Rice v. Smith

1. ExeuftioN. Life insurance. Code 1880, $ 1261. Under § 1261, code 1880, providing- that “the amount of any life insurance policy not exceeding- ten thousand dollars, upon any one life, shall inure to the party or parties named as the beneficiaries thereof, freed from all liability for the debts of the person paying-the premiums thereon, ” where one insures his own life, the policy being made payable to himself, ‘ ‘ Ms executors, administrators, or assig-ns, ” he is the real beneficiary, and the proceeds, being liable to his debts, cannot be claimed by his heirs as exempt. Yale v. MoLaurin, 66 Miss., 461, cited. 2. Same. Act April 1, 1892, ?¿ 2. Constitutionality. Const. 1890, $ 16. Obligation of contracts. Section 2, act April 1, 1892 (Laws, p. 42), providing that the proceeds of any life insurance policy taken out by one on his own life, payable to his executors or administrators, then in the hands of the legal representatives of the insured, shall inure to the benefit of his heirs, conflicts with § 16, constitution 1890, prohibiting- laws impairing contracts. Johnson v. Fletcher, 54 Miss., 628.

Thom the chancery court of Sunflower county. HoN. W. E. TRIGG, Chancellor. In addition to the facts set out in the opinion, it is, perhaps, material to state that the appellants, who filed the bill in the court below to recover of the administrator the proceeds of the life insurance policy, are the brothers of Wm. H. Rice, deceased, whose life was insured. They reside in North Carolina. The said Wm. H. Rice died intestate in this state on February 2, 1892, and the defendant, A. B. Smith, a creditor, was appointed administrator of his estate February 17, 1892. It will thus be seen that the policy was issued, the debts contracted, and the said Wm. H. Rice died, prior to the passage of the act of April 1, 1892, mentioned in the opinion. Section 1261, code 1880, is an exemption statute, designed to secure the proceeds of a life insurance policy to those who the ties of blood or affection should induce the assured to name as beneficiaries. No matter how largely the assured was indebted, and, although he paid the premiums, one taking under such a policy, as .a named beneficiary, would receive the proceeds free from debts of the deceased, and an administrator taking the same must be regarded as a trustee for the benefit of such person. The act of 1892 (Laws, p. 42), in the second section, declares that the proceeds of life policies, .such as the one in question, in the hands of personal representatives, shall inure to the benefit of heirs at law. Cases are cited to show that this section of the act is unconstitutional or not applicable. This was a special exemption statute, under which the debtor could direct the proceeds of the policy as he wished by naming the beneficiary, or he might ignore creditors, and make no outlay on account of premiums, and, by reason of such default, a policy payable to himself would be nullified. The character of the fund makes it doubtful whether the act of 1892 is one that offends the constitutional provision impairing the obligation of contracts. Clearly, there is no reason to so impugn it, if it be regarded as in part declaratory of the existing law. It shows the legislative will, and is the best guide as to what was previously intended. The law favors insurance for the benefit of the family. Tale v. Mclaurin, 66 Miss., 461, does not militate against our contention. The clear intent of the law was to free the proceeds from liability for the debts of the assured. It will be observed that the provision in favor of the beneficiary named is entirely independent of the status of the assured as the head of a family. No matter who is named as beneficiary, he will take the proceeds discharged from all debts of the assured. As an administrator takes as much for the next of kin as for creditors, it seems proper that he should be treated, in cases of this kind, as holding for the former alone. This must have been contemplated by the assured, and he had the right to direct as to the disposition of the fund. Filed separate briefs, relying mainly upon the same authorities, and making the following points: The proceeds .of the insurance policy were not exempt under the provisions of § 1261, code 1880. The act of April 1, 1892, is violative of § 16, constitution 1890, in so far as it seeks to impair the rights of creditors of W. IT. Rice, deceased. The law as it exists at the time the debt is contracted is a part of the contract, and only such property as is then exempt can be kept from creditors. The policy in this case was made payable to W. H. Rice, his executors, administrators or assigns; therefore he was the real beneficiary. He could have assigned it during his life, and it was not competent for the legislature, after his death and after the rights of creditors had attached, to divert the fund. Lessley v. Phipjts,, 49 Miss., 790; Johnson v. Fletcher, 54 lb., 628; 4 Wheat., 122; Wade on Retroactive Laws, pp. 2, 41, 45.