
    Craft & Co. v. Stoutz.
    
      Bill in Equity by Judgment Creditor, to reach and subject Property held by Wife of Deceased Debtor.
    
    1. Waiver of exemptions in note; insurance by debtor for benefit of his wife. — A waiver of exemptions in a promissory note does not affect the debtor’s right to insure his life for the benefit of his wife, paying annual premiums not in excess of $500 (Code, § 2356); nor can the creditor, having reduced his debt to judgment, reach and subject in equity property which the surviving wife has bought or improved with the proceeds of the policy.
    Appeal from tbe Chancery Court of Mobile.
    Heard before tbe Hon. Wi. H. Tavloe.
    Tbe bill in this case was filed on tbe 14th November, 1890, by Jobn Craft, doing business under tbe name of Craft & Co., against Mrs. Julia J. Stoutz, both individually and as executrix of tbe will of her deceased husband, F. Arnold Stoutz, and contained these allegations : (1.) That said F. A. Stoutz was indebted to complainant, January 1st, 1883, for goods sold and delivered, and tbe indebtedness continued to increase until August 19th, 1885, when be executed to complainant bis several promissory notes for tbe amount due, each containing a waiver of exemptions; and on these notes complainant recovered a judgment against him, Dec. 16th, 1887, on which an execution was afterwards issued, and returned “No property found.” (2.) That said Stoutz, “during tbe existence of said indebtedness, and before the execution of said notes,” bad taken ont a policy of insurance on bis own life in tbe sum of $4,000, for tbe benefit of bis wife, and be continued to pay the quarterly installments, about $30, until bis death, wbicb occurred on tbe 3d May, 1890; and tbe bill charged that these payments were in tbe nature of a voluntary conveyance, and were fraudulent as against complainant’s rights as ‘a creditor. (3.) That on tbe 26th February, 1883, said Stoutz executed to bis wife a deed conveying the bouse and lot in wbicb they resided as a homestead, and wbicb was of value more than $2,000; and tbe bill charged that this conveyance was voluntary, though it also recited tbe payment of a nominal consideration, “and was and is null and void, because not executed as by law prescribed for tbe conveyance of tbe homestead.” (4.) That on tbe 1st April, 1884, Stoutz and wife executed a mortgage on tbe property, still occupied as their homestead, to Phoebe A. Tutbill, to secure a debt of $1,000, money borrowed by said E. A. Stoutz; and this mortgage being foreclosed, M. G. Hudson became tbe purchaser, at tbe price of $1,060, and received a conveyance from tbe mortgagee, dated March 23d, 1886; but, on tíre 26th June, 1886, be re-conveyed tbe property to her, on tbe recited consideration of $1,060 paid. (5.) That on the 28th June, 1886, E. A. Stoutz borrowed $1,200 from one E. L. Gelbke, and paid $1,100 of tbe money to Phoebe A. Tutbill in satisfaction of her claim; who thereafter conveyed tbe property by deed, reciting that consideration, to tbe wife of said Stoutz; and on tbe next day, June 29th, Stoutz and wife conveyed the property by mortgage to Gelbke to secure tbe payment of tbe $1,200 so borrowed. (6.) That Mrs. Stoutz collected tbe insurance money soon after tbe death of her husband, paid off tbe mortgage to Gelbke, satisfaction of wbicb was entered on tbe record, expended $2,000 or more in tbe erection of improvements on tbe property, reported tbe estate of her husband insolvent, and bad it so declared, and refused to pay complainant’s judgment; and tbe bill alleged that in fact there were no assets of tbe estate out of wbicb satisfaction of tbe judgment could be enforced.
    On these allegations, tbe bill prayed (1) that tbe conveyance by said Stoutz to bis wife be declared null and void, and be cancelled; (2) that tbe payments made by him in premiums on tbe policy of insurance, after tbe execution of notes to tbe complainants, be declared fraudulent as against complainant’s rights as a creditor, and chargeable on tbe insurance money received by tbe defendant, and on tbe property in wbicb she bad invested tbe same; and (3) that ■ the conveyance from Mrs. Tuthill to the defendant be declared fraudulent, and the property condemned to the satisfaction of the complainant’s debt.
    Thé defendant demurred to the bill for want of equity, (1) because it showed that the policy of insurance was taken out before the execution of the notes by said Stoutz to the complainant, and (2) because it showed that the annual premiums paid were less than $500, and (3) because it showed that defendant did not join in the execution of said notes; and also for multifariousness, because it sought to have complainant’s debt declared a charge on the property, and also to have the conveyances of the property declared fraudulent and void.
    The chancellor sustained the demurrer generally, not specifying any ground, but gave the complainant leave to amend his bill; and an amendment was then filed, which is thus set out in the record: “(1.) By striking out, on page 9 of the bill, the last two lines, beginning with the word then immediately after the word Honor; also, by striking out the first line on page 10, ending with the word cams. (2.) Also, by striking out the first eleven lines of the prayer on page 1Ó, and beginning on the 10th page with the words the deed of conveyance, &c. (3.) Also, by adding after the word debt, in the 19th line of page 10, the following : ‘ That payment of $1100 by said F. A. Stoutz to Phcebe Tuthill, and the investment of the purchase of said property, wherein the title to said property is taken in the name of defendant; and that your Honor will then charge said property with the payment of said sum due to complainant from said Arnold Stoutz ; and that said property be condemned and subjected to the satisfaction of complainant’s said debt; and that said deed from said Phoebe Tuthill to defendant be set aside, can-celled and annulled;’ ” and the general prayer for other and further relief was then added.
    The defendant demurred to the amended bill, on the same grounds as to the original; and the chancellor sustained the demurrer. The decrees on the demurrers are assigned as error.
    Wm. E. EichabdsoN, for appellant.
    F. G. Beombeeg, contra.
    
