119 Kan. 593 | Kan. | 1925
The opinion of the court was delivered by
Plaintiff brought this action to subject the proceeds of a life insurance policy to the satisfaction of the debts of a bankrupt corporation which had originally been designated as beneficiary by the insured who was its president and business manager.
The facts were these: In 1918, Walter S. Herr was president and manager of the Murray Extract Company, a Wichita business corporation. He applied for and received from the defendant a $5,000 policy of life insurance, naming the corporation as his beneficiary, and the policy provided that the beneficiary could not be changed. The annual premiums were paid by the corporation as they became due; the policy was for term insurance, and it had no cash surrender or loan value.
On February 23, 1923, the Murray Extract Company was adjudged a bankrupt, and a trustee in bankruptcy was appointed and placed in charge of the bankrupt corporation’s estate. One of the creditors of the bankrupt was the Union National Bank of Wichita which held the corporation’s note for $8,500, dated November 25, 1922, and due January 5, 1923. The bank proved its claim against the bankrupt and received partial dividends thereon as they were distributed by the federal trustee.
Among the assets of the bankrupt corporation turned over to the federal trustee was this policy of life insurance. In September,
Plaintiff lays claim to this insurance money on behalf of himself and any other creditors because on March 12, 1923, he purchased the note and the claim, against the bankrupt which it represents from the Union National Bank of Wichita; and about the same time he acquired from the Union National Bank all the assets of the bankrupt estate which had theretofore been purchased by the bank. Plaintiff also founded his right to litigate this action on the alleged ground that he personally was ready, able and willing to pay the insurance premium in September, 1923, for the benefit of the bankrupt estate, and because, as he alleged, he made a timely demand on the trustee in bankruptcy that the annual premium due in September, 1923, be paid by the trustee.
Issues were formed and testimony and other evidence introduced, but no sharply disputed facts were developed; and the cause turned largely upon questions of law which were suggested from the admitted or established facts.
Judgment was entered in favor of Minnie M. Herr, the last designated beneficiary.
Plaintiff appeals, contending that while the corporation’s interest in the policy as designated beneficiary was a sort of asset or property right of the bankrupt corporation’s estate, it was not of such a character as would pass to the trustee in bankruptcy, for the reason that under plaintiff’s construction of the federal bankruptcy statute (U. S. Comp. Stat. 1918, § 9654) such trustee can acquire no interest in a policy of life insurance having no cash surrender or loan value. That statute reads:
“The trustee of the estate of a bankrupt, . . . shall in turn be vested by operation of law with the title of the bankrupt, as of the date he was*596 adjudged a bankrupt, except in so far as it is to property which is exempt, . . . 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 trastee 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.”
Plaintiff maintains the theory that a bankrupt corporation may possess certain peculiar assets or property rights—such as its interest in this policy—which must be protected for the benefit of the corporation and its creditors through its officers and board of directors, notwithstanding all its other assets, business, records and concerns are under the dominion and control of the federal trustee. And plaintiff argues that because the officers and directors have been and are delinquent in not asserting the bankrupt corporation’s rights under the policy, and because Herr, its dead president and manager, was especially delinquent and acted for himself and for the benefit of his wife, and to the prejudice of the corporation, in securing a relinquishment of the policy from the federal trustee and in changing the name of the beneficiary, this plaintiff as a creditor has the right to maintain this action.
According to plaintiff’s viewpoint we might have the spectacle of a federal trustee taking charge of all a bankrupt corporation’s assets except the shadowy, nonsalable, nonassignable right of the corporation as designated beneficiary of a life insurance policy. But with that right the federal trustee might not meddle. Yet, being an asset of sorts—a theoretical, potential asset—it would be proper for the retiring board of directors, indeed their statutory duty, to turn that peculiar asset into cash and devote the proceeds to the payment of the corporation’s debt.
The mere statement of such á contention is enough to condemn it. There is no such incongruity in our jurisprudence, notwithstanding its complex duality of state and federal powers. Once the federal trustee in bankruptcy has taken charge of an insolvent corporation’s assets, business and affairs, pursuant to federal law, the corporation’s officers and board of directors have no further official concern with it, unless and until it is financially rehabilitated and surrendered to their custody by order of the bankruptcy court.
The federal statute discussed in the briefs and cited above concerns itself with the disposition of life insurance policies of an in
The foregoing does not exhaust the objections to the cause of action plaintiff sought to maintain, but it will suffice to show that the trial court committed no error.
The judgment is affirmed.