Kimball v. Cunningham Hardware Co.

• Decision Date: 16 November 1916
• Docket Number: 1 Div. 909
• Citation: 73 So. 323,197 Ala. 631
• Parties: KIMBALL et al. v. CUNNINGHAM HARDWARE CO. et al.
• Court: Alabama Supreme Court

73 So. 323

197 Ala. 631

KIMBALL et al. v. CUNNINGHAM HARDWARE CO. et al.

1 Div. 909

Supreme Court of Alabama

November 16, 1916

Rehearing Denied Dec. 21, 1916

Appeal from Chancery Court, Mobile County; Thomas H. Smith Chancellor.

Bill by the Cunningham Hardware Company and others against Mary E Kimball and others. From decree for complainants, respondents appeal. Affirmed.

A bill seeking to subject nonexempt life insurance policies to deceased husband's debts properly sought the removal of the administration of his estate into the chancery from the Probate Court notwithstanding the administrator had filed a report in the Probate Court.

By the bill, complainants, creditors of the estate of Lee E Kimball, deceased (parties respondent being Mary E. Kimball, widow of said deceased, and L.R. Kimball, administrator of said estate), seek to subject the proceeds of certain insurance policies on the life of said Lee E. Kimball.

The bill alleges that Lee E. Kimball died intestate on August 12, 1912; that his estate was insolvent, the indebtedness being in excess of $27,000, and assets less than $10,000; that said Kimball carried insurance payable to his wife in the sum of $55,000, all of which was collected and appropriated to her own benefit; that Kimball was insolvent at the time of his death, and that his estate is wholly insolvent unless the proceeds of the insurance policies payable to his wife be held subject to the payment of his debts; that complainants are creditors of said estate, and their claims were properly filed in the probate court.

It is further alleged that the insurance on the life of deceased was evidenced by several policies, each of which contained a stipulation whereby the company undertook and bound itself to pay certain amounts to the insured, personally, at his option, at the expiration of a given number of years after issuance of the policy; that by the terms of the policy such payments were to be in commutation or satisfaction of the contract of insurance, and that the premiums on the policies were paid by said Lee Kimball during his lifetime; that the stipulation in the policies by which the insured was to receive certain payments at the expiration of given periods was the reservation to him of such a benefit as would render the transaction fraudulent as to his creditors, and subject to the payment of his debts that portion of the proceeds of the policies not exempt to the widow.

It is further averred in paragraph 6 1/2 of the amended bill that the annual premiums on all of said insurance policies largely exceeded the sum of $750 per annum; that the amount of insurance on the insured which an annual premium of $750 would purchase as an ordinary life policy in a standard company would not exceed $30,000, and therefore that a large amount of said insurance, to wit, the sum of $25,000, did not fall within the exemption allowed by section 4502 of the Code and was subject to the payment of the debts of the deceased.

It is further alleged in the amended bill that Mary E. Kimball, the widow, is entitled to a portion of the proceeds of said insurance policies as exempt to her, under section 4502 of the Code, but that the utmost amount which she could lawfully claim as so exempt would not exceed $30,000.

The bill further shows that L.R. Kimball, administrator of the estate of Lee Kimball, had filed in the probate court of Mobile county on November 19, 1913, a report in which he alleges that the estate is insolvent; and it appears from said report that the administrator makes no claims against the said Mary Kimball for any portion of the proceeds of said insurance policies.

Complainants pray that the court fix the amount of the proceeds of the insurance policy which is exempt to the said widow and the amount not exempt, and decree that so much of the surplus, over and above such exemption, as may be necessary to pay the valid debts of the estate of deceased, be declared an asset of the estate; and that the said Mary E. Kimball hold such portion of the proceeds of the policies in trust for the creditors of said estate, and be required to pay over to the administrator so much of the surplus as may be necessary to cover the indebtedness, taking into account the amount of money now in the hands of the administrator. It is further prayed that the administration be removed into the chancery court.

A demurrer to the bill as amended was overruled, and a final decree rendered, granting to complainants the relief prayed in the bill, and ordering the removal of the administration of the estate into the chancery court, and a reference to ascertain who were the creditors and the amount of the indebtedness of each.

Decree pro confesso was rendered by the chancery court against each of the respondents because of their failure and refusal to fully answer the interrogatories propounded under the statute by complainants. Evidence in the cause was also taken by complainants, and photographic copies of the policies of insurance were made part of the record. It appears from the record that, during the pendency of the proceedings in the chancery court, respondent L.R. Kimball, as administrator, filed in the probate court his resignation. No relief is asked or granted in the decree as against said administrator, except that necessary to the removal of the administration to the chancery court. From the said final decree the respondents prosecute this appeal.

Frederick G. Bromberg, of Mobile, for appellants.

Inge & McLeod and Harry T. Smith & Caffey, all of Mobile, for appellees.

GARDNER J.

The original bill in this cause has recently been under review by this court. Kimball v. Cunningham Hardware Co., 192 Ala. 223, 68 So. 309. The majority opinion, written by Mr. Justice Mayfield, reviews the cases of Tompkins v. Levy, 87 Ala. 263, 6 So. 346, 13 Am.St.Rep. 31, and Fearn v. Ward, 80 Ala. 555, 2 So. 114, and also section 4502 of the Code of 1907, quoted in the opinion, which also contains extracts from some of our cases discussing the objects and policies of said section and its progenitors.

The amended bill, after averring in substance what was alleged in the original bill in regard to the provisions in the policies involving reservations for the benefit of the insured being contracts to pay the insured, personally, at his option, stated sums of money on the expiration of a given number of years, alleges also that the said payments were to be, by the terms of the policies, in commutation or satisfaction of the contracts of insurance.

The amended bill then further alleges that the annual premiums on these policies largely exceeded the sum of $750 per annum, and that the amount of insurance on the life of the insured which an annual premium of $750 would purchase, as an ordinary life policy in a standard life insurance company, would not exceed $30,000, and therefore that a large amount of said insurance, to wit, the sum of $25,000, did not fall within the exemption allowed by Code, § 4502, and so was subject to the payment of the debts of the deceased.

In Kimball v. Cunningham Hardware Company, supra, the opinion of the majority concludes as follows:

"If the whole or any part of the proceeds of this policy should appear not to be within the exemption statute, then probably the whole, or the part not exempt, could be reached by the creditors, as was done in the cases of Fearn v. Ward, and Tompkins v. Levy, supra; but we decline to now intimate a decision on this question."

The court at that time declined to commit itself to the proposition that that part of the proceeds of these policies not within the exemption statute could be reached by these creditors, for the reason that there was nothing in the bill to indicate that such a situation was presented or would be presented.

The question is now squarely presented; and upon due consideration we are of the opinion that the concluding paragraph of the majority opinion on former appeal clearly...