The opinion of the court was delivered by: BARD
This action was brought by plaintiff against J. William Hardt, Trustee, for Creditors of Martin M. Pearlman, under a trust agreement dated October 1, 1930, to enjoin the defendant from distributing any part of the proceeds of an insurance policy on the life on Pearlman and to compel the defendant to account for and to pay to plaintiff the distributive share of such proceeds to which he claims he is entitled under the trust agreement. The defendant interpleaded the other creditors who were beneficiaries of the trust agreement and all the defendants filed answers to the complaint. A preliminary injunction was granted restraining the trustee from distributing any of the proceeds of the policy, but this was later modified so as to permit him to distribute all such proceeds in excess of $5,000.
There is no dispute as to the facts in the case and they have been set forth in a stipulation entered into by all parties in interest. From this stipulation I make the following special
1. On or about October 1, 1930, Martin M. Pearlman and his wife entered into a trust agreement with J. William Hardt and certain other creditors of Pearlman whereby the Pearlmans transferred and assigned to Hardt, as trustee for the creditors, certain assets to administer in accordance with the terms of the trust agreement, and to distribute among the creditors in the ratio each of their claims bore to the total claims.
2. One of the creditor parties to the agreement was the Southwark National Bank, which was succeeded by the Commercial National Bank of Philadelphia.
3. On June 22, 1934, a receiver was appointed for the Commercial National Bank of Philadelphia, and the present plaintiff is currently the duly appointed receiver of that institution.
4. One of the assets transferred to Hardt as trustee under the agreement of trust was an insurance policy on the life of Pearlman for the sum of $100,000.
5. Subsequent to the assignment and transfer Pearlman ceased to pay the premiums on this policy and in order to reinstate it without a medical examination of the insured, it was necessary that a premium of $7,555.20 should be paid thereon prior to February 4, 1934.
6. Section XII of the trust agreement provided that if Pearlman failed to pay the premium on any of the policies of life insurance transferred to him by the trust estate, the trustee should have the right "to expose the Trust Estate or such part thereof as then remains undistributed, at public or private sale * * * and Trustee shall have the right representing such of Creditors as wish to join therein, to purchase the same or any part thereof * * *."
7. All the creditor parties to the trust agreement agreed that this premium should be paid by the trustee from funds to be contributed by each of them in the proportion that each of their claims bore to the total of all claims.
8. The then receiver of the Commercial National Bank of Philadelphia contributed his proportionate share of that premium amounting to $564.58, and all of the other creditor parties likewise contributed their shares in accordance with their agreement.
9. In order to reinstate the policy once more without a further physical examination of the insured, it became necessary to pay a premium of $9,799.19 on or before May 4, 1936.
10. In April of 1936 the trustee notified all the creditor parties of a meeting to consider what steps might be taken to meet this payment. Pursuant to this notice, a meeting was held on April 14, 1936, but this was not attended by the then receiver of the ...