surance policy for such sum over that amount per year as the debtor had paid for two years.

In Re New York L. Ins. Co. (1919) 16 Ont. Week. N. 258, the case was controlled by a statute permitting insurance by any person for the benefit of another, whether the beneficiary had an insurable interest in the life of the assured or not, but providing that if the premiums were paid by the assured with intent to defraud his creditors, they should be entitled to receive out of the insurance money an amount not exceeding the premiums so paid, and interest thereon.

And as to the similar provision of the Married Women's Act of England, see Holt v. Everall (1876) L. R. 2 Ch. Div. (Eng.) 266, 45 L. J. Ch. N. S. 433, 34 L. T. N. S. 599, 24 Week. Rep. 471-C. A., cited under V. f, infra.

e. Effect of provisions of policy or nature of insurance.

A distinction as regards the present question is made in Talcott v. Field (1892) 34 Neb. 611, 33 Am. St. Rep. 662, 52 N. W. 400, between the ordinary case of life insurance and one of investment in an endowment policy, it being held that while ordinarily a policy of life insurance, payable to the wife upon the death of the husband, is not subject to be applied in payment of his debts, yet, where the policy is in the form of an endowment, and a certain sum is to be repaid after a specified number of years, the transaction is in the nature of a loan, the insurance being a mere incident, and where the premiums have been paid by an insolvent debtor, the insurance money on such policies received by the wife during the lifetime of the husband does not become hers as against creditors of the husband, but is subject to their claims. The court said: "It may be conceded that where a reasonable amount of insurance is effected upon the life of a husband, the sole object being to provide a fund for the support of a beneficiary in case of the death of the insured, that such fund will not ordinarily be liable for his debts. Where, however, the money, or a considerable portion of it, is to be

repaid in his lifetime, the transaction partakes more of the character of a loan. On principle, the insured might deposit the premiums in a bank on time certificates drawing interest, and at the end of fifteen years draw the same with accrued interest. Such funds remain the property of the debtor. So in case of an endowment policy. The transaction is simply one of contract, in which the insurer promises after a certain date to repay the insured the amount agreed upon. Now, suppose the money so invested belongs to the debtor, and which should be applied to the payment of his debts, the mere act of filtering it through the insurance company will not transmute it so that it becomes the property of the beneficiary, free from the claims of creditors. If so, it would afford an easy mode of evading the law, and no stronger illustration is required than the case under consideration. If a debtor's property may be given to his wife in the way proposed, free from the claims of creditors, then our attachment and other laws for the collection of debts are wholly deficient and ineffectual to protect the rights of creditors."

But, if the husband is not insolvent at the time he pays the premiums on the endowment policy, it has been held that the money received by the wife from the insurance company is not subject to the claims of his creditors, although, after the receipt of the money, he becomes insolvent. Studebaker Bros. Mfg. Co. v. Welch (1897) 51 Neb. 228, 70 N. W. 920. Attention is called to this case as distinguishing Talcott v. Field (Neb.) supra, although it will be noted that the Welch Case is not on facts within the scope of the title to the present annotation, the insolvency being a subsequent matter.

It was held in Ramsey v. Nichols (1898) 73 Ill. App. 643, that mortuary assessments paid by an insolvent husband to maintain his certificates of membership in a benevolent association, by the terms of which, upon his death, his wife and children were to receive the sums of money specified in

such certificates, must be treated as premiums paid for life insurance, within the meaning of the statute in that state making it lawful for a married woman to cause the life of her husband to be insured for her sole use, free from the claims of his creditors, but providing that if the premium of any such policy was paid by any person with intent to defraud his creditors, an amount equal to the premium so paid, with interest, should inure to the benefit of said creditors, the important feature of such association being life insurance, and the whole of the assessments being paid to cover the cost of insurance, and not as a mere charity.

en

Where the assured did not survive the twenty-year period at the expiration of which, according to the provisions of the policy, he was titled to certain exchange or surrender privileges, it has been held that such provisions do not render the policy fraudulent and void as to creditors of the assured, in case the policy is in favor of the wife and premiums are paid by the husband while he is insolvent, the title being, nevertheless, vested in the beneficiary as soon as the policy is issued, although it was subject to certain conditions which might devest the wife of title after the expiration of twenty years. Hendrie & B. Mfg. Co. v. Platt (1899) 13 Colo. App. 15, 56 Pac. 209.

