
    Woldemar Kittel, Appellant and Respondent, v. Charlotte Domeyer, Respondent and Appellant. The Provident Savings Life Assurance Society of New York and William M. Hoes, Public Administrator, as Administrator, etc., of Frederick Domeyer, Deceased, Respondents, Impleaded with Others.
    
      Insurance foi' the benefit of the wife of the assured—how affected-by chapter 373 of the Laws of 1896 — an action for the insurance money in excess of the statutory amount lies by the legal representative, not by a crediioi', of the deceased husband— policies pledged to creditors, how far considei'ed.
    
    Section 33 of chapter 373 of the Laws of 1896, relating to policies of insurance procured by married women upon the lives of their husbands, and which provides, that a married woman shall he “entitled to receive the insurance • money payable by the terms of the policy as her separate property, and free from any claim of a creditor or representative of her husband,' except that where the premium actually paid annually out of the husband’s property exceeds five hundred dollars, that portion of the insurance money which is purchased by excess of premium above five hundred dollars is primarily liable for the husband’s debts,” applies to policies of insurance obtained by a wife upon the life of her husband previous to its enactment, and while chapter 277 of the Laws of 1870, which provided, “when the premium paid in any year out of the property or funds of the husband shall exceed five hundred dollars, such exemption from such claims shall not apply to so much of said premium so paid as shall be in excess of five hundred dollars, but such excess, with the interest thereon, shall inure to the benefit of his creditors,” was in force.
    Under the act of 1896 a creditor of the deceased husband cannot maintain, in his individual right, an action to reach “that portion- of the insurance money which is purchased by excess of premium above five hundred dollars,” as the fund thus created is for the benefit of all the creditors of the husband.
    
      Semble, that such an action can only be maintained by an administrator or executor of the deceased husband; or, in the event of his refusal to act, by a creditor of the deceased husband, suing on behalf of himself and all other creditors.
    
      Semble, that in determining what portion of the insurance money was purchased by premiums in excess of §500, there should be excluded from the calculation premiums paid on policies issued to the wife upon the husband’s life, and which, prior to the husband’s decease, had been assigned by the husband and the wife as collateral security for a debt owing by the husband.
    Cross-appeals by the plaintiff, Woldemar Kittel,. and by the defendant, Charlotte Domeyer, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of New York on the 21th day of April, 1901, upon the decision of the court rendered after a trial at the New York Special Term.
    
      George H. Fletcher, for the plaintiff,
    
      Charles C. Sanders, for the defendant Charlotte Domeyer.
    
      William T. Gilbert, for the respondent Provident Savings Life Assurance Society of New York.
   McLaughlin, J.:

Frederick Domeyer died January 31, 1900, and at the time of his death his wife, the defendant Charlotte Domeyer, held three insurance policies for $10,000 each upon his life, by the terms of which the amounts assured thereby were payable to her; one issued by the Provident Savings Life Assurance Society of- New York, June 1, 1892; one issued by the United States Life Insurance Company, August 30, 1893, and one issued by the Penn Mutual Life Insurance Company, August 26,1895, The plaintiff also held three policies aggregating $10,000, issued on the 4th of June, 1891, by the Provident Savings Life Assurance Society of New York upon the life of Frederick Domeyer, payable to the defendant Charlotte Domeyer, and which were, on the 25th of September, 1894, assigned by Mrs. Domeyer and her husband to the plaintiff as collateral security for the payment of a debt then due him from the husband.

The United States Company and the Penn Company paid to Mrs. Domeyer the amounts covered by their respective policies, after deducting the premiums due. The Provident Company paid into court the amount secured" by the policy issued June 1,1892, but refused to pay. the policies assigned to the plaintiff, for the reason that the proceeds of such policies were claimed by both the plaintiff and the defendant Charlotte Domeyer.

Thereupon this action was brought to procure a judgment establishing ah alleged claim of the plaintiff against the estate of Frederick Do'meyef, deceased^ and adjudging that the proceeds of the three policies theretofore assigned belonged to him to be applied towards the satisfaction of his claim, and also adjudging that he had a lien, sufficient to satisfy his claim, upon the proceeds of the other policies for any sum that might remain after such application. The plaintiff had a judgment establishing bis claim against such estate at $18,939.28, and directing, the Provident Company to pay to him the proceeds of three policies theretofore assigned, such proceeds to be applied towards the satisfaction of his claim, and also adjudging that he had a lien upon the proceeds of the other policies, fexcept the one issued by the United States Company, and as to that he had a lien for so much of the proceeds as was purchased by the annual premiums in excess of $74, and directing the wife to pay to the administrator of Frederick Domeyer, deceased, so much of the proceeds of the policy issued by the United States Company as was purchased by the annual premiums in excess of $74, and the entire proceeds of the policy issued by the Penn Company; also directing that the money theretofore paid into court on the $10,000 policy issued by the Provident Company be also paid to the administrator.

