133 Ark. 224 | Ark. | 1918
(after stating the facts). It can serve no useful purpose to set out and discuss the evidence relating to the issue of insolvency. A preponderance of the evidence shows that at the time of the change of the beneficiaries and the transfer of the policy by Jones to Mrs. Cramer and his son, Gus K. Jones, Jr., that Jones, the insured, was insolvent. We have reached the conclusion also that the preponderance of the evidence shows that the transfer by Jones of the policy in controversy to his sister and son was voluntary. These are purely issues of fact and we deem it unnecessary to do more than merely announce our conclusion.
Appellees on their cross-appeal contend that inasmuch as the surrender value of the policy was $250.00 that this amount was exempt to Jones under the provisions of § 5212 Kirby’s Digest. That section provides: “It shall be lawful for any married woman, by herself and in her name, or in the name of any third person, with his assent, as her trustee, to cause to be insured, for her sole use, the life of her husband, for any definite period, or for the term of his natural life; and in case of her surviving her husband, the sum or net amount of her insurance becoming due and payable by the terms of the insurance shall be payable to her and for her use; and in case of the death of the wife before the decease of her husband, the amount of the said insurance may be made payable to his or her children, for their use, and to their guardian, for them, if they shall be under age, as shall be provided in the policy of the insurance; and such sum or amount of insurance so payable shall be free from the claims of the representatives of the husband, or any of his creditors; but such exemption shall not apply where the amount of premium annually paid out of the funds of property of the husband shall exceed the sum of three hundred dollars. ’ ’
Laws exempting a reasonable sum out of insolvent debtors ’ estates to provide insurance for their wives and children have received a liberal construction in other jurisdictions. The Supreme Court of Missouri, in Judson v. Walker, 155 Mo. 166, construing somewhat similar statutes, says: “'These statutes are now pronounced by the courts praiseworthy, and construed with liberality. Of this nature is the statute which authorizes a husband, even though insolvent, to devote a limited amount to providing, by way of insurance on Ms life, for the relief of Ms widow after Ms death. That statute is also to be construed liberally in furtherance of its benevolent purpose. ’ ’ See Rose v. Wortham, 95 Tenn. 505, 32 S. W. 458; Elliott v. Bryan, 64 Md. 368; Cole v. Marple, 98 Ill. 58.
We do not find in the abstracts any testimony to prove that the $250 surrender value was exempt under •section 5212, supra. Nor was there any proof that the cash surrender value of the policy ($250) was exempt as part of Jones’-personal estate. For aught appearing to the contrary, Jones’ personal estate may have been worth more than five hundred dollars exclusive of the $250 cash surrender value of the policy.
But counsel for the appellees, as cross-appellants,, •contend that the transfer was not fraudulent because Jones, even though insolvent, had the right, in the absence of an actual intent to defraud creditors, to appropriate a reasonable sum out of his personal estate, over and above his exemptions, to pay premiums on insurance in a reasonable sum, for the benefit of Ms minor son. To support this contention counsel cite the leading case of Central Bank of Washington v. Hume, 128 U. S. 195, where it is held, quoting syllabus: “A married man may rightfully devote a moderate portion of his earning’s to insure his life, and thus make reasonable provision for his family after his decease, without thereby being held to intend to hinder, delay or defraud Ms creditors, provided no such fraudulent intent is shown to exist, or Must be necessarily inferred from the surrounding circumstances.” Several other cases are cited and relied on to the same effect.
The distinguished author of American State Reports in a note to Hise v. Hartford Life Ins. Co., 29 Am. St. Rep. 358, 364, says: ‘ ‘ The great weight of the later authorities is in accord with the rule established in Central Bank of Washington v. Hume, supra, to the effect that an insolvent husband or his wife may insure his life and keep -such insurance alive for the benefit of the wife and their children, or the husband may insure his life in his own name and subsequently assign it for the benefit of his wife and children, his children alone, or his next of kin, without thereby being held to hinder, delay or defraud creditors, and after his death they will have no interest in the insurance money, but it will belong to the beneficiary absolutely. ’ ’
Appellees contend that the claim of appellant Bank Commissioner was barred by the statute of nonclaim.
This contention can not be sustained for the reason that the suit is one to set aside an alleged fraudulent conveyance of property, that but for such conveyance would belong to the estate of Jones, and there would be no basis for the suit at all except upon the assumption that the transfer was fraudulent and that the property transferred, therefore, notwithstanding the conveyance, belonged to the estate of Jones.
The Southern Trust Company, as the administrator of Jones’ estate, filed an intervention, and asked that if the transfer of the policy were set aside that the amount of the proceeds be turned over to it.
So in reality the suit is nothing more nor less than an effort on the part of appellants to subject the property of Jones to the payment of, their claims. The appellants do not assert any title or right of property in the funds and have no right or title therein. They are asking that the transfer of the funds be set aside because fraudulent and therefore void, leaving the property just as it was before such transfer. They asked that this may be done in order that they may further seek the process of the court to subject the funds to the payment of their claim.
