183 So. 217 | La. | 1938
The question in this case is whether the statute (Act No. 189 of 1914 as amended) which exempts the proceeds or avails of all life insurance from liability for the debts of the insured forbids an insured, who has no forced heir, and whose life insurance is payable to his executors or administrators, or his estate, to stipulate in his will that his executors shall apply the proceeds of his life insurance to the payment of his debts before paying any of the legacies provided for in the will.
The testator, in his will, directed that 40 acres of land which he owned should be sold for cash, and that the proceeds, together with his life insurance, should be applied first to the payment of his debts. Thereafter in his will he bequeathed a legacy of a sum of money to each one of five nieces. His life insurance consisted of a policy for $1,000, payable to his executors or administrators, or his estate. The executors collected on the policy $1,001.46; which, with the proceeds of the sale of the property referred to, was not enough to pay all of the debts of the succession, — though more than enough to pay the preferred claims, such as expenses of last illness, funeral expenses, and costs of court. The executors filed an account, showing the amounts collected, and proposing to pay the preferred claims in full, and to prorate *919 the balance of the funds, including the proceeds or avails of the life insurance, among the ordinary creditors of the testator. The five nieces, or legatees, sued, not as heirs but as legatees, to have the proceeds or avails of the life insurance paid to them, in proportion to the amounts of their legacies. The judge of the district court decided in their favor, maintaining that the statute on the subject, Act No. 189 of 1914, as amended, forbade the executors to apply the proceeds or avails of the life insurance to the payment of the debts of the testator, even though he directed the executors so to do, in his will. The executors appealed from the decision to the court of appeal. That court reversed the decision, and approved the plan of distribution proposed by the executors. The case is before us on a writ of review.
The statute on the subject is Act No. 189 of 1914, as amended by Act No. 88 of 1916, and by Act No. 95 of 1934 and Act No. 155 of 1934. Neither one of the acts of 1934 makes any reference to the other act of that year. Each act purports merely to amend and re-enact the act of 1914, as amended by the act of 1916. Some question may arise, therefore, as to whether both of the acts of 1934 are in effect, in some respects. But that is a matter of no importance in this case. The only pertinent part of the statute is that which declares that the proceeds or avails and dividends of all life insurance are exempt from liability for any debt, except for a debt secured by a pledge of the policy, or any right under the policy that may have been assigned, *920 or any advance payment made on or against the policy.
This court has not had occasion heretofore to decide the question that is presented in this case. The court has decided, however, in at least two cases, that the proceeds or avails of life insurance, where the policy is payable to the executors or administrators, or the estate, of the insured, form a part of his estate, and are subject to disposal by testament, like any other part of the estate. Succession of Cotton,
The decision rendered by the court of appeal in this case conforms with the decisions in two States having statutes similar to the Louisiana statute, exempting the proceeds or avails of life insurance from liability of the debts of the insured. In the case of Union Trust Co. v. Cox, 1902,
In the case entitled In re Caldwell's Estate, Davidson Realty Co. v. Caldwell, 1927,
"The devise of the proceeds of the testator's policies of life insurance is specifically made subject to the prior provisions of the will. This, it seems to us, evinces a clear purpose on his part to provide for the *922 payment of his debts out of the proceeds of his life insurance. The first item of the will relates to the payment of debts and other expenses, and the clause quoted makes the bequests thereof subject to the prior provisions.
"This being the intention of the testator clearly expressed in the will, the next and more important and difficult question presents itself: Did the testator have a right, first, to dispose of the proceeds of life insurance by will, and second, to subject the same to the payment of his debts? The first question is answered by the recent decision of this court in Miller v. Miller, 200 Iowa, 1070,
"The right of the insured to dispose of life insurance by will necessarily carries with it the right to set the same aside for the payment of debts."
When we say that the right of the insured to dispose by testament of life insurance belonging to his estate carries with it the right of the insured to direct his executors to apply the proceeds of his life insurance to the payment of his debts, we are speaking of a case where there is *924 no forced heir. We are not prepared to say that a testator may dispose of his life insurance to the prejudice of the legitime of a forced heir, even for the purpose of paying the debts of the testator. It does not require a testamentary disposal to subject other property of the testator — other than the proceeds or avails of his life insurance — to the payment of his debts. That is the difference which the act of 1914 makes between the life insurance and the other property belonging to a testator.
The judgment of the court of appeal is affirmed. *925