est in it, pass under the deed of assignment | receive in cash its then cash-surrender value. for the benefit of creditors; and could the assignee exercise the privilege given by the policy to the insured, of surrendering it in accordance with its terms, and take its then cash-surrender value in discharge of all the company's liability on it? The estate of the assignor embraced by the general deed of assignment is regulated by $ 75, Ky. Stat. 1903, which reads in part: "The deed of assignment shall be acknowledged by the assignor in the same manner as other deeds, and shall be recorded in the county clerk's office of the county where the assignor resides, and where the business in respect of which the same is made is carried on, and in each county where a tract of land or the greater part thereof conveyed by the deed is situated; and the deed shall vest in the assignee the title to all the estate, real and personal, with all deeds, books, and papers relating thereto, belonging to the assignor at the time of the making of the assignment, except the property exempt by law shall not pass unless embraced in the deed." We think it is first necessary to determine the rights of the parties to the contract of insurance, who are (1) the insurer, (2) the insured (R. P. Townsend), and (3) the assured, the beneficiaries named or described in the policy. At the time of the suit, and of the judgment, the latter were the children of R. P. Townsend. But, should other children be born to him, or should any of his children die in his lifetime leaving children, the clause in the policy naming its beneficiaries would open up to let them in. In Hopkins v. Hopkins, 92 Ky. 324, 17 S. W. 864, the law is thus stated as to the rights of beneficiaries named in life-insurance policies: "The general rule is that the right to a policy of insurance, and the money to become due under it, vests immediately upon its issual in the person named in it as the beneficiary; and that this interest, being vested, cannot be transferred by the insured to any other per son. Central Nat. Bank v. Hume, 128 U. S. 195, 32 L. ed. 370, 9 Sup. Ct. Rep. 41. The vested right cannot be devested without the consent of the person invested with it. This is so as to insurance in both mutual and ordinary life insurance companies. This does not hold true, however, where the contract of insurance provides that the insured may change the beneficiary. In such case it vests conditionally only." In the case at bar there was no reservation in the policy of the right to change the beneficiary. The only reservation to the insured was the right to surrender the policy at the end of the first ten years, or at the end of any subsequent five years, and to And this right continued only for thirty days immediately following the ten and five year terms mentioned. Unless, then, this right was exercised at the time, and in the manner expressed in the policy, the interest of the named beneficiaries continued unaffected by it. Their interest was vested, subject to be defeated only (1) if they died before the insured, or (2) if he, at the time and in the manner expressed in the policy, exercised his option to surrender it in exchange for its then cash-surrender value. It was not within the power of the insured, or within his and the insurer's power, to alter the terms of the contract so as to affect the interests of the beneficiaries. The insured had not the right to assign the policy to another, for value or not; nor had he the right to pledge it as collateral to secure his own indebtedness. The assignee could take no better title than he himself had, which was that of ultimate beneficiary in event of his failure of issue during his life. In the latter event it is quite likely his assignment to a creditor would be held to create an equitable lien upon the fund. But it is contended that the insured has exercised his option to surrender the policy in exchange for its cash-surrender value. It must be remembered, in testing this act, that it must be done not only when, but done in the way, the policy required. This is not so much for the benefit of the insurer who might waive the question, but for the assured, the beneficiaries. The power of attorney given to the bank was not an exercise by the insured of this option. It was an attempt on his part to give to an- ! other the power to exercise an option which he alone had under the contract. Admitting, that one may transfer his option so as to vest it in his assignee, it must at least be confined to his option concerning that which is his alone. If he has, by a tripartite contract, the option to adopt such a course in his judgment as would end the estate of one of the parties, the latter is entitled to have him exercise his own option. A might be willing that B should have the power to terminate the former's estate; whereas, he would be altogether unwilling to risk it with C, although selected by B for the purpose. That the beneficiaries in this policy did not exercise their own will in bringing the contract into existence takes nothing from the applicability of the principle that one vested with a power, to be exercised on behalf of or against another party to the instrument creating it, must exercise it in person, and may not delegate it to another. Sugden, Powers, 214-224. In addition, the attempted exercise of the power by the insured was not done in the manner nor at the times specified in the contract. He must have surrendered up this policy to the insurer within thirty days after the termination of the ten and five year periods, respectively, to wit, within thirty days after February 4, 1895, February 4, 1900, February 4, 1905. As it affected the interests of others than the insured and insurer, time was of the essence of this contract. owe other obligations in this life just as sacred, even in the eyes of the law, as those to his coal dealer or butcher. It admits the obligation to provide, first, at least a reasonable