16 F. Supp. 861 | S.D.N.Y. | 1936
The trustee makes this motion to compel the bankrupt to submit to a physical examination by an insurance company for the purpose of obtaining a policy of insurance on the bankrupt’s life.
Levy, the bankrupt, is the beneficiary during his life of the income from three trusts; two of these were created by the will of his aunt, Minnie Levy, and the other by the will of his father, Arthur Levy. This income was garnisheed by the trustee in bankruptcy and executions issued to the extent of 10 per cent, of the income accrued and to accrue until $14,738.-14, the amount due from the bankrupt with interest and expenses, is paid. The collections from this source would probably average around $500 annually, with the result that' it will require some 30 years to collect the full amount if the bankrupt, now 46 years of age, lives that length of time.
The trustee believes that it would be advantageous to the estate to insure the life of the bankrupt and thus eventually secure for the estate the full amount due. The trustee asserts that he has an insurable interest in the life of the bankrupt and that the bankruptcy court has the inherent power to require the bankrupt to submit himself for a physical examination for the purpose of taking out this insurance. The bankrupt objects to submitting himself to a physical examination and denies that the court has power to compel him to; the bankrupt also denies that the trustee has an insurable interest in his life.
It is clear, I think, that in the present instance the trustee has an insurable interest in the life of the bankrupt as the trustee will sustain a financial loss by the happening of the event-insured against. 32 C.J. § 204 and cases cited. It does not follow, as has been suggested, that if this is so then every trustee in bankruptcy has an insurable interest in the life of a bankrupt, for in the usual case the bankrupt’s estate has no further pecuniary interest in the life of the bankrupt after his discharge.
However, to continue this estate in bankruptcy, to use or to invest its available funds in the payment of premiums through a period of some 30 years instead of liquidating the estate now and distributing the assets among creditors, is contrary to the policy of the Bankruptcy Act. The act contemplates and directs the reduction of the property of the bankrupt to cash, its early distribution among the creditors and the closing of the estate. See sections 2 (7) and 47a of the Bankruptcy Act, as amended (11 U.S.C.A. §§ 11 (7) and 75 (a).
If the creditors desire to, they themselves might purchase from the trustee this particular asset; then, as assignees of the claim, they might be in a position to seek the insurance on Levy’s life as suggested by the trustee.
Report of referee confirmed as to the result.
