
    Mary Rison et al., vs. T. W. Wilkerson & Co.
    1. Insurance. Of life by husband. Bights of widow. Act of 1846, oh. 216, | 3. The act of 1846, eh. 216, g 3, by which the proceeds of a policy of life insurance, effected by the husband upon his life, enufes at his •death, to the benefit of his widow and heirs, does not deprive said husband of the power to assign or otherwise dispose of said policy during his life time.
    2. Same. Same. Same. Case in judgment. Where a husband in order to obtain credit, effected an insurance of his life for seven years and assigned the policy to his creditor, but paid only the first and second annual premiums, and said policy was kept alive by the creditor who paid the several other premiums accruing before the death of the insured, and after tliat event collected tlie amount of tlie policy, it' was properly Reid by ai Court of Chancery, that the fund belonged to tbe creditor to the amount of his debt and payments aforesaid, but that the surplus belonged to the-widow and heirs.
    KOM SHELBY.
    The complainants, the widow and children of John-W. Rison, deceased, filed this bill in the Chancery Court at Memphis, to recover of the defendants, merchants at Memphis, the proceeds of a policy of insurance, effected by the said' decedent in his life time upon his life. It seems that the insurance was effected by way of indemnity to the defendants for debts due them from the deceased, and that the policy had been regularly assigned by him to the defendants. The first and second premiums were paid by the deceased, after which he declined to pay any more, and the intervening premiums to the time of his death, were paid by the defendants and the policy thus kept alive. The defendants collected the insurance, the whole of which they claimed by virtue of their debts, the assignment and their payments. The amount of the policy exceeded that of the debts. The complainants claimed the whole amount of said insurance, under the act of 1846, ch. 216, § 3, and upon application to the defendants for the whole amount,' payment was refused by the active partner, T. W. Wilkerson, who, however, gave the complainants his share of the fund as a donation from himself, but declined giving up the rest, which he claimed on account of his partners, who were non-residents. At the January Term, 1856, Chancellor Caruthers gave a decree, subjecting the fund pro tanto, to the payment of the debts due the defendants, and reimbursing them their payments of premiums, and giving the surplus to the complainants. The defendants appealed.
    J. Calvin Jones and C. B. Frazer, for the complainants.
    Wright and Ctjrrin, for the defendants,
   Caruthers, J.,

delivered the opinion of the Court.

In the month of 'June, 1847, J. M. Rison effected an insurance of $2,000.00 upon his life, in the “Mutual Life Insurance Company of New York,” through its agent, A. S. Caldwell, at Memphis, for the term of seven years, at a certain annual premium. He died intestate, in February, 1852, leaving the complainants, consisting of his wife and children. In 1848, this policy was transferred with the assent of the agent, by assignment to the defendants, as collateral security for a note of $1097, given for a bill of goods then purchased from them. The said Rison having failed after the first year, to pay the annual premiums, the policy would have been forfeited and lost, but for the acts of the defendants, in discharging them at the, proper times, down to the death. After the death of Rison, the defendants received as assignees $1980 upon said policy, and claimed to hold not only the amount of the note with interest which it was intended to secure, and the amount advanced by them for premiums to keep the policy alive, but also the balance of the amount received, except so much as they might voluntarily donate to the family in their poverty. The complainants, on the other hand, claim the whole amount, without paying the note of $1097, or the said advances upon the premiums. This bill is grounded upon the provisions of the act of 1846, ch. 216, § 3; Nich. Sup. 280. It is in these words: That from and after the passage of this act, whenever any married woman may cause a life insurance to be effected upon her husband’s life, the said insurance shall in no case be subject to execution or attachment for the debts of said husband, but the same shall enure to the benefit of the widow and heirs of said husband. And further, that any husband may effect a life insurance on his own life, and the same shall in all cases enure to the benefit of his widow and heirs, in the present rates of distribution, without being in any manner subject to the debts of [said husband, whether by attachment, execution or otherwise.”

It is contended that this act operates as a settlement upon the widow and children of the insured, and cannot be divested from their use and benefit by any act of his, or his creditors. It would be more difficult to meet this argument, if indeed, it could be successfully met at all, if the policy had expressly provided that in the event of death, the sum secured should be paid to the widow and children. But this is an ordinary policy upon his life, without any special stipulations of that or any other kind. So the case is to be decided upon the construction of the act alone. Its phraseology is very strong and forcible, in favor of the rights of the widow, in exclusion of creditors. But it must have given to it, a sensible construction, promotive of the intention of the legislature. Without -this act the insurance money would go to the personal representative of the deceased, and constitute assets in his hands, subject to the payment of debts. ‘ Before the act, creditors would have preference over the family, but since, the latter have the exclusive claim to the particular fund.

The wisdom and humanity of the law, may be admitted, but surely it was not intended to divest the insured, while he lived, of the right of disposing of his own as he pleased, so as to bind those who might come after him and stand in his shoes. This would be the effect of the construction contended for by the complainants.

We think that nothing more is intended by the act and that no other operation can be given to it, than to prevent a fund of this kind from passing into the hands of the administrator with the other effects of the insured, in favor of the widow and children, or in other words, to prefer them to creditors to that extent. But it can only apply where the claim remains undisposed of by the deceased. His power over it during his life is not at all affected by the act, but continues as ample and unrestricted as before.

This method is often resorted to, as in this case, by men in slender circumstances, whose ability to pay is supposed to depend upon their personal exertions, and it cannot be supposed that the legislature intended to deprive poor men of this mode of obtaining credit, and thereby getting into business, and making a living for themselves and families.

We do not feel constrained so to construe the language used in the act before us, but are of opinion that to give it such an operation would be going beyond the objects and intention of the Legislature.

But the transfer was only made to secure the debt of the defendants, and they can retain no more of the fund than is sufficient for that purpose, and to reimburse the amount paid by them in annual premiums; the balance must .go to the complainants.

So held the Chancellor, and his decree is affirmed with costs.  