In re Churchill
| Citation | 198 F. 711 |
| Parties | In re CHURCHILL. |
| Decision Date | 07 September 1912 |
| Court | U.S. District Court — Eastern District of Wisconsin |
The bankrupt scheduled a policy of insurance in the New York Life Insurance Company for the sum of $2,000, issued to him December 20, 1892. It provided, first, for the payment of $2,000 to his widow, in case of the death of the assured during 'the continuance of this bond policy,' or, in the event of her prior death, to the insured's executors administrators, or assigns; second, that if the death of the assured occur prior to December 8, 1912, and the premiums paid, with interest as stated, exceed the face amount of the bond policy, such excess would be paid as a mortuary dividend. Certain clauses of the policy gave the assured benefits or options as follows:
'If the insured is living on the 8th day of December in the year nineteen hundred and twelve, and if this bond policy is then in force, the premiums having been paid in full to that date the insured shall be entitled to one of the following benefits:
1. The continuanceof this bond policy, which then becomes a paid-up insurance, payable at the death of the insured, together with an annual income during the life of the insured of eighty dollars and . . . cents per annum (being equal to four per cent. of the total amount of annual premiums paid), the first payment of said income to be made to the said insured, if living, on the 8th day of December, nineteen hundred and thirteen, and an equal payment to be made annually thereafter, provided the said insured shall be living when such annual payment becomes due, and, in addition, the conversion of the surplus then apportioned by the company to this bond policy into a life annuity, payable together with the income above guaranteed.
2. The continuance of this bond policy, guaranteeing a paid-up insurance and an annual income as specified in benefit '1,' and the withdrawal in cash of the above-defined surplus.
3. The surrender of this bond policy to the company for its cash value, which is hereby guaranteed shall not be less than two thousand dollars, and which shall, in addition to that amount, include the above-defined surplus.
4. The surrender of this bond policy, and the conversion of its cash value, as above defined, into an annual income during the life of the insured, payable in like manner as provided in benefit '1,' it being hereby guaranteed that the annual amount of such income shall not be less than two hundred and forty-nine dollars and ten cents.
'Provided however, that the insured shall notify the company, in writing, not less than three months before the first-named date above, which privilege is selected, and that, in default of such notice, benefit '1' shall be considered selected.'
In the bankruptcy proceedings the policy is stated to be payable to his wife as beneficiary, and that the interest of the bankrupt therein is of no value. The adjudication occurred September 15, 1910, the policy being in force, 18 annual premiums having been paid.
The bankrupt and his wife made application for an order declaring the insurance policy to be exempt and free from any claim on the part of the trustee, which application the referee denied, but directed the bankrupt to turn over to the trustee the policy of insurance. The order of the referee is brought here for review.
D. L Jones, of Waukegan, Ill., and Peter Fisher, of Kenosha, Wis for bankrupt.
E. E. & E. L. Browne, of Waupaca, Wis., for trustee.
GEIGER, District Judge (after stating the facts as above).
The question is presented whether the insurance policy is property passing to the trustee, to be disposed of for the benefit of creditors, or whether it is exempt under the laws of the state of Wisconsin. The policy, it is conceded, was not of the class referred to in section 70a, subd. 5, of the Bankruptcy Law (Act July 1, 1898, c. 541, 30 Stat. 565 (U.S. comp. St. 1901, p. 3451)), as having a cash surrender value payable to the bankrupt; but the question is whether the policy, if property, comes within the provision of section 6 of the act, allowing the bankrupt to retain the exemptions provided in the state law.
Aside from the question of exemption, insurance policies or bonds, of the character held by the bankrupt, have uniformly been treated as property of the bankrupt, passing to the trustee. In re Welling, 113 F. 189, 51 C.C.A. 151; In re Hettling, 175 F. 65, 99 C.C.A. 87; In re Schofield (D.C.) 147 F. 862; In re Slingluff (D.C.) 106 F. 154; Hiscock, Trustee, v. Mertens, 205 U.S. 202, 27 Sup.Ct. 488, 51 L.Ed. 771; In re Orear, 178 F. 632, 102 C.C.A. 78, 30 L.R.A. (N.S.) 990; In re Coleman, 136 F. 818, 69 C.C.A. 496.
An examination of these cases shows that a liberal construction has been given to the language of the Bankruptcy Act, and the right of the trustee to take the policies has been upheld whether at the time of the adjudication a cash surrender value was obtainable, either by the express terms of the policy, or through a practice or concession of the company issuing the policy, or even where the proof would show that the policy, whatever its terms may be, was salable or capable of transfer in the market. An examination of the policy in question, and particularly the terms relating to benefits or options accruing to or to be exercised by the...
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In re Churchill
...the estate. The order made by the referee accordingly was affirmed by the District Court, on certification of the proceedings for review. 198 F. 711. Fisher, of Kenosha, Wis., for petitioners. Lloyd D. Smith, of Waupaca, Wis., for respondent. Before BAKER, SEAMAN, and KOHLSAAT, Circuit Judg......