Counsel for appellants say that the matter is practically settled in the case of Fred v. Asbury, 105 Ark. 494, where we said: “The statute of nonclaim does not refer to claims of title or for the recovery of property for the reason that claims of such a character can not in any just sense be said to be claims against the estate of the deceased. On the contrary, the right to recover is based upon the fact that the property claimed does not belong to the estate, but belongs to the parties asserting title to it. ’ ’ This doctrine can not have any application here for the reason already stated, that appellants are not claiming any right of property in the funds but are only seeking to subject the funds as the property of the estate of Jones to the payment of their claim against his estate.
The debt being barred, a mere remedy for its enforcement ‘ ‘bottomed solely upon the debt or demand, and having no independent form and foundation,” can not be maintained. McKneely v. Terry, 61 Ark. 527. See also Linthicum v. Tapscott, 28 Ark. 267; Waddell, Admr., v. Carlock, 41 Ark. 523; Stephens v. Shannon, 43 Ark. 464.
It follows that the court erred in entering a decree in favor of the appellant Bank Commissioner for the sum of $250.
The claim of the appellant Giles was duly probated and allowed, therefore he had a right to pursue his remedy to set aside the fraudulent transfer and to subject the unexempt property of Jones to the payment of his claim. This brings us to the consideration of the question as to what property value Jones had in the policy that could be subjected by the creditors to the payment of his debts.
A man must be just to creditors before he can be generous to relatives. Therefore, where an insolvent debtor makes a voluntary transfer of his property, which is not exempt under the law from his debts, to those who are near of kin, whether he intends it as a fraud or not, it operates as a fraud on his creditors for the reason that such a transfer hinders, delays or defeats them in the collection of their claims. Wilks v. Vaughan, 73 Ark. 174; Simon v. Reynolds-Davis Gro. Co., 108 Ark. 164.
The purpose of our statute declaring void the conveyance or assignment made in fraud of creditors is to enable the creditors to set such conveyance or assignment aside and to subject the property therein conveyed' to the payment of their claims. In Continental National Bank v. Moore, 82 N. Y. Sup. 302, it is held: “Where an attempted assignment of an insurance policy was set aside as fraudulent as against the insured’s creditors, and the insurance had become payable by the death of insured before the judgment annulling the transfer, the entire insurance inured to the benefit of creditors, and not merely the cash value thereof.” In that case the court said: “The case is not, we think, distinguishable in'principle from those holding that, where a transfer of property made by a debtor is set aside on the ground of fraud at the instance of his creditors, their rights attach, not merely to the value of the property prior to the assignr ment, but to the property itself, including appreciation or increase in value.” In the above case the facts showed an actual intent to defraud creditors.
The Supreme Court of Alabama also holds that where an insolvent debtor invests his funds in the payment of the premiums on a policy of life insurance in favor of relatives, on the death of the assured, creditors may subject the entire proceeds of the policy to the payment of their claims. That court says: “The insurance constituted the property purchased and is the subject matter of the investment. * * * If the subject of the gift or investment consists of a policy of insurance on the life of the debtor the donee is liable for the money recovered on the policy. ’ ’ Fearn v. Ward, 80 Ala. 555-564. See, also, Lehman v. Gunn, 124 Ala. 213.
The Supreme Court of New Jersey seems to entertain the same view, for that court, through Mr. Justice Pitney, in Merchants & Miners Transportation Co. v. Borland, 53 N. J. Eq. 282, 286, 287, says: “There is, and can be in law, no difference between the payment by a husband of a stated sum of money at stated periods to an insurance company, upon promise to pay a certain sum at the death of the payer, to his wife, and the deposit by the husband of a like stated sum, at like stated periods, in a savings bank, to the credit of the wife. Both are gifts to the wife, and the money afterwards paid by the savings bank or the insurance company, as the case may be, to the wife or her personal representatives, is nothing more than a payment to her of the money previously paid to it by the husband, with its earnings and increase. * * * A husband can not settle money or property in any shape upon his wife while he is indebted. If he attempts it the creditors are entitled to the aid of this court to reach the property so settled, in whatever form it may be found. ’ ’
"Where a fraudulent conveyance or assignment is set aside, the effect and the only effect is to make available for the payment of his debts such property as the debtor possessed and that would have been subject to legal process for the payment of his debts at the time the transfer was made. This is the only right the creditors have under our statute.
(11) Until the death of the assured nothing except the cash surrender value of an insurance policy is property, in the meaning of the statuté declaring fraudulent conveyances and assignments void. How then can it be said that an insolvent debtor made a fraudulent transfer of that which did not exist during his life? It is impossible. See Hendrie & Bolthoff Mfg. Co. v. Platt, supra.