From this judgment both parties have appealed. The plaintiff apparently succeeded at the trial and he seeks to sustain the judgment in this court, substantially upon the theory that, inasmuch as Frederick Domeyer for several years prior to his death was insolvent, and during that time the premiums on all of the policies referred to exceeded $500 a year, and such premiums were paid by the deceased out of his own. property, the plaintiff, as a creditor, is entitled to recover, after applying the proceeds of the policies assigned to him, the balance of his claim out of the proceeds of the other policies ; in other words, that he has a lien given to him by statute on such proceeds.

The question presented, therefore, is whether the plaintiff, as a creditor of the estate of Frederick Domeyer, deceased, is entitled,after applying the proceeds of the policies theretofore assigned to him, , to so much of the proceeds of the other policies as will be sufficient to satisfy his claim in full". The determination of this question necessarily involves a consideration of the statutes in relation to insurance obtained by a wife on the life of her husband, when the- premiums upon the policies have been paid out of the property of the husband. The first statute giving to the wife the right to insure the life of the husband is chapter 80 of the Laws of 1840, but it did not, in terms, permit the use of the husband’s property to pay the premiums upon- such policies, and the first -statute which did was chapter 187 of the Laws of 1858, which was amended by chapter 277 of the Laws of 1870,- and further amended by chapter 272, section 22, of the Laws of 1896. The statute as amended by the Laws of 1896 provides that “ A married woman may, in her own name, or in the name of a third person, with his consent, as her trustee, cause the life of her husband to be insured for a definite period, or for the term of his natural life. Where a married woman survives such period or term she is entitled to receive the insurance money payable by the terms of the policy as her separate property, and free from any claim of a creditor or representative of her husband, except that where the premium actually paid annually out of the husband’s property exceeds five hundred dollars, that portion of the insurance money which is purchased by excess of premium ab.ove five hundred dollars is primarily liable for the husband’s debts.” The amount of premiums annually paid on the policies, the proceeds of which are here in dispute, largely exceeded the $500 provided by this statute, inasmuch as they amounted to $1,262. In order, therefore, to determine the rights of the plaintiff,, it is necessary, as already indicated, to construe this statute and ascertain, if possible, just what the Legislature intended by its enactment.,

The manifest purpose of the statute of 1858, as it seems to us, was to exempt from the rights of creditors a certain share of the income of the husband which he might apply towards the establishment of a. fund for the benefit of his widow. By the act of 1858 the wife was permitted to cause to be insured for her sole benefit the life of her husband, for any definite period or for the term of his natural life, and. in case of her surviving her husband the insurance becoming due by the terms of the policies payable to her was to be her own property, free from all claims of creditors, of her husband. The act, it will be observed, further provided that such exemption should not apply where the amount of the premium annually paid out of the property of .the husband exceeded $300. Thus, by the express language of the act, it would seem that thé Legislature intended to exempt for the benefit of the wife certain property of the husband, and to put it beyond the reach, of his representatives or creditors. That this was the intent is apparent from the fact that the statute expressly provides that the exemption shall not apply; . that is, there shall be no exemption where the amount of premiums paid by the husband on policies for the benefit of his wife shall annually exceed the sum of $300. This was the condition of the statute until- the act of 1870 was passed (Chap. 277) by which it was amended, so far as the benefits to be derived by the wife were concerned, so as to provide that when the premium paid in any year out of the property or funds of the husband shall exceed five hundred- dollars, such, exemption from such claims shall not apply to so much of said premium so paid as shall be in excess . of five hundred dollars, but such excess, with the interest thereon, shall inure to the benefit of his creditors.” The exemption provided in the act of 1858 was thus increased from' $300 to $500, but the whole exemption was not forfeited if there was an excess of premiums paid; Only so much of the premium paid as was in excess of $500 should inure to the benefit of creditors; that is, not one but all of the creditors of the deceased husband, and such excess was evidently intended to be administered as part of his estate and in that way distributed jpro rata among all the creditors according to their respective claims. The principal and substantially the only change which seems to have been made by the act of 1896 was that the excess of premium was not the fund which was to inure to the benefit of creditors, but that the insurance purchased by premiums in excess of $500 should be “ primarily” liable for the husband’s debts, and should be no longer free from the claims of creditors and representatives of the husband. It is, however, claimed on the part of the defendant Charlotte Domeyer that the act of 1896 cannot apply to the proceeds of the policies here in question, inasmuch as they were obtained by her on the life of her husband prior to the passage of that act. We cannot agree to this contention. When the history of the legislation on the subject is taken into consideration with the object and purpose of it, it seems to us that the legislative intent is a mere exemption from the claim of creditors and nothing else. It is, in other words, a gratuity given by the Legislature to his wife. The rights involved are not of contract but of legislative intent. The statutes which were in force at the time the policies wei'e issued did not give to the husband, by the mere issue of such policies, the right, for the term of his life, to appropriate money, which in equity, except for this legislation, belonged to his creditors, to keep alive policies for the purpose of creating a fund for the benefit of his wife when he died. Any change in respect to the right of the husband to use money for the purpose of creating this fund is a mere matter of State regulation, determining what property shall be exempt from execution and nothing more. Of course, it could not be said that if a man purchased a farm, and at the time it was exempt from execution by levy from creditors, the Legislature would have no right thereafter to remove or alter that exemption. So here, all the Legislature has done is to alter the exemption so that the creditors can reach the fund created in excess of $500 per year. This is in harmony with the rule which would have existed had there been no statute whatever on the subject, viz., that the executor or administrator of the estate of the deceased insolvent could, for the benefit of creditors, recover the insurance which had been bought by him with money which should have been applied to the payment of his just- debts.