And where the husband died without having exercised the right given him by the provisions of the insurance policy on his life, payable to his wife, to change the beneficiary, it was held, in Weil v. Marquis (1917) 256 Pa. 608, 101 Atl. 70, that the statute applied which provided that all policies of life insurance taken out for the benefit of, or bona fide assigned to, the wife or children or dependent relative of the assured, should be vested in such wife or children or other relative, full and clear of all claims of the creditors of such person. The court took the view that, on the death of the assured under such circumstances, the position of his creditors became the same as it would have been if, when the policy was originally issued,

no right to change the beneficiary had been reserved.

The New Jersey statute was held applicable, in G. P. Farmer Coal & Supply Co. v. Albright (1919) 90 N. J. Eq. 132, 106 Atl. 545, to a case where the insurance policies on the life of a husband, which were payable on his death to his wife, gave him the option or privilege of assigning them, of surrendering them for their cash value, or of substituting for them an endowment form of policy, or of changing the beneficiary, it being unsuccessfully contended that that provision of the statute that every policy of life insurance made payable to or for the benefit of a married woman should inure to her separate use and benefit, subject to the provisions relating to premiums paid in fraud of creditors, did not apply, in view of the assured's power of revocation under the provisions of the policies in question. The court said that the language of the statute clearly indicated that the legislative purpose was to declare that the provision which one by his life insurance had made for the support of his wife and children after his death should not be wholly subordinate to the claims of creditors, without distinguishing whether such provision was made by a policy revocable or irrevocable in form. The contention in this instance was that the proceeds of the policies belonged to the assured's estate, because of the control reserved to him therein, and were not the property of the beneficiary.

f. Miscellaneous.

In Stokes v. Amerman (1890) 121 N. Y. 337, 24 N. E. 819, the question was as to the right of a judgment creditor, during the husband's lifetime, and before the policy became due, to equitable relief by injunction to prevent disposing of the policy, and to determine the creditor's rights; and it was held that the interest of the creditor by reason of the payment by the judgment debtor of premiums in excess of the amount of $500, as specified in the statute (which declared that when the premiums paid in any year out of the property or funds of the husband exceeded $500,

the exemption from claims of creditors should not apply to so much of the premiums so paid as should be in excess of $500, but that such excess, with interest thereon, should inure to the benefit of his creditors), might be. declared by a court of equity and impressed upon the contract, in an action where the insurance company and all the persons interested therein were parties, although the money secured was not due; that the court had power to determine and declare the rights of the judgment creditor in the policy, and to enjoin the husband and wife from making any transfer thereof except in subordination to the creditor's rights.

A policy of insurance issued by a company organized and conducted outside of the limits of the state, as well as a policy issued by a company of the state, has been held within the Ohio statute providing that a person might effect insurance on his life for the benefit of his widow or children, and that the amount of insurance coming due should be payable to such widow or children, exempt from claims of the representatives and creditors of the husband, but that the amount of annual premiums should not exceed $150, and that, in case of excess, there should be paid to the beneficiary such portion of the insurance as the sum of $150 bore to the whole annual premium, and that the residue should be paid to the representatives of the deceased. Cross v. Armstrong (1887) 44 Ohio St. 613, 10 N. E. 160.

It was held in Weil v. Marquis (1917) 256 Pa. 608, 101 Atl. 70, that retrospective operation was not intended, and could not constitutionally be given, to the statute enacted in that state in 1911, so as to make it applicable to policies taken out before the act became effective. The statute provided that a policy of insurance issued by any company on the life of any person, expressed to be for the benefit of any married woman, whether procured by herself, her husband, or any other person, "shall inure to her separate use and benefit and that of her children," independently of the husband's creditors, and that, "if the premium

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 their benefit."

