Hurley, Al H.

English

Marquette University Law School

Marquette Law ReviewVolume 12Issue 4 June 1928 Article 12Insurance: Proceeds of Life Policy Payable toPartnership Held Not Exempt from Insured Debt's,Although Insured Became Partnership SuccessorAl H. HurleyFollow this and additional works at: http://scholarship.law.marquette.edu/mulrPart of the Law CommonsThis Article is brought to you for free and open access by the Journals at Marquette Law Scholarly Commons. It has been accepted for inclusion inMarquette Law Review by an authorized administrator of Marquette Law Scholarly Commons. For more information, please contactmegan.obrien@marquette.edu.Repository CitationAl H. Hurley, Insurance: Proceeds of Life Policy Payable to Partnership Held Not Exempt from Insured Debt's, Although Insured BecamePartnership Successor, 12 Marq. L. Rev. 327 (1928).Available at: http://scholarship.law.marquette.edu/mulr/vol12/iss4/12NOTES AND COMMENTThe judgment lien, so obtained against the partnership, was held by theSupreme Court of the United States not to be annulled as againstpartners, under the Bankruptcy Act, 67c, 67f (i i USCA par 107), sinceit is not essential to the adjudication of a partnership that a partner,or partners, should be adjudged bankrupt individually.The Supreme Court, in this decision, reversed the decision of theCourt of Appeals, which decided that the "adjudication of the partner-ship was necessarily an adjudication of the bankruptcy of the indi-viduals composing it," and that the lien of a judgment obtained withinfour months of filing of petition against the partnership was lostby the adjudication. The Court of Appeals seems to have followedthe Old Bankruptcy Law of 1867, which did not permit the partner-ship entity to be adjudged a bankrupt, and which declared that whentwo or more persons who were partners in trade were adjudged bank-rupt, the property of the partnership as well as the partner should betaken over by the Bankruptcy Court for administration.In Section 5a (ii USCA par. 23) the Supreme Court of theUnited States sees a basis, in 268 U.S. 426, 431, 45 S. Ct. 56o, 562(69 L. Ed. 1028), for the following conclusion, namely, that there"can be no doubt that a partnership may be adjudged a bankrupt asa distinct legal entity; and if proceeded against as a distinct legalentity, without reference to the individual partnerships, it may, as such,under section 12a (i USCA par. 30) offer terms of composition tothe partnership creditors alone. The court then cites a long line ofcases in support of this principle.Hence the court concludes, in reversing the decision of the Courtof Appeals, "that the involuntary petition filed against the ProvisionCo., which did not in terms seek an adjudication that the Beckers(the individual partners) as individuals, nor allege that as individualsthey were insolvent or had committed any acts of bankruptcy, wasnot in legal effect a petition filed against them individually, and theadjudication under that petition that the partnership was a bankrupt,was not in legal effect an adjudication that they were bankrupts in-dividually." There is hence no ground, under either section 67c or sec-tion 67 f of the Act, for annulling the judgment liens obtained upontheir individual real estate more than eight months prior to the filingof their voluntary petitions.Reversed.RAYmoND FoRDInsurance: Proceeds of Life Policy Payable to Partnership HeldNot Exempt from Insured Debt's, Although Insured Became Part-nership Successor.This case involved a controversy over the avails of a life insurancepolicy.' The material facts of the case are as follows: Cohen andone Kirsner formed a partnership for the purpose of engaging in themercantile business. The partnership was later dissolved, Kirsnerceasing to be a member. Cohen assumed all the firm liabilities andremained in business as the successor of Cohen and Kirsner. Thecreditors were informed of this arrangement. While the partnership'Cohen v. Gordon Ferguson, Inc. (N.D.) 218 N.W. 209.MARQUETTE LAW REVIEWwas still in existence, Cohen obtained an ordinary life insurance policy.By the terms of the policy the insurance company agreed to pay to"Cohen and Kirsner, a partnership of which the insured is a member,its successors or assigns, immediately upon the receipt of due proofof the death of Charles W. Cohen, the insured, $2,500"; and "if suchdeath is accidental, $5,ooo." After the dissolution of the partnershipno changes were made in the policy, and Cohen himself continuedto pay the premiums.Subsequently Cohen was killed in an accident. The question thenarose whether the avails of this policy belonged, and should be dis-tributed, to the heirs at law of Charles W. Cohen in accordance withthe statute,2 or whether they belonged to the estate of Cohen and weresubject to the claims of creditors and distributable the same as otherassets belonging to the estate of the deceased.The ,appellants were of the contention that inasmuch as CharlesW. Cohen became the successor of the firm of Cohen nd Kirsner, thepolicy became in fact, although not in terms, payable to him; and thatupon his death, his personal representatives would be entitled to collectthe avails of the policy and that consequently, it falls within the statute,section 8719.However, the court was of the opinion that the question of whetherthe distribution of the avails of an insurance policy is controlled bythe statute, is determinable by the terms of the policy itself, namely,by the terms used to designate the beneficiaries therein. Nowhere inthis disputed section of the statutes can any terms be found which mightinclude policies made payable to the insured himself. Thus the con-tention of the appellants could not be sustained by the court. Thegeneral rule is, that unless exempted by statute, the avails of a lifeinsurance policy, made payable to the insured himself, become athis death a part of his estate, and assets in the hands of the adminis-trator of his estate. 