But then the question presented is as to how this claim of the ■ creditors can be enforced. The statute provides that that portion of the-insurance money which was purchased by excess of premiums above $500 is “ primarily ” liable for the husband’s debts. The word “primarily” is used as a synonym for the word “first” — that is, that the excess of the insurance shall be first liable for the husband’s - debts, and secondly that after thé husband’s debts have been satisfied, the remainder of the excess shall belong to the wife. If we are right in thus construing the statute, it necessarily follows that this excess of insurance is a fund for not one but all the creditors of the" deceased. It is an equitable asset of the estate of the husband who died insolvent, without sufficient property to pay all his just debts.- Therefore, the executor or administrator of the husband’s estate, in the administration of the same, is obligated to reduce this equitable asset to possession, under the powers conferred by chapter 314 of the Laws of 1858, and distribute the same among all the creditors of the deceased. Of course, the wife cannot be deprived of any part of this insurance which is not necessary for the payment of the debts of the deceased. That this was the legislative intent is indicated by the phrase that this -excess of insurance shall be “ primarily ” liable for the payment of the husband’s debts; in other words, if the husband does not leave sufficient property to pay-Ms debts, then the claims of all the creditors are to become a lien upon the insurance purchased by annual premiums in excess of $500, and until such claims have been paid, the wife has no interest in such proceeds ; that is, the proceeds of the excess of insurance is property which has been produced by the misapplication of assets of the-insolvent husband and which, under the statute,-forms a. part of his estate to be distributed, after his other property has been exhausted, among all his creditors.

It may be suggested that the executor or administrator might be Unwilling to take the necessary legal proceedings to reduce this insurance to possession. That may be. But if an administrator or an executor refuses to perform his duty, he can be removed and some one appointed in his place who will properly execute the duties of his trust; or, in case of his refusal, it is possible a creditor, on behalf of himself and all other creditors, might bring an action, making the executor or administrator a party defendant, and alleging that he had refused to bring such action.

It seems to us clear, however, that a creditor situated as the plaintiff is, has no standing whatever to maintain an action of this character. In this connection it may not be out of place to call attention to the fact that in no event can the premium paid upon the three policies assigned to the plaintiff be charged to the defendant Charlotte Domeyer; in other words, such premiums cannot be considered as a part of the $500 in determining what insurance she is entitled to under the statute. These policies' were assigned as collateral security for the payment of the husband’s debts long before his decease. By virtue of the assignment, in which she joined, she thereby, until the husband’s debts had been paid, parted with all her interest in such policies. The premiums thereafter used in keeping such policies alive were not for her benefit, but for the benefit of the husband and this plaintiff. The husband had the right, and it was a laudable act on his part, to use so much of his own property as he saw fit to keep those policies alive in order that he might secure to his creditor the payment of his claim. It needs no argument to demonstrate that if the plaintiff’s claim against the husband’s estate exceeds the proceeds’ of the policies, and for that reason he is entitled to take the entire proceeds, that the premium paid cannot be included in the $500 which the husband had a right to use for the purpose of creating a fund for the benefit of his wife after he had died.

It follows, therefore, that the judgment appealed from must be reversed, with costs, and, inasmuch as the plaintiff cannot under any circumstances recover in this action, the complaint must be dismissed, with costs to the defendant Charlotte Domeyer.

Van Brunt, P. J., Ingbaham, Hatch and Laughlin, JJ. concurred.

Judgment reversed, with costs, and complaint dismissed, with costs to the defendant Charlotte Domeyer.  