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cation. The amount of premium paid on this policy was $242.26, a loan having been deducted from the full premium of $337.20.
On the 13th of June, 1881, the Connecticut Mutual Life Insurance Company, of Hartford, in consideration of an annual premium of $350.30, to be paid before the day of its date, issued a policy of insurance
the life of Thomas L. Hume, in the sum of $10,000, for the term of his natural life, payable at Hartford to Annie G. Hume and her children by him, or their legal representatives. The application for this policy was signed "Annie G. Hume, by Thomas L. Hume." It was expressly provided, as part of the contract, that the policy was issued and delivered at Hartford, in the State of Connecticut, and was to be in all respects construed and determined in accordance with the laws of that State."
The “statute of Connecticut respecting policies of insurance issued for the benefit of married women was printed upon the policy under that heading, and is as follows : “Any policy of life insurance expressed to be for the benefit of a married woman, or assigned to her or in trust for her, shall inure to her separate use, or, in case of her decease before payment, to the use of her children or of her husband's children, as may be provided in such policy. Provided, that if the annual premium on such policy shall exceed three hundred dollars, the amount of such excess, with interest, shall inure to the benefit of the creditors of the person paying the premiums; but if she shall die before the person insured, leaving no children of herself or husband, the policy shall become the property of the person who has paid the premiums, unless otherwise provided in such policy;" and this extract from the statute was printed upon the policy and attention directed thereto. From the $350.30 premium the sum of $105 was deducted, to be charged against the policy in accordance with its terms, with interest, and $245.30 was therefore the sum paid.
The American Life Insurance and Trust Company, of Philadelphia, had also issued a policy in the sum of $5,000 on the life of Hume, payable to himself or his personal representatives, and this was collected by his administrators.
Thomas L. Hume died at Washington, on the 23d of October, 1881, insolvent, his widow Annie G. Hume and six minor children surviving him.
November 20, 1881, the Central National Bank, of Washington, as the holder of certain promissory notes of Thomas L. Hume, amounting to several thousand dollars, filed a bill in the Supreme Court of the District of Columbia against Mrs. Hume and the Maryland Life Insurance Company, the case being numbered 7,906, alleging that the policy issued by the latter was procured while Hume was insolvent; that Hume paid the premium of $242.26 without complainant's knowledge or consent, and for the purpose of hindering, delaying, and defrauding the complainant and his other creditors; and praying for a restraining order on the insurance company from paying to, and Mrs. Hume from receiving, either for herself or children, the amount due pending the suit, and “that the amount of the said insurance policy may be decreed to be assets of said Thomas L. Hume applicable to the payment of debts owing by him at his death," etc. The temporary injunction was granted.
On the 12th of November, the insurance company filed its answer to the effect that Mrs. Hume obtained the insurance in her own name, and was entitled under the policy to the amount thereof, and setting up and relying upon the 17th section of its charter, quoted above. Mrs. Hume answered, November 16, declaring that she applied for and procured the policy in question, and that it was not procured with fraudulent intent; that the estate of her father, A. H. Pickrell, who died in 1879, was the largest creditor of Hume's estate; that she is her father's residuary legatee; that the amount of the policy was intended not only to provide for her, but also to secure her against loss; that her mother had furnished Hume with about a thousand dollars annually to be used for her best interests and that of his wife and children; and that the premium paid on the policy in question, and those paid on other policies, was and were paid out of money belonging to her father's estate, or out of the money of her mother applied as directed and requested by the latter.
Benjamin U. Keyser, receiver, holding unpaid notes of Hume, was allowed, by order of court, November 16, 1881, to intervene as co-complainant in the cause.
R. Ross Perry and Reginald Fendall were appointed, November 26, 1881, Hume's administrators.
On January 23, 1882, the administrators filed three bills (and obtained injunctions against Mrs. Hume and each of the other insurance companies, being cases numbered 8,011, 8,012 and 8,013, attacking each of the policies (except the American) as a fraudulent transfer by an insolvent of assets belonging to his creditors.
The answers of Mrs. Hume were substantially the same mutatis mutandis as above given, and so were the answers of the Connecticut Mutual and the Virginia Life, the former pleading the statute of Connecticut as part of its policy, and the latter the seventh section of its charter.
The Hartford Life and Annuity Company did not answer, and the bill to which it was a party defendant was taken pro confesso.
The administrators were, by order of court, January 2, 1888, admitted parties defendant to said first case numbered 7,906, and cases numbered 8,011, 8,012, and 8,013 were consolidated with that case.
January 4, 1883, the court entered a decretal order, dissolving the restraining order in original cause numbered 8,012, and directing the Virginia Insurance Company to pay the amount due upon its policy into court, and the clerk of the court to pay the same over to Mrs. Hume, for her own benefit and as guardian of her children (which was done accordingly), and containing the injunctions in original causes 8,011, 8,013, and 7,906, but ordering the other insurance companies to pay the amounts due into the registry of the court.