and decent subsistence for our dependent members; that little children have moral and legal rights upon the parents as much entitled to the law's respect and consideration, as creditors have. Therefore, the legislature of this state has enacted: "Sec. 654. A policy of insurance on the Furthermore, the bank, though we should life of any person expressed to be for the hold it had the same right to exercise the benefit of, or duly assigned, transferred, or power to disappoint the beneficiaries that made payable to, any married woman, or to the insured had, has never exercised that any person in trust for her, or for her benpower. In whatever view the subject is efit, by whomsoever such transfer may be looked at, the case always comes back to made, shall inure to her separate use and this point: The right reserved to the in- benefit, and that of her children, independsured to surrender the policy at stated in-ently of her husband or his creditors, or tervals in exchange for its cash-surrender any other person effecting or transferring value has not been exercised, and therefore the vested interest of the beneficiaries remains unaffected by it. From what has been said it follows that, if the insured could not assign the policy, in spite of its declaration that it was not assignable, and in spite of the vested interests of its beneficiaries, so as to secure a particular debt of his own, he could not as sign it for the benefit of his creditors generally so as to vest his assignee with all the rights and power under it that the insured himself had. the same, or his creditors. And a married woman may, without consent of her husband, contract, pay for, take out, and hold a policy of insurance upon the life or health of her husband or children, or against loss by his or their disablement by accident, and the premiums paid on any such policy shall be held to have been her separate estate, and such policy shall likewise inure to her separate use and benefit and that of her children, free from any claim of her husband or others. But, if the premium on any policy in this section mentioned is paid by any person with intent to defraud his creditors. an amount equal to the premium so paid, with interest thereon, shall inure to the benefit of said creditors, subject, however, to the statute of limitations." Ky. Stat. 1903. "Sec. 655. When a policy of insurance is effected by any person on his own life, or on another life in favor of some person oth Certain cases in this court have involved the rights of the creditors of the insured in policies of life insurance, where there was an assignment for the benefit of creditors. Planters' State Bank v. Willingham, 111 Ky. 64, 63 S. W. 12; Larue v. Larue, 96 Ky. 326, 28 S. W. 790; Barbour v. Larue, 106 Ky. 546, 51 S. W. 5; Morehead v. Mayfield, 109 Ky. 51, 58 S. W. 473. It is thoughter than himself, having an insurable interthat these cases indicate that a policy of insurance on one's life, in which his estate is the beneficiary, is such property as passes under a general deed of assignment. If the insured's estate is the only beneficiary, and if the policy has been in existence long enough to have a cash value, it is such estate. But that is not this case. Life in surance was primarily for the benefit of the dependent members of the family of the insured. While not exclusively so, nor necessarily so, such is generally its purpose. A man can labor while he lives to feed and clothe those who are dependent on him. It is a natural and commendable desire to provide for the same objects after his death. Such providence is looked upon encouraging ly by the law. It is viewed in the same light that homestead and other exemptions are, all of which evidences the humaneness of the law. It recognizes that a man may est therein, the lawful beneficiary thereof, other than himself or his legal representatives, shall be entitled to its proceeds against the creditors and representatives of the person effecting the same: Provided, that, subject to the statute of limitations, the amount of any premiums for said insurance paid in fraud of creditors, with interest thereon, shall inure to their benefit from the proceeds of the policy; but the company issuing the policy shall be discharged of all liability thereon by payment of its proceeds in accordance with its terms, unless, before such payment, the company shall have written notice by, or in behalf of, some creditor, with specification of the amount claimed, claiming to recover for certain premiums paid in fraud of creditors." There is no claim in this case that the insured diverted an unreasonable amount of his estate to life insurance for the benefit of not. If a debtor has a homestead exemption, or the two horses exempt from execution, could he be compelled to sell and convert the property into cash (for he has the right and power to do so) so that his creditors could reach it? A married woman may make a will. She may exclude her husband from her estate. But it is subject to his right of renunciation within one year, in which event he would take under the statute of descent. It has been held by this court that an indebted husband could not be com his family. At that time he was a very | eise it against his children, and in favor of rich man. His creditors then had no right his creditors? Or could he have been reto complain. The policy was fully paid up quired to so exercise it as to give it all to years ago, and while he was still in affluent one child who was indebted, so that the circumstances. There is no hint that he creditors might get it, and so as to exclude acted in any fraudulent sense in the matter. the other child? Is this case different in It was therefore allowable, without preju-principle from those supposed? We think dicing his creditors' rights, that he take out the policy for the benefit of his family as he did. It was to insure them against mis hap in fortune as well as against his own premature death. Such insurance is made exempt, by the statutes quoted, from the debts of the insured. That it was competent for the legislature to have done so is not open to question. That such insurance, honestly effected, is not liable for the debts of the insured, has been held in Hise v. Hartford L. Ins. Co. 90 Ky. 101, 29 Am. St. Rep. 358, 13 S. W. 367; Thompson v. Cun-pelled to exercise his option to renounce the diff, 11 Bush, 567; Stokes v. Coffey, 8 Bush will which gave all the property to his 533; Hopkins v. Hopkins, 92 Ky. 324, 17 S. children, and to take his part under the statW. 