The opinion of the court was delivered by: CAMPBELL
CAMPBELL, District Judge.
This is a motion made on behalf of the bankrupt for an order directing the trustee to turn over to the bankrupt certain life insurance policies.
The bankrupt is the owner of five certain insurance policies, each of which contains total and permanent disability provisions.
The beneficiary in each of these policies is the wife of the bankrupt.
No question has been raised in regard to the exemption of these policies, claimed under section 55-a of the Insurance Law of the State of New York (Consol. Laws N.Y. c. 28).
For some years prior to the filing of the petition in bankruptcy herein, and prior to the creation of the obligation to the Manufacturers Trust Company, to wit, since October 8, 1930, the bankrupt has been collecting disability payments amounting to $300 per month. All payments for premiums have been waived and the bankrupt has not paid any premiums on the policies in question since October 8, 1930.
On October 8, 1931, the bankrupt signed an agreement guaranteeing payment to the Manufacturers Trust Company of the indebtedness of the Audrey Import Company, Inc., and/or Arthur Schoenbrun, under certain terms and conditions. Arthur Schoenbrun, the only stockholder and officer of the Audrey Import Company, Inc., is the son-in-law of the bankrupt.
On or about August 30, 1932, the Manufacturers Trust Company commenced an action against the bankrupt under the guaranty agreement. Trial was had on the 8th and 9th days of March, 1933, in the Supreme Court, New York County, which resulted in a verdict in favor of the bankrupt herein against the plaintiff, dismissing the complaint. Judgment was entered on the 11th day of March, 1933, against the plaintiff.
The Manufacturers Trust Company took an appeal for the said judgment, and the Appellate Division of the New York Supreme Court, First Department, unanimously reversed the judgment so appealed from, and directed a new trial. Manufacturers Trust Co. v. Rechtman, 239 App. Div. 517, 268 N.Y.S. 104. A judgment thereon in favor of the said Manufacturers Trust Company was entered on February 2, 1934.
Thereafter the bankrupt appealed from said judgment to the Court of Appeals of the State of New York (264 N.Y. 639, 191 N.E. 603), which on May 22, 1934, affirmed said judgment of the Appellate Division, and judgment was entered by the Manufacturers Trust Company against the bankrupt herein, on June 7, 1934, in the sum of $9,206.97.
An action pending in the City Court of the City of New York, New York County, wherein the bankrupt was plaintiff, against the Manufacturers Trust Company as defendant, was dismissed on November 24, 1934, and judgment for costs in favor of the Manufacturers Trust Company against the bankrupt herein was entered.
The effective date of section 55-b of the Insurance Law of the State of New York was May 14, 1934.
The Manufacturers Trust Company is the only creditor of the bankrupt.
The wife of the bankrupt is the beneficiary named in the said life insurance policies, but is not entitled to the disability payments which by the terms of the ...