Fearn v. Ward

• Citation: 80 Ala. 555,2 So. 114
• Court: Supreme Court of Alabama
• Decision Date: 02 February 1887
• Parties: FEARN, EX'X, AND OTHERS v. WARD, ADM'R.

2 So. 114

80 Ala. 555

FEARN, EX'X, AND OTHERS v. WARD, ADM'R.

Supreme Court of Alabama

February 2, 1887

Appeal from chancery court, Marshall county.

Bill in equity by creditor to subject proceeds of life insurance by deceased debtor.

The bill in this case was filed on February 7, 1878, by F. P Ward, as the administrator de bonis non with the will annexed of Thomas Fearn, deceased, against Robert T Coles, the administrator of the estate of Robert Fearn deceased, together with his widow, (Eliza Lee Fearn,) his infant daughter, (Kate Coles Fearn,) and James I. Donegan. Its object and purpose was to reach and subject to the satisfaction of a judgment, which the complainant, as administrator of said Thomas Fearn, had paid, and on which said Thomas Fearn was liable only as the surety of said Robert Fearn, certain moneys in the hands of Donegan which had been realized on a policy of insurance on the life of said Robert Fearn, and loaned to said Donegan, on mortgage by the guardian of said Kate Coles Fearn, the sole beneficiary of the policy. The judgment paid by the complainant was rendered by the circuit court of Madison county on April 27, 1871, in favor the personal representative of F. J. Levert, deceased, in a suit commenced in the year 1867, which suit was founded on a bond or promissory note under seal for $1,150, dated July 29, 1857, and payable 12 months after date, and signed by said Robert Fearn and Thomas Fearn, as joint obligors. The bill alleged that Thomas Fearn signed said bond only as the surety of Robert Fearn; that the complainant paid the judgment in full, under execution, on February 19, 1872, and took an assignment of it to himself, as administrator, from the attorneys of record of the plaintiff therein; that the estate of Robert Fearn was declared insolvent on October 18, 1876; and that the complainant had filed said judgment as a claim against said insolvent estate on January 30, 1877. It was further alleged that the policy in favor of Kate Coles Fearn was received by said Robert Fearn on July 18, 1870, in consideration of his surrendering a former policy, which he had effected on his own life on August 7, 1869, in favor of his wife and children, in the Piedmont Real Estate Insurance Company; that he "paid in annual premiums, out of his own means, on said first-named policy, the sum of $204.08, and on said last-named (or substituted) policy the sum of $624.17; and that, at the time of effecting said insurance, and taking out said policies, as aforesaid, and at the time of his death, in March, 1873, said Robert Fearn was largely indebted, and was insolvent, and he effected said insurance, and took out said policies, and paid the annual premiums thereon, with the intent to hinder, delay, and defraud his creditors, and without any valuable consideration therefor, but as a voluntary gift to his said infant daughter;" and that there was no property or assets out of which the complainant could make the amount of money due him on said judgment so paid, except the moneys realized on the said policy of insurance, and loaned by the guardian of said Kate Coles Fearn to said Donegan. The prayer of the bill was "that an account may be taken of what is due to complainant on his said claim against the estate of Robert Fearn, and its payment decreed out of said insurance money, and the property mortgaged by said Donegan be subjected to its payment, and for such other and further relief as the nature of the case may require."

A demurrer to the bill was interposed by the widow, both individually and as guardian of Kate Coles Fearn, and upon the hearing of the same, it was overruled by the court. An appeal was duly taken to the supreme court of the state, in which the action of the lower court was affirmed, (65 Ala. 33;) the said decree of affirmance being made November 17, 1880. The said cause being again upon the docket of the lower court, the death of James J. Donegan and Kate Coles Fearn was suggested, and leave given to file a bill of revivor against William H. Donegan, as administrator of said James J. Donegan, and William H. Donegan, Samuel W. Donegan, Fannie Donegan, and Eliza Lee Fearn, as executrix of Kate Coles Fearn, deceased, which was accordingly done, the said bill being filed July 22, 1881.

