39 S.W.2d 741 | Tenn. | 1931
By original bill in equity, creditors of the estate of W.C. Pipkin, deceased, seek to reach in satisfaction of their debts the proceeds of life insurance effected by the deceased on his own life, and payable to his estate. Except for this fund the estate is wholly insolvent, and the creditors are without other recourse.
The suit is resisted by Pearl H. Chandler, a niece of the deceased, as executrix of his will, and individually as legatee of the fund in dispute. The will provides:
"To my niece, Pearl H. Chandler, I give, devise and bequeath a policy of life insurance issued on my life by Massachusetts Mutual Life Insurance Company, which policy is or will be made payable to my estate, for the *617 sum of $4000 and which original policy is dated March 7, 1916. I give to her said policy because of the many kindnesses which she has rendered me from time to time."
The insured was survived by a widow and three children. It was stated at the bar by counsel that the widow and children make no claim to the insurance.
The appeal presents the single question whether the proceeds of life insurance payable to the estate of the insured, and disposed of by his will to a person other than widow, child, or dependent relative, are liable to the satisfaction of the debts of the estate, in preference to the claim of such legatee.
The reported opinions of this court do not include a case in which the rights of creditors, occupying the status of complainants here, were adjudicated.
It is, however, contended for the legatee that the effect of statutes and previous decisions is to exclude such insurance entirely from the class of assets liable to the debts of the estate, except where the will itself "by apt words" creates such liability.
We quote sections 4030 and 4231 of Shannon's Code (all editions):
4030. "A life insurance effected by a husband on his own life shall inure to the benefit of the widow and next of kin, to be distributed as personal property, free from the claims of his creditors."
4231. "Any life insurance effected by a husband on his own life shall, in case of his death, inure to the benefit of his widow and children; and the money thence arising shall be divided between them according to the law of distributions, without being in any manner subject to the debts of the husband, whether by attachment, execution, or otherwise." *618
These sections were originally enacted by Acts 1845-1846, chapter 216, and were carried into the official Code of 1858 as sections 2294 and 2478. Other statutory provisions to the same effect being Shannon's Code, sections 2265, 4232, and Acts 1925, chapter 113. An exemption in favor of "dependent relatives" of the insured was added by the latter statute, but it is stipulated that the legatee herein is not a "dependent relative."
Prior to the creation of this statutory exemption, the proceeds of life insurance payable to the estate of the insured, and disposed of by his will, were a part of the assets of the estate and liable for its debts. "Every debtor's property, except such as may be specially exempt by law, is assets for the satisfaction of all his just debts." Shannon's Code (all editions), sec. 3985; Code of 1858, sec. 2252; Rison v. Wilkerson, 35 Tenn. (3 Sneed), 564, 569; State v. Anderson,
As an original proposition, it seems to us that it would be a perversion of the statutory intent, clearly expressed, to construe the statutes cited as exempting this class of property from the claims of creditors, in favor of all persons who may have an interest therein by virtue of the will of the insured, when the statutes expressly limit the exemption to the widow, children, and dependent relatives. "In the exposition of a statute the intention of the lawmaker will prevail over the literal sense of the terms, and its reasons and intention will prevail over the strict letter." Rose v. Wortham,
The original exemption statute of 1846 was construed in 1856, in Rison v. Wilkerson, supra. It was there held that before the statute, life insurance constituted *619 assets of the estate, subject to the payment of debts, with preference to creditors over the family of the insured. The purpose and limited effect of the statute were stated as follows:
"We think that nothing more is intended by the act, and that no other operation can be given to it, than to prevent a fund of this kind from passing into the hands of the administrator with the other effects of the insured, in favor of the widow and children, or, in other words, to prefer them to creditors to that extent. But it can only apply where the claim remains undisposed of by the deceased. His power over it during his life is not at all affected by the act, but continues as ample and unrestricted as before."
Williams v. Carson,
In these cases the court was dealing only with the proceeds of insurance which could, under the terms of the statute, inure to the benefit of wife or child of the insured; and as to such insurance it was held that the statute did not interfere with the right theretofore possessed by the insured to make a contrary disposition by assignment or by will. But in the first of the two cases, Rison *620 v. Wilkerson, it was expressly recognized by the court that this right of disposition by will was subject to the claims of creditors, prior to the statute of 1845-1846.
It is customarily said of property owned absolutely that the owner has the unlimited right of disposition, but it is always implied in such statements that property so owned may not be bequeathed or devised, by way of gift, so as to defeat the payment of just debts of the testator. And it was clearly in this sense that general statements as to the right of the insured to dispose of his life insurance were made in the two cases cited and chiefly relied upon by the appellee.
Rose v. Wortham,
In a contest between creditors of the insured and a legatee of his insurance, who is not within the favored class created by the statutes, the intention of the testator is immaterial. The creditors take contrary to his intent, unless the statute operates to defeat them. In the case at bar, the testator has by the use of apt words diverted the fund from the class favored by statute, for whom *621 the exemption was created, and having done so, he has rendered the statute wholly inapplicable.
In Agee v. Saunders,
Chrisman v. Chrisman,
White v. Bickford,
Consideration of Acts 1925, chapter 113, greatly strengthens the conclusion reached in the cause before us. The earlier statutes were restricted to insurance effected on the life of a "husband." They had no application to insurance on the life of an unmarried person, payable to his estate. Wright v. Wright,
We conclude that there is nothing in the decisions construing the cited statutes which would in any degree support a holding that life insurance payable to the estate of the insured, and so disposed of by will as to prevent the application of the statutory exemption in favor of widow, child, or dependent relative, is nevertheless exempt from the just debts of the insured. Exclusion of the favored class by the will of the insured destroys the exemption, and the insurance becomes assets of the estate, from which creditors may not be excluded by a bequest to a person or persons not within the scope or purview of the statutory exemption.
The bequest will, of course, carry to the legatee any surplus of the insurance after the debts of the estate are satisfied.
The chancellor sustained appellee's demurrer to the complainants' bill. His decree will be reversed, and a decree entered here overruling the demurrer, and remanding the cause for further proceedings. Appellee will pay the costs of the appeal. *624