LeWis v. American Life Ins. Co.

• Decision Date: 22 April 1879
• Citation: 7 Mo.App. 112
• Parties: MARTROM D. LEWIS, Plaintiff in Error, v. AMERICAN LIFE INSURANCE COMPANY ET AL., Defendants in Error.
• Court: Missouri Court of Appeals

7 Mo.App. 112

MARTROM D. LEWIS, Plaintiff in Error,

v.AMERICAN LIFE INSURANCE COMPANY ET AL., Defendants in Error.

St. Louis Court of Appeals, Missouri.

Apr. 22, 1879.

A settlement in fraud of creditors cannot be impeached by the administrator of the settler.

ERROR to St. Louis Circuit Court.

Affirmed.

DAVID GOLDSMITH and ED. CUNNINGHAM, JR., for plaintiff in error: The reasons for the rule which at common law precluded the administrator from suing for property given by his intestate in fraud of his creditors were, first, that he was the representative only of his intestate, and, second, that creditors might sue the fraudulent donee as executor de son tort.-- Babcock v. Booth, 5 Hill, 181; 4 Bac. Abr., tit. “Executors and Administrators,” B. 3, p. 28; Cooley v. Brown, 30 Iowa, 470; McLean v. Weeks, 61 Me. 277; Bouslaugh v. Bouslaugh, 68 Pa. St. 499; Hunt v. Butterworth, 21 Texas, 133. Our administration law has entirely superseded the machinery of the common law for administration of the estates of deceased persons.-- Teterington's Administrator v. Hooker, 58 Mo. 593; Holland v. Cruft, 20 Pick. 321; Pearce v. Calhoun, 59 Mo. 274; Ansley v. Baker, 14 Texas, 607. Under our system of administration, neither of these reasons any longer exists.-- Stewart v. Kearney, 6 Watts; Dixon v. Cassell, 5 Ohio, 533; Barasien v. Odum, 17 Ark. 122; Fox v. Von Norman, 11 Kan. 214. And the rule should therefore no longer be enforced.-- Gibbons v. Peeler, 8 Pick. 254. But the gift was not complete in the lifetime of Sanfelder; the possession of the policy, and all rights under it, remained in him up to the time of his death, and thereupon vested in plaintiff.-- Worthington v. Curtis, 5 Big. Life Ins. Cas. 740; Clark v. Durand, 12 Wis. 223; Kerman v. Howard,23 Wis. 108; Gambs v. Covenant Mutual Ins. Co., 50 Mo. 44; Huey v. Huey, 65 Mo. 689. And in such cases the rule has no application, and had none at common law. On the contrary, it is the administrator's right and duty to sue for the property.-- Bethel v. Stanhope, 1 Cro. 810; Shears v. Rogers, 3 Barn. & Adol. 362; Hunt v. Butterworth, 21 Texas, 133; Smith v. Pollard, 4 B. Mon. 68; Kilbourne et al. v. Fay, 29 Ohio St. 264.

A. BINSWANGER, for defendant in error, cited: McLaughlin v. McLaughlin, 16 Mo. 242; Brown's Administrator v. Finley, 18 Mo. 375; George v. Williamson, 26 Mo. 190; Hall v. Callahan, 66 Mo. 323.

BAKEWELL, J., delivered the opinion of the court.

The petition states that the plaintiff is the administrator of Sandfelder; that on February 22, 1875, the defendant, in consideration of $98 then paid by Sandfelder, and a like sum to be paid annually thereafter, insured the life of Sandfelder for $5,000, to be paid at his death to his wife and his five children and their legal representatives. The wife and children are co-defendants. The petition alleges that Sandfelder paid the annual premiums during his life, and died in April, 1877; that due notice and proofs of loss were made, and that the defendants hold and refuse to deliver the policy; that Sandfelder was insolvent when the payments were made, and died insolvent; that he left creditors, many of whom were creditors at the date of the policy; that the sum due has not been paid; that the insurance company is ready to pay to the party entitled to receive the money; and that the creditors of Sandfelder are seventy in number. The defendants demurred, on the grounds that the plaintiff has no legal capacity to sue; that no right is vested in him; that by the terms of the policy the loss is payable to the parties interested, share and share alike; and that the petition does not set forth facts sufficient to constitute a cause of action. The demurrer was sustained. The plaintiff declined to plead further, and there was final judgment. The plaintiff brings the cause here by writ of error.

The demurrer was properly sustained. Whether this provision made by the deceased during his lifetime for his wife and children could be successfully attacked as in fraud of creditors, it is not necessary for us to determine. What we regard as settled is that it cannot be attacked by his administrator. The rule that a settlement in fraud of creditors cannot be impeached by the administrator of the settler, has been constantly affirmed in Missouri.

Parties and privies cannot allege their own frauds as a ground for avoiding a conveyance. Henderson v. Henderson, 13 Mo. 151. A conveyance of an intestate cannot be impeached by his administrator for fraud as to creditors. None but the creditors themselves, and those in privity with them, can attack it. McLaughlin v. McLaughlin, 16 Mo. 242. None but a creditor or purchaser can raise the objection that a deed conveying articles consumable in the using, the grantor retaining possession, is void and inoperative. Ibid. An administrator cannot impeach a gift of his intestate for fraud as to creditors, although the estate may be insolvent. George v. Williamson, 26 Mo. 192. The doctrine of these cases has been recently affirmed by the Supreme Court in Hall v. Callahan, 66 Mo. 323, and has been followed by this court in Pullis v. Robinson, 5 Mo. App. 548.

The donor in a voluntary conveyance has parted with all his interest in the property. If the administrator, as trustee of the creditors, were in a better condition than the fraudulent donor, several difficulties would arise. The creditors must then be paid pro rata out of the funds, irrespective of the question of diligence, and their right to file bills, and to maintain a priority in accordance with the order of the equitable lien...