Luckey v. Gannon — 31 N.Y. Super. Ct. 12

Majority

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J. NELSON LUCKEY, Plaintiff and Respondent, v. THOMAS GANNON, Defendant and Appellant.

Headnote

Held, in an action for the conversion of two policies of insurance, pledged as security for a specified debt, that they could not be retained as security for any.other debt; and that a demand and refusal to deliver, after payment of the debt for which they were pledged, was sufficient evidence of a conversion to allow a recovery.

If either party claim there is a question of fact for the jury, the request must be made at the trial to submit such question, and it is too late to take the objection for the first time on the appeal

Before Monell, Jones, and Fithian, JJ.

[Decided February 12, 1869.]

This was an action for the conversion of two policies of insurance.

The complaint alleged, that in August, 1866, the plaintiff procured two policies of insurance—one from the State Insurance Company of Jersey City, and the other from the Security Insurance Company of Philadelphia—upon property consisting of a rosin-oil factory, in Brooklyn, and the machinery and other property therein, each for the amount of $625; that such policies provided that the loss, if .any, should be payable to the defendant, to the extent of any indebtedness which at the time thereof should be owing to him from the plaintiff. The complaint further alleged that, at the time of the insurance, the defendant was in the employment of the plaintiff, and the loss was made payable to him, as security for any indebtedness of the plaintiff therefor; and that it was agreed that the policies should be returned to the plaintiff on demand, and on payment or tender of any amount which he should then owe the defendant; and that if at the time any loss should occur, nothing should be owing by the plaintiff to the defendant, then the policies should be delivered up to the plaintiff.

It was further alleged, that in January, 1867, the property covered by the policies was .destroyed by fire; that in March fol

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lowing, the insurance companies adjusted the loss under each of the policies at $237.50, which sums the companies were willing to pay, upon production and cancellation of the policies ; that since the loss and adjustment, the plaintiff has demanded the policies of the defendant, and offered to pay him any sum which might he found due him from the plaintiff, but the defendant refused ; that although the plaintiff has offered to pay, &c., yet that at the time of the loss there was not, nor has there since been, any thing due from the plaintiff to the defendant.

The answer of the defendant averred that the plaintiff was indebted to him, and has been since the time stated in the complaint, in a sum exceeding $475 ; that the plaintiff has not offered to pay any sum of money since the delivery of the policies. The defendant denied the conversion of the policies, and further alleged that the plaintiff was indebted to him in the sum of $1,300.

Upon the trial before Mr. Justice Barbour and a jury, the plaintiff testified that at the time of the fire he did not owe the defendant any thing, nor had he owed him any thing since; he once owed him about $250, which he had paid him in full. There was further evidence tending to show that the plaintiff was not indebted at the time of the fire, or since, to the defendant.

A general motion was made to dismiss the complaint without stating any ground therefor, which was denied.

The defendant testified to the sale of some worms to one Fisher, and the taking of his notes and of a chattel mortgage as security for the purchase-money, and gave other evidence tending to show that the loss under the insurance policies was made payable to the defendant as additional security for such notes. .He was then asked, “ Have you been paid your indebtedness arising out of this transaction ? ” And he answered “No ; ” and that there was still $1,300 due ; that neither before nor after the fire had he had any settlement with the plaintiff ; that the plaintiff had neither paid nor offered to pay him any thing.

All the evidence of an agreement by the plaintiff to pay the

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notes of Fisher was, on motion, stricken out by the Court, and the defendant excepted.

There was other evidence that the defendant had not been paid, but it mostly referred to the non-payment of the Fisher notes, although some of the evidence left it uncertain which indebtedness was referred to.

At the close of the evidence the Court directed the jury to find a verdict for the plaintiff, and the defendant excepted.

Mr. A. J. Perry for appellant.

Luckey was a partner with Fisher in the oil factory, and was liable to Gannon for the whole indebtedness, independent of any promise he had made subsequent to the fact, or any thing he had assumed, and independent of any thing to be concluded from his procuring and delivering the policies of insurance, and this question of fact, it being denied by him, should have been submitted to the jury.

Defendant’s motion to dismiss the complaint should have been granted. It was Competent for Luckey to do what he in fact did, pledge the policies for any person’s indebtedness, and he is bound by that act; and until there was an accounting and payment, the condition of things was not such as to justify a demand by the plaintiff, for the redelivery of the policies.

The policies on their face have no value ; there is no proof that defendant has at any time received, or that he can receive, value for them, bio damages for a wrongful conversion of a worthless article can be maintained, and the complaint should have been dismissed.

Mr. J. C. Conable for respondent

The directions of the Court to the jury to render a verdict for plaintiff were right—there was no question of fact for the jury.

The pleadings and bill of particulars set forth that the

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policies were held as security for a debt due from the plaintiff to the- defendant, while the only debt proved was from Fisher to the defendant.

Luckey was not liable for the debt of Fisher. The parol promise to pay the same attempted to be proved was void under the statute of frauds (Jackson v. Raynar, 12 Johns., 291 ; Mallary v. Gillett, 21 N. Y., 412 , and cases cited ; Knox v. Nutt, 1 Daly, 213 ).

Luckey, by the alleged parol promise, at most was a mere surety for Fisher’s debt, for which Gannon also held the mortgage as further ' security, and the sale of the mortgage property to Gannon without notice to Luckey operated to release Luckey, and entitled him to the policies.

