The opinion of the court was delivered by: BYERS
In this action a trustee in bankruptcy seeks: (a) to set aside as fraudulent the assignment by the first named defendant, the bankrupt, of a life insurance policy to his wife on November 20, 1929; (b) to procure a decree that the premiums paid pursuant thereto between November 20, 1929, and January 10, 1940, the date of filing the petition, shall inure to the benefit of the only creditor filing a claim; and (c) that $1,532.21 applied by the bankrupt's wife, the co-defendant, some months after the petition was filed, toward the purchase of their residence, be recovered by the plaintiff.
An additional demand for relief, pleaded as a third cause of action, was abandoned, and not made the subject of proof.
The plaintiff's principal evidence consisted in the testimony of the defendants, a representative of the company issuing the insurance policy, an attorney for Morris Plan Bank, and one of the employees of the latter; the defense called no additional witnesses, and the facts therefore cannot be said to be in dispute. As to the inferences to be drawn from them, there is room for difference of opinion.
The manifest object of the petition was to obtain discharge from a judgment recovered by the Morris Plan on or about November 19, 1930, in the sum of $1,270.38, upon a note given by one Suchonik as borrower, and five co-makers of whom the bankrupt was one. Seemingly the amount claimed to be due thereon when the petition was filed was $1,969.09. An earlier judgment, recovered by the same lender on the Worksman loan, an entirely separate transaction, was also scheduled, as to which the claimed balance was $183.82.
These were the only debts set forth in the petition (although another was added by amendment) and no others were proved, so that the Morris Pan is the real party in interest for whom the trustee is acting.
The evidence is deemed to establish that:
1. Arthur C. Coen (also known as Cohen) filed a voluntary petition in bankruptcy in this court on January 10, 1940, and schedules listing only two debts, both owing to Morris Plan on judgments recovered against him as co-maker of notes; one given by Worksman, as to which the balance alleged to be due was $183.82, and the other by Suchonik, as to which the balance alleged to be due was $1,969.09, making $2,152.91 in all. The assets shown were $1.72.
2. Thereafter the plaintiff was duly appointed, and qualified as trustee.
3. On November 20, 1929, the bankrupt assigned to his wife, Rose, ordinary life insurance policy for $12,500.00, No. 2,944,960B, issued by the Mutual Life Insurance Company under date of January 28, 1928, in which she was named as beneficiary; this was one of two equal policies which replaced an earlier one dated December 8, 1921, for $25,000.00 which was a 20-payment life policy, in which the same beneficiary was named, with right to change, and as to which policy the premiums had been paid in full.
The cash surrender value of the policy so assigned was $2,989.63 on January 8, 1940.
4. The other $12,500.00 policy was also assigned on the same date and to the same person, but is not involved in this controversy. There was no change in the beneficiary named in either policy.
5. The cash surrender value of the policy No. 2,944,960B, as to which plaintiff seeks relief, was $1,015.38 on November 29, 1929.
6. As early as 1925 the premiums upon the $25,000.00 policy were paid by the defendant Rose Coen by check drawn upon her individual bank account, and this practice continued after that policy was split, and ...