Kansas City v. Halvorson

• Citation: 180 S.W.2d 710,352 Mo. 1027
• Decision Date: 05 June 1944
• Docket Number: 38855
• Parties: Kansas City, Missouri, Appellant, v. H. H. Halvorson, Esther E. Halvorson, State Mutual Life Assurance Co., New England Mutual Life Insurance Co., Mutual Life Insurance Co., John Hancock Mutual Life Insurance Co
• Court: United States State Supreme Court of Missouri

180 S.W.2d 710

352 Mo. 1027

Kansas City, Missouri, Appellant, v. H. H. Halvorson, Esther E. Halvorson, State Mutual Life Assurance Co., New England Mutual Life Insurance Co., Mutual Life Insurance Co., John Hancock Mutual Life Insurance Co

No. 38855

Supreme Court of Missouri

June 5, 1944

Appeal from Jackson Circuit Court; Hon. Emory H. Wright Judge.

Affirmed.

William E. Kemp, City Counselor, Arthur R. Wolfe and David M Proctor, Assistant City Counselors, for appellant.

(1) The appellant as creditor of respondent, H. H. Halvorson, the insured, has the right to collect all premiums paid while insolvent on the policies involved in excess of the sum of $ 500 per year paid in premiums under Sec. 5850, R.S. 1939. The Missouri courts have consistently recognized and enforced the rights of creditors under this section and its predecessors. Sec. 5883, R.S. 1939; General Statutes, 1865, Chap. 115, Sec 15; Sec. 5978, R.S. 1879; Sec. 5851, R.S. 1889; Sec. 7895 R.S. 1899; Sec. 6944, R.S. 1909; Sec. 6149, R.S. 1919; Sec. 5739, R.S. 1929; Sec. 5850, R.S. 1939; Charter Oak Life Ins. Co. v. Brant, 47 Mo. 419; Pullis v. Robison, 73 Mo. 201; Kiely v. Hickcox, 70 Mo.App. 617; Judson v. Walker, 155 Mo. 166; Sternberg v. Levy, 159 Mo. 617. (2) In many other states, the courts have uniformly recognized and enforced the rights of creditors of the insured in and to policies on the life of a husband with his wife as beneficiary under state statutes similar to Sec. 5850, R.S. 1939, and announcing the same legislative intent. Sec. 5212, Kirby's Digest (Ark.), 202 S.W. l.c. 241; Davis v. Cramer, 202 S.W. 239; Sec. 7881, Comp. St., Neb., 1922, 215 N.W. l.c. 563; La Borde v. Farmers' State Bank, 215 N.W. 559; Bailey v. Wood, 89 N.E. 147; Statutes of 1894 (Mass.), p. 718, Chap. 522, Sec. 73, 89 N.E. l.c. 148; Statutes (Mass.), 1864, p. 126, Chap. 197; Bailey v. Wood, 89 N.E. 149; Smith's Admx. v. Milton, 171 Ky. 819, 188 S.W. 877; 106 A.L.R. 596-602; In re Brown's Estate, 55 P. 1055; Secs. 690 and 1465, Code of Civil Procedure (Calif.); Kittel v. Domeyer, 67 N.E. 433; Laws (N.Y.), 1896, p. 220, Chap. 272, Sec. 22; Hendrie & Bolthoff Mfg. Co. v. Platt, 56 P. 209; Continental Natl. Bank v. Moore, 83 A.D. 419, 83 N.Y.S. 302, 202 S.W. l.c. 243; Merchants' & Miners' Transportation Co. v. Borland, 53 N.J.Eq. 282, 31 A. 272, 202 S.W. l.c. 244. (3) Sec. 5850, R.S. 1939, gives to appellant, judgment creditor, the privilege of asserting its claim as such during the lifetime of the insured. The language of this statute justifies this conclusion; it contains no implication that a creditor, particularly a judgment creditor must wait until the death of the insured before seeking satisfaction. Mattero v. Central Life Ins. Co., 202 Mo.App. 293; Sec. 5877, R.S. 1939; Bailey v. Wood, 202 Mass. 562, 89 N.E. 149; Kittel v. Domeyer, 67 N.E. 433. (4) In life insurance policies providing for stipulated premiums, the cash value of a paid-up policy or the cash surrender value of policies not maturing until the contingency of death, are assets which may be reached by trustee in bankruptcy for benefit of the insured's creditors. In re Loveland, 200 F. 136; In re Morse, 206 F. 350; U.S. Bankruptcy Act, July 1, 1898, Chap. 541, 30 Stat. 565, U.S. Comp. St., 1901, p. 3451; Remington on Bankruptcy, sec. 1270; Sec. 2, Bankruptcy Act, 11 U.S.C.A., Sec. 11; General Statutes, Kansas, 1901, Sec. 3463; Holden v. Stratton, 198 U.S. 202; Laws of Washington, 1895, p. 336; Bailey v. Wood, 202 Mass. 562, 89 N.E. 149; Levinson v. Greene, 296 F. 598; Sec. 5877, R.S. 1939. (5) There is no obstacle which would prevent a chancellor, after ascertaining all the facts, from determining the total amount of premiums paid in any year in excess of $ 500 and ordering that said excess paid out of the cash value and cash surrender value, shall inure to the benefit of a judgment creditor during the lifetime of the insured. Secs. 608, 617, 618, R.S. 1939.