By the Court:

The only issue in this case presented by the pleadings was upon the nature and extent of the indebtedness for which the policies of insurance were intended as a security. The plaintiff claimed, and so alleged in his complaint, that at the time of the insurance the defendant was in his employment, and that the loss was made payable to him, as expressed in the policies, in order to secure him for any indebtedness 'that the plaintiff might owe him therefor, and for no other purpose whatever ; and that it was then agreed, between the plaintiff and defendant, that such policies should be held by the defendant only for the purposes of such security, and should be returned to the plaintiff at any time when the plaintiff should demand the same, on payment or tender by the plaintiff of any amount he should then owe the defendant; and that if any loss should occur under the policies, and nothing should be owing by the plaintiff to the defendant, the policies should be delivered to the plaintiff, and all rights of the defendant released to the plaintiff.

These allegations of the nature of the indebtedness intended to be secured, as well as the agreement between the parties in respect thereto, were not denied in the answer ; the only allegations in the complaint negatived in the answer being those aver

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ring payment, or offer of payment, of the alleged indebtedness. So that the case, upon the pleadings, was narrowed to the single issue of payment or offer of payment of any indebtedness of the plaintiff to the defendant, growing out of the employment of the latter by the former.

On the trial it was attempted to show, on the part of the defendants, that the insurance policies were intended to secure ,the payment of a certain chattel mortgage, given to the defendant by one Fisher, upon two copper worms used in the distillation of rosin oil, to secure the payment of thirteen hundred and upward of dollars; and some evidence was furnished that- the mortgage debt had not been paid. But the Court, on motion, struck out all the evidence of an agreement on the part of the plaintiff to pay the debt of Fisher, probably on the ground that no such agreement had been set up in the answer; and also that the agreement set forth in the complaint was admitted by the answer.

I have examined the evidence furnished by the defendant, and cannot find any that is pertinent to the only issue presented by the pleadings.. All the evidence relates to the non-payment of the debt due from Fisher, and was clearly inadmissible. As all evidence showing or tending to show that it was agreed or intended to secure the Fisher notes was excluded, it was immaterial, so far as the plaintiff’s rights were concerned, whether such notes were paid or remained unpaid ; and the evidence could not be made pertinent without an amendment of the answer.

Under this view of the case there was nothing to go to the jury! The debt agreed to be secured by the transfer of the policies was admitted, and the evidence of the payment of such debt was not contradicted by the defendant, although he proved in general terms that the plaintiff had not paid him. Yet it is so evident that he referred to the Fisher debt that it may safely be said that the plaintiff’s evidence was undisputed. But were it otherwise, and the evidence on the subject of payment, or on the other subject of partnership between the plaintiff and Fisher, was conflicting, the defendant should have called the attention of

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the Court to it by a request to submit such questions to the jury; and it is too late to raise the objection now, that the case should have gone to them upon any' of the conflicting evidence in the case.

The only remaining question is, whether the plaintiff can maintain an action for the conversion of the policies, and that question was properly raised, I think, by the motion to dismiss the complaint.

The policies were taken in the name of the plaintiff, and contained a clause making the “loss, if any, payable to the defendant.” Such words operated to give the defendant the same rights and interests in the policy which he would have had if, without such words, the policies had been assigned to him with the assent of the insurers (Grosvenor v. Atlantic Fire Insurance Co., 5 Duer, 517 S. C., 17 N. Y. Rep., 395 ; Ennis v. Harmony Fire Insurance Co., 3 Bosw., 516 ). There cannot be a doubt that the assignee, before payment of the debt, could maintain an action upon the policy, for a loss to the subject insured. Before the code an assignee could not, in this State, have brought an action in his own name (Jessel v. Williamsburgh Ins. Co., 3 Hill, 88 ). It was otherwise in some of the States (Motley v. Manufacturers’ Ins. Co., 29 Maine, 337), and is otherwise now in this State, the Code having provided that the action shall be in the name of the party in interest; and it has accordingly been held that the person to whom the loss is made payable, can sustain an action against the insurers (Frink v. Hampden Ins. Co., 45 Barb., 384 ). It is equally clear, I think, that after payment of the debt, the right of the assignee to sue, if not gone entirely, could be taken from him by the assignor, who upon discharging the debt is reinstated to all rights which he possessed before the assignment— not by subrogation, but by operation and force of the purposes of the assignment having been fully met and answered.

In the case of Roberts v. The Traders’ Ins. Co. ( 17 Wend., 631 ), the question was whether, after judgment in favor of an assignee against the insurers, and payment of the mortgage debt by the assignor, he was entitled to collect the judgment; and the Court

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said (p. 638) that the assignee took only a collateral interest in the policy, liable to be diverted whenever the mortgage was paid, and that the payment of the mortgage had the effect to bring back to the mortgagor and assignor of the policy the interest which he had assigned, and of course the interest in the judgment which had been obtained upon the policies.

The cases cited establish, that upon payment of the debt the assignor is restored to his interests, and may maintain an action upon the policies, or to compel a re-assignment to himself, if that be necessary for the purpose of bringing suit.

That an action can be maintained for the conversion of a chose in action which has been pledged as a security for a debt, is now well settled (Campbell v. Parker, 9 Bosw., 322 ; Decker v. Matthews, 12 N. Y. R., 313). An action to redeem is not the only remedy; and where the pledgee has wrongfully disposed of the pledged property, so as to put it out of his power to deliver it, or where, upon payment of the debt for which it was pledged and demand for its return, he refuses to return it, it is a conversion for which an action will lie.

The evidence in this case of the payment of the debt for which the insurance policies were pledged, and of the demand and refusal to return them to the plaintiff, was undisputed, leaving, therefore, nothing for the jury.

' The direction to find for the plaintiff was correct, and the judgment should be affirmed.