IMPORTANT INSURANCE CASE.

Oamaru Mail, Volume I, Issue 331, 16 May 1877, Page 4

IMPORTANT INSURANCE CASE.

The "Wellington correspondent of the Dunedin Star telegraphed to that journal the following judgment, given by the Chief Justice and Judge Richmond in the Supreme Court on Saturday, in the case of Hammond v. the Public Trustee, in ■which the question at issue was whether the amount of a life insurance policy went to a deceased man's creditors or to his family:—"This was'a special case stated for the opinion of the Court under the 441 st section of the general rules. The question for the opinion of the Court is whether a sum of money received by the defendant, as administrator of the gocd3 of one Robert Lowe, who died intestate, leaving a widow and children, such, money having been received under a policy of life insurance effected by the deceased on Jii3 own life with an insurance company, was assets for the payment of creditors or not? and it turns upon the construction to be put upon the 46th section of ' The Life Insurance Company Act, 1873.' W fTiinlr that the provision in the 46th section, by which it is enacted that the property and interest of the person who effects such a policy as that now in question 'shall not be seized or levied upon by or under the process of any Court whatever.' must be taken to mean that such policy, or the moneys payable thereunder, shall not be made available by the process of any Court for the payment of the debts of or other claims against the assured or his personal representatives. The language is very general. The process intended is, no doubt, in respect of debts or of claims against the assured or his personal representative. This is not so stated, but it follows from the fact that it is only in respect of such debts or claims that, but for the exemption, the policy could be seized or the moneys applied the process intended is not expressed to be in an action against the assured, nor is there anything limiting the provision to process issued during his life. The language is sufficiently general to apply not only to the case of process in a suit against the assured, but also to the case of process in an action against his personal representatives, who succeed to the legal ownership of the policy after the death of the assured. There is nothing in the 46th section which shows any intention that the provision should have any limitation put upon it. If, therefore, neither the policy nor the money received thereunder be seized or levied upon in any action whatever in respect of a claim against the assured, whether the action be against that person during his life or after his death, or against his administrators, it must have been the intention that such moneys should not be applicable to the payment or satisfaction of such claims either voluntarily by the administrator and without suit or compulsion under the order of a Court of Law, whether such Court enforces its orders by seizure of the moneys or by attachment of the person of the administrator. It was contended on behalf of the defendant that the effect of the 46th section was not only to protect the policy and the money received thereunder from debts of the intestate, but to create a trust for the next of kin. It was admitted that the trust was capable of being frustrated by assignment of the policy by the assured during his life ; but it was argued that it was not deferrable by his will. As we think that the policy is not assets for the payment of debts by reason of the express exemption in the Act, it is not necessary for the purposes of the present case to decide whether or not such a trust is created. We nevertheless think it well to state that it is our opinion that no such trust is created, and that the assured in such a case may dispose of his will as he may by assignment during his life. The provision that the protection against seizure shall accrue for the benefit only of the personal representative of the assured, was relied upon as establishing such a trust/ But the term ' personal representatives ' of a deceased person ordinarily means ' the executor or administrator ' of such person, and that meaning must here be attributed to it, there being nothing in the context which shows that the Legislature used the term in other than the ordinary sense. The expression is used in the earlier part of the same section in its ordinary sense. In other sections of the same Act, where a trust was intended to be created, express language is used for the purpose. The effect therefore of the 46fch section seems to be that, subject to the conditions mentioned in the section, a life policy is not liable to claims against the assured, or the personal representative. The assured may dispose of the same by his will, and if he die intestate as to the policy, it will be distributable by the executors, as administrators, amongst the next of kin. Judgment is therefore for the defendant."