Ernest D. Martin for H. H. Halvorson and Esther E. Halvorson, respondents.

(1) Demurrers were properly ruled. Kramer v. K.C.P. & L. Co., 311 Mo. 383, 279 S.W. 43; Silverford v. Bank, 128 S.W.2d 1072; Niederberg v. Golluber, 162 S.W.2d 592; Bovard v. Jones, 142 S.W.2d 14; State ex rel. v. Fid. & Dep. Co., 53 S.W.2d 1036; Kiely v. Hickcox, 70 Mo.App. 617; Pullis v. Robison, 73 Mo. 201; Wayland v. Ins. Co., 166 Mo. 221, 148 S.W. 626; Jones v. Ins. Co., 236 S.W. 429; Judson v. Walker, 155 Mo. 166, 55 S.W. 1083; Sternberg v. Levy, 159 Mo. 617, 60 S.W. 1114; Stevenson v. McFarland, 62 Mo. 159, 62 S.W. 695; McPheters v. Ry. Co., 66 Mo. 103; Weil v. Taylor, 43 Mo. 581; Jones v. Huntington, 9 Mo. 249; Anth v. Lehman, 144 S.W.2d 190; 1 C.J. 1101, sec. 264; 23 C.J. 327; 37 C.J., pp. 588, 360, 564, 597. (2) Courts of other states overrule appellant. Chelsea Exchange Bk. v. Travelers' Ins. Co., 160 N.Y.S. 225; Van Dyke Co. v. Moll, 217 N.W. 29; Farmers & Mer. Bk. v. Natl. Life Ins. Co., 161 Ga. 793, 131 S.E. 902; Columbia Bank v. Eq. Life Assur. Co., 80 N.Y.S. 428; Boisseau v. Bass, 100 Va. 207, 40 S.E. 647; Beggert v. Staub, 193 Mass. 77, 78 N.E. 770; Marks v. Eq. Life Ins. Co., 109 A.D. 675; Bank v. Friend, 23 S.W.2d 125; Noe v. Montray, 170 Ill. 169, 48 N.E. 709; Bracewell v. Hughes, 242 N.W. 66; Smith v. Russell, 272 N.W. 121; Frost v. Atwood, 73 Mich. 67, 41 N.W. 96; Drake on Attachments, sec. 551; 37 C.J., pp. 556-564-597. (3) Sec. 5850, R.S. 1939, primarily is an exemption statute which contemplates that the death of policyholders must occur before a creditor can come within, or make any claim under, its provisions, or come into court, or ask any relief while insured is alive. Secs. 5850, 5883, R.S. 1939. (4) Sec. 5883, R.S. 1939, emphatically prohibits rights, funds or benefits of policyholders from being seized, taken or molested, in any manner by anyone in any kind of a suit or proceeding, either legal or equitable. Secs. 5883, 6127, R.S. 1939. (5) There can be no lien in this case. Secs. 5850, 5883, 6127, R.S. 1939; Noe v. Montray, 170 Ill. 169, 48 N.E. 709; Smith v. Russell, 272 N.W. 121; Hayden v. Delay, 16 Ky. 278; Frost v. Atwood, 73 Mich. 67, 41 N.W. 96; Mitchell v. Standard Repair Co., 275 Pa. 328, 119 A. 410; Bracewell v. Hughes, 242 N.W. 66; People's Electric Co. v. McKeen, 214 F. 73; 37 C.J. 312.

