policy for the benefit of such member's wife, the surviving partner is entitled to the proceeds of the policy to the extent of the money misappropriated (Holmes v. Gilman, 138 N. Y. 369, 34 N. E. 205, 20 L. R. A. 566, 34 Am. St. Rep. 463, reversing Holmes v. Gilman, 19 N. Y. Supp. 151, 64 Hun, 227, which reversed in part Holmes v. Davenport [Sup.] 18 N. Y. Supp. 56). But where one of the intermediate premiums is paid by the beneficiary with her own money, she is entitled to a pro rata share of the proceeds (Dayton v. H. B. Claflin Co., 45 N. Y. Supp. 1005, 19 App. Div. 120). 3. RIGHTS OF CREDITORS AND ASSIGNEES. (a) Rights of creditors in general. (b) Same-Mutual benefit certificates. (c) Persons paying premiums. (d) Exemption statutes in general. (e) Same-Mutual benefit certificates. (f) Same-Following proceeds. (g) Assignments in general. (h) Assignees without interest. (i) Collateral assignment of the policy. (j) Assignment for benefit of creditors-Bankruptcy. (a) Rights of creditors in general. In the absence of special equities arising in connection with an attempted but invalid assignment or pledge to creditors, payment of premiums by creditors, payment of premium by insured while insolvent, or the like, the creditors of insured have no interest in the proceeds of a policy designating or for the benefit of a special beneficiary. Reference may be made to the following cases as illustrative: Hendrie & Bolthoff Mfg. Co. v. Platt, 13 Colo. App. 15, 56 Pac. 209; In re Donaldson's Estate (Iowa) 101 N. W. 870; Skinner v. Gaither, 87 Md. 330, 39 Atl. 876; Pullis v. Robinson, 73 Mo. 201, 39 Am. Rep. 497; First Nat. Bank v. Simpson, 152 Mo. 638, 54 S. W. 506; Studebaker Bros. Mfg. Co. v. Welch, 51 Neb. 228, 70 N. W. 920; Southwell v. Gray, 72 N. Y. Supp. 342, 35 Misc. Rep. 740; In re Schaefer's Estate, 194 Pa. 420, 45 Atl. 311, affirming 8 Pa. Dist. R. 221; Hancock v. Fidelity Mut. Life Ins. Co. (Tenn. Ch. App.) 53 S. W. 181. See, also, Pingree v. Jones, 80 Ill. 177, and In re Van Dermoor's Estate, 42 Hun (N. Y.) 326. And conversely the proceeds of a policy, by its terms payable to a creditor, inure to him, at least to the extent of his debt,1 free from the claims of other creditors or insured's family. Belknap v. Johnston, 86 N. W. 267, 114 Iowa, 267; Maynard v. Life The creditors of an infant taking a policy of insurance on his life with In Jewelers' League v. Hepke, 60 N. Y. Supp. 224, 28 Misc. Rep. 716, affirmed without opinion 63 N. Y. Supp. 1110, 49 App. Div. 648, the circumstances were held to show that it was intended to make the creditor a beneficiary only to the extent of his debt. Such a decision is also found in McDonald v. Humphries, 56 Ark. 63, 19 S. W. 234. And where this is true, the net amount realized from the policy should be applied as a credit on the debt (Raley v. Ross, 59 Ga. 862). A somewhat obscure stipulation rendering the policy void beyond the amount of the debt was in Kentucky Life & Acc. Ins. Co. v. Hamilton, 63 Fed. 93, 11 C. C. A. 42, 22 U. S. App. 386, held to apply only to assignments, and not to a policy in which the creditor was named as beneficiary. And certainly it would not apply, the court held, where the beneficiary did not become a creditor until after the issuance of the policy. The proceeds of a policy payable to insured's "heirs" vest in the heirs under the policy, and, in the absence of some other controlling circumstance, do not become a part of the insured's estate subject to payment of debts. Hubbard v. Turner, 93 Ga. 752, 20 S. E. 640, 30 L. R. A. 593; In re 1 As to the question of insurable interest as affecting the right of a cred itor to hold more than his debt and expenses, see ante, vol. 1, pp. 301-306. But where the policy is payable to the heirs, executors, administrators, or assigns of the insured, the proceeds go to his legal representatives as assets for the payment of debts (Rawson v. Jones, 52 Ga. 458). So, also, in the absence of statute, the creditors are entitled to preference over the family in the proceeds of a policy made payable to insured's estate. Bickel v. Bickel, 25 Ky. Law Rep. 1945, 79 S. W. 215; In re Kennedy's And where a policy by its terms payable to insured's "executors, administrators, or assigns" is bequeathed by insured to his widow and child, and the estate becomes insolvent during administration, the creditors may resort to the insurance fund for the payment of their claim (Dulaney v. Walsh [Tex. Civ. App.] 37 S. W. 615). The right of a creditor named as beneficiary is not cut off, though the debt itself is barred by the statute of limitations. Townsend v. Tyndale, 165 Mass. 293, 43 N. E. 107, 52 Am. St. Rep. 513; Connecticut Mut. Life Ins. Co. v. Dunscomb, 108 Tenn. 724, 69 S. W. 345, 58 L. R. A. 694, 91 Am. St. Rep. 769. Where the policy is intended by the parties as collateral for debts then existing, it will not be extended by implication to cover subsequent debts. Levy v. Taylor, 66 Tex. 652, 1 S. W. 900. See, also, in