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Debtor.
____________________
Appellants,
v.
Appellees.
____________________
____________________
Before
br
_____________
Caron
appeal
bankruptcy
the
court's
surrender value
Because we
district
denial
court's
of
affirmance
an exemption
of an insurance policy on
for
of
the
the
cash
Background
Background
__________
13 bankruptcy petition in
financial
of New
affairs, they
Hampshire.
listed as
they
claimed
the
policy's
In
their statement
an asset
a Metropolitan
$19,260 cash
of
value
Caron, and
as
exempt
property pursuant
to
522(b)(2)(A) of the
Bankruptcy Code.
only permitted
those specified in
Ann.
11 U.S.C.
522(d).
Farmington National
Bank, a
filed
to
an objection
not
creditor of the
the exemption
claim,
Carons, timely
in which
the
which
After a
hearing
before the
copy of
the life
insurance
bankruptcy court,
policy was
at
placed in
evidence, the court ruled that the policy was property of the
-2-
estate
under
11
surrender value of
under
U.S.C.
and
that
the United
541(a)(1)
cash
not exempt
States District
the
Court
for the
District of
New
The
sole issue
for determination
time
of the
owned the
change
the
life insurance
beneficiary
the
by the bankruptcy
filing of
is whether
the
court: that at
bankruptcy petition,
policy and
(his wife
retained the
and
co-debtor
the
Mr. Caron
right to
Lorraine
well as the right to surrender the policy for its cash value.
the
is
legal conclusion that the policy was not exempt, and our
Discussion
Discussion
__________
policy is exempt,
we begin with
If
insurance
a policy
of
is effected
life or
endowment
by any
person on
-33
himself having an
statute,
insurable
interest
therein, the
lawful
legal
entitled
representatives,
to its
benefits
against
representatives
the
proceeds and
shall
all other
creditors
of the
be
and
person effecting
creditors,
shall
with
enure to
interest
their
thereon,
benefit from
the
exempt,
incorporating
by
reference its
discussion
1994)
where
exemption
it
claims
decided
under
three
New
separate
Hampshire's
of the
(Bankr. D.N.H.
cases
involving
life
insurance
exemption statute,
Because
rendered any
statute
district
as
408:2.
the New
Hampshire
decisions construing
we think
that court
court agreed
with
Supreme Court
408:2,
would
has not
we interpret the
interpret it.
the bankruptcy
court that
The
the
the
beneficiary
and
provides
provided the
beneficiary with
other benefits of
insured, the
the policy
protection
for
the
no right
to the proceeds
death of
or
the
maintain the
no
policy
for her
benefit
or to
husband to
surrender
the
-44
interest was as
The
Chapter
appellees, Farmington
13 Trustee,
distinguishes between
argue
that the
National
Bank and
New Hampshire
the
statute
policy and a
third
person
beneficiary
person entitled
thereof," not
only
and clearly
to the exemption is
the insured/owner.
specifies
the
The appellees
argue that
interest
therein" would
from the
In re Bray,
__________
not "parted
policy,
but
a life
insurance policy
had
that
with all
1934).
They reason
bankruptcy filing,
his beneficial
rather retained
be exempt
interest" in
ownership and
the
the concomitant
he still
Mrs. Caron's
interest, they
the beneficial
interest.
defeasible by
While the
statute is
court to be compelling.
not a model
We
Mrs.
policy in favor of an
Caron, do
we
beneficiary,
of clarity,
owner/insured, but
not
-55
arise
until Mr.
Caron's
death,
and
terminated
Caron
filed,
her
prospective
rights can
diminished
or
in bankruptcy was
in the policy
rights
be
and
that could be
powers
owner/insured, Mr.
under
exempted by
the statute.
The
the
retained
the
policy
interest
of the estate
See 11 U.S.C.
___
by
541(a)(1)
in property
are entitled to
While
we recognize
construe
exemption
remedial
purposes, we
narrow
reading.
statutes
liberally
find reasons
to
here to
courts are
to
reflect
their
afford
a more
U.S.C.
that generally
exemption, 11
____________________
1.
We note, but
is
co-debtor in
therefore that
asset of
this
her creditors if
___
joint bankruptcy,
her interest in
it appears
At
most, the
was an
claims of
exemption
makes no reference
to the creditors
the insured;
of the beneficiary.
408:2.
-66
the federal
overly
indulgent of
Even more
the
exemption scheme
because it was
debtors at
the expense
persuasive is legislative
New Hampshire
too "liberal,"
of creditors.2
to delete
language that would have made the Carons' arguments much more
plausible.
The
statute at
issue, as
originally proposed,
such
person
struck.
New
Journal of
the
owner/insured],"
Hampshire House
but
Report
the
was
House Bill
224,
on
legislature declined
policies where
to alter
the
the owner/insured
beneficiary.
Of
to
that language
deletion that
exemption to
power
[the
is reserved or permitted
We infer from
to extend
the
retained the
like import
is
the
for
the person
effecting
such insurance
to exercise
such
right to change
this deletion
not
a legislative
prevent
a bankruptcy
Id.
___
We infer from
statute should
trustee
from
stepping into
the
____________________
2.
See New
___
of
(stating
that
the proposed
Report, Journal
statute
1981, at 533
"prevents New
law.");
Minutes
of
House
Judiciary
Committee
(federal bankruptcy
act
is "very
-77
liberal" and
that
policy
owner's
shoes to
exercise
rights, such
New Hampshire's
policy
life insurance
as
Thus,
exemption,
and the
Carons'
to
follow,
and
need
not
overrule,
the
district
In re Bray,
___________
8 F.
Supp. 761
(D.N.H. 1934).
The
court
1909), and
Whelpley
________
decision predates
the enactment
of the present
for
the
exemption.
Moreover,
opinion is devoid of
held
analysis.
the
statute and
two-paragraph Whelpley
________
In Bray, the
____
district court
that the life insurance policy was not exempt under the
___
provides more
Bray, 8
____
F. Supp. at 763.
analytical discussion,
is just as plausible,
it is not
While Bray
____
clear which
rendered it non-exempt.
in our view,
to read Bray as
____
support
having
considered
unpersuasive.
both
Whelpley
________
and Bray,
____
we
It
find
Thus,
them
-88