing specifications which later were duly filed. The objecting creditors' specifications were overruled by the special master. Eleven specifications were filed, but the two which seemed to me to require the most serious consideration are specifications "seventh" and "eleventh," which read as follows:

"Seventh Specification. That the said bankrupt, upon information and belief, at a time subsequent to the first day of the twelve months immediately preceding the filing of the petition at divers times thereafter, while insolvent, and with intent to hinder, delay and defraud his creditors, transferred, removed and concealed a portion of his property to wit, a large sum of money, by paying over to the Metropolitan Life Insurance Company of New York, and to the New York Life Insurance Company, divers sums of money as insurance premiums upon policies insuring the life of the said bankrupt, in favor of Rose Hirsch, the wife of the said bankrupt, as beneficiary and that this creditor cannot at this time state the exact dates of said payments, nor the amounts thereof, with further particularity."

"Eleventh Specification. Upon information and belief, that the said bankrupt, at a time subsequent to the first day of the twelve months immediately preceding the filing of the petition and at divers times thereafter, while insolvent, and with intent to hinder, delay and defraud his creditors, transferred, removed and concealed a portion of his property, to wit, a large sum of money, by paying over to the Metropolitan Life Insurance Company of New York and to the New York Life Insurance Company, divers sums of money as insurance premiums upon policies insuring the life of the said bankrupt, in favor of Rose Hirsch, the wife of the said bankrupt, as beneficiary and that this creditor cannot at this time state the exact dates of said payments, nor the amounts thereof, with further particularity."

The facts upon which these specifications are based were elicited by the counsel for the objecting creditors in his examination of the bankrupt and from witnesses, and are as follows:

On July 25, 1932, when Hirsch knew that he was insolvent, he repaid to the Metropolitan Life Insurance Company $728.84 on loans which he had obtained in 1930 and early in 1932 on insurance policies which he had taken out for the benefit of his wife, and on August 29, 1932, four days after he had retained an attorney to represent him in his insolvency proceedings, and two days before executing the assignment for the benefit of his creditors, he repaid loans totaling with interest $491.29 to the New York Life Insurance Company on policies he had taken out some years before in favor of his wife, which loans he had obtained upwards of six months previously from that company, and he also paid advance premiums on those policies amounting to $137.59, which premiums were not due until January and March, 1933.

The question presented, and which apparently has not been passed upon since section 55-a of the Insurance Law was enacted, is whether the payment of loans by the bankrupt on such policies and/or the payment of advance premiums on them when he knows he is insolvent, and shortly before a petition in bankruptcy is filed, is a fraud on then existing creditors and is sufficient to prevent the court's approval of a composition.

For the answer to this question it is necessary to examine the Bankruptcy Act and the statutes of the state of New York dealing with life insurance and its exemptions. The Bankruptcy Act § 6 (11 USCA § 24) provides that exemptions which are granted by the state in which the petition is filed and where the bankrupt has had his domicile shall not be effected. In other words, the rights to exemption in such insurance policies and premiums are determined by the statute, if any, of the particular state. In re Turnock & Sons (C. C. A.) 230 F. 985. In New York an exemption is allowed and its nature is defined in § 55-a of the Insurance Law (chapter 468, ...

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10 cases
  • United States v. Sullivan
    • United States
    • U.S. Court of Appeals — Third Circuit
    • April 10, 1964
    ...Falls v. State Life Ins. Co., 80 F.2d 499 (5 Cir. 1935); Lee v. Equitable Life Assur. Soc'y, 56 F.Supp. 362 (E.D.Mo.1944); In re Hirsch, 4 F.Supp. 708 (S.D.N.Y. 1933); In re Schwartz' Estate, 369 Pa. 574, 87 A.2d 270, 31 A.L.R.2d 975 (1952). Cf. Carpenter v. Commissioner, 322 F.2d 733 (3 Ci......
  • Adlman, In re
    • United States
    • U.S. Court of Appeals — Second Circuit
    • September 14, 1976
    ...to remove such funds from the reach of her creditors by placing the same in an exempt catagory." He cited as his authority In re Hirsch, 4 F.Supp. 708 (S.D.N.Y.1933). He also noted that the payments of the premiums could be set aside as fraudulent under Section 276 of the New York Debtor an......
  • Ford v. Mutual Life Ins. Co. of New York
    • United States
    • Mississippi Supreme Court
    • April 19, 1943
    ... ... obtained a judgment against Parker in this case ... Williams v. Union Central Life Ins. Co., 291 U.S ... 170, 54 S.Ct. 348, 78 L.Ed. 711, 92 A.L.R. 693; Board of ... Assessors v. New York Life Ins. Co., 216 U.S. 517, 30 ... S.Ct. 385, 54 L.Ed. 597; In re Hirsch, D.C., 4 ... F.Supp. 708; Wagner v. Thieriot, 203 A.D. 757, 197 ... N.Y.S. 560, affirmed 236 N.Y. 588, 142 N.E. 295; Rustin v ... Ætna Life Ins. Co., 98 Neb. 426, 153 N.W. 548; Jansen v ... Tyler et al., 151 Or. 268, 47 P.2d 969, 49 P.2d 372; ... Baker v. General American Life Ins. Co., 222 ... ...
  • United States v. Sullivan
    • United States
    • U.S. District Court — Eastern District of Pennsylvania
    • February 2, 1962
    ...Co., 80 F.2d 499 (5th Cir. 1935); Lee v. Equitable Life Assurance Society of United States, 56 F.Supp. 362 (E.D.Mo.1944); In re Hirsch, 4 F.Supp. 708 (S.D.N.Y.1933), and recognized by the Commissioner in Revenue Ruling 56-48, published February 13, "Where an insurance company does not have ......
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