Samuel D. Newkirk and Henry I. Eager for The Mutual Life Insurance Company of New York and John Hancock Mutual Life Insurance Company respondents; Michaels, Blackmar, Newkirk, Eager & Swanson of counsel.

(1) Appellant was not entitled to the amount of the premiums paid by H. H. Halvorson in excess of $ 500 per year, if any, and the trial court correctly sustained the demurrers to plaintiff's amended petition: Because there is no allegation in the amended petition that appellant was an existing creditor of H. H. Halvorson at the time any of the premiums were paid nor is there any allegation that Halvorson paid any of the premiums with the intent to defraud the appellant as a subsequent creditor. Coleman v. Hagey, 158 S.W. 829, 252 Mo. 102; Clapp v. Kenley, 210 S.W. 10, 277 Mo. 380; Heineman v. Marshall, 92 S.W. 1131, 117 Mo.App. 546. (2) Because if appellant was in a position to claim the amount of the alleged excess premiums, such amount could only be collected out of the proceeds of the policies, if and when such proceeds become payable. Appellant does not claim there is anything now due or payable on the policies. The insured is living and appellant does not allege that the policies have matured, nor that the insured has elected to take the cash surrender value, in fact, appellant does not allege that there is any cash surrender value under the policies. The insurance companies are not now obligated to pay any amount on the policies and may never be and there is no fund out of which the amount of the alleged excess premiums can be paid and there may never be any such fund. Sec. 5850, R.S. 1939; Sternberg v. Levy, 159 Mo. 617, 60 S.W. 1114; Farmers & Merchants Bank v. Natl. Life Ins. Co., 161 Ga. 793, 131 S.E. 902, 44 A.L.R. 1184; Van Dyke Co. v. Moll, 241 Mich. 255, 217 N.W. 29, 57 A.L.R. 692; First Natl. Bank of Burkburnett v. Friend, 23 S.W.2d 482; United States v. Pennsylvania Mut. Life Ins. Co., 130 F.2d 495; United States v. Mass. Mut. Life Ins. Co., 127 F.2d 880; Columbia Bank v. Equitable Life Assur. Society, 80 N.Y.S. 428; Chelsea Exchange Bank v. Travelers' Ins. Co., 160 N.Y.S. 225; Boisseau v. Bass's Administrator, 100 Va. 207, 40 S.E. 647, 57 L.R.A. 380. (3) The allegations of the amended petition are insufficient to state a cause of action under Section 5850, R.S. 1939, and there is no merit in appellant's contention that under said section appellant can assert its claim during the lifetime of the insured. Sec. 5850, R.S. 1939; United States v. Massachusetts Mut. Life Ins. Co., 127 F.2d 880; Sec. 70 of the Bankruptcy Act of 1898, 9 Remington on Bankruptcy (5th Ed.), p. 899. (4) A trustee in bankruptcy has greater rights and powers than a judgment creditor, in respect to the life insurance policies of the debtor, and the bankruptcy cases cited by appellant under point IV in its brief have no application here. Sec. 70 of the Bankruptcy Act with Amendments to July 28, 1939, 9 Remington on Bankruptcy, (5th Ed.), p. 1101; 11 U.S.C.A. 110, Sub. a(3). (5) There is no merit in appellant's contention under its point (5) that the court may order that the excess premiums shall inure to the benefit of a judgment creditor during the lifetime of the insured. Sec. 5850, R.S. 1939.

Lathrop, Crane, Reynolds, Sawyer & Mersereau for State Mutual Life Assurance Company and New England Mutual Life Insurance Company respondents.

The court did not err in sustaining the defendants' demurrers to plaintiff's first amended petition, because plaintiff has no claim to any interest in the...