In re Steele

• Decision Date: 12 December 1899
• Citation: 98 F. 78
• Parties: In re STEELE et al.
• Court: U.S. District Court — Southern District of Iowa

98 F. 78

In re STEELE et al.

United States District Court, S.D. Iowa, Eastern Division.

December 12, 1899

W. J Roberts and Hillhouse Buel, for creditors and trustee in bankruptcy.

W. B Collins, for bankrupts.

SHIRAS District Judge.

From the record certified to the court in this case it appears that the firm of Steele & Co., and the partners therein, Anna M. Steele, Daniel Steele, William M. Steele, and Daniel H Steele, have been duly adjudged bankrupts in this district and, in the proceedings had before the referee, the question arose as to the rights of the creditors represented by the trustee in certain policies of life insurance held by the bankrupts, and from the ruling made by the referee an appeal has been taken to this court. It appears from the evidence that Anna M. Steele is the wife of Daniel Steele; that Daniel, William M., and Daniel H. Steele are and were, when the proceedings in bankruptcy were instituted, heads of families, and were then, and are now, citizens and residents of the state of Iowa. Of the policies in question, three are on the life of Daniel Steele, two on the life of William M. Steele, and one on the life of Daniel H. Steele.

Under the broad provisions of section 1805 of the Code of Iowa, none of these policies could be now subjected to process in favor of creditors, or be rendered available to the creditors by proceedings other than those instituted under the bankrupt act; and, as the policies are exempt from liability to creditors by this provision of the state statute, it is earnestly contended that they must be held exempt in the bankruptcy proceedings by reason of the declaration contained in section 6 of the bankrupt act, to the effect that the act shall not affect the allowance to a bankrupt of the exemptions which are prescribed by the state laws in force at the time of the filing of the petition. In the case of In re Lange (D.C.) 91 F. 361, I held that the general provisions of section 6 of the act were limited and controlled by the exception contained in section 70, and that, construing the two sections together, it must be held that, where a bankrupt held a policy payable to himself, his heirs or legal representatives, the surrender value thereof would be part of the assets of his estate in bankruptcy.

While I freely admit that the question is not free from doubt, I shall adhere to the view expressed in the Lange Case of the meaning of the statute; and therefore the remaining question is, what is the result of the application of this rule to the policies involved in this case?

The policy issued by the Mutual Benefit Life Insurance Company upon the life of Daniel Steele, numbered 109,795, for the sum of $2,000, is payable to Daniel Steele, his executors, administrators, or assigns.

The surrender value of this policy is payable to the bankrupt, no other person having any interest in the policy or its...