Hendrie & Bolthoff Mfg. Co. v. Platt

• Decision Date: 13 February 1899
• Citation: 13 Colo.App. 15,56 P. 209
• Parties: HENDRIE & BOLTHOFF MFG. CO. v. PLATT.
• Court: Colorado Court of Appeals

56 P. 209

13 Colo.App. 15

HENDRIE & BOLTHOFF MFG. CO. v. PLATT.

Court of Appeals of Colorado

February 13, 1899

Appeal from district court, Arapahoe county.

Action by the Hendrie & Bolthoff Manufacturing Company against Sarah S. Platt. There was a judgment for defendant, and plaintiff appeals. Affirmed.

R.D Thompson and Harvey Riddell, for appellant.

Westbrook S. Decker, for appellee.

WILSON J.

This is an action brought by a creditor of a deceased insolvent for the purpose of subjecting to the payment of the latter's debts the funds realized from life and accident insurance taken and carried by the latter in favor and for the benefit of his wife, who is the defendant. James H Platt died on August 13, 1894, and his estate was found to be insolvent. The complaint charges: That, while insolvent, the said Platt carried upon his life, and obtained, life and accident insurance, in favor of the defendant, as follows, to wit: A policy of life insurance, for $25,000, in the New York Life Insurance Company of New York, dated January 9, 1890 No. 344,968, with an annual premium of $1,540, payable annually; another policy of life insurance, for $15,000, in the New York Life Insurance Company of New York, dated June 29, 1893, No. 548,481, with a semiannual premium of $391.20 payable semiannually; another policy of life insurance, for $20,000, in the Massachusetts Benefit Association of Boston, Mass., dated, to wit, ______, 1890, with an annual premium of $400, payable annually; another policy of life insurance, for $10,000, in the Provident Savings Life Assurance Society of New York, dated, to wit, A.D.1887, with an annual premium of $275, payable annually; a policy of accident insurance, for $10,000, in the Travelers' Insurance Company of Hartford, Conn., dated, to wit, November 17, 1893, with an annual premium of $50, payable annually; another policy of accident insurance, for $10,000, in the Fidelity & Casualty Company of New York, dated, to wit, A.D.1890, with an annual premium of $42, payable annually; another policy of accident insurance, for $5,000, in the Preferred Accident Insurance Company of New York, dated, to wit, about A.D.1887, with an annual premium of $12 per annum, payable annually; another policy of accident insurance, for $5,000, of the United States Mutual Accident Association of New York, dated about A.D.1887, with an annual premium of $15 per annum, payable annually; another policy of accident insurance, for $10,000, of the Standard Accident Insurance Company of Michigan, dated about December, 1892, with an annual premium of $42, payable annually. That all of said insurance had been paid to the defendant. That at the times during which the indebtedness to plaintiff was incurred, and while the assured was insolvent, he paid out of his own means and money the premiums on the policies taken out prior to said indebtedness; and that "said payments were made for the purpose of placing so much of his means, also the moneys, that upon his death should be payable to this defendant under the said policies, beyond the reach of this plaintiff, for the purpose of hindering and delaying and defrauding this plaintiff in the collection of the moneys owing them." That the moneys advanced for premiums on the policies between May 27, 1893, and May 31, 1894, were taken from the capital and business of said Platt, and impaired his ability to meet his just debts, and tended to impair the successful operation of said business, as he, the said Platt, and this defendant, well knew. The answer of the defendant denied, inter alia, that any insurance was effected or any premiums paid during the insolvency of the assured, and alleged that, at all the times of such payments, he was wholly solvent. The answer further alleges that, at the time of his death, the deceased was indebted to defendant in a large sum of money, which she had loaned to him about the time of their marriage, in 1884, long prior to the contracting of this indebtedness, and to any charge of insolvency, and that to insure her against the loss of said money, and also for her support and the support of their children, the deceased had agreed to keep his life fully insured in her behalf. It appeared upon the trial that the policy of insurance for $10,000 in the Provident Savings Life Assurance Society of New York was not in favor of the defendant, but that the beneficiary therein was one Sarah A. Keeney, who was a creditor of the decedent, and who had collected the insurance due upon the policy, and, after deducting therefrom the amount of the debt owing to her, had paid the balance to the defendant as executrix, and that the same had been accounted for to the estate of decedent. This balance, amounting to something over $6,000, was credited by the defendant to the estate, and applied to the payment of its debts, she therefore receiving no benefit from it. This policy is therefore eliminated from the consideration of this case. Excluding this, it will be seen that the amount received by defendant on account of life policies was $60,000, the policies on $45,000 of which had been taken in 1890, long prior to the contracting of the indebtedness to plaintiff, and to any attempted proof of insolvency. On account of policies for accident insurance, the defendant received $40,000, the policies for all of which, except $10,000, were issued long prior to the indebtedness to plaintiff. The annual premiums required to be paid on all the policies was, in the aggregate, about $2,500, of which $161 paid the annual premiums on all of the accident policies. At the time when this insurance was effected, there were dependent upon the deceased for support his wife, the defendant, and two daughters, one the child of a former marriage.

