Cluck v. Mack

Conley Byrd, Justice.

Appellants The First Pyramid Life Insurance Company of America and Charles Donald Cluck appeal from an order of the trial court awarding $667.12 of dividend accumulations on a life insurance policy to appellee Margaret Ann Mack, a judgment creditor of appellant Cluck. For reversal appellant Cluck contends that the funds are exempt from judicial seizure by Ark. Stat. Ann. § 30-208 (Repl. 1962). Pyramid Life complains that the trial court erred in not allowing it, as an interpleader, an attorney’s fee and in denying certain costs.

The record shows that Cluck had purchased from Pyramid Life a life insurance policy containing a special dividend provision for the tenth year distribution of accumulated dividends at the option of the policyholder. After Cluck elected to receive the dividends, appellee as a judgment creditor caused a writ of garnishment from the Circuit Court of Clay County to be issued on Pyramid Life before the end of the policy period. Another garnishment was subsequently issued out of the Chancery Court of Clay County upon a joint judgment due appellee and one Blanche L. Cluck. This present proceeding developed when Pyramid Life filed a statutory inter-pleader action, Ark. Stat. Ann. § 27-816 (Repl. 1962).

The exemption of proceeds of life insurance funds from judicial process is set forth in Ark. Stat Ann. § 30-208 (Repl. 1962) as follows:

“All moneys paid or payable to any resident of this state as the insured or beneficiary designated under any insurance policy or policies providing for the payment of life, sick, accident and/or disability benefits shall be exempt from liability or seizure under judicial process of any court, and shall not be subjected to the payment of any debt by contract or otherwise by any writ, order, judgment, or decree of any court, provided, that the validity of any sale, assignment, mortgage, pledge or hypothecation of any policy of insurance or if any avails, proceeds or benefits thereof, now made, or hereafter made, shall in no way be affected by the provisions of this section,”

The policy here issued by Pyramid Life to Cluck contained a special provision whereby $104.50 of the second, third, fourth and fifth annual premiums were to be deposited in a special fund for investment in certain named corporate stocks. The dividends from the investment in the stocks were payable to Cluck at his option as the policy holder at the end of either the tenth or twentieth calendar year if he was then living. No part of the dividends were payable to the beneficiaries named in the life policy — in fact in the event of Cluck’s death prior to the tenth or twentieth calendar year, the dividends were accumulated and paid to other like policyholders according to their respective interests. Thus as we construe the policy it was to pay dividends to the policyholder as an investor and not “as the insured or beneficiary designated under any insurance policy. . .” It follows that the trial court properly denied the exemption. In upholding the trial court, we hasten to add that the dividends here involved were not a mere incident of th¡e life policy for such dividends would be exempt. See Allen v. Central Wisconsin Trust Co., 143 Wis. 381, 127 N.W. 1003 (1910).

We find no abuse of discretion in denying the attorney’s fee to the interpleader and the costs in serving Carolyn Cluck Jackson, Doris Cluck Swang and Elma Cluck Hornyak. On the cost issue there is nothing in the record to show the above named individuals were claiming a right to any part of the funds.

The issue over the allowance of the attorney’s fee arises in this manner. The bill of interpleader was filed on March 20, 1972, answers by all interested parties were promptly filed. Thereafter on April 14, 1972, a trial judge other than the one who heard the dispute on April 19th entered an order for the deposit of the money and also an order which provided:

“WHEREFORE, IT IS HEREBY ORDERED AND DECREED that Plaintiff, The First Pyramid Life Insurance Company of America, be, and it hereby is, released and discharged from all liability to Defendants Charles Donald Cluck, Blanche L. Cluck, Margaret Ann Mack, Carolyn Cluck, Doris Cluck Swang, and Elma Cluck Hornyak, or as to any one or more of them, as to the sum to be paid into the registry of this Court; that it be, and hereby is, awarded as its attorney’s fee the sum of $ , to be taxed as costs in this suit; and that it have and recover for its other costs herein, for all of which costs the Clerk of this Court is hereby ordered and directed to forthwith issue his check, payable out of the sum so paid into the registry of this Court.

“Jurisdiction is retained to determine the adverse claims of the defendants to the remaining sum.”

These two orders do not recite any appearance on behalf of appellee or any other party and make no mention of the plea of appellee that the bill of interpleader was filed in bad faith. Both such orders were filed on the day that the lower court held the hearing here involved. The last order recites that notice of the time and place of the hearing had been given to all parties but that Pyramid Life failed to appear.

We recognize that the allowance of an attorney’s fee to the statutory interpleader, Ark. Stat. Ann. § 27-816 (Repl. 1962), is a matter of right but where, as here, the interpleader has notice that the fee has not been fixed and fails to appear after notice and fails to establish the statutory grounds for an equitable interpleader action, we cannot say that the trial court erred in failing to allow such fee. This is particularly so in a case where the issue of bad faith in filing the interpleader action is raised. See Wall v. Wall, (Tex. Civ. App.) 181 S.W. 2d 817 (1944).

Affirmed.

Harris, C.J., and Fogleman, J. dissent in part.