In re Wright
| Decision Date | 07 November 1907 |
| Docket Number | 55. |
| Citation | 157 F. 544 |
| Parties | In re WRIGHT. |
| Court | U.S. Court of Appeals — Second Circuit |
J. A Van Arsdale, for petitioner.
Charles P. Norton, for respondent.
Before LACOMBE, COXE, and NOYES, Circuit Judges.
The bankrupt is a party to a contract with a life insurance company, under which he is appointed its managing agent, and in addition to commissions for writing new policies, receives commissions upon renewal premiums. The contract has several years to run, and the bankrupt's interest in renewals upon policies in force at the time of the bankruptcy amounts to about $5,000 a year. The contract is terminable by the company in case the agent fails to comply with its conditions, or the business is unsatisfactory. Upon such termination the interest of the agent ceases. The company agrees to maintain an office and provide a cashier for the purpose of collecting premiums. In case the agent dies, the company pays to his widow, if living, otherwise to his estate, the renewal interest for five years less a collection charge. In case of withdrawal from the territory the agent is entitled to his renewal interest during the term of the contract, provided he continue in the company's service. A creditor applied to the referee in bankruptcy for an order directing the bankrupt to assign this contract to the trustee. The referee declined to make the order, but certified the following question to the District Court: Whether the interest of the bankrupt in the commissions on renewal premiums accrued since the bankruptcy, pursuant to the terms of the contract between him and such life insurance company, was property which, at the time of such bankruptcy, he could by any means have transferred without the consent of the company, or which might have been levied upon and sold under judicial process against him, and also without such consent. The District Court answered this question in the affirmative.
Section 70 of the bankrupt act (Act July 1, 1898, c. 541, 30 Stat 565 (U.S. Comp. St. 1901, p. 3451)) provides that the trustee shall be vested with 'the title of the bankrupt, as of the date he was adjudged a bankrupt, except so far as it is property which is exempt to all * * * (5) Property which prior to the filing of the petition he could by any means have transferred or which might have been levied upon and sold under judicial process. ' The question briefly stated is, therefore, whether the bankrupt's interest in the renewal premiums under the contract was property which he could by any means have transferred.
At the outset, it is apparent that these interests are of substantial value: (1) To the bankrupt. He will receive $5,000 a year from them, and, according to his own testimony, more than three-quarters of the renewal premiums are paid upon mere notice. (2) To the bankrupt's widow or his estate. They will receive the renewal commissions in case of the bankrupt's death less a small collection charge. (3) To the insurance company. Manifestly the company could afford to pay well for a release from the renewal provisions of the contract. So we have interests accruing under a contract which are of value to the insurance company and to the bankrupt and his estate. The only question is whether they are available for the payment of the bankrupt's debts.
Now, it is of little importance whether the bankrupt and the insurance company, jointly or separately, might interfere with the trustee in realizing upon these interests. If they are property which can by any means be transferred, the creditors of the bankrupt are entitled to the benefit of them, however little they may bring. Marketability and assignability are quite distinct. Upon the face of the papers it would seem that the bankrupt had an interest in this contract which should be made available for the payment of his debts. Courts should not be swift to find reasons why creditors should not receive the benefit of all a bankrupt's assets. But...
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