245 F. 504 | D. Del. | 1917
Grace Baird and the Wilmington Trust Company, trustee in lunacy of Mary II. Baird, have petitioned for the review of certain orders of the referee in the matter of Robert S. Baird, bankrupt. The petitioner Grace Baird made and filed November 11, 1915, a proof of claim against the estate of the bankrupt in the. sum of $31,500. It is alleged in the proof of claim that the petitioner holds as partial security for the repayment of the said debt a paid up policy of life insurance of the Provident Rife and Trust Company of Philadelphia on the life of the bankrupt of the face value of $10,000, but of a present surrender value of about $7,525, issued December 19, 1902, being No. 101,001. Exceptions were filed by a creditor of the bankrupt to the above proof of claim, in which it was in substance alleged that whatever value there might be in the said policy of insurance “belongs to the estate of the said Robert S. Baird, and not to the said Grace Baird,” and further, that the said policy should be assigned to the trustee in bankruptcy. The referee, September 22, 1916, allowed the proof of claim made by tlie petitioner as an unsecured claim, but limited it to the sum of $16,010.42, being $14,500 together with interest thereon until the date of the filing of the petition in bankruptcy; and ordered that the petitioner deliver or cause to be delivered to the trustee in bankruptcy as part of the assets of the bankrupt’s estate the said insurance policy. The referee failed to find that there was any pledge of the said policy of insurance to Grace Baird as collateral security for the indebtedness due to her from the bankrupt “sufficient to secure” to Grace Baird “the present value and benefits” of the said insurance policy. It appears from the findings of the referee and is admitted by counsel on both sides that Grace Baird has a valid claim against the estate of the bankrupt for the sum of $14,500, with interest thereon to the date of the filing of the petition in bankruptcy.
The petitioner Wilmington Trust Company, trustee for Mary H. Baird, made and filed December 24, 1915, a proof of claim against the estate of the bankrupt in the sum of $26,000, alleging a preferential right to the same as against general creditors as representing a trust fund belonging to Mary H. Baird, and further alleging that the petitioner holds as partial security for the repayment of the said debt a policy of life insurance of the above mentioned insurance company on the life of the bankrupt of the face value of $30,000, and of a present surrender value of about $19,906.76, issued August 13, 1903, being No. 105,-
“becomes a claim either by maturity of the endowment or by prior decease of the person whose life is insured, the person entitled to receive it may elect to take the amount due under the policy at the time in one sum or have the amount paid to him or her in equal annual instalments for 10, 15, 20, 25 or 30 years, with the further privilege of terminating the payment of the instalments at any subsequent anniversary of the date of the instalment certificate issued in place of the original policy, and receiving in lieu of the instalments then unpaid the equivalent on the basis set forth in the following, table, which is calculated as for $10,000 insurance.”
“No assignment of this policy shall be of any force or effect unless made In writing, and recorded by the company on its books.”
This provision is intended for the protection of the insurance company in making payment of the insurance; but cannot affect the force or validity as against the assured of any contract between the assured or his representatives or assigns and a third person touching the ultimate receipt and enjoyment of the insurance moneys. It appears that the bankrupt signed, sealed and acknowledged, November 10, 1911, a paper in the following words, letters and figures:
“Assignment, Conditional upon Death Prior to Maturity of Policy, and the Survival of the Assignee.
“For value received, I hereby transfer, assign and set. over unto my sister, (Trace Baird, and lier assigns, all my right, title and interest in Policy of Insurance issued by The Provident Ufe and Trust Company of Philadelphia, No. 101001 dated 12th mo. 19fch 1902, and all advantages to be derived therefrom: Provided, the said Policy shall become payable by reason of my death prior to the date when the endowment would have matured; and Provided also that the said assignee shall then survive me, otherwise all right, title and interest in the said Policy is to x-evert to me, as fully as if this assignment had never been made.
“I hereby reserve the right to revoke this assignment at any time during my life by filing with the Company an instrument of revocation duly executed under my hand and seal.
. "Witness my hand and seal, this tenth day of November, 1911.
"The words T hereby reserve the right to revoke I his assignment,’ etc., Inserted before signing. [Signed] Robert S. Baird. [Seal.]
“Sealed and delivered in presence of “[Signed] Abbye Hornsby.
“[Signed] Thomas K. Porter.
“[Signed] Frank Sheppard.”
It further appears that on the same day, November 10, 1911, the bankrupt signed, sealed and acknowledged another paper, purporting to be an assignment of policy No. 105,850 to Mary H. Baird, his wife. This paper contained conditions similar to those appearing in the paper purporting to be an assignment to Grace Baird and certain other conditions not material to consider in this connection. Both of these papers, termed assignments merely for the purpose of identification, were filed with the insurance company and recorded on its books November 13, 1911, and certified copies were delivered to the bankrupt and until July 3, 1912, were retained by him in his possession unknown to his sister and wife. At the time of the signing, sealing and acknowledgment of the assignments the bankrupt was indebted both to Grace Baird and to Mary H. Baird. The assignment to Grace Baird does not mention or suggest the idea of collateral security. It purports to be a Conditional assignment, subject to revocation at pleasure, of the right to receive and enjoy the amount of the insurance, if the same should become payable by reason of the death of the bankrupt prior to the maturity of the same, and if his sister should survive him at the date of such maturity. Otherwise the assignment should have no effect. On its face it indicates an intention on the part of the bankrupt that his sister should have the benefit of only what he could
“July 3rd, 19-12.
