Cohn v. Malone/Opinion of the Court

In 1902 and 1905 the bankrupt took out two policies on his life in the Penn Mutual Life Insurance Company, loss under one payable to his 'executors, administrators or assigns,' under the other to his sister and brother with full power in the assured 'while this policy is in force and not previously assigned, to change the present beneficiary or beneficiaries.' By formal written instruments dated July 15, 1910, he assigned both policies to his wife 'if she outlives me, otherwise to may estate, with full power to the insured to change the beneficiary or surrender this policy to said company at any time, this to be done by instrument in writing under his hand and seal to be recorded at the home office of the company.'

While both policies were in the bankrupt's possession, the trustee demanded them in order that their cash surrender value might be secured and distributed under Bankruptcy Act July 1, 1898, c. 541, 30 Stat. 544 (Comp. St. §§ 9585-9656). The bankrupt defended upon two grounds: First, that the cash surrender value was not property which could have been transferred by him prior to bankruptcy; and, second, that the assignment to his wife could not be defeated by the trustee because protected by section 2498, Georgia Code 1910, which provides:

'The assured may direct the money to be paid to his personal     representative, or to his widow, or to his children, or to      his assignee; and upon such direction given, and assented to      by the insurer, no other person can defeat the same. But the     assignment is good without such assent.'

The Circuit Court of Appeals held both grounds of defense bad. 236 Fed. 882, 150 C. C. A. 144. As to the first its ruling accords with the doctrine recently announced in Cohen v. Samuels, 245 U.S. 50, 38 Sup. Ct. 36, 62 L. Ed. 143. In respect of the second that court declared:

'Nothing in the terms of the statute, especially when they     are considered in the light of the circumstances of its      enactment, indicates that it had any other purpose or effect      than to deny to any one other than the assured himself the      power to defeat a direction by him to pay to his personal      representative, or to his widow, or to his children, or to      his assignee, the money payable in a life policy issued to      him. The provision does not purport to make every such     direction by the assured irrevocable by him, or to invalidate      a stipulation in a life policy giving the assured the right      to change the beneficiary at any time during the continuance      of the policy. The statute puts a direction by the assured to     pay to his widow on the same footing as one to pay to his      assignee. If a policy is assigned as security for a debt     which the assured pays during his life, certainly the statute      is not to be given the effect of putting it out of the power      of the assured to change the beneficiary upon the      reassignment of the policy to him by the satisfied creditor. Nothing in its terms justifies giving it a different     operation or effect in the case of a direction to pay to the      widow. We are not of opinion that the provision quoted had     the effect of conferring on the bankrupt's wife, as the result of her having been named as      the beneficiary, a vested and indefeasible interest in      policies by the terms of which the beneficiaries could be      changed by the bankrupt at any time.'

And we approve its conclusion.

Petitioner has not complained here of the action below concerning a third policy, issued by the New York Life Insurance Company.

The judgment of the Circuit Court of Appeals is

Affirmed.