William H. Donegan, as administrator of James J. Donegan, deceased, demurred to said bill of revivor on the following grounds: (1) That it was not filed on this court within 18 months after the death of said James J. Donegan, deceased, and that no motion or suggestion was made to revive the suit within the said eighteen months against this defendant as the administrator of said decedent's estate; (2) that it fails to aver or show that the claim here sued on was presented by the complainant to this defendant as administrator as aforesaid, wherefore this defendant says that said claim is barred by the statute of non-claim. Upon the hearing of the above demurrers to the said bill of revivor, they were overruled, and the revival was decreed as prayed for in the bill.

The facts of the case necessary to a full understanding of the issues raised, appear in the opinion of the court. The said cause was submitted for final decree at the November term, 1884, of said court, and a decree was rendered in accordance with the prayer of the original bill, from which this appeal is prosecuted.

Watts & Son, L. Wyeth, and Humes, Gordon & Sheffer, for appellants.

Cabaniss & Ward, contra.

CLOPTON J.

In July, 1873, Eliza Lee Fearn, as guardian of Kate Coles Fearn, received from the Piedmont & Arlington Life Insurance Company about $9,500, being the proceeds of a policy of insurance issued by the company in July, 1870, on the life of Robert Fearn. The policy was payable to Kate Coles Fearn, who was an infant child of the assured. Eliza Lee Fearn loaned $8,000 of the money received on the policy of James J. Donegan, who executed to her a mortgage on real estate to secure the payment of the loan. The bill is brought by appellee, as administrator of Thomas Fearn, to subject the money in the hands of Donegan to the payment of a judgment which was recovered by Eliza Levert, as executrix of Francis Levert, in April, 1871, against Robert Fearn. The judgment was founded on a bond for the payment of money, made by Robert Fearn and Thomas Fearn in 1857, and payable 12 months after date. Complainant, whose intestate was a surety on the bond, paid the demand, and the judgment was assigned to him as such administrator by the attorneys of record of the plaintiff, as authorized by the statute. Robert Fearn died in March, 1873, and his estate has been declared insolvent. The bill alleges and the proof shows a deficiency of legal assets to pay the demand. By section 3418 of the Code, being the statute under which the judgment was assigned, the complainant is authorized to assert in law or equity any lien or right against Robert Fearn, the principal debtor, which the plaintiff in the judgment could assert if the debt had not been paid. A court of equity will intervene at the instance of a creditor, on averment and proof of a deficiency of legal assets, to subject to the satisfaction of his debt property fraudulently conveyed by a deceased debtor in his life-time. Battle v. Reid, 68 Ala. 149; Sharp v. Sharp, 76 Ala. 312.

At the time the policy of insurance was procured, Robert Fearn had a wife and several children living. The policy was issued in favor of only one of his children. When this case was before the court on a former appeal, taken from a decree overruling a demurrer to the bill, (65 Ala. 33,) it was held that the policy is not protected against the claims of creditors by the statute, which authorizes a married woman to cause the life of her husband to be insured for the benefit of herself and her children, free from the claims of the representatives of the husband or any of his creditors. Code 1876, §§ 2733, 2734. It is said: "The policy, in this case, was procured by the husband in favor of one of his several children. The statute designed it for the benefit of the wife and children. It is not, therefore, in compliance with the requirements of the statute, and is not such a policy as justifies the invocation of the statute for its protection." The equity of the bill was sustained, which involved the right of complainant to maintain the suit, and his title to relief, if the allegations were admitted or proved. The case, therefore, must be considered and determined on principles which apply independent of the statute.

The denials of the answers make it incumbent on complainant to prove that the premiums were paid by Robert Fearn with his own funds, and it is insisted that the evidence is insufficient to this end. Positive proof is not required. It may be established by circumstantial evidence. Neither is it incumbent on complainant to show the sources from which he derived the money. The agent of the company testifies that all the premiums were paid by Robert Fearn, either in person or by others for him. He was engaged in cultivating, in partnership with Ferguson, a large plantation from 1866 to 1872, inclusive. Humphrey, the agent of the commission merchants of the partnership, states that he made advances to Fearn, and paid premiums to the insurance company, which were charged to Fearn & Ferguson, and which they shipped cotton to meet. Eliza Fearn, his wife, and Coles, his brother-in-law, and the administrator of his estate, both state, they do not know from what source he derived the money to pay the premiums. The last premium was paid by Humphrey, and charged to Coles. On this evidence, we are forced to conclude, in the absence of opposing or explanatory proof, that Robert Fearn paid with his own funds all the premiums except the last....