THE 244 INSURANCE LAW JOURNAL. REPORTS OF DECISIONS RENDERED IN INSURANCE CASES IN THE FEDERAL COURTS, AND IN THE STATE SUPREME COURTS. WALTER S. NICHOLS, Editor. VOLUME XXI. NEW SERIES, VOLUME I. NEW YORK: PUBLISHED BY C. C. HINE, 137 BROADWAY, 1892, THE INSURANCE LAW JOURNAL. VOLUME XXI. 1892. [NEW SERIES, VOLUME 1.] REPORTS OF DECISIONS RENDERED IN INSURANCE CASES, IN THE FEDERAL COURTS, AND IN THE STATE SUPREME COURTS. From certified transcripts in our possession. SUPREME COURT OF CONNECTICUT. JOSEPH L. BARBOUR, ADMINISTRATOR, v8. CONNECTICUT MUTUAL LIFE INS. CO. ET AL. Policies were taken out by the insured for his own benefit. After the payment of two premiums he became insolvent, and the policies were mentioned to his assignee among other assets. Apparently deeming them of no value, their surrender was not asked for, and shortly before his discharge from insolvency under the Canadian act, the policies were surrendered by the insured to the company in exchange for others payable to his wife. Some years later he again became insolvent. Held, That a subsequent creditor could not claim an interest in the policies, on the ground that they had been fraudulently withheld from former creditors. J. M. HALL, J. The finding in this case shows that Arthur W. Masters, a trader in St. John, New Brunswick, Canada, on July 2, 1870, took out two policies of insurance upon his life in the Connecticut Mutual Life Insurance Company of Hartford, Connecticut, each for the sum of $2,500, and payable to his legal representatives upon his death. One of the policies was a ten payment life policy, upon which an annual premium of $206.53, less dividends, was to be paid for ten years; and the other was an ordinary life policy requiring an annual payment of $128.83, less dividends. The premiums on each of these policies were duly paid in July, 1871 and 1872. On February 3d, 1873, Masters made an assignment for the benefit of his creditors under the insolvent act of 1869, of the Dominion of Canada, to an official assignee. The first meeting of creditors was held on February, 22, 1873, to receive a statement and appoint an assignee of the estate and effects of Masters under said insolvent act. At that meeting Masters met his creditors, and when asked by them about his assets, told them, after mentioning other items of property, that he held the two policies of insurance above described, and also informed them that but two premiums had been paid upon them. The creditors discussed the value of the policies in a general way, some of them expressing the opinion that they were of very little value. It appears also from the finding that the Bank of New Brunswick, on account of whose claim the present action was brought, was present at the meeting of creditors by counsel, but it does not appear whether the bank was at that time a creditor or not. The assignee never demanded, claimed, or took possession of the policies, nor did any of the creditors ever take any action to obtain such possession. On January 17th, 1874, Masters surrendered the policies to the insurance company and new polices were at his request issued for the same amounts and premiums, and identical in all respects with those surrendered, except that they were made payable to his wife, Hannah Masters. On February 4th, 1874, Masters was duly discharged in insolvency, and there was not at the date of this suit any creditor whose claim was outstanding at the time of the insolvency, or so far as it appeared of the discharge. After Masters took out the new policies for the benefit of his wife, he applied to his sons for help to keep up the policies, as he was unable to pay the premiums upon them. They from time to time thereafter advanced money to pay these premiums. The premiums on one of the policies became actually paid up in July, 1879. The premium of $128.83, on the other policy, less the dividends, was duly paid each year until the death of the insured. The sons paid directly the premium due in 1883 on the last-named policy, and annually thereafter. In April 1883, Masters again failed in business and was then indebted to said Bank of New Brunswick on claims which originated after the beginning of the year 1883, and which are now represented by two judgments amounting to upwards of $2,600. Masters died October 23, 1888. Thereupon the bank, as such creditor, caused application to be made in the Court of Probate for the District of Hartford for the appointment of an administrator upon his estate, and the plaintiff was duly appointed administrator, and commenced this suit, in which the defendant subsequently filed an answer by way of cross-bill, and asked that Hannah Masters be made a party thereto, and interplead with the plaintiff, as appears of record. No claim against said estate other than that of said bank has been presented or is known to exist. The policies in question were not liable to be taken on execution for the payment of debts in the province of New Brunswick, either in 1873 or in 1874, but would have been assets, if of any value, in the hands of the assignee in insolvency, if he had taken possession of them. Upon the foregoing facts the plaintiff claims in his appeal, as matter of law, that the surrender and reissue of the policies was fraudulent and void as against the creditors whose claims existed at the time such surrender was made, and if so fraudulent as against existing creditors, then such surrender and reissue can be avoided by any subsequent creditor. A proper consideration of this legal proposition requires its division. The first question is, whether in view of all the facts found by the court below, the act of Masters, the insolvent, in surrendering the policies to the company and causing them to be reissued in favor of his wife, was a fraudulent act upon his existing creditors. A policy of life insurance, being a contract to pay a fixed sum of money to the beneficiary of the policy, provided certain stipulated premiums are paid, constitutes a chose in action, its value depending on the nearness of the day for the performance of the contract. Undoubtedly whenever choses in action belonging to a debtor may be reached by creditors, a voluntary transfer of a life insurance policy in fraud of the rights of creditors may be set aside for their benefit. "Where a person has taken out policies of insurance upon his life for the benefit of his estate, it has been frequently held that, as against creditors, his assignment when insolvent of such policies to or for the benefit of wife and children, or either, constitutes a fraudulent transfer of assets within the statute, and this even though the debtor may have had no deliberate intention of depriving his creditors of a fund to which they were entitled; because his act has in point of fact withdrawn such a fund from them |