In re Seldon, 45720.

• Decision Date: 19 February 1945
• Docket Number: No. 45720.,45720.
• Parties: In re SELDON.
• Court: U.S. District Court — Eastern District of New York

58 F. Supp. 843

In re SELDON.

No. 45720.

District Court, E. D. New York.

February 19, 1945.

Ernest I. Shapiro, of New York City, for bankrupt.

Henry W. Parker, of New York City, for trustee.

GALSTON, District Judge.

These are cross-motions which relate to an order of the referee holding that the trustee in bankruptcy is entitled to recover the sum of $2,063.69 paid to the Equitable Life Assurance Society and the Metropolital Life Insurance Company, to increase the cash surrender values of policies issued by those companies on the life of the bankrupt. The order recites that those payments were made in fraud of, and with intent to hinder, delay and defraud creditors. The facts may be briefly stated:

On April 30, 1929, the Morris Plan Company of New York obtained a judgment against the bankrupt in the amount of $535. Prior thereto, on February 18, 1925, the Metropolitan Life Insurance Company had issued a life insurance policy in the amount of $5,000 upon the life of the bankrupt, the wife, Annette Seldon, being named as beneficiary. On October 15, 1929, the Equitable Life Assurance Society issued its policy of $10,000 upon the life of the bankrupt, the wife also being named beneficiary in this policy.

At various times during the years 1936 and 1937 the bankrupt borrowed monies from the two insurance companies on these policies. In all, the sum of $1,150 was thus advanced by the Metropolitan Life Insurance Company, and $1,105.98 by the Equitable Life Assurance Society.

At the hearing before the referee the bankrupt was called as a witness by the trustee. He testified that his wife was and had been doing business under the trade name Acme Hat Company, and that the monies which he borrowed from the insurance companies he gave to his wife to enable her to operate the business of that company. He was asked:

"Q. Did you lend that money to your wife? A. I lent it or gave it to her; I don't know what difference it makes. My wife needed it and I took it out and gave it to her, and she repaid it later."

Continuing, the bankrupt testified that she repaid the loan by direct payments to the insurance companies. It also appears that on November 19, 1940, he had the principal sum of the Equitable policy reduced from $10,000 to $5,000, and at the time of the reduction he obtained a check from the Equitable Life Assurance Society for $729.60, which he endorsed and delivered to the Metropolitan Life Insurance Company.

The bankrupt testified that premiums on the policies were paid by his wife, and that all repayments of loans made on the policies, with the exception of the check just mentioned, were made by his...