In re Heilbron's Estate

• Decision Date: 21 May 1896
• Citation: 45 P. 153,14 Wash. 536
• Court: Washington Supreme Court
• Parties: IN RE HEILBRON'S ESTATE. v. FAY ET AL. [1] GUARANTEE LOAN & TRUST CO.

45 P. 153

14 Wash. 536

IN RE HEILBRON'S ESTATE.

GUARANTEE LOAN & TRUST CO. v. FAY ET AL. ^[1]

Supreme Court of Washington

May 21, 1896

Appeal from superior court, King county; J. W. Langley, Judge.

Petition by the Guarantee Loan & Trust Company, a corporation, against George F. Fay and another, executors of George H. Heilbron in the matter of the estate of George H. Heilbron. From a judgment for petitioner, defendants appeal. Reversed.

R. C Strudwick, for appellants.

Preston & Albertson, for respondent.

GORDON J.

This action was tried in the superior court for King county, and findings of fact and conclusions of law were duly made. No exceptions were taken to any of the findings of fact, and it appears therefrom that the appellants are executors of the last will of one George H. Heilbron, who died on the 5th of April, 1895, leaving in force two life insurance policies issued to him in April, 1889, by the Equitable Life Insurance Society of the United States, each of said policies being for the sum of $5,000 payable to his executors in case of his death. All of the premiums upon said policies were paid by the said George H. Heilbron. After the probate of the will of the deceased the amount of said policies was paid to the appellants as such executors. By the terms of his will the said George H. Heilbron bequeathed to his brother, W. C. Heilbron, the sum of $5,000. Other legacies were bequeathed, aggregating an additional sum of $3,500. On June 27, 1895, the said W. C. Heilbron assigned and transferred to the respondent, the Guarantee Loan & Trust Company of Seattle, the whole of said legacy of $5,000. The ninth finding of the court was as follows: "That the said George H. Heilbron, in his lifetime, and prior to March 20, 1895, made, incurred, and contracted many bona fide debts and obligations to various and sundry creditors. That said debts and obligations are still outstanding, wholly unpaid, and in full force and effect; and that the said creditors have filed their said claims, duly verified, as required by law, and the same have been allowed, with said respondents, and are demanding of said respondents the payment of their said demands from the assets of the estate of said George H. Heilbron, including the ten thousand dollars of insurance money mentioned in said petition. That the number and amount of said demands, debts, and obligations is such that all the assets which have come into the hands of said respondents, or which will come into the hands of said executors, including the ten thousand dollars of insurance money mentioned in said petition, will be required to pay off and discharge said debts and obligations, if said funds are applied to their payment; and if said legacies are paid by said respondents out of said insurance money it will result in depriving the said creditors of the payment of a portion of their said debts." The respondent, as assignee of the legacy bequeathed to the said W. C. Heilbron, having demanded of the executors (appellants) payment thereof out of said insurance fund in their hands, instituted the present proceeding, claiming that the fund derived by the executors from said life insurance was exempt from any and all debts of the deceased by virtue of the act of March 20, 1895, which is as follows: "That the proceeds or avails of all life insurance shall be exempt from all liability for any debt." Laws 1895, p. 336. The lower court concluded as matter of law "that said insurance fund of ten thousand dollars in the hands of said executors is exempt from all liability for any debt of said George H. Heilbron, deceased, and that said petitioner, the Guarantee Loan & Trust Company, is, as the assignee of said W. C. Heilbron, entitled to be paid by said executors, out of said fund of ten thousand dollars, the sum of five thousand dollars, bequeathed by said will to said W. C. Heilbron, and by him assigned to said petitioner as aforesaid," and entered an order and decree accordingly, from which this appeal was taken.

Upon the part of appellants it is argued that the order and decree cannot be sustained without giving retrospective effect to the statute above set out, and that the legislature did not intend that it should operate upon insurance effected or indebtedness contracted prior to its passage; and that, if it should be considered that the act in question was intended to operate retroactively, and to exempt the proceeds of life insurance in effect at the date of its enactment from liability for indebtedness contracted prior to that time, then, that the act is unconstitutional, in that it impairs the obligation of a contract. Section 10, art. 1, of the federal constitution provides: "No state shall pass any law *** impairing the obligation of a contract;" and section 23, art. 1, of the constitution of this state provides that "no law impairing the obligation of contracts shall ever be passed." It is objected by respondent's counsel that it does not appear from the record that the debts in question were contracted subsequently to the issuance of the policies. We are disposed to regard this objection as technical merely, and not warranting serious consideration, inasmuch as it affirmatively appears that the policies were issued in the year 1889,-six years prior to Mr. Heilbron's death,-and, while the precise nature and character of the indebtedness does not appear upon the record, it is stated in the ninth finding that there were outstanding at the date of his death "many bona fide debts and obligations to various and sundry creditors," from which we think it is fairly to be presumed that some, at least, of said debts were contracted within six years prior to his death, especially in view of our statute of limitations.

Upon behalf of respondent it is contended that the statute under consideration was intended to apply "both to antecedent policies and antecedent debts," and it becomes necessary to consider whether, so construing it, the act conflicts with the constitutional provisions above set out. Statutes of this character are founded on charity. They are remedial, and partake of the nature of, but are not strictly, exemption laws. Cole v. Marple, 98 Ill. 58; Fearn v Ward, 65 Ala. 33. And we may add that such laws should be liberally construed for the purpose of effecting the object intended. It is manifest that the fund derived from the insurance company is liable for the payment of the indebtedness owing by said Heilbron at the time of his death, unless the act of the legislature in question operates to render said fund exempt. The rule is well settled that a policy of life insurance and the money to become due under it belong from the moment the policy is...