Dreyfus v. Barton

Decision Date13 February 1911
Docket Number14823
Citation54 So. 254,98 Miss. 758
CourtMississippi Supreme Court
PartiesISIDORE DREYFUS, TRUSTEE, v. S. K. BARTON

APPEAL from the chancery court of the First district of Hinds county, HON. G. G. LYELL, Chancellor.

Petition by Isidore Dreyfus, trustee, in bankruptcy against Carroll Barton, administrator of the estate of S. K. Barton deceased. Decree for defendant, complainant appeals and defendant takes cross appeal.

The record shows the facts as follows:

S. K Barton filed a petition in bankruptcy on November 28, 1908 having at that time an insurance policy on his life, payable to his estate, in the sum of three thousand dollars, on which he had borrowed the full loan value. The cash surrender value at that time was forty-two dollars. On December 1st, before a trustee had been appointed and before a meeting of his creditors, Barton committed suicide. He left no will. On the 9th day of December Carroll Barton, appellee, was appointed administrator of the estate of said decedent, and the amount of the insurance policy, less the loan, etc., was paid to the administrator. The administrator paid the expenses of last illness and funeral and made proper report to the chancery court, and was ordered to distribute the remainder among the heirs of S. K. Barton, consisting of appellee and his two sisters.

Thereafter appellant, who had in the meantime been appointed trustee in bankruptcy of S. K. Barton, filed his petition in the chancery court, asking that the order of distribution be set aside, claiming that the proceeds of the insurance policy should go to the creditors in bankruptcy of the deceased. When S. K. Barton filed his schedules in bankruptcy, listing his assets, among which this policy appears, and claiming his exemptions, he did not claim the proceeds of the policy in question among his exemptions. It is contended by the appellant that the proceeds of the life insurance company upon the death of the decedent, should be applied to the payment of his creditors. Since, under the law, the bankrupt had the privilege of paying to the trustee the cash surrender value of the insurance policy and retaining it in full force it is contended that, inasmuch as such cash surrender value is the property of the creditors and collectible by the trustee, therefore, upon the death of the bankrupt, the proceeds of the policy likewise inured to the benefit of the creditors, and that, the title of the policy being at the time of the death of the bankrupt in the trustee, the proceeds of the policy immediately vested in the trustee, and could not be divested in favor of his heirs; he having at the time neither wife, nor children, nor others dependent upon him for support.

The chancellor held that the trustee was entitled to forty-two dollars, the cash surrender value of the policy, and that the rest of the proceeds were exempt and not liable for the debts of the decedent, and were properly payable to the administrator for the benefit of the heirs at law.

Reversed

Green & Green, for appellant.

Section 70 of the act provides: "The trustee of the estate of a bankrupt, upon his appointment and qualification 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 said property is exempt," etc.

After some contrariety of opinion upon the subject, the supreme court of the United states has definitely settled the true construction here, and held that the provisions of this section are not exclusive but cumulative, and that in addition to the rights given under the exemption statutes of the state, the additional right provided by this section is given to the bankrupt, whereunder, "When any bankrupt shall have any insurance policy which has a cash surrender value payable to himself, his estate, or personal representatives, he may, within thirty days after the cash surrender value has been ascertained and stated to the trustee by the company issuing the same, pay or secure to be paid to the trustee the sum so ascertained and stated, and continue to hold, own and carry such policy free from the claims of the creditors participating in the distribution, otherwise the policy shall pass to the trustee as assets.

Barton died between the adjudication and the first meeting of his creditors by suicide, the policy had, or would have had, had he not committed suicide, the said value of forty-two dollars, but by reason of his death the total amount thereunder was paid, and the contest is over who is entitled to it, the creditors or his brother and sisters.

It is axiomatic that the trustee but stands in the shoes of the bankrupt; that upon his appointment he is vested with the title to all the property is, we submit, beyond the peradventure of a doubt, and that among the assets so passing was the policy of insurance herein litigated. In re Hottling, 175 F. 65; In re Whipley, 169 F. 1019; In re White, 174 F. 334; In re Moore, 173 F. 681; 1 Remington on Bankruptcy, §§ 1002, 1005; In re Shugluff, 106 F. 154; In re Willing, 113 F. 193; In re State, 98 F. 78; Clark v. Society, 143 F. 175; In re Coleman, 136 F. 818; Fuller v. New York et al., 67 N.E. 879.

But it will doubtless be argued here, as it was in the court below, that there was no right in the trustee at all to these policies, but that the award to the appellant of even that which would have been the cash surrender value, was erroneous. But such contention can find no support in the authorities, which we submit are all in our favor. In re Shugluff, 106 F. 154; Waldron v. Becker et al., 68 N.Y.S. 402; In re Willing, 113 F. 193.

