Bonds v. Bonds
| Decision Date | 27 January 1982 |
| Docket Number | No. 53000,53000 |
| Citation | 409 So.2d 704 |
| Parties | Martha Moore BONDS v. George Mitchell BONDS and Life & Casualty Insurance Company. |
| Court | Mississippi Supreme Court |
Nora J. Hall, Roy O. Parker & Associates, Tupelo, for appellant.
Finch & Finch, J. Barry Finch, Iuka, Hugh N. Clayton, New Albany, for appellees.
Before PATTERSON, C. J., and BROOM and DAN M. LEE, JJ.
This is an appeal from the Chancery Court of Tishomingo County wherein Martha Moore Bonds, complainant/appellant, caused a writ of garnishment to issue against Life & Casualty Insurance Company, who admitted indebtedness to George Mitchell Bonds, defendant/appellee, in the amount of $10,477.28, being the cash value of three separate insurance policies issued to George Bonds. The writ of garnishment was quashed by the chancellor who opined that the cash values of the policies were exempt under Mississippi Code Annotated section 85-3-11 (1972). Aggrieved of this finding, Martha Bonds appeals and we reverse.
On May 24, 1977, George Mitchell Bonds was held in willful contempt of the Chancery Court of Tishomingo County for non-payment of child support and alimony. A judgment was rendered against him in the amount of $21,006.84, in favor of Martha Moore Bonds, his former wife, for child support and alimony.
In an effort to satisfy a portion of the judgment, Martha Bonds subsequently caused a writ of garnishment to issue against Life & Casualty Insurance Company of Tennessee. Life & Casualty answered the writ, admitting it was indebted to George Bonds for the cash value of three policies issued to Bonds, being: (1) No. 853594 with a cash value of $3,509.45; (2) No. 878333 with a cash value of $3,737.60; and (3) No. 1164454 with a cash value of $3,230.23.
In an attempt to quash the writ, George Bonds asserted the cash surrender value of the life insurance policies was exempt pursuant to Mississippi Code Annotated section 85-3-11 (1972). Martha Bonds answered the assertion to the right of exemption, stating that Section 85-3-11 was inapplicable due to the fact that appellee had the right to change the beneficiary at any time. In fact, George Bonds had exercised his right to change beneficiaries several times.
The chancellor found Section 85-3-11 controlling, so he granted Bonds' motion to quash the writ and entered a final decree to that effect. Did the chancellor err in quashing the writ of garnishment?
Mississippi Code Annotated section 85-3-11 (1972) provides:
The proceeds of a life insurance policy up to and including the sum of fifty thousand dollars ($50,000.00), including cash surrender and loan values, shall inure to the party or parties named as the beneficiaries thereof, free from all liability for the debts of the person whose life was insured, even though such person paid the premium thereon. In addition to the above exempted amount, all proceeds including cash surrender and loan values, of a policy of life insurance owned by or assigned to another, shall inure to the beneficiary or beneficiaries named therein, subject to terms of any assignment, free from all liability for debts of the person whose life was insured. (emphasis added.)
Appellant contends this statute is inapplicable to the present case due to the fact that appellee reserved the right to change the beneficiary in each policy; therefore, the beneficiary's interest would not vest until the death of the insured.
This question was well settled by this Court in American Life Insurance Company v. Hauer, 218 Miss. 560, 67 So.2d 523 (1953), the Court stating:
It seems to be settled beyond peradventure that the beneficiary in an insurance policy, where the right to change is reserved, has no vested interest therein until the death of the insured. Lamar Life Insurance Company v. Moody, 122 Miss. 99, 84 So. 135; Bank of Belzoni v. Hodges, 132 Miss. 238, 96 So. 97; Faulkner v. Faulkner, 192 Miss. 358, 5 So.2d 421. (218 Miss. at 565, 67 So.2d at 525) (emphasis added.)
This principle of law applied to this case simply means the cash surrender value is still controlled or owned by Bonds until his death and does not answer the question presented here which is, does Section 85-3-11 exempt the cash surrender value from an action to garnish these funds to partially satisfy a decree for child support and alimony ?
This precise question has not been dealt with to our knowledge in this state; however, this Court in Dreyfus v. Barton, 98 Miss. 758, 54 So. 254 (1910), interpreted what is now Mississippi Code Annotated section 85-3-13 (1972), not the exemption statute involved here, exempting certain proceeds of life insurance policies made payable to the estate or administrator:
The object of this statute is to secure to the insured a policy, not to exceed three thousand dollars, from liability to any creditor for any debt. This statute exempts the whole proceeds, or any part of it, whether the value accrues during the life or after the death of the insured. The cash surrender value of the policy is just as much "proceeds" of the policy, within the meaning of the statute, as would be the full amount after the death of the insured. In other words, when the person insured dies, the proceeds of the policy are exempt; while he lives, if the policy acquires a cash surrender value, this cash surrender value is "proceeds" within the meaning of the statute, and exempt so long as the value in either case does not exceed three thousand dollars. Any other construction of the statute would impair, if it did not destroy in some cases, the object of the statute.
The law recognizes this, and also recognizes the fact that in the main the insurance policy is procured for the benefit of dependents, and undertakes to secure it to them, rather than to creditors. Persons insure, frequently, for the very purpose of building up an estate which cannot be taken for the purpose of paying their debts, and frequently these policies of insurance furnish the only protection to the family of the insured against poverty and want. (98 Miss. at 768, 769, 54 So. at 255) (emphasis added.)
Dreyfus, supra, involved the ordinary contractual obligation by which creditors and debtors are created, not child support and alimony payments that are involved here.
This Court has distinguished the ordinary creditor and debtor relationship from child support and alimony judgments for exemption purposes as early as 1932 in the case of Hollis v. Bryan, 166 Miss. 874, 143 So. 687 (1932), interpreting exemptions under a federal act for world war veterans pertaining to child support and alimony, wherein this...
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