Majority
p. 291JONAS FISCHER, Plaintiff and Respondent, v. THE HOPE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK, Defendant and Appellant.
Headnote
I. RE-INSURANCE.1. Liability of RE-issT¡3n?e oomfahy to holders of policies OF THE RE-INSURED COMPANY.
a. Liable for the amount of premiums paid to the re-insured com pany, and interest thereon.
1. Where by the contract, the re-insuring company agrees to re-insure all the outstanding policies of the re-insured company, and to pay to the holders thereof, all such sums as the re-insured company might by force of such policies become liable to pay; and the re-insured company agrees to assign all premiums due, and to become due on its policies, and the good-will of its business, to the re-
p. 292Before Monelu, Oh. J., and Curtis, J. Decided January 3, 1876.
insuring company ; and the re-insured company thereupon ceases to transact business; a policy holder who has paid all the premiums on his policy which fell d/ue before and at the date of the transaction may, without payment of the premiums thereafter falling due, recover from the re-insuring company the amounts paid by him for premiums, with interest thereon, although he is not a party to the contract of re-insurance.
1. Disaffirmance by policy holder oe the contract created BY THE POLICY, WHAT IS NOT.
1. The bringing of an action against the re-insured company for the premiums paid and interest thereon, and prosecuting the same to judgment is not,
H. RES ADJUDICATA.
1. Dismissal of complaint on the merits in an action brought by a judgment creditor against the judgment debtor and a third party, in the nature of a creditor’s bill to reach the judgment debtor’s assets in the hands of the third party, is not res adjudicata to a claim against such third person, in favor of the party who obtained the judgment, arising out of an agreement between the third party and the judgment debtor, whereby as between themselves the third party answered and agreed to pay the claim upon which the judgment was recovered.
Appeal by the defendants from a judgment in plaintiff’ s favor entered upon the report of a referee.
The plaintiff, on August 28, 1869, insured his life in the Craftsman’s Life Assurance Company of New York, for one thousand dollars, taking a ten years’ endowment policy, and paid thereon twelve quarterly premiums of twenty-seven dollars and sixty cents each, including that of May 25, 1872, amounting in all to three hundred and thirty-one dollars and twenty cents.
The Craftsman’s Company refused to accept the quarterly premium falling due in August, 1872. The plaintiff then ascertained that on May 25, 1872, the Craftsman’s Company entered into an agreement with
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the defendants by which the latter for a valuable consideration agreed to re-in sure the former on all risks of that company for which policies were then outstanding, and to assure all such policies, and to pay to the holders thereof all such sums as the said Craftsman’s Company might by force of such policies become liable to pay, including dividends declared for the year 1872, on premiums not yet due, and also to accept from all holders of policies a surrender of the same, and thereupon to issue to such holders its own policies of like class and like amounts.
The Craftsman’s Company, from the date of said agreement, ceased to issue policies or to receive premiums, and each company proceeded to carry into effect such agreement
The value of the policies existing on May 25, 1872, of the Craftsman’s company was fixed. The value of the plaintiff’s policy that day was fixed at two hundred and forty-nine dollars and fifty cents between the two companies, including the cost of re-insurance ; and the Craftsman’s Company placed in the defendant’s possession assets of the value of one hundred and fifty-five thousand dollars, and from which the defendants realized afterwards more than one hundred and thirty-five thousand dollars.
The plaintiff commenced an action against the Craftsman’s Company, in the court of common pleas, to recover the damages he had suffered by reason of its not fulfilling the agreement contained in the policy of insurance, and recovered a judgment against the company on April 29,1873, for the sum of five hundred and eighteen dollars and seven cents, and caused execution to be issued to collect the same, which was afterwards returned wholly unsatisfied, and the same remains unpaid.
In October, 1873, the plaintiff brought an action against both the companies to reach the property of
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the Craftsman’s Company, and for other relief, which resulted in a dismissal of his complaint upon the merits, and judgment in favor of the defendants.
The plaintiff then commenced the present suit, claiming that the defendants were liable by reason of their contract with the Craftsman’s Company. The defendants by answer, insisted, that no such liability arose from the contract, and that in the action last above referred to, the same subject-matter was involved as in this action, and that they recovered judgment therein.
The referee found that the plaintiff was entitled to the amount paid for premiums, with interest.
Samuel A. Noyes, attorney, and of counsel for appellant, urged :
I. The plaintiffs’ action in bringing his suit against the Craftsmen’s Life Assurance Company, is clearly in disaffirmance of his policy or contract of insurance with that company. On the other hand, if the plaintiff had brought an action in affirmance of his policy, its validity, and his rights thereunder, the action would have been for the issue to him of a paid-up policy for as many tenths of one thousand dollars as