3  There is no such exemption to be found inthis statute, and had the lawmakers intended to include policies madepayable to the insured himself, they would undoubtedly have done so.Former decisions of the court have upheld this section of the statute.The court can neither add nor detract from its terms, but it mustregard it as being applicable only to the classes or kinds of policiesenumerated therein. 4Thus section 8719 does not purport to apply to all insurance policies,but only to those where the insured has, by the use of appropriateterms in designation of beneficiaries, indicated an intention that thepolicy shall be controlled by it. The section is applicable only topolicies where by their terms are "made payable to the personal rep-'Section 8719 C.L. 1913. North Dakota. "The avails of a life insurancepolicy or of a contract payable by any mutual aid or benevolent society, whenmade payable to the personal representatives of a deceased, his heirs or estateupon the death of a member of such society or of such insured shall not besubject to the debts of the decedent except by special contract, but shall beinventoried and distributed to the heirs or heirs at law of such decedent."4 Cooley's Brief on Insurance. 3726.4 Baznk v. Smith, 36 N.D. 225, 162 N.W. 302; Talcott v. Bailey, 54 N.D. 19,208 N.W. 549.NOTES AND COMMENTresentatives of a deceased, his heirs or estate." The policy in suitwas not so made; it being made payable to "Cohen and Kirsner, apartnership, its successors or assigns."Thus the only logical conclusion for the court to come to was that theavails of the insurance policy were held by the administratrix as partof the general assets of the estate of Charles W. Cohen, deceased,subject to claims of creditors, and not distributable to his heirs at law.AL H. HURLEYIntoxicating Liquors: Searches and Seizures.In the case of Fabri v. United States (24 Fed. (2d) 185), a pro-hibition agent searched the residence of Fabri under authority of asearch warrant, which he assumed to be valid, and seized and tookaway quantities of various liquors. Upon his arrest Fabri appearedand filed a verified petition, assailing the validity of the warrant,praying that it be quashed and the evidence so obtained suppressedand that the seized property be ordered returned to him at his home.In the petition he alleges only that he was in possession, and not thathe was in the lawful possession of the property. Upon a hearingthe court below ordered the warrant quashed and the evidence sup-pressed, but denied the prayer for a return of the property. Defend-ant sued out a writ of error, which is directed to the part of theorder denying him a return of the seized property.The court held that "where upon an unlawful search of a dwellinghouse, government agents seize property, the possession of which mayor may not have been unlawful, the person from whose possession it iswrongfully taken is prima facie entitled to its restoration, and that thegovernment can make successful resistance to an appropriate petitionfor its return only by showing affirmatively, by proofs other than thoseobtained as a result of the unlawful search, that the property was,at the time of seizure, being used in the commission of crime."Upon the, general question of the duty of the courts to order thereturn of liquor wrongfully seized by government agents in the courseof an unlawful search, there is hopeless conflict in the federal courts.In arriving at its conclusion this court said, "Possession of liquorin a dwelling house may be lawful or unlawful, depending upon themode of acquisition or the intended use," and "Unless we resort tothe facts disclosed by the search there is no ground at all on whichto invoke the presumption of section 33 of the National ProhibitionAct (41 Stat. 317; U.S.C.A. No. 50.)."EUGENE M. HAERTLELarceny, Bailment, Misappropriation of Funds by a Broker.Section 343.17, Statutes, among other things provides that "Who-ever being a bailee of any chattel, money or valuable security shallfraudulently take or fraudulently convert the same to his own use orto the use of any person other than the owner thereof .... shall beguilty of larceny."A bailment "is a delivery of goods in trust, upon an agreement ex-pressed or implied, that the trust shall be duly exercised, and thegoods returned or delivered over when the purpose of the bailment

Insurance: Proceeds of Life Policy Payable to Partnership Held Not Exempt from Insured Debt\u27s, Although Insured Became Partnership Successor

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Insurance: Proceeds of Life Policy Payable to Partnership Held Not Exempt from Insured Debt\u27s, Although Insured Became Partnership Successor

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