The questions presented for determination are those of first impression in this jurisdiction, and, it is scarcely necessary to say, are also of first importance. Impressed with this fact, the court has given to them the most thorough consideration, examination, and study, in which work we have been most materially aided by the able, thorough, and exhaustive arguments of counsel on both sides.

In the examination of the question as to how far, in the absence of statute, the fund realized from insurance upon the life of an insolvent debtor can be made chargeable with his debts, we are not aided by a very large number of authorities upon the direct proposition. There are, however, a number of well-considered cases in which the question, in its varying phases as presented, has been considered and determined. The absence of a great number of cases bearing upon the question may be accounted for by the fact that in the great majority of states the question is expressly regulated by statute. In this state, however, there is no statute, except in regard to insurance on the assessment plan. As to the fund realized from this character of insurance only, it is provided by the statute that it shall not be liable for the debt of any certificate holder or beneficiary named therein. Laws 1887, p. 289, § 10.

By the authorities which have adjudicated the question independent of statute, we find three distinct propositions announced First. That, in the absence of actual fraud, the fund derived from insurance upon his own life by an insolvent debtor in favor of his wife or child or children, dependent upon him, cannot be reached by his creditors, and made subject to the payment of his debts, except, possibly, in certain contingencies, which we will hereafter discuss, the amount of the premiums paid by the insolvent debtor during insolvency. In support of this doctrine, either in whole or in part, are Bank v. Hume, 128 U.S. 195, 9 S.Ct. 41; Appeal of Elliott's Ex'rs, 50 Pa.St. 75; AEtna Nat. Bank v. United States Life Ins. Co., 24 F. 770; Bank v. Hume, 3 Mackey, 360; In re Anderson's Estate, 85 Pa.St. 202; Pence v. Makepeace, 65 Ind. 345; Pinneo v. Goodspeed, 120 Ill. 536, 12 N.E. 196; State v. Tomlinson (Ind.App.) 45 N.E. 1120; Holmes v. Gilman, 138 N.Y. 369, 34 N.E. 205; Stigler's Ex'x v. Stigler, 77 Va. 163; 2 Bigelow, Frauds, p. 129. To this effect in principle are, also, Forrester v. Gill, 11 Colo.App. 410, 53 P. 230; McLean v. Hess, 106 Ind. 555, 7 N.E. 567. Another doctrine supported by some authority is that the procurement of such insurance by an insolvent is a voluntary conveyance or gift, which is void as to existing creditors, though no fraud may have been intended, and that the whole of the insurance would be subject to the debts of the insured. The principal authorities in support of this doctrine to which we have been cited seem to be Fearn v. Ward, 80 Ala. 555, 2 So. 114, Transportation Co. v. Borland, 53 N.J.Eq. 282, 31 A. 272, and Stokes v. Coffey, 8 Bush, 533. Another line of authorities holds that in such cases the amount of the premiums paid by the insolvent, and that alone, of the proceeds, can be reached by his creditors. We think that the weight of authority is in favor of the doctrine announced by the first line of authorities, and that it is better sustained upon reason and upon principle. The reasoning by which the courts holding to this view support their conclusions commends itself most highly to our judgment. In the first place, it is undoubtedly the law, as held almost if not quite universally, that the policy is the contract of insurance, and that, the moment it is issued, its ownership vests in the beneficiary. The applicant for it, and he who paid the premium which secured it, cannot thereafter change, assign, alienate, or incumber it, or any rights to be secured under it, upon compliance with its provisions. He cannot even defeat it by a refusal to pay the subsequent premiums required, if the beneficiary or any person for her pays them. The...