Section 70a declares that there shall be thus vested in the trustee "property which prior to the filing of the petition he could by any means have transferred or which might have been levied upon and sold under the judicial proceedings against him." Then follows the proviso which we have considered. It is clear that this proviso merely defines a certain class of insurance which may be excepted and exempted, by the action of the bankrupt and upon the conditions stated, from the general property which by the law is vested in the trustee. In other words, the proviso is in the nature of a privilege to the debtor to retain such specified insurance upon yielding to the trustee the cash surrender value of the policy at the time of adjudication. All other property of the bankrupt, including all insurance owned by him, which does not fall within the provisions of the proviso, passes to the trustee.

2 May Ins., § 459d; Porter v. Porter, 2 Willson, Civ. Cas. Ct. App., § 434; Cameron v. Fay, 55 Tex. 58; Levy v. Van Hagen, 69 Ala. 17; Tompkins v. Levy, 87 Ala. 263, 6 So. 346, 13 Am. St. Rep. 31; Boyden v. Insurance Co., 153 Mass. 544, 27 N.E. 669; Tennes v. Ins. Co., 26 Minn. 271, 3 N.W. 346; Talcott v. Field, 34 Neb. 611, 52 N.W. 400, 33 Am. St. Rep. 662; Evers v. Assn., 59 Mo. 429, 98 F. 78; Clark v. Society, 143 F. 175; Coleman, 136 F. 818; Fuller v. Fire Ins. Co., 67 N.E. 879; Hettling, 175 F. 65; Whelpley, 169 F. 1019; White, 174 F. 334; Moore, 173 F. 681; McKenzie, 132 F. 986.

Easterling & Manship, for appellee.

Appellee in this case bases his contention upon section 2141 of the Code of 1906, exempting the proceeds of an insurance policy payable to the executor or administrator from the debts of the insured and upon the statutes of the bankruptcy act of 1898, recognizing the exemptions of the state in which the bankrupt lives, stating that the act shall not affect the exemptions allowed by the state in which the bankrupt has his residence and upon the further provision of the act allowing the bankrupt to pay the cash surrender value of a life insurance policy and to continue to own the policy for the purpose of recovering the ultimate proceeds.

Section 2141 of the Mississippi Code of 1906, is as follows:

Under Chapter 48, Titled Exempt Property: "The proceeds of a life insurance policy, not exceeding three thousand dollars (changed to five thousand by the act of 1908) payable to the executor or administrator of the insured, shall inure to the heirs or legatees, freed from all liabilities for the debts of the decedent."

Section 5 of the bankruptcy act 1898 is as follows:

Sec. 5. "This act shall not affect the allowance to bankrupts of the exemptions which are prescribed by the state laws in force at the time of the filing of the petition in the state wherein they have had their domicile for the six months, or the greater portion thereof immediately preceding the filing of the petition."

Section 70 of the act is as follows: "Title to property. (a) The trustee of the estate of a bankrupt, upon his appointment and qualification, and his successor or successors, if he shall have one or more, upon his or their qualification and appointment, shall in turn 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, to all (1) . . . (5) property which prior to the filing of the petition he could by any means have transferred or which might have been levied upon and sold under judicial process against him; provided, that when any bankrupt shall have any insurance policy which has a cash surrender value payable to himself, his estate, or personal representatives, he may, within thirty days after the cash surrender value has been ascertained and stated to the trustee by the company issuing the same, pay or secure to the trustee the sum so ascertained and stated, and continue to hold, own and carry the policy free from the claims of the creditors participating in the distribution of his estate under the bankruptcy proceedings, otherwise the policy shall pass to the trustee as assets."

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11 cases
  • In re Brinson
    • United States
    • U.S. District Court — Southern District of Mississippi
    • 16 Diciembre 1919
    ...($5,000.00) dollars and the excess of the latter only shall be exempt.' Laws 1908, c. 175, in effect February 20, 1908. In Dreyfus v. Barton, 98 Miss. 758, 54 So. 254, Supreme Court of Mississippi held that the cash surrender value was 'proceeds' of a life insurance policy, and exempt under......
  • Penn Mut. Life Ins. Co. v. Henry, Ins. Com'r
    • United States
    • Mississippi Supreme Court
    • 20 Diciembre 1915
    ...insist that the dividends, if received, are to be deducted because they are amounts received in cash under the policy contracts. Dreyfus v. Barton, 54 So. 254; etc. v. Wellington, 113 Mass. 86; Lea v. Cutrer, 51 So. 808; Bishop v. Bishop, 81 Conn. 527; Smith v. Dana, 77 Conn. 543, 548, 556,......
  • In re Henderson
    • United States
    • U.S. Bankruptcy Court — Northern District of Mississippi
    • 15 Julio 1993
    ...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......
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    • United States
    • Mississippi Supreme Court
    • 11 Febrero 1929
    ...to the heirs and legatees, and that no part of it can be claimed as exempt by the insured. This identical contention was made in Dreyfus v. Barton, 98 Miss. 758. In that case, was a petition in bankruptcy filed, the bankrupt listing a life policy of the sum three thousand dollars, which was......
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