Hise v. Hartford Life Insurance , 90 Ky. 101 ( 1890 )

JUDGE BBJSNETT

delivered the opinion of the court.

Joseph S. Hite, now deceased, qualified as the guardian, in 1867, oí the appellants, and received ah estate belonging to them, about thirteen thousand six hundred dollars, consisting oí bonds. In 1868 and 1869, .after said qualification and receipt of said bonds, he insured his life in the appellees’ companies for the benefit of his wife and children, which sums amounted, in the aggregate, to about thirty-two thousand dollars. The premiums on these sums were paid annually until 1871, including that year, when the said Hite ceased to pay any more premiums, and for the premiums, already paid he took a paid-up policy, likewise for the benefit of his wife and children. In the course-of two or three years thereafter said Hite became hopelessly insolvent, and later on he died. These suits were instituted by the appellants, his former wards, against the said insurance companies and said wife and children to subject said policies to said demands, upon the grounds, first, that the investment for the benefit of said Hite’s wife and children was in the nature of a gift, and, therefore, void as to existing creditors; and second, that it .was intentionally fraudulent as to said creditors.

The proof shows that said Hite, at the time he took out said policies for the benefit of his wife and children, and the payment of the premiums thereon, was not insolvent; that he was in debt, but not to the ex-text of his ability to pay, nor to the extent of affecting his credit, nor to the extent of materially impairing his ability to pay, nor to the extent of materially affecting the rights of creditors by investing as much as between five thousand and six. thousand dollars (this was the sum invested in the paid-up policy) in. a policy for his wife and children — nine children in all — the most of whom were infants, and one of whom, an infant, was a cripple.

It was held in the case of Stokes v. Coffee, 8 Bush, 533, that an insurance by the husband for the benefit of his wife and children was not within the statute of voluntary conveyances, consequently was not, per se, fraudulent as against antecedent creditors; but if said insurance did not materially affect the rights of such creditors by withdrawing the money that they were entitled to receive from the insurer on account of his indebtedness to them, the insurance for the benefit of his wife and children would be valid as against said creditors. It was also held that an insolvent husband might insure his life for the benefit of his wife and children in a reasonable sum, and the same would not be subject to the payment of his debts, provided his wife had not a sufficiency of estate of her own with which to support herself and children, and to educate the latter.

This decision was rendered without reference to the act of 1870, which provides, in substance, that insurances made by husbands, whether insolvent or not, for the benefit of their wives and children, are valid as against creditors, unless the insurance is made with the intention to defraud creditors, in which case only the premiums paid on such policies shall be subject to their debts.

This court, in the case of Thompson v. Cundiff, &c., 11 Bush, 567, decided that this act, while it did not control, as matter of statutory obligation, insurances theretofore effected, should be received as a legislative interpretation of such policies, to the effect that they were valid, though made by an insolvent husband against existing creditors, to the extent that the £ £ sum was reasonable; ’ ’ that in no case could said policies be successfully attacked by antecedent creditors, except for intentional fraud, and insurances by insolvent husbands for the benefit of their wives and children in unreasonable sums would be sufficient evidence of such fraud, and would subject the premiums-paid to the debts of such creditors.

The judgment is affirmed.