“Received, of my brother Robert S. Baird insurance policy #101,001 in the Provident Life and Trust Go. for $10,000, fully paid up and in which X am beneficiary as security for his indebtedness to me; also as Trustee for his wife, policy #105,850 in the Provident Life and Trust Co. for $30,000, fully paid as security for his indebtedness to his wife Mary IL Baird, in which policy she is beneficiary. [Signed] Grace Baird.”
At the time of the signing of the receipt policy No. 101,001 together with the copy of its assignment was delivered to Grace Baird on her own account as collateral security, and policy No. 105,850 together, with the copy of its assignment was delivered to her as trustee for Mary H. Baird as collateral security. The receipt of July 3, 1912, indicates more than the mere fact of receipt of the. policies. It was prepared or caused to be prepared by the bankrupt and was given to and retained by him, and is potent evidence that he delivered the policies as collateral security for the payment of his indebtedness to his sister and wife respectively. It is true that there was a literal inaccuracy in the statement in the receipt that his sister and wife were beneficiaries in the policies respectively; but I attach no importance
“Provided, the said policy shall become payable by reason of my death prior to the date when the endowment would have matured; and provided also that the said assignee shall then survive me, otherwise all right, title and interest in the said policy is to revert to me, as fully as if this assignment had never been made.”
The assignment of policy No. 105,850 contained similar provisos. It is true that July 3, 1912, the later of the two policies had not fully matured; but it lacked the payment of only one annual premium, and in point of fact it fully matured during the lifetime of the bankrupt. It would be the height of unreason to attribute to 'the bankrupt or Grace Baird any idea that either of the assignments should or could be relied upon as constituting the only collateral security for the payment of the bankrupt’s indebtedness. The inevitable conclusion in this connection is that when the two policies were received by Grace Baird from the bankrupt on her own account and as trustee for Mary H. Baird, the two assignments which had been preserved by the bankrupt together with the policies were incidentally handed by him to his sister at the time of the delivery of the policies. Had the assignments or either of them been deemed or intended to serve as collateral security, undoubtedly some reference would have been made in the receipt given by Grace Baird to the bankrupt on that occasion. But while the receipt is wholly silent upon that point, it expressly refers to the two policies as being received as collateral security. Some of the oral evidence touching the purpose and eifect of the assignments of November 10, 1911, and of the delivery of the policies in connection with the taking of tire receipt for them July 3, 1912, is not unnaturally lacking in scientific accuracy, coming as it did from the bankrupt and Grace Baird. But when considered as a whole and after due allowance for the absence of professional knowledge of the law on their part it is, I think, such as to leave no doubt of the correctness of the conclusions so far reached in this opinion relative to the giving
“Provided, that when any bankrupt shall have any insurance policy which has a cash surrender value payable to himself, his estate, or personal representatives, he may, within thirty days after the cash surrender value has been ascertained and stated to the trustee by the company issuing the same, pay or secure to the trustee the sum so ascertained and stated, and continue to hold, own, and carry such policy free from the claims of the creditors participating in the distribution of his estate under the bankruptcy proceedings, otherwise the policy shall pass to the trustee as assets.”
On the assumption that under the conditions of the policies their delivery in pledge by the bankrupt July 3, 1912, was inoperative as against the insurance company, such pledge did not avoid the policy, and I perceive no reason why the pledge was not good as against the bankrupt by way of collateral security for his indebtedness, and equally as against the trustee in bankruptcy. The policies passed, subject to the provisions of section 70a, to the trustee in bankruptcy, but subject also to the indebtedness for which they had been pledged. The claimants, being unable to collect the surrender value of the policies from the insurance company, it is proper that the trustee in bankruptcy who represents his creditors and is subject to the direction of the court in the administration of the bankruptcy estate, be directed on the delivery to hirn by the claimants of the two policies for that purpose, to receive from the bankrupt or collect from the insurance company such surrender value and apply the proceeds to the payment of the indebtedness of the bankrupt to them. Grace Baird and the Wilmington Trust Company, trustee in lunacy for Mary H. Baird, are each entitled to an order setting aside and vacating the order of the referee requiring that the policies of insurance held by them respectively be turned over to the trustee in bankruptcy as part of the bankrupt’s estate, and directing that the trustee in bankruptcy forthwith secure from the insurance company an ascertainment and statement of the cash surrender value of the policies held by them respectively as of the date of the filing of the petition in bankruptcy (Everett v. Judson, 228 U. S. 474, 33 Sup. Ct. 568, 57 L. Ed. 927, 46 L. R. A. [N. S.] 154), and providing that unless the bankrupt shall within thirty days next after the trustee in bankruptcy shall secure such ascertainment and statement, pay or secure to the trustee in bankruptcy the sum so ascertained and stated, to be applied toward the payment of the demands of the claimants respectively, for the payment of which those policies were pledged as collateral security, the trustee in bankruptcy shall, with all conven
An order in accordance with this opinion may be prepared and submitted.
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