426
The Green Bag
contingent, but it is entirely reasonable to suppose that the interests were vested until divested by the operation of a condition subsequent, namely, the ex ercise of the power. Moreover, the deci sion was not unanimous and Mr. Justice Sheldon in pronouncing the opinion of the court observed there was no case exactly like the one decided; that deci sions were not uniform in cases re sembling more or less closely the one at bar. The court in deciding Re Loveland, supra, relied largely upon Blinn v. Dame, but it will be noticed that in the latter case the power reserved had been executed by the donee, while Loveland had not exercised the power at the time he was adjudged a bankrupt. In a case decided by the supreme court of Wisconsin in 1910 (Allen v. Central Wisconsin Trust Co., 143 Yis. 381) the power to change the beneficiary was not allowed to defeat the rights of the bankrupt's beneficiary in the policy. The bankrupt was receiving annual divi dends on the policy and it had an ad mitted value of $1,159.83. The court said "conceding that he still has the right to change the beneficiary and assuming that he may do so, yet it is not easy to perceive upon what grounds it can be claimed that the trustee is con cerned with what may afterwards become of the exempt property. The trustee is vested with the title to the property of the bankrupt if at all as of the date he was adjudged a bankrupt. At that time this policy was exempt and did not pass to the trustee. It cannot pass later, no matter what the bankrupt may do." And in a late Minnesota case, in Re Johnson, 176 Fed. Rep. 591, the statutory exemption was upheld al though there was reserved in the bank rupt's policy a power to change the beneficiary. The answer then to the question
"What are the rights of a bankrupt's trustee to his life insurance policies?" so far as a general answer is possible is this: the trustee takes all policies pay able to the bankrupt or to his executors, administrators or assigns. By weight of authority he also takes all endowment policies payable to the bankrupt at maturity, and in many jurisdictions he also takes endowment policies payable to a beneficiary other than the insured in event of his death, and this too occa sionally where a state exemption statute exists for the protection of the wife and children. And by a still more general qualification, the trustee takes policies which he would not otherwise get be cause of the power to change the benefi ciary reserved to the bankrupt. In all instances where the trustee takes the policies the bankrupt may redeem those of them having cash surrender values by paying the amount of the surrender value to the trustee. Is this condition of the authorities what it ought to be? The law of insur ance is not a mere application of con tracts and agency but a separate subject having peculiar doctrines of its own, being of Continental birth and a part of the Law Merchant.11 On broad grounds of public policy it is desirable that those dependent upon the producer's continued ability to care for and educate his family, should be protected against the untimely loss through death of that care and sup port, by insurance. For more than sixty years, and contemporaneously with the beginning and wonderful develop ment of insurance in this country, the states of the Union have sought to make insurance effective for its primary pur pose by exempting the proceeds from the reach of creditors. Recent interpre tation of the bankruptcy law in its rela11 Introd. Wambaugh's Cases on Insurance.
