Wyman v. Gay

Haskell, J.

Trover, by the assignee of an insolvent debtor, against a creditor to recover the value of chattels conveyed to him by the debtor in fraud of the insolvent law.

The case found the conveyance to have been fraudulent, but the defendant claims that the chattels, when conveyed to him, were exempt from attachment and therefore do not belong to the assignee. This defense is groundless. Exempted property is a personal privilege of the debtor. He may waive it, and certainly does waive it when he conveys it to another. His interest in the property is then. gone. He cannot reclaim it or recover it. If it serves a fraud, his assignee may do so and thereby prevent an unequal distribution of his assets among his creditors. Nason v. Hobbs, 75 Maine, 396, is directly in point. There, the assignee sued to recover the value of a yoke of oxen, sold by the debtor before his insolvency in fraud of creditors. Exemption of the oxen from attachment was set up as a defense. The court says, at the date of the insolvent proceedings the debtor “did not then own the oxen, for he had sold them the day before to the defendant, and he could not legally claim sold oxen as exempt.” The jury found the value of the chattels on the day of their conveyance to the defendant to have been $147.85, which sum the plaintiff may recover with interest from the date of conversion.

The plaintiff also sues to recover $345.52, the agreed value of two policies of insurance on the insolvent’s life, conveyed by him to the defendant in fraud of the insolvent law, and thereby converted to his own use. The same defense as to the chattels is interposed. Revised Statutes, c. 49, § 94, is invoked. That section exempts all such policies where the annual premium is less than $150, meaning on each one, from “attachment and from all claims of creditors, during the life of the assured.” This statute means to allow the assured such property, while he holds it, free from the claims of creditors, but when he sells it for cash, he will have received its equivalent, and the purchaser will hold an investment, a security that is just as much a part of his estate as a bond or promissory note would be.

So when the insured assigns his policy in payment of a debt, the policy becomes assets in the hands of a creditor, and he should not thereby be permitted to gain a fraudulent preference in his own favor over other creditors of the same debtor. When the assured parts with his policy, he places it without the protection of the statute. It then becomes the same as any chattel, and the title goes to the assignee in insolvency, rather than to work a fraud. Any other doctrine might be m ade to thwart the equality of creditors and make it possible for a dishonest debtor to give his property to a single creditor. Pie might take his entire assets and procure numerous policies of insurance, with annual premiums of not over $150 on each as in this case, and appropriate the whole of them to a favored creditor.

We think the defense of exemption does not apply to the policies any more than to the chattels, and that the plaintiff may recover for tbeir conversion the agreed value of $345.52; but as the case does not show when that value attached, it must be presumed as of the date of the verdict, from which time interest should be added.'

Judgment for plaintiff.