Johnson v. Alexander

• Decision Date: 11 November 1890
• Docket Number: 14,552
• Citation: Johnson v. Alexander, 125 Ind. 575, 25 N.E. 706 (Ind. 1890)
• Parties: Johnson v. Alexander et al
• Court: Indiana Supreme Court

25 N.E. 706

125 Ind. 575

Johnson v. Alexander et al

No. 14,552

Supreme Court of Indiana

November 11, 1890

From the Posey Circuit Court.

Judgment affirmed, with costs.

E. D Owen, for appellant.

W Loudon and F. P. Leonard, for appellees.

OPINION

Olds, J.--

William D. Alexander, in his lifetime, in 1886, procured from the Mutual Life Insurance Company, of New York, a policy of insurance upon his own life for the sum of five thousand dollars, payable at his death to his executors, administrators or assigns. On the 8th day of April, 1887, said Alexander being indebted to Welburn, Rause, Hutchinson & Spencer, in the sum of $ 3,395, with the consent of the company, assigned and transferred by endorsement in writing, said policy of insurance to his said creditors to secure said indebtedness, and delivered said policy to them, taking back from said assignees an agreement, in writing, stipulating that the assignment was made to secure them the amount due from the assignor, and containing an agreement on the part of the assignees to keep up said insurance, and upon the death of said Alexander and the payment to them of the amount due them, with interest, and all premiums paid and expenses incurred on account of said insurance out of said insurance to pay the balance remaining to the heirs of the said Alexander, or to his order, which agreement was signed by the assignees and delivered to Alexander. The said assignees paid the premiums and kept up said policy. William D. Alexander died in September, 1887, without making any other disposition of said policy, or giving any further orders as to the disposition of the proceeds. After the death of said William D. Alexander, Marion Aldrich was, by the Posey Circuit Court, appointed administrator of his estate. The company paid the full amount of the policy, $ 5,000, to the assignees of the policy and the administrator, the assignees receiving the amount due them, and the administrator receiving the residue, $ 1,115.10.

The appellees, the widow and children of said William D. Alexander, and being his sole heirs, file their petition in this case, in the Posey Circuit Court, alleging the facts and asking an order upon the administrator to pay to them the said sum of $ 1,115.10 in his hands so received on said policy; also alleging that appellant, Johnson, claimed to have a lien upon said money by virtue of an execution issued from the circuit court of Posey county for $ 2,500 in his favor.

Appellant demurred to the complaint, which was overruled and exceptions reserved. Appellant, Johnson, also filed an answer and a demurrer was sustained to it, and failing to plead further a judgment was rendered ordering the administrator to pay the money to the appellees.

The administrator does not appeal, but Johnson alone appeals and assigns as error the overruling of his demurrer to the complaint, and the sustaining of a demurrer to his first and third paragraphs of answer.

It is contended on the part of the appellant that there was not such a disposition of the policy as to give to the widow and children, who are the heirs of the deceased, the right to the excess above paying the amount due the assignees; that it was in the nature of a gift to the heirs, and by the terms of the agreement Alexander retained the right to make some other disposition of the surplus and order it paid to other persons, hence the donor did not release all control over the fund, and it did not constitute such a delivery as to make a valid gift; also that the policy having been made payable to the personal representatives of the deceased, Alexander being insolvent, a gift of any portion of it to his heirs is in fraud of his creditors, and, therefore, void. It is upon this theory that it is contended that the court erred in its rulings.

The law favors the making of a reasonable provision by a man for his family, and those who are dependent upon him, and it is not a violation of the statute, and in fraud of creditors for a debtor, though insolvent, to contribute and pay a reasonable amount for insurance for the benefit of his family. In Pence v. Makepeace, 65 Ind. 345 it is held that only on the clearest proof of fraud, if at all, can the premiums paid by an insolvent debtor on a policy of insurance upon his life, for the benefit of his wife and children, be recovered by his creditors, and in no event...