420
The Green Bag
that the proceeds of the insurance in such a case are no part of the estate of the insured, but are the absolute property of the wife and children.2 The peculiar nature of insurance which sets it apart from other incidents of economic life was well recognized in the case of Central Bank of Washing ton v. Hume, 128 U. S. 195, where Chief Justice Fuller, giving the unani mous opinion of the Court said: Conceding then in the case in hand that Hume paid the premiums out of his own money, when insolvent, yet as Mrs. Hume and the children survived him and the contracts covered their insurable interest, it is difficult to see upon what ground the creditors or the administrators as representing them can take away from these dependent ones that which was expressly secured to them in the event of the death of their natural supporter. The interest secured was neither the debtor's nor the creditor's. In no sense was there any gift or transfer of the debtor's prop erty unless the amounts paid as premiums are to be held to constitute such gift or transfer. But even if Hume paid this money out of his own funds when insolvent, and such payments were within the statute of Elizabeth, this would not give the creditors any interest in the pro ceeds of the policies which belonged to the beneficiaries. ... It seems to us that the same public policy which recognizes the support of wife and children as a positive obligation in law as well as in morals should be extended to protect them from destitution after the debtor's death by permitting him, not to accumulate a fund as a permanent provision, but to devote a moderate portion of his earnings to keep on foot a security for support already or which could thereby be lawfully obtained, at least to the extent of requiring that in such circum stances the fraudulent intent of both parties should be made out. And inasmuch as there is no evidence from which such intent on the part of Mrs. Hume or the insurance companies could be inferred in our judgment none of these premiums can be recovered.
This opinion of the United States Supreme Court states very satisfac torily the economic reason for the existence of state statutes exempting 'Burwell v. Snow. 107 N. C. 85.
the proceeds of insurance policies from the creditors of the insured. It must be said, however, that the courts have found many pretexts for reasons for defeating the broad principle embodied in these statutes. After the decision in Bank v. Hume appeared, Professor Williston strongly criticised it, upholding the English view that the creditors of the bankrupt are entitled to the entire proceeds of his policies where they are settled upon the wife of the bankrupt while he is insolvent.3 But in the English cases the point con sidered was the case where policies originally payable to the personal re presentatives of the insured were as signed by him to his wife after he was involvent. Nevertheless, adhering strictly to the peculiar nature of in surance and the true concept of insur able interest, the view of the Court in Bank v. Hume seems more nearly correct. Moreover, eight years later (1899) in a carefully studied opinion, the Court of Appeals of Colorado in a case of first impression followed Bank v. Hume,t Here again the Court held that the duty which the insured owes to his dependent family and to the state is of higher importance than that which he owes to his creditors. "We see no difference in principle be tween compelling the husband while living to support his wife and family and in permitting him to make some provision for their support after his death." The increasing tendency to place the bankrupt's policies in the hands of his trustee is also in conflict with the true idea of insurable interest. One court has said of this, "We do not re gard the right of the wife to insure the life of her husband as property. It is 1 25 Am. Law. Rev. 185. 'Manufacturing Co. v. Platt. 13 Col. App. 15.
