In re How ( 1894 )

Canty, J.

On February 24,1894, Mary M. How, being insolvent, made an assignment for the benefit of her creditors under the insolvency laws of this state.

A short time prior to this, her husband, David L. How, died. His life was insured in eight different mutual benefit associations or insurance companies for the total aggregate amount of $15,800, she being the beneficiary entitled to all of said insurance. She listed all of these insurance claims in her inventory, but claims all of them as exempt, and so claimed them in said inventory. The assignee, on notice to her and her creditors, petitioned the court in the insolvency proceedings to determine and adjudge whether the amounts due on said policies were exempt. She appeared in support of such application, and a number of her creditors appeared in opposition thereto. The court below held the amounts so due on such insurance policies exempt, and directed the assignee not to claim the same, and from this order three of said creditors appeal to this court.

No objection is here made to the mode of proceeding in the District Court, and we do not wish to be understood as approving that practice where the fund in controversy is not in court, and the application is opposed by the creditors, or most of the creditors, appearing.

It is urged by respondent that the order appealed from is not an appealable order. We are of the opinion that it is appealable, under either subdivision 5 or 6 of 1878 G-. S. ch. 86, § 8.

Laws 1877, ch. 128, § 2, (1878 G-. S. ch. 34, § 369,) provides: ‘When any benevolent association or society, similar to those enumerated in section one of this act, set apart or appropriate a beneficiary fund to be paid over to the families of deceased, or to any member of said families, any such fund not exceeding the sum of five thousand dollars, so provided and set apart, according to the rules,regulations or by-laws of said association or society, to the family of any deceased member, or to any" member of said family, shall be exempt from execution, and shall under no circumstances be liable to be seized, taken or appropriated by any legal or equitable process, to pay any debt of such deceased member.”

Laws 1885, ch. 184, § 17, provides: “The money or other benefit, charity, relief or aid to be paid, provided or rendered by any corporation, association or society, authorized to do business under this act, shall be exempt from execution, and shall not be liable to be seized, taken or appropriated by .any legal or equitable process, to pay any debt or liability of a member.”

The court below held that the latter section repealed the former by implication, that the latter was constitutional, and that all of the $15,800 was exempt from the creditors of the insolvent.

In Brown v. Balfour, 46 Minn. 68, (48 N. W. 604,) it was held that the former section exempted the fund from seizure by the creditors of the beneficiary as well as from seizure by the creditors of the deceased member. The same interpretation should be applied to the latter section. It will be seen that the former section limited the amount exempt to $5,000, while by the latter section it is wholly unlimited.

The chapter in which the latter section is' found prescribes certain regulations, on complying with which all such insurance corporations and associations may do business in this state, whether organized in this or some other state, or in a foreign country.

It seems to us that by this section the legislature intended to exempt the insurance money payable on all such policies on the life of the same member, however great the number of companies or policies, or the aggregate sum thus exempted. Appellant concedes that this is the legislative intent, but urges that the section in question is unconstitutional.

The constitution, Art. 1, § 12, provides: “A reasonable amount of property shall be exempt from seizure or sale, for the payment of any debt or liability; the amount of such exemption shall be determined by law.”

This court has held that the statute limiting the homestead exemption by area alone is valid. Cogel v. Mickow, 11 Minn. 475 (Gil. 354); Barton v. Drake, 21 Minn. 299. But in that case there is a limit, and a natural and proper one as far as it goes. In the present case there is no limit but the total amount of insurance which can be obtained on the life of the insured from all such insurance companies doing business in the state. This may amount to millions. It is clear that the total aggregate of the capacity or power of all these insurance companies to insure the life of one individual is no proper measure of the amount that shall be exempt, and no proper basis or principle by which to determine a proper or reasonable amount. All other exemption laws in this state which have come to our notice measure the amount of the exemption by the number, quantity, or value of the thing or things exempt. Some or all of these measures are applied. But in the case at bar there is no certain or proper measure of any kind. The aggregate capacity or power of all such insurance companies to insure the life of one individual is no criterion by which to determine what is a reasonable amount of exemption.

The constitutional provision in question prohibits the legislature from exempting an unreasonable amount of property; We are of the opinion that said section 17 is unconstitutional and void. This being so, it does not repeal by implication Laws 3877, ch. 128, § 2, but the same is still in force. This entitles the insolvent to an exemption of only $5,000.

The order appealed from is reversed.

GiiiPXlian, C. J., absent on account of sickness; took no part.

(Opinion published 01 N. W. 456.)