864; Wirgman v. Miller, 98 Ky. 620, 33 ute. Bottom v. Fultz, 30 Ky. L. Rep. 479, S. W. 937; Morehead v. Mayfield, supra. 98 S. W. 1037. We are unable to distinThose cases, we concede, dealt with the ques-guish between the principle in that case and tion of the right of one indebted to insure this one. his life for some members of his family, and to pay for it out of his means; while here the debtor insures his own life for the benefit of his estate in a contingency reserving to himself also the right to anticipate the sum insured and apply it to his own use if he so choose. Holding that the option to cash the policy has not been exercised, and that the power is not assignable, it is nevertheless such estate as, under a general deed of assignment, will not pass by law to the assignee for creditors. His interest is remotely contingent, and incapable of being valued. It is so woven in with other considerations, such as his conception of duty to his children, and the exercise of judgment in their behalf and in his own, that there can be no certain way of estimating the value of that interest, or of disposing of it without destroying or endangering other interests under the policy which are primary to those of the insured. The option is, baldly, to let his children have this provision for their future support, or to take it himself. Whether he should take it himself involves the exercise of judgment, discretion, and his own conception of duty. No one else has the right to exercise it for him, nor against the children; no one else could be actuated by the same impulse. Suppose the case were that the insured merely had reserved the power to change the beneficiary. have time and again held, since the Hopkins Case, supra, that such a power reserved in the policy was not affected by the statutes quoted above. Could he be required to exer We A statute of the United States (bankr. act July 1, 1898, chap. 541, 30 Stat. at L. 544, U. S. Comp. Stat. 1901, p. 3418) provides that life policies of bankrupts shall be subject to administration by the trustee for the benefit of creditors. But this proceeding is not under that statute. Nor can it elucidate the principle under consideration to note the decisions of the Federal court expounding that statute, although it might be noted, in passing, that Congress seems to have deemed it necessary to expressly include such policies, or they probably would not have passed under the bankrupt proceedings. We conclude that the life policy in this suit was not assignable so as to affect the interests of the beneficiaries provided in it, that it did not pass to the assignee under the deed of assignment for creditors, and that therefore the assignee had no right of action upon it or to recover it. Such was the judgment of the circuit court. It is affirmed. Hobson, J., dissenting: In the application for the policy, which was made a part of it, there was this: "To whom is this insurance payable in case of loss? Emma S. Townsend. Relationship to the insured? Wife. To whom is it payable in case the endowment insurance, if the person insured survives the term, and to whom if the policy be surrendered for a cash value as herein provided? To myself." The fundamental error in the opinion, it seems hard to understand how the court could say this in view of the authorities which were before it. The bankruptcy statute is just like our statute, in that it vests in the trus tee in bankruptcy all the property of the bankrupt. There then follow certain exceptions of things which do not pass, and to one of these exceptions is attached this proviso: "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 trustee 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 participating in the distribution of his estate under the bankruptcy proceed to me, is that it fails to recognize that an | cies, or they probably would not have passed option to collect $6,240 is a right to that under the bankrupt proceedings." It is much money, and therefore property. Few insurance policies require the insured to aceept the cash-surrender value, and, if the right to accept the cash-surrender value is not property, then in practically no cases would the insurance policy pass to the assignee for the benefit of creditors, and the rule so often announced by this court that insurance policies having a cash-surrender value pass to the assignee under a deed of assignment amounts to nothing. Larue v. Larue, 96 Ky. 326, 28 S. W. 790; Barbour v. Larue, 106 Ky. 547, 51 S. W. 5;. Planters' State Bank v. Willingham, 111 Ky. 64, 63 S. W. 12; Morehead v. Mayfield, 109 Ky. 51, 58 S. W. 473. The effect of the ruling is that, although Townsend had assigned all his property for the benefit of his creditors, he still had $6,240 beyond the reach of his creditors, which he could collect at the end of the tontine period and put in his pocketing; otherwise the policy shall pass to the to commence business on again. The fact that the money was not due at the date of the assignment no more exempts it from the claims of the assignee than the fact that a note or other obligation was not due would exempt it. Our statute provides that all the property of the assignor shall vest in the assignee. It does not except any thing except the exempt property. Ky. Stat. 1903, § 75. There is no exception in the statute of the property held by the assignor in insurance policies. The deed of assignment