
    Montgomery County.
    Hon. Z. S. WESTBROOK, Surrogate.
    April, 1885.
    Matter of Palmer. In the matter of the estate of James M. Palmer, deceased.
    
    No inventory of decedent’s property having been made or filed, and no proceedings having been taken to compel the return of an inventory, certain creditors cited the executors to account, with a view to the payment of their claims; whereupon the latter filed a duly verified account showing that no property of decedent’s estate had come into their hands.—
    
      Held, that the burden was cast upon the creditors, of proving that the executors were chargeable with assets.
    Testator, during his lifetime, insured his life in two “benefit insurance associations,” the certificates being made payable to his mother, who, shortly before testator’s death, assigned the same to the executor and executrix named in his will, the latter of whom was his wife, in trust for the use of the assignor during life, the principal, upon her death, to go to the wife. Simultaneously with this assignment, testator executed his will confirming this disposition of the moneys to become payable upon the certificates. Testator having died insolvent, and the executors having received the benefit moneys, decedent’s creditors sought to reach the same as constituting assets of his estate.—
    
      Held, that it was to be presumed, from the beneficial nature of the policies, that the same were within the scope of the statutes relating to the insurance of a man’s life for the benefit of his family, and that the moneys which the executors had received thereunder were not assets in the hands'of the executors, and could not be disposed of as such, but should be applied in accordance with the terms of the trust, to the exclusion of the claims of decedent’s creditors.
    Application by certain creditors of decedent to compel Frederick F. Wendell, as executor, and Elizabeth Palmer, as executrix, of decedent’s will, to account and pay their claims. The facts appear in the opinion.
    
      Sutton & Moorehouse, Weller & Moore, and W. H. Van Steenburgh, for creditors.
    
    J. D. Wendell, for executors.
    
    C. N. Hemiup, for Mrs. Palmer.
    
   The Surrogate.

The executor and executrix are called upon to account by sundry creditors, who have filed claims against the deceased, incurred by him in his lifetime. An account, duly verified, has been presented and filed, by which the executor and executrix represent that no property or assets have come into their hands, for which they are liable to account. No inventory has been made or filed, and no proceedings have been taken to compel the return of an inventory.

The contesting creditors, however, allege that the executor and executrix received certain moneys from insurance upon the life of the deceased, which are liable to be applied to the payment of debts, and for which they should account, that the proper application thereof may be made.

It appears that the testator, James M. Palmer, died March 10th, 1883, being at that time wholly insolvent. In his lifetime he became a member of the Commercial Travellers Association,” and of the u Empire Order of Mutual Aid,” benefit insurance associations of this State, and held the usual certificates of membership therein. The benefits in these companies were made, by the testator, payable to his mother,Mrs. C. C. Palmer, either when he originally joined or subsequently, and she held the certificates.

On January 3rd, 1883, for the purpose of providing-for payment of the benefits in these associations to the wife and mother of deceased, and by concurrence of the parties, Mrs. C. C. Palmer duly assigned the certificates of membership in said associations to the executor and executrix (the latter being the wife of the testator), by an assignment in writing, in which it was provided that $6,000, to be realized therefrom, should be kept upon trust by the assignees, and the fund invested, and the interest be paid to the assignor during her life, and, upon her death, the principal to the wife.

The cleceased, at the same time and as a contemporaneous transaction, made his will, bearing even date therewith, in which he expressed a desire and intention that the moneys realized from said certificates of insurance, should be disposed of as follows: $6,000 to be safely invested by the executor and executrix (who are the same persons named as assignees in the assignment referred to), and the income thereof paid to his mother, Mrs. C. C. Palmer, during her life, and, upon her death, the principal fund to his wife, her heirs or assigns, and u the balance of said insurance money, viz.: $1,000,” to be paid to his said wife. After the testator’s death, his will was duly proved, and the executor and executrix obtained the money on said insurance certificates, to wit, $5,000, from the “ Commercial Travellers Association,” and $2,000 from the “ Empire Order of Mutual Aid.” It is not claimed that there is any property liable to be applied to the payment of testator’s debts, unless the said insurance moneys can be reached for that purpose.

With the account as verified and filed, showing that no property has been realized, the burden is cast upon the contesting creditors to show that the executor and executrix have, or are chargeable with, property or assets liable to the payment of testator’s debts.