By order of court, January 30, 1883, the Farmers' & Mechanics National Bank of Georgetown, which had proved up a large claim against Hume's estate, was allowed to intervene in original cause No. 7,906, as a co-complainant; and March 19, 1883, George W. Cochran, a creditor, was by like order allowed to intervene as cocomplainant in the consolidated cases.
Replications were filed and testimony taken on both sides.
The evidence tends to show that Hume's financial condition as early as 1874, was such that if called upon to respond on the instant, he could not have met his liabilities, and that this condition grew gradually worse until it culminated in irretrievable ruin in the fall of 1881; but it also indicates that for several
to October 21, 1881, two days before his death, he was a partner in a going concern apparently of capital and credit ; that he had a considerable amount of real estate, though most of it was heavily encumbered; that he was an active business man, not personally extravagant; and that he was, for two years prior to October, in receipt of moneys from bis wife's mother, who had an income from her separate property.
He seems to have received from Mrs. Pickrell, or the estate of Pickrell, his wife's father, of which Mrs. Hume was the residuary legatee, over six thousand dollars in 1879, over three thousand dollars in 1880, and over seventeen hundred dollars in 1881.
Mrs. Pickrell's fixed income was one thousand dollars a year from rents of her own property, which after the death of her husband in May, 1879, was regularly paid over to Mr. Hume. She testifies that she told Hume that “he could use all that I (she] had for his own and his family's benefit, and that he could use it for anything he thought best;" that she had out of it herself from $200 to $250 a year from the death of Pickrell, in May, 1879, to that of Hume, in October, 1881, and that before his death Mr. Hume informed his wife and herself that he had insured his life for Mrs. Hume's benefit, but did not state where the premium money came from.
Blackford, agent for the Maryland Company, testified, under objection, that Hume told him in February, 1881, that certain means had been placed in his hands, to be invested for his wife and children, and he had concluded to take $10,000 in Blackford's agency, and should some months later take $10,000 in the Connecticut Mutual. He accordingly took the $10,000 in the Maryland, and subsequently, during the summer, informed Blackford that he had obtained the insurance in the Connecticut Mutual.
Evidence was also adduced that Mr. Hume was largely indebted to Pickrell's estate, by reason of endorsements of his paper by Pickrell, and the use by him in raising money of securities belonging to the latter, and that said estate is involved in litigation and its ultimate value problematical.
The causes were ordered to be heard in the first instance at a general term of the Supreme Court of the District of Columbia, which court, after argument, on the 5th day of January, 1885, decreed that the administrators should recover all sums paid by Thomas L. Hume as premiums on all said policies, including those on the Virginia policy from 1874, and that after deducting said premiums, the residue of the money paid into court (being that received from the Maryland and the Connecticut Mutual) be paid to Mrs. Hume individually or as guardian for herself and children, and that the Hartford Life and Annuity Company pay over to her the amount due on the certificates issued by it.
From this decree the said Central National Bank, Benjamin U. Keyser, the Farmers' & Mechanics' National Bank of Georgetown, George W. Cochran, and the administrators, as well as Mrs. Hume, appealed to this court, and the cause came on to be heard bere upon these cross-appeals.
FULLER, C. J. After stating the case as above. No appeal was prosecuted from the decree of January 4, 1883, directing the amount due upon the policy issued by the Life Insurance Company of Virginia to be paid over to Mrs. Hume for her own benefit and as guardian of her children, nor is any error now assigned to the action of the court in that regard. Indeed, it is conceded by counsel for the complainants, that this contract was perfectly valid as against the world, but it is insisted that, assuming the proof to establish the insolvency of Hume in 1874, and thenceforward, the premiums paid in that and the subsequent years on this policy belonged in equity to the creditors, and that they were entitled to a decree therefor as well as for the amount of the Maryland and Connecticut policies and the premiums paid thereon.
It is not denied that the contract of the Maryland Insurance Company was directly between that company and Mrs. Hume, and this is, in our judgment, true of that of the Connecticut Mutual, while the Hartford Company's certificates were payable to her, if living
Mr. Hume having been insolvent at the time the insurance was effected, and having paid the premiums himself, it is argued that these policies were within the provisions of 13 Elizabeth, c. 5, and inure to the benefit of his creditors as equivalent tɔ transfers of property with intent to hinder, delay, and defraud. The object of the statute of Elizabeth was to prevent debtors from dealing with their property in any way to the prejudice of their creditors; but dealing with that which creditors, irrespective of such dealings, could not have touched, is within neither the letter nor the spirit of the statute. In the view of the law, credit is extended in reliance upon the evidence of the ability of the debtor to pay, and in confidence that his possessions will not be diminished to the prejudice of those who trust him. This reliance is disappointed, and this confidence abused, if he divests himself of his property by giving it away after he has obtained credit. And 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 euch policies, to or for the benefit of wife and children, or either, constitutes a fraudulent transfer of assets within the statutes, and this, even though the debtor may bave 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, and dealt with it by way of bounty: Freeman vs. Pope, L. R., 9 Eq., 206; S. C., L. R., 5 Ch., Ap. 538. The rule stands upon precisely the same ground as any other disposition of his property by the debtor. The defect of the disposition is that it re