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Heritage Bank North v. Ashley Development Corp.

Decided: June 26, 1984.

HERITAGE BANK NORTH, SUCCESSOR TO STATE BANK OF RARITAN VALLEY, PLAINTIFF-APPELLANT,
v.
ASHLEY DEVELOPMENT CORP., ARTHUR W. DIXON, MARTIN L. FENIK AND W. E. ROOSEVELT, DEFENDANTS-RESPONDENTS



On appeal from the Superior Court of New Jersey, Law Division, Middlesex County.

King and Bilder. The opinion of the court was delivered by Bilder, J.s.c. (Temporarily Assigned).

Bilder

On this appeal we are asked to consider the right of a creditor to reach accumulated dividends on a life insurance policy, a question yet undecided in New Jersey. A judgment creditor appeals from the denial of a motion for the turnover of accumulated life insurance dividends due the judgment debtor. The trial court denied the motion on the ground the dividends were exempt from execution under N.J.S.A. 17B:24-6. Appellant alleges that the judgment debtor has converted the accumulated dividends to cash additions to the policy and contends that this should be set aside as a transfer in fraud of creditors.

In July 1983 appellant bank levied upon "monies due or to become due to the defendant . . . from two policies of life insurance issued by Connecticut Mutual Life Insurance Company." Defendant's daughters are the named beneficiaries of these policies. The policies provide that, at the insured's option, dividends may be:

(1) paid in cash; or

(2) left with the Company, subject to withdrawal, to accumulate at such rate of interest, credited annually at not less than 2 1/2%, as the Company may determine; or

(3) applied on a premium due hereon; or

(4) converted into a participating paid-up addition to the sum insured hereunder. Any such additions outstanding may at any time be surrendered to the Company for cash in an amount equal to the then reserve thereon.

The policy also provides that:

Any dividends due and unpaid and any paid-up additions outstanding at the maturity of this Policy shall be payable with the sum herein due the insured to the payee (beneficiaries) of such insurance.

Until sometime in May 1983, defendant had opted to allow his dividends to accrue with interest under option (2). Shortly before the writ of execution was issued, defendant converted the accumulated dividends of about ...


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