A statute exempting the proceeds of all life insurance from liability for debt was held, in Northwestern Mut. L. Ins. Co. v. Chehalis County Bank (1911) 65 Wash. 374, 118 Pac. 326, not to be repealed by implication by the subsequent enactment of another statute providing that sums paid upon premiums for life insurance, in fraud of creditors, might be recovered out of the proceeds of the policies, for the benefit of the estate, although the title of the latter act was broad enough to cover the whole scheme of life insurance. The court held that the statutes were not necessarily inconsistent, and that the principles applied that repeals by implication are not favored and that exemption statutes are favored. And it was held that where an insurance policy for the sum of $20,000 was taken out by one who was alleged to be insolvent, the proceeds of the policy were exempt to the widow, as against creditors of the husband's estate. The court does not discuss the effect of the insured's insolvency except to say that, under its construction of the statute, such insolvency made no difference. But it should be observed that the court did not directly decide the question whether sums paid by an insolvent for premiums for insurance on his own life would be in fraud of creditors. It was contended that, in any event, a sum equal to the amounts paid for premiums should be returned to the creditors, but the court said that, as the records showed that the amounts thus paid were paid by a secured creditor (the policy having been assigned. to a creditor as security), or deducted from the policy by the insurance company, they could not, in any event, be recovered, never having been a part of the estate.

As to the proper person to bring suit for insurance premiums paid by an insolvent where the statute provides that premiums paid with intent to defraud creditors shall inure to the benefit of the creditors, see Wil

liams v. Harth (Ky.), under VII. infra.

By the Married Women's Property Act of England, effective in 1870, it is provided that a policy of insurance effected by any married man on his own life, and expressed upon the face of it to be for the benefit of his wife, or of his wife and children, shall inure to and be deemed a trust for the benefit of his wife, or of his wife and children, for her separate use and that of the children, and shall not be subject to the control of the husband or of his creditors; but if it is proved that the policy was effected and the premiums paid by the husband, with intent to defraud his creditors, they should be entitled to receive out of the sum secured an amount equal to the premiums so paid. Holt v. Everall (1876) L. R. 2 Ch. Div. (Eng.) 266, 34 L. T. N. S. 599, 45 L. J. Ch. N. S. 433, 24 Week. Rep. 471. It was held in this case that the provision of the Bankruptcy Act that any settlement of property made by a trader upon his wife and children should be void if he became a bankrupt within two years from the date of the settlement of the property was so far modified by the Married Women's Property Act that if a trader effected a policy of insurance on his own life, for. the benefit of his wife and children, it would be valid under the latter statute, subject to any liability there might be to repay premiums paid in fraud of his creditors. Whether premiums paid by one who is insolvent would be regarded as in fraud of creditors is not discussed, and the value of the case as a precedent on the present question is impaired by the fact that the premiums on the policies were found to have been paid out of the wife's separate estate.

Under the provision of the New York statute declaring that a married woman might, in her own name, or in the name of a third party, with his consent, cause the life of her husband to be insured for a definite period, or for the term of his natural life, and that where she survived such period or term, she should be entitled to receive the insurance money as her separate

property, free from any claim of creditors or representatives of her husband, except where the premiums actually paid annually out of the husband's property exceeded $500, "that portion of the insurance money which is purchased by excess of premium above $500 is primarily liable for the husband's debts," it was held in Kittel v. Domeyer (1903) 175 N. Y. 205, 67 N. E. 433, that the word "primarily," as used in the statute, was not to be used in the sense of authorizing an immediate proceeding by a creditor against the insurance fund, without regard to the condition of the estate of the deceased generally, but that the intent of the statute was that when such estate was insufficient for the payment of the debts, the right of the wife to that portion of the insurance purchased by the excess of premiums should be postponed to the rights of creditors; in other words, that the wife should not be deprived of any portion of the proceeds of insurance until it was ascertained by administration upon the estate that the other assets were insufficient to satisfy the claims of creditors.