   COLEMAN, J.'

Craft & Co., complainants, as creditors of the estate of F. Arnold Stoutz, filed the present bill to subject to the payment of their claim certain property, the legal title to wbicli is in tbe name of bis wife, tbe respondent.

It is unnecessary to consider tbe validity of tbe deed of 1883, by wbicb Arnold Stoutz, tbe husband, conveyed tbe homestead to bis wife. If null and void for want of consideration, or defective execution of tbe conveyance, or for any other cause, tbe mortgage on this property executed by Stoutz and wife to Phoebe A. Tuthill, on tbe 1st day of April, 1884, is not assailed. At tbe time of tbe execution of this mortgage, complainants bad no lien on, or claim to this property, and the grantors bad a perfect right to mortgage the same, if the}'- saw proper. This mortgage was foreclosed on tbe 23d day of March, 1886, and at tbe sale tbe property was purchased by one Hudson, either for himself or the mortgagee. If this property, conveyed by tbe mortgage to Tuthill, was tbe property of Arnold Stoutz, as charged in tbe bill, complainants, as judgment-creditors of Arnold Stoutz, were authorized to redeem this property from tbe purchaser. Their judgment against Arnold Stoutz was recovered on tbe 16th day of December, 1886, and they have permitted more than two years to elapse, tbe time allowed by statute for redemption. Tbe present bill is not one to redeem tbe property.

It is averred that, on tbe 28th day of June, 1888, Phoebe Tuthill by deed conveyed tbe property to Julia Stoutz, for an expressed consideration of eleven hundred dollars; that on tbe 28th day of June, 1888, twelve hundred dollars was borrowed by Arnold Stoutz from one Gelbke, tbe payment of wbicb was secured by a mortgage executed by Julia Stoutz (tbe wife) and her husband on this property to said Gelbke, and that tbe money thus borrowed was tbe money paid to Mrs. Tuthill, tbe consideration for tbe conveyance to Mrs. Julia Stoutz of June 28th, 1888. Tbe bill then shows that tbe husband, Arnold Stoutz, died, and out of tbe proceeds of a policy of insurance taken out by him in bis life-time for tbe benefit of bis wife, Julia Stoutz, tbe mortgage to Gelbke was paid by her; and that tbe wife, in addition to tbe money paid to satisfy this mortgage, expended about two thousand dollars in improving tbe premises. Tbe bill charges that complainant’s judgment was founded upon notes made by Arnold Stoutz, in which be waived bis right to claim exemption of personal property, and that these notes antedated tbe payment of the annual premiums, and that tbe premiums paid upon tbe policy were voluntary, and null and void for this reason as against him. Tbe equity of complainant’s bill, and bis right to relief in this aspect of tbe case, depend upon tbe right of tbe wife to tbe money collected from tbe policy.

Section 2356 of tbe Code provies, that tbe wife may insure tbe life of tbe husband, for tbe benefit of herself, or for tbe benefit of herself and child or children of tbe marriage. It also provides that tbe husband or father may insure bis life for the benefit of tbe wife and child or minor children, and such insurance is exempt from liability for bis debts or engagements, if tbe annual premiums do not exceed five hundred dollars. In this case, as appears from tbe bill, tbe annual premiums were not so much as five hundred dollars.

A note waiving exemption as to personal property is a mere debt or engagement. It in no sense creates a lien on property or money. Tbe effect of tbe statute which permits the husband to insure bis life for tbe benefit of bis wife is to enable tbe husband to expend so much money in tbe manner prescribed, for tbe benefit of bis wife, which, without tbe statute, would not be exempt from liability for the debts of tbe husband. Tbe creditors of Arnold Stoutz, tbe bus-band, have no claim upon tbe insurance money, tbe proceeds of tbe policy taken out for tbe benefit of the wife. This money belongs to her in her absolute right, and she bad tbe power to expend it as she saw proper. «

Tbe demurrer to tbe bill raised these questions, and was properly sustained.

Affirmed.  