United States Mortgage & Trust Co. v. Ruggles , 231 N.Y.S. 100 ( 1928 )

Proskauer, J.

The administrator of an insolvent decedent, resident of this State, sues to recover for the benefit of creditors that portion of certain insurance upon the life of the debtor which was purchased by the premiums in excess of $500 per annum. The action is based upon section 52 of the Domestic Relations Law.

The decedent Ruggles and the defendant Mary B. Ruggles, his wife, resided in Ohio prior to 1923. In that year they removed to New York and continued to be residents thereof until the date of Mr. Ruggles’ death on March 13, 1926. All the policies involved in this suit had their inception prior to the removal of Mr. and Mrs. Ruggles' to New York. Inferably the policies were kept alive, however, after they became residents of New York, and Mrs. Ruggles, as the beneficiary named in these policies, asserts title to their proceeds. She rests her claim upon the proposition that the contracts of insurance were made and to be performed outside of the State of New York, that a New York statute cannot be interpreted to impair the validity of these contracts, and that, therefore, section 52 cannot avail to protect the creditors. In my opinion there is no question here whatever of the impairment, of the obligation of contract. The contracts were valid in their inception and it must be conceded that the New York statute would have no extraterritorial effect to reach the proceeds of these policies to the extent that they grow out of payments of premiums made before the parties became residents of this State. With respect to the proceeds representing premiums paid after they became residents of this State, however, an entirely different situation exists. At the time of the removal to New York there was no contractual obligation upon Mr. Ruggles to pay the premiums and no contractual right in Mrs. Ruggles to require him to pay the premiums. The payment by Mr. Ruggles of all premiums after he became a resident of the State of New York was made voluntarily and not pursuant to any obligation either to the insurance companies or to Mrs. Ruggles. In the payment of these premiums he disposed of his property at a time when he was a resident of the State of New York. This disposal of his property was subject to the statutory regulations of the New York law and the administrator has a right to follow the proceeds of these policies to the extent of the amount of insurance purchased by. premiums in excess of $500 a year after the time when Mr. and Mrs. Ruggles became New York residents. .

For these reasons the judgment appealed from should be reversed and a new trial ordered, with costs to the appellant to abide the event.

Merrell and Martin, JJ., concur; Dowling, P. J., and O’Malley, J., dissent.