Schneider v. United States Life Insurance — 22 N.Y. St. Rep. 464

Majority

p. 464

Eliza Schneider, Pl’ff and Resp’t, v. The United States Life Insurance Company, Def’t and App’lt.

(Supreme Court, General Term, First Department,

Filed March 29, 1889.)

Headnote

Insurance (life)—Policy on life of husband in favor of wife—Surrender OF POLICY BY THE HUSBAND—WlFE ENTITLED TO HAVE IT REVIVED AND ENFORCED AFTER DEATH OF HUSBAND—WHAT NOT GOOD DEFENSE.

A husband had his life insured by the defendant in favor of his wife without her knowledge. Subsequently, on the receipt by the husband of a notice for the payment of a premium before the time for payment had expired, he surrendered the policy to the company, and received $525, the-surrender value. The surrender was accepted by the company, and the

p. 465

value paid upon a release subscribed in the name of the wife and her husband, but the signature of the wife was forged, and she did not know of the release or surrender. Her husband subsequently died, and the facts of the insurance and of the surrender coining to the plaintiff’s knowledge, she-commenced this action. Held (1), that the surrender of the policy was. without authority, and was a fraud upon the plaintiff, and she was entitled to have it revived and enforced according to its terms; (2), that the. defendant’s defense that the policy was forfeited by the failure to pay the premium -within the thirty days mentioned in the notice received by the husband, was not a good defense; (8), that the collection by the plaintiff of another policy issued by the defendant upon the same life for her benefit, in no manner affected her right in this action; (4), that the company could look to the commissioner of deeds for indemnity, who had falsely certified that the plaintiff had appeared before him and acknowledged the execution of the release by her.

Appeal from a judgment recovered upon a trial before the court.

Oliver P. Buell, for app’lt; Lucius McAdam, for resp’t.

—By the judgment the plaintiff has been permitted to recover the amount for which a policy of insurance was issued by the defendant upon the life of her husband. She had no knowledge of the existence of this insurance prior to his decease. By the formal language of the-policy $6.47 for one-fourth of the annual premium would become due on the 17th of April, 1886, and notice of that fact was on the 15th of March, 1886, given to the plaintiff’s husband, pursuant to chapter 341 of the Laws of 1876. This notice was not brought to the knowledge or attention, of the plaintiff, but before the thirty days expired, and on or about the 25th of March, 1886, the policy was surrendered by the husband, whose life was insured, to the company for the sum of $525, which was paid to him. This surrender was accepted and the payment was made upon the authority and release subscribed with the name of the-plaintiff and of her husband, as that, in case she had subscribed her name, was permitted to be done by section 3 off chapter 710 of the Laws of 1870. But as a matter of fact, she neither subscribed, nor knew of the release or surrender, of the policy, but her name subscribed in this manner was a forgery. Her husband died on the 22d of December, 1886, and after the facts of the issuance of the policy and its surrender in this manner came to her knowledge, this, action was commenced to revive it, as an obligation against the company and to enforce its payment for her benefit.

The court at the trial held that the surrender of the? policy was not only without the authority but a fraud upon the plaintiff, and that she was entitled to have it revived and enforced according to its terms against the defendant. The defense, which was mainly relied upon, was the omission, or failure to pay the premium within the

p. 466

thirty days mentioned in the notice mailed to the plaintiff’s husband on the 15th of March, 1886. But this defense was not sustained by the law, although in ordinary cases such a «default would forfeit the policy. Holly v. Metropolitan Life Ins. Co., 105 N. Y., 437 ; 7 N. Y. State R., 204.

But this principle was rendered inapplicable to this insurance by reason of the accepted surrender of the policy by the defendant before a default had taken place in the payment of this installment of the premium. That was held ■to be the law in Whitehead v. N. Y. Life Ins. Co. ( 33 Hun, 425 ), which was to this extent affirmed in 102 N. Y., 143 . For as to the two policies which, in that instance, had been ■surrendered without right, before the arrival of the time for the payment of the premium, the court held the defendant in the action to be liable, and this holding, of necessity, maintained the right "of the plaintiff in this action to recover against the defendant.

The collection by the plaintiff of a paid-up policy issued "by the defendant upon the same life, for her benefit, in place of another preceding policy, in no manner affected her right in this action. For that right arises entirely out •of what transpired between the parties concerning the policy upon which she was held entitled to recover, notwithstanding this fraudulent surrender of it.

The liability of the company to pay the amount of the policy to the plaintiff is undoubtedly a hardship, but it cannot be excused or exempted from that liability by its reliance on the forged and fraudulent instrument produced as the authority for the surrender of the policy. It is not, '.however, without a remedy. For as long as it acted. upon the certificate of the commissioner of deeds, who falsely •certified that the plaintiff had appeared before him, and was personally known to him to be an individual described in, and who had executed the authority and acknowledged .such execution before him, it may be at liberty to resort to him for indemnity for the loss in this manner produced.

The judgment was right and it should be affirmed, with •costs.

Van Brunt, Oh. J., and Brady, J., concur.