VI. Subsequent creditors.

While few cases have discussed the question of the rights of subsequent creditors, as such, in its relation to the present subject, it will be observed that the rule above laid down, upholding in general the right of the insolvent debtor to carry insurance as applicable to creditors, applies a fortiori to creditors whose debts are incurred after the payments by the debtor for insurance. Several cases deal specifically with the rights of subsequent creditors, without indicating, in some instances, as to what the holding might have been in case the rights of existing creditors had been involved. These, and one or two other cases distinctive to the question of the rights of subsequent creditors, are here set out. But, as already indicated, the fact should be borne in mind that such creditors are, a fortiori, within the rules laid down in the other subdivisions of the annotation.

It was held in May v. May (1882) 19 Fla. 373, that payment of premi

ums on life insurance by a father as a gift to his daughter, or for her benefit, could not be treated as a fraud against subsequent creditors of the father, on the ground that, at the time, he was insolvent.

So, in Wagner v. Koch (1892) 45 Ill. App. 501, it was held that payment of insurance premiums by one who is insolvent would not be a fraud on subsequent creditors, the insurance being taken out by a husband in favor of his wife, although the statute gave a remedy against the proceeds of insurance received by a deceased debtor's wife to the extent of premiums paid in fraud of creditors. The court said: "In order that a voluntary conveyance of property without consideration should be void as to any particular creditors, the debt should be an existing one at the time of the conveyance, the debtor not retaining sufficient property to pay all his debts.

In case the debtor is ever so much indebted to others aside from the complaining creditors at the time of the conveyance, the latter cannot complain when his indebtedness is contracted afterward, because the debt was not contracted on the faith of the ownership of the property given away, nor could such creditor come in and share out of the proceeds of the property, even if the conveyance be set aside by the rightful creditors. His claim cannot be tacked on to those having a right to complain. . . . For anything the bill shows, this claim had not been contracted till after the last premium was paid. The bill only shows deceased was indebted to appellant in his lifetime and at the time of his decease, and was also indebted to others, and that the premiums were paid while deceased was insolvent, without complainant's knowledge, and with intent to defraud complainant and his other creditors. It might all be true that the premiums were paid without appellant's knowledge, and that deceased was insolvent at the time, and yet appellant at the time may have had no indebtedness against him. Unless appellant was a creditor at the time the premiums were paid, how could deceased intend to defraud him? This

allegation of intent to defraud appellant is a mere conclusion of law and a misapprehension on the part of the pleader. From the facts stated there could be no such intent."

That in the absence of actual fraudulent intent, payment by a husband of insurance premiums on policies on his life, in favor of his wife, at a time when he is insolvent, or at least financially embarrassed, will not be deemed to be in fraud of subsequent creditors. see also Weber, L. &. Co. v. Paxton (Ohio), under V. c, supra.

But in a suit brought by a creditor of the insured on behalf of himself and other creditors, to subject to the payment of their claims the amount of insurance purchased by the excess of premiums over that allowed by statute, it has been held not essential that the excess premiums should have been paid by the insured after the debt of the particular creditor who brought the suit was incurred, but that, if the insured dies insolvent, the amount of the excess insurance obtained by such excess premium becomes an equitable asset, applicable to the satisfaction of all his debts. Guardian Trust Co. v. Straus (1910) 139 App. Div. 884, 123 N. Y. Supp. 852, affirmed, without opinion, in (1911) 201 N. Y. 546, 95 N. E. 1129. The statute entitled a married woman who had caused the life of her husband to be insured to receive the insurance money free from the claims of his creditors, but provided that when the premiums paid annually out of the husband's property exceeded $500, that portion of the insurance money purchased by such excess of premiums was primarily liable for the husband's debts.

The doctrine that subsequent creditors may have equitable relief against a voluntary conveyance in fraud of creditors if, during all the time in question, the debtor could not have discharged his obligations and there were creditors who could have brought the suit, the continuing indebtedness being merely shifted from one creditor to another, or from one form of indebtedness to another, is approved and held applicable in Red River Nat. Bank v. DeBerry (1907) 47 Tex. Civ. App. 96, 105 S. W. 998, to a case where