The testator had the legal right to provide this insurance for the benefit of his family, and designate the beneficiaries who should receive the benefits thereof -after his decease, exclusive of the claims of creditors. This has been the law of this State for many years in respect to general life insurance, aside from the special character of benefit associations (L. 1840, ch. 80; L. 1858, ch. 187; L. 1870, ch. 277 ; L. 1873, ch. 821). The only restriction in the insurance of a man’s life for the benefit of his family, is that he shall not be allowed to expend for that purpose over $500, annually (L. 1870, ch. 277). And when the premiums paid by the husband in such case exceed-the $500, annually, limited by the statute, the excess only can be reached by creditors.

Payment of an excess over the premiums allowed by the statute, by a person who is insolvent, would so far be a fraud upon his creditors; and the excess of insurance in such case, and so far, could be legally reached and applied to the claims of creditors. This question, however, does not arise in this case. To bring an insurance upon the life of a man for the benefit of his wife within the acts referred to, it is not essential that it should appear, either by the terms of the contract or policy, or by extrinsic evidence; the intention will be presumed from the beneficial nature of the policy (Brummer v. Cohn, 86 N. Y., 11).

It may be that the mere assignment of the certificate by Mrs. C. C. Palmer would have been ineffectual to transfer the moneys over to the trustees (the assignees) had the testator (the assured) seen fit to change the beneficiaries before his death. But at the time of the assignment, and as a concurrent act, he made his will in confirmation of the transfer, and therein and thereby made the wife and mother the beneficiaries under the certificates, and provided for the disposition of the moneys, to be derived therefrom for their benefit, substantially the same as in the assignment. That operated as a valid and effectual designation of the wife and mother as the beneficiaries, and continued unrevoked at his death, and the associations recognized it as such. The executor and executrix of the will, as assignees under the transfer, became, by the acts of the parties, trustees of the fund to be realized from the insurance certificates, to receive and dispose of the same as provided by the assignment and will, construed together, for the exclusive benefit of the wife and mother. After the sum of $0,000 is set apart, for the income thereof to be paid to the mother, the balance ” is given to the wife absolutely, and directed to be paid to her.

The contesting creditors assert that the moneys received from the benefit associations became assets in the hands of the executor and executrix, to be accounted for as a part of the estate-.

This is a mistake: the certificates were not, during the lifetime of the testator, liable to be seized by legal process to pay his debts, and the moneys realized therefrom after his death did not become assets to be accounted for and applied to the payment of the claims of creditors, “or for "distribution among the next of kin (Brown v. The Catholic Mut. Benefit Assoc’n, 33 Hun, 26-3).

The act of the legislature incorporating the “ Empire Order of Mutual Aid” (L. 1879, oh. 189) specially provides that the benefits paid shall be exempted from seizure, bjr legal or equitable process, to pay a debt or liability of the deceased party, on account of whose death the same shall be paid. This provision is contained substantially in the by-laws of all benefit associations, though the particular provisions in the charter or by-laws of the Commercial Travellers Association have not been made to appear. .

It may be assumed, however, that they contain the ordinary provisions for paying over the fund, provided as a benefit, to the designated beneficiaries. In such cases the benefits are exempted from the claims of creditors. It is the object of these associations not to benefit the estates of members during life, or increase them after death, but to provide funds for the benefit of their families or others specially dependent on them, after death, who may be designated during the lifetime of the members to receive the same (Loos v. John Hancock Life Ins. Co., 41 Mo., 538; Brown v. Catholic Mut. Benefit Assoc’n, supra). It is held, in some eases, that the fund provided as a benefit can in no event be passed to the estate of a deceased member, and if the beneficiary named to receive the benefit, in accordance with the by-laws of the association, dies before the assured, the benefit fails, and cannot be collected by the executor or administrator of the deceased (Hellenberg v. Ind. Order of B’nai B’rith, 94 N. Y., 580).

In this case, it is not even shown that the testator ever contributed or paid anything towards sustaining his membership, or that his estate has ever, in any respect, been diminished by reason thereof. The creditors fail to show that they have, in any respect, been injured by reason of the insurance, or that any provision of law has been violated in providing the insurance benefits for the wife and mother of the testator. Until they do so, they have no just grounds for complaint.

They have failed, as it appears to me, to show that the insurance moneys came to the hands of the executor and executrix as assets liable for the payment of debts, and, considering the beneficial character of the moneys, every reasonable presumption should be indulged against any such conclusion, that the intention of the testator, in making a just provision for his family, may not be frustrated where no rule of law or principle of justice is contravened.

I think that the accounts of the executor and executrix, as filed, should be finally judicially settled and allowed, and the objections thereto overruled.

A decree will be entered accordingly.  