connection, Shove v. Shove, 79 Wis. 497, 48 N. W. 647, which, however, was decided on a question of evidence. The personal representatives of insured, in the absence of a special contract or equity to the contrary, are entitled to any surplus which the creditor, to whom the policy has been made payable, is not entitled to hold, either on account of rules as to insurable interest or because of a prior contract with insured. Crotty v. Union Mut. Life Ins. Co., 144 U. S. 621, 12 Sup. Ct. 749, 36 L. But where the contract looked 'to the payment to the insured's widow of the surplus over the debt, such surplus was, of course, held by the creditor in trust for her (Sell v. Steller, 53 N. J. Eq. 397, 32 Atl. 211). (b) Same-Mutual benefit certificates. Mutual benefit certificates have always been regarded both by the legislatures and the courts as peculiarly intended for the protection of insured's family, rather than of his creditors. Thus, it is a general provision of statutes looking to the incorporation of mutual benefit societies that the beneficiary of any certificate issued shall be a member of insured's family or in some manner dependent upon him. Such a charter provision of the state where the contract is executed and to be performed will be given effect in another state, except so far as modified by the statute of that state granting franchise rights to transact business therein. In re Andress' Estate (Com. Pl.) 6 Ohio Dec. 174. See, also, Northwestern Masonic Aid Ass'n v. Jones, 154 Pa. 99, 26 Atl. 253, 35 Am. St. Rep. 810. And conversely, where by the charter of the company a creditor was permitted to take, and a substitution of a creditor was made after the issuance of a certificate to a resident of a foreign state, such creditor was entitled to the proceeds, though after the issuance of the certificate, and before the substitution, the association had obtained a license to do business in the foreign state, thereby subjecting itself to a statute of such state forbidding the issuance of a certificate to a creditor. 2 Belknap v. Johnston, 114 Iowa, 265, 86 N. W. 267. But see, in connection, Pietri v. Seguenot, 96 Mo. App. 258, 69 S. W. 1055. The rights of relatives or dependents, as against the creditors, are, of course, especially strong where the insured has himself designated as the beneficiary some member or members of the preferred class. Supreme Council v. Priest, 46 Mich. 429, 9 N. W. 481; Bishop v. Curphey, 60 Miss. 22; Fisher v. Donovan, 77 N. W. 778, 57 Neb. 361, 44 L. R. A. 383; Bown v. Catholic Mut. Ben. Ass'n, 33 Hun (N. Y.) 263; In re Palmer, 3 Dem. Sur. (N. Y.) 129; In re Oerlett's Estate, 7 Pa. Dist. R. 678, 21 Pa. Co. Ct. R. 616. See, also, In re Brooks, 5 Dem. Sur. (N. Y.) 326, and Appeal of Hodge, 8 Wkly. Notes Cas. (Pa.) 209. A designation of the "heirs at law" as beneficiaries will place the proceeds beyond the reach of creditors (Northwestern Masonic Aid Ass'n of Chicago v. Jones, 154 Pa. 99, 26 Atl. 253, 35 Am. St. Rep. 810). 2 Acts 21st Gen. Assem. Iowa, c. 65, § 7. Though the member has designated no one whom he wishes to take, yet, if the charter designates relatives or dependents as those to whom the certificate is to be paid, such persons will take as against the creditors. Warner v. Modern Woodmen of America (Neb.) 93 N. W. 397, 61 L. R. A. 603; Golden Star Fraternity v. Martin, 59 N. J. Law, 207, 35 Atl. 908; Beeckel v. Imperial Council of the Order of United Friends, 58 Hun, 7, 11 N. Y. Supp. 321, affirmed without opinion 124 N. Y. 661, 27 N. E. 413; In re Beyer's Estate, Prob. Ct. Rep. (Ohio) 241; Northwestern Masonic Aid Ass'n v. Jones, 154 Pa. 99, 26 Atl. 253, 35 Am. St. Rep. 810; Morrell's Estate, 8 Wkly. Notes Cas. (Pa.) 183; Ballou v. Gile, 50 Wis. 614, 7 N. W. 561. And it has been held that a designation of a creditor as beneficiary, by a member of an order doing business under such a charter, is void and of no effect. Kentucky Grangers' Mut. Ben. Soc. v. McGregor, 7 Ky. Law Rep. 750; See, also, In re Smith's Estate, 87 N. Y. Supp. 725, 42 Misc. Rep. 639, It was further held in the McGregor, Schwarzenberg and Carson Cases that such a contract is not entirely void, but that the fund should go to those who might properly have been named as beneficiaries. This rule is not varied by making the certificate payable to one lawfully authorized to receive the benefit under an agreement by him to act as trustee for a creditor. Such an agreement the courts will not enforce. (Gillam v. Dale, 69 Kan. 362, 76 Pac. 861.) But in Michigan, where it is provided by statute that an assessment company may issue certificates payable to creditors, it has been held that a person insured in such an association can charge his beneficiary with payment of a debt out of the insurance money. 3 Woodruff v. Tilman, 112 Mich. 188, 70 N. W. 420. See, also, Maybury v. Berkery, 102 Mich. 126, 60 N. W. 699, where it was held that one who had accepted the proceeds under an agreement that they Comp. Laws, § 7487. |