Merrill v. Anderson — 17 N.Y. Sup. Ct. 604

Majority

p. 604

In the Matter of the Petition of BETSEY A. MERRILL v. JOHN J. ANDERSON, Receiver of the Continental Life Insurance Company.

Headnote

Settlement of loss with inswramee company — check of company — withdrawal of money by the receiver of the company, before presentation of the check.

A life insurance company settled a loss accruing under a policy issued by it, and delivered a check for the amount to the claimant, drawn upon the United States Trust Company, where the company then had a deposit largely in excess of the amount thereof. The claimant indorsed, upon the back of the check, a receipt in full for all demands under the policy. Before indorsement and presentation of the check a receiver of the company was appointed, who withdrew all the funds from the trust company. Reid, that the claimant was entitled to have the amount of such check paid by the receiver out of the funds so withdrawn.

Appeal from an order made at tbe Special Term, directing tbe receiver of tbe Continental Life Insurance Company to pay to tbe petitioner tbe amount of a ebeck drawn by tbe company prior to tbe appointment of tbe receiver.

p. 605

Elliott F. Shepard, for the petitioner.

The draft of the Continental Life Insurance Company was on a particular fund in the United States Trust Company (not a banker, but a trustee), and the draft operated as an equitable assignment of $7,820.67 of those funds to the petitioner. (Yreeland v. BT/unt, 6 Barb., 182 ; Hosack v. Rogers, 6 Paige, 415-429.) In equity, an order given by a debtor to his creditor upon a third party, having funds of the debtor to pay the creditor out of such funds, is a binding equitable assignment of so much of said fund. {Hall v. Buffalo, 1 Keyes, 193 ; Burn v. Carvalho, 4 M. & C., 690; Morton v. Hafflor, 1 Hill, 583 -585.) Such a draft, without acceptance, is an assignment, and good against the bankruptcy assignee of drawer. ( Yates v. Groves, 1 Ves., Jr., 280.) No particular form of words is necessary to constitute an assignment. Ad intention to surrender all control over the fund is sufficient. (.Dickenson v. PMllips, 1 Barb., 454 .) It can be enforced, even though the drawee refuse acceptance. {Lett v. Morris, 4 Sim., 607.) Such a draft is a valid, equitable assignment of the fund pro tanto. {Bradley v. Root, 5 Paige, 632; Re Alderson, 1 Mod. R., 55; Clark v. Mauran, 3 Paige, 373.) An order drawn by a creditor on his debtor is a prima facie evidence of an assignment of the debt pro tanto. {McEwen v. Johnson, 7 Cal., 258 .) Any act amounting to an appropriation of a debt, will constitute an assignment of it. No particular form of transfer is essential. (Wiggins v. McDonald, 18 Cal., 126 .)

Sewell <& Pierce, for the receiver.

A check is not an assignment of the fund on deposit in the hands of the banker. It is not even an equitable assignment. The holder of a check cannot sue the banker, and has no claim on the fund in case of refusal to pay. {Bank of Republic v. Millard, 10 Wall., 152 ; Chapman v. White, 2 Seld., 412; Etna v. Fourth Hat. Bk., 46 N. V., 82; Bellamy v. Majorilanks, 8 E. L. and Eq., 523 ; Dykus v. Leather Bk., 11 Paige, 612; Harris v. Clark, 3 Comst., 93; CowperthwaAte v. Sheffield, 3 N. Y., 243 ; Winter v. Drury, 5 N. Y., 525 ; Schneider v. Lrving Bk., 1 Daly, 500 .)

The Continental Life Insurance Company insured the life of Albius C. Merrill in the sum of $10,000, payable at his death to

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the petitioner, Betsey A. Merrill. The insured died in September, 1876, and the company adjusted the loss with the petitioner at $7,820,67, and delivered to her a check for that sum, of which the following is a copy :

“(No. 792.)

“ Continental Like Insurance Company oe New Tore, ) New Tore, October 14, 1876. J

“ $7,820.67. United States Trust Oonvpcmy. (Claim 14,214.)

“ Bay to the order of Betsey Ann Merrill seventy-eight hundred and twenty dollars and sixty-seven cents.

“CONTINENTAL LIFE.

“R. C. Frost,

“Actmg President.

“ J. P. Rogers, Secretary.

“ $7,820.67.”

On the back of this check was the following indorsement:

“ This check is accepted as full payment of all claims on policy No. 14,214.

“MERRILL.”

At the time this check was drawn, the insurance company had $21,074.94 on deposit with the trust company, but before the check was indorsed by the petitioner and presented for payment, a receiver of the company had been appointed, and the funds had been withdrawn, and when the check was presented for payment it was refused for want of funds. Now the petitioner asks to have this sum paid to her by the receiver, and an order has been made at Special Term that it be so paid. From that order an appeal is now taken, and we have to determine whether this money which was so appropriated to the payment of this claim can be taken by the receiver and placed in the common fund, and used for the payment of the debts of this insolvent corporation, and the petitioner thus be compelled to take her share of her claim the same as the other creditors.

The statement of the case shows that the company had settled with the petitioner and adjusted her claim, and had a special deposit with the trust company to secure that settlement, which was

p. 607

intended to be appropriated by tbe check drawn against it. An equitable claim upon this fund was thus created in favor of tbe petitioner, and tbe receiver took tbe fund subject to tbis equity. In fact, tbe receiver never should have withdrawn tbis money from tbe trust company. Tbe insurance company was bound by tbe settlement, and be was bound in tbe same manner, and to tbe same extent. After tbe delivery of tbe check to tbe petitioner, both equity and fair dealing would forbid tbe withdrawal of tbe fund out of which tbe check was to be paid, and we cannot give our sanction to such a course of conduct.

Tbe order appealed from must be affirmed, with costs.

Present' — • Barnard, P. J., and Dyeman, J. Gilbert, J., not sitting.

Order affirmed, with costs and disbursements.