In re Coleman
| Decision Date | 20 March 1905 |
| Docket Number | 26. |
| Citation | 136 F. 818 |
| Parties | In re COLEMAN. |
| Court | U.S. Court of Appeals — Second Circuit |
The following is the opinion of the court below:
The three policies, each for $10,000, issued by the New York Life Insurance Company on January 30, 1901, in the very nature of the contract, had no cash surrender value, and, in fact, had none at the time of the adjudication of Coleman as a bankrupt on November 20, 1902. Mr. Howard, officially connected with the insurer, testified that on January 30, 1903, each policy would have a paid-up value of $1,000, and could be used by the company as collateral for a loan to the extent of $869.90. While the policies could not be converted into values on the day of adjudication, November 20, 1902, yet without further payment, they would, on January 30, 1903 have a certain surrender value for paid-up insurance, and a certain value as collateral security by the company. They had an inchoate value. Thus each policy has a substantial value as property, and the trustee is entitled to the benefit of it. Therefore he may take the $750 deposited in court in lieu of the three policies.
Section 70, subd. 5 (Act July 1, 1898, c. 541, 30 Stat. 565 (U.S.Comp.St. 1901, p. 3451), contains a proviso which is intended to modify the right of the trustee to take title to policies by enabling the bankrupt to retain policies that have a cash surrender value by paying the amount thereof to the trustee. This is a privilege conferred upon the bankrupt respecting the class of policies that have an ascertainable cash value. In such case the rights of the parties are specifically stated. The value of such a policy is easily ascertainable, and the bankrupt is given an opportunity to pay the ascertained value and keep the policy. This peculiar favor to the bankrupt is a limitation upon the trustee's right, but the proviso is not to be regarded as the sole grant of power to the trustee to take policies not exempt. The trustee's capacity to take this and other property is found in the portion of the statute, whereby he is vested with the title to all 'property which, prior to the filing of the petition, he (bankrupt) could by any means have transferred or which might have been levied upon or sold under judicial process against him. ' This is sufficiently comprehensive to carry to the trustee the policies in question. If a tontine policy have but a day to run after the adjudication in bankruptcy, the trustee should not be deprived of it because it has no technical cash surrender value. It is difficult to conceive that Congress so intended. Indeed, the evidence of Mr. Howard shows that the New York Life Insurance Company does not issue at present policies that have a cash surrender value. If that be the practice of other companies, an intended bankrupt could withhold his property from his creditors in bankruptcy by investing it in insurance, if the bankrupt's present contention prevail. The proviso in question was an exception, intended to be helpful to the bankrupt in a certain class of cases, and the only class which Congress could regulate definitely, and it may not be used to defeat the right of the trustee to any policies save those subjected to specific treatment. The contention made by the bankrupt would convert a proviso into a restricted grant of power, rather than a qualification of such grant, and make the exception more effectual than the body of the statute.
The final inquiry relates to the policy for $5,000 issued May 26 1900, by the Equitable Life Assurance Society, upon the bankrupt's life, payable to his wife, Ida M. Coleman, if living at the assured's death, and, if not, then to the assured's executors, administrators, or assigns. This policy was issued on January 30, 1870, for the benefit of the bankrupt's first wife, and presumably inuring to him upon her death. The premium stipulated is $99.45 per annum. The insurer will pay voluntarily, but by no obligation, $939.43 for the policy, but very properly requests a release from the bankrupt and his wife. There is no evidence that the husband's contingent interest has any value, and, if ordered sold by the court, will be open to the hazard of bringing a nominal price, like other unmarketable or worthless assets. But that furnishes no sufficient reason for denying the trustee's title. It would be the duty of the court to arrange for its disposition in such manner as not to oppress either the bankrupt or his...
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... ... change the beneficiary, and endowment or tontine policies ... payable to the bankrupt, if living when it matures, but in ... case of his death to some member of his family, have all been ... held to pass to the trustee of the bankrupt. In re ... Coleman, 136 F. 818, 69 C.C.A. 496; In re ... White, 174 F. 333, 98 C.C.A. 205, 26 L.R.A.(N.S.) 451; ... In re Orear, 178 F. 632, 102 C.C.A. 78, 30 ... L.R.A.(N.S.) 990. That vested remainders pass to the trustee ... seems to me beyond question. In re Arden (D.C.) 188 ... The ... ...
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...having no cash surrender value would not pass to the trustee in bankruptcy. We think it sufficient to say, as held in Re Coleman, 136 F. 818, 69 C. C. A. 496, that where policies, as will be here presumed, have a collateral loan value, or a paid-up insurance value, the same will pass to the......
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Burdett v. Burdett
...in question having no cash surrender value would not pass to the trustee in bankruptcy. We think it sufficient to say, as held in Re Coleman, 136 F. 818, 69 C. A. 496, that where policies, as will be here presumed, have a collateral loan value, or a paid-up insurance value, the same will pa......