156 Misc. 629 | N.Y. Sup. Ct. | 1934
This is an action brought by a judgment creditor to set aside an assignment by the defendant Abraham Weinberg to Gussie Weinberg, his wife, of certain disability income payments due under policies of life insurance issued on the life of Abraham Weinberg. Gussie Weinberg is named as beneficiary in each of the policies.
During the year 1931, Abraham Weinberg was engaged in the fruit business with one Abraham Ackman as his copartner. To recover for merchandise sold and delivered to the copartnership between the 19th and 22d days of October, 1931, the plaintiff, on
0:i the evidence I find that the partnership of Weinberg & Ackman was insolvent on May 7, 1932, the date of the assignment, and that the defendant Abraham Weinberg was also insolvent on that date. I find also that the assignment of the disability income payments by Abraham Weinberg to his wife was void for fraud. The testimony of Weinberg and that of his wife establish that the assignment under attack was made without consideration. The only reason ascribed by them for making the transfer was to enable Gussie Weinberg to safeguard the financial affairs of her husband. It was a voluntary conveyance made by Weinberg to his wife at a time when he was insolvent and when he was indebted to the plaintiff. Such a conveyance is fraudulent as to creditors without regard to actual intent. (Kerker v. Levy, 206 N. Y. 109; Chase National Bank v. United States Trust Co., 236 App. Div. 500; Debtor and Creditor Law, §§ 271, 273; Laws of 1925, chap. 254, § 1.)
The contention of the defendants that the disability benefits of life insurance policies when assigned to the lawful beneficiary of the policies are exempt from the claim of creditors of the insured under section 55-a of the Insurance Law (Laws of 1927, chap. 468) is without merit. Under the law, disability benefits due to an insured judgment debtor under policies of life insurance are not exempt from levy by judgment creditors of the insured, as the exemption under that section applies only where the beneficiary is a person other than the insured. (Lion Credit Union v. Gutman, 148 Misc. 620; Herbach v. Herbach, Id. 33; affd., App. Term, First Dept., N. Y. L. J. May 12, 1933.) Moreover, the exemption provided for in section 55-a of the Insurance Law is expressly made inapplicable where an assignment by the insured to another is made in fraud of creditors. (Levy Leasing Co., Inc., v. Wishner, 147 Misc. 828.) Before the assignment of the disability payments by Weinberg to his wife, this income belonged to Weinberg, despite the fact that the policy itself was payable to the assured’s wife. (Donahue v. New York Life Insurance Co., 259 N. Y. 98.) As the assignment to Gussie Weinberg is void, the plaintiff may reach the payments due from the insurance company to the assured.
Judgment for plaintiff. Submit findings on notice.