Burlingham v. Crouse, ante, p.
229 U. S. 459,
followed to effect that, under § 70a of the Bankruptcy Act, the
trustee only takes surrender value of insurance policies on the
bankrupt's life, or, in case loans have been made by the company
issuing the policies, only the excess of surrender value over the
amount of the loan.
Under § 70a of the Bankruptcy Act, the bankrupt is entitled to
the policy by paying the amount of the cash surrender value or
excess thereof over loans as of the date of the filing of the
petition, and in case of the maturity of the policy before the
adjudication, he or his legal representative is entitled to the
proceeds of the policy over and above such amount.
Congress, by the proviso in § 70a, fixed the date of filing the
petition as the line of cleavage as between the trustee and the
bankrupt in regard to life insurance policies, and this is not
affected by subsequent events such as the maturity of the policy by
the suicide of the bankrupt, even though prior to adjudication.
192 F. 834 affirmed.
The facts, which involve the construction of § 70a of the
Bankruptcy Act and the ownership of policies of
Page 228 U. S. 475
insurance on the life of a bankrupt, are stated in the
opinion.
Page 228 U. S. 476
MR. JUSTICE DAY delivered the opinion of the Court.
This case involves the title to the proceeds of certain
insurance policies upon the life of Alfred M. Judson, bankrupt,
deceased, collected by the trustee in bankruptcy. The executor of
Judson's estate brought suit against the trustee in the United
States District Court for the Southern District of New York,
asserting title to such funds. The district court ordered that the
proceeds of the policies, less their cash surrender value, be paid
to the executor (188 F. 702); the Circuit Court of Appeals for the
Second Circuit, upon petition to revise, affirmed that order (192
F. 834), and the case comes here on certiorari.
Page 228 U. S. 477
A petition in involuntary bankruptcy was filed against the firm
of Judson & Judson and its members, Alfred M. Judson being one,
on December 17, 1910, and on December 23, 1910, Judson entered a
notice of his appearance in the proceedings. On January 9, 1911,
the firm and its members were adjudged bankrupts, and on February
9, 1911, Everett qualified as trustee. Judson owned certain life
insurance policies at the time of the institution of the bankrupt
proceedings, and thereafter and until his death, payable to his
executors, administrators, or assigns. So far as this case is
concerned at the time of the filing of the petition in bankruptcy,
these policies, with cash surrender values and subject to loans,
were as follows: one policy for $5,000, having a cash surrender
value of $2,291.49, and subject to a loan of $2,238; another for
$1,000, having a cash surrender value of $332.31, and subject to a
loan of $322, and another for $10,000, having a cash surrender
value of $5,030, and subject to a loan of $5,240. It therefore
appears that the cash surrender value of the policies on December
17, 1910, was $63.80.
On January 4, 1911, Judson committed suicide. Notice was served
on the trustee that the executor claimed the right, under § 70a of
the Bankruptcy Act, to pay to the trustee the cash surrender value
of the policies when ascertained, but the trustee denied such right
and also the right of the executor to the balance of the proceeds
of the policies. Under agreement, the insurance companies paid to
the trustee $8,675.14 upon the policies. The executor asserted
title to the difference between the sum realized on the policies
and the cash surrender value -- namely, $8,611.34. The district
court, upon the authority of
Burlingham v. Crouse, 181 F.
479, held that the proceeds of the policies, over and above the
cash surrender value as of the date of the filing of the petition,
passed to the executor. The circuit court of appeals affirmed the
order of the district court, holding that the
Page 228 U. S. 478
time when the interest of the bankrupt estate in the policies
passed to the trustee was the date of the filing of the petition,
and further, also upon the authority of
Burlingham v. Crouse,
supra, that the interest of the trustee in the policies
extended only to their cash surrender value.
The present case was argued at the same time as the case of
Burlingham v. Crouse, ante, p.
229 U. S. 459,
and insofar as it is like that case, the principles therein laid
down are controlling. The present case has, however, a feature not
directly involved in the case of
Burlingham v. Crouse,
because Judson, the insured, committed suicide before the
adjudication in bankruptcy, although after the filing of the
petition, and it is the contention of the petitioner that the
Bankruptcy Act vested the title to the property in the trustee as
of the time of the adjudication, and that the death of the bankrupt
between the filing of the petition and the date of the adjudication
made the proceeds of the policies assets in the hands of the
trustee.
While it is true that § 70a provides that the trustee, upon his
appointment and qualification, becomes vested by operation of law
with the title of the bankrupt as of the date he was adjudged a
bankrupt, there are other provisions of the statute which, we
think, evidence the intention to vest in the trustee the title to
such property as it was at the time of the filing of the petition.
This subject was considered in
Acme Harvester Co. v. Beekman
Lumber Co., 222 U. S. 300,
wherein it was held that, pending the bankrupt proceedings, and
after the filing of the petition, no creditor could obtain by
attachment a lien upon the property which would defeat the general
purpose of the law to dedicate the property to all creditors alike.
Section 70a vests all the property in the trustee which, prior to
the filing of the petition, the bankrupt could by any means have
transferred, or which might have been levied upon and sold under
judicial process against him. The
Page 228 U. S. 479
bankrupt's discharge is from all provable debts and claims which
existed on the day on which the petition for adjudication was
filed.
Zavelo v. Reeves, 227 U. S. 625,
227 U. S.
630-631. The schedule that the bankrupt is required to
file, showing the location and value of his property, must be filed
with his petition.
We think that the purpose of the law was to fix the line of
cleavage with reference to the condition of the bankrupt estate as
of the time at which the petition was filed, and that the property
which vests in the trustee at the time of adjudication is that
which the bankrupt owned at the time of the filing of the petition.
And it is as of that date that the surrender value of the insurance
policies mentioned in § 70a should be ascertained. The subsequent
suicide of the bankrupt before the adjudication was an unlooked-for
circumstance which does not change the result in the light of the
construction which we give the statute.
It follows that the judgment should be
Affirmed.