in this case transferred to the assignee all of the assignor's property, real and personal, "also all notes, stocks, bonds, choses in action, and all other property of every kind and description." When the court refuses to adjudge the money in controversy to the assignee, it goes without saying that the assignor may collect his $6,240 when he gets ready; and, if such a right is not included by the words "choses in action and all other property of any kind and description," it is difficult to un derstand what these words would include. In disposing of the authorities under the United States bankruptcy act (act July 1, 1898, chap. 541, 30 Stat. at L. 544, U. S. Comp. Stat. 1901, p. 3418), the court says: "A statute of the United States trustee as assets." Construing this pro- [the bankruptcy act] provides that life poli- Under under the present act, that policies pass to the trustee which have a real value, al though they have no cash-surrender value and are not within the provisions of § 70a. Re Slingluff (D. C.) 106 Fed. 154; Re Mertens (D. C.) 131 Fed. 972; Gould v. New York L. Ins. Co. (D. C.) 132 Fed. 927; Re Coleman, 69 C. C. A. 495, 136 Fed. 818; Van Kirk v. Vermont Slate Co. (D. C.) 140 Fed. 38. These courts further hold uniformly that an option to accept a cash-surrender value is property and passes to the trustee in bankruptcy. Re Diack (D. C.) 100 Fed. 770; Re Boardman (D. C.) 103 Fed. 783; Re Holden, 51 C. C. A. 97, 113 Fed. 141; Re Mertens, 73 C. C. A. 561, 142 Fed. 445; Clark v. Equitable Life Assur. Soc. (C. C.) 143 Fed. 175; Hiscock v. Mertens, 205 U. S. 202, 51 L. ed. 771, 27 Sup. Ct. Rep. 488. That this policy would pass to the trustee in bankruptcy under the rulings of the United States courts must be admitted. The ruling of this court can have only the effect to compel creditors to preserve their rights in bankruptcy courts; and what good will come from this is hard to see. The rules for the administration of an insolvent estate should be the same in both courts, so that confusion may be avoided. The court quotes at length §§ 654 and 655, Ky. Stat. 1903. These sections, so far as they pertain to this case, are copied from | the act of 1870. The facts as to that act are these: In Stokes v. Coffey, 8 Bush, 533, this court held that, if an insolvent debtor insured his life for the benefit of his wife, so as to make an unreasonable provision for her, it was fraudulent as to antecedent creditors. To protect insurance of this character for the benefit of the wife, the legislature passed the act referred to. Thompson v. Cundiff, 11 Bush, 567. The act applies to insurance for the benefit of the wife and children. It does not apply to insurance which the husband takes out for his own benefit. If the policy in question had not contained the provision that, in case the insured survived the term, the cash-surrender value should be paid to him, the act would apply; but, so far as it is a contract to pay money to him, it is not within the language or the purpose of the statute. It has been supposed that our laws are so framed that human ingenuity could devise no plan by which a man might hold property free from the claims of his creditors. The statute was not intended to contravene this principle, and there is nothing in the subsequent decisions justifying such a construction. The interest of the children in the policy in contest is not absolute. It is not an insurance for their benefit, for the insured may yet exercise his right to accept the cash-surrender value when he needs the money. The case of Bottom v. Fultz, 30 Ky. L. Rep. 479, 98 S. W. 1037, has no application. The right of the husband to renounce the wife's will is a purely personal privilege conferred on him by the statute to protect him from injustice by the will of the wife. It is not property which the creditors can subject to their debts. To so hold would be to defeat the purpose of the statute. This doctrine is not applicable to rights created by contract which are property. When the husband does not, within the year allowed him, renounce the will of the wife, the rights of the devisees become absolute. Here the insured may in future, when he wishes to, turn in the policy and accept the cashsurrender value. The rights of the children under the policy are not absolute as long as he lives. Every chose in action is assignable. Anything that is assignable may be pledged for debt. The tontine feature of the policy did not change its legal character. This was simply for the convenience of the insurance company. The clause in the policy forbidding its assignment was also solely for the company's protection. If it was not affected, no one else could complain. The bank had a lien on the policy for its debt, and the right to surrender it pursuant to the policy and accept the cash-surrender value. If it did not do so, Townsend could do so and receive himself the surplus over and above the bank debt. This right which he had to receive about $4,000 passed by his assignment for the benefit of his creditors. The policy had been fully paid up for years before the assignment was made. The fund was simply so much laid up by the insured for a rainy day. When he needed the money, he could surrender the policy and collect the cashsurrender value. It is a novel idea that a man may have insurance which he may collect and use if he remains solvent, but that if he becomes insolvent his creditors cannot reach it. On the contrary, as settled by this court in a long line of decisions, the law is that a man cannot have property which is beyond the reach of his creditors, and that he cannot, by providing in the deed or settlement that his rights shall not be assignable, tie the hands of creditors. There is no reason that money payable by an insurance company should stand differently from money payable under other engagements or settlements. For these reasons, I dissent from the opinion of the court. Lassing and Barker, JJ., concur in this dissent. |