186 Ky. 775 | Ky. Ct. App. | 1920
Opinion of the Court by
Affirming.
The life of John W. Landrum, who died in the month of March, 1914, was insured, in.the Commonwealth’s Life Insurance Company, for the sum of $5,000.00. The policy was issued upon his application, and was, when first issued, made payable to his estate, in the event of his death. The policy contract contained a clause to the effect, that the insured, might, at any time, change the beneficiary or beneficiaries of the policy, by filing a written request to that effect, with the company, accompanied by the policy, and the change of the beneficiary should take effect, when the company should indorse the change thereon. In the year, 1909, the insured made a written request, of the company, that the beneficiary of the policy, should be changed from the “estate” of the insured, to his wife, Bessie A. Landrum, if living, one-third,
The insured was largely involved with debts at the time of his death, and an action was instituted, by his administratrix, against his heirs and creditors, for a settlement of his estate. Wyatt, the trustee, collected the insurance under the policy. The estate of decedent consisted, chiefly, of the proceeds of the policy of insurance; certain interests in real estate; the sum, of $25,000.00 of the first mortgage bonds of the Mayfield Water & Light Company, one hundred and fifty shares, of the par value of $100.00 each, of the common stock of the Water & Light Company, which was of the actual value of about $50.00 to the share, and certain articles of household property. The real estate was encumbered with mortgage liens, as was, also, the bonds of the water and light company, and one hundred and thirty shares of the common stock of the
Another theory, upon which it is insisted, that appellants are entitled to be subrogated to the claims of the creditors, is that the arrangement-by which the change of beneficiaries of the policy was effected, by which its proceeds were to be first applied to the payment of the debts of certain creditors, amounted to an assignment of the policy as a security for the payment of such debts, and that the arrangement having been made at the request of the debtor, it gave the policy the status of a surety, for the payment of the debts, and the appellants, the status of sureties of the insured, while he was living,, and the general assets of his estate after his death, and; the proceeds of the policy having been exhausted in the; payment of the debts, the appellants should be substituted to the claims of such creditors, as against the assets; of the estate, which otherwise would pass to the heirs,, upon the equitable principle of subrogation.
Touching this contention, it may be conceded, that where an insured owes debts and makes an assignment of the policy to the creditor, without any consideration passing at the time, the general rule is, that the assignment though absolute in form will be considered as an assignment as a security, and if the debts are paid, the insured will be entitled to a return of the policy, or to such portion of its proceeds as may be left after the discharge of the debts. Baldwin v. Hayden, 24 R. 900; Caudill v. Woodward, 96 Ky. 646; Baird v. Sharp, 100 Ky. 606.
The transaction here, was not an assignment on the part of the insured but a change of beneficiaries, but as to the beneficiaries afterpayment of debts, the same then, as stated above, would occur, that is, they would be entitled to such part of the policy, as was not consumed in the payment of the debts, not however, because they were sureties, but on account of the express conditions of the policy when treated as testamentary in its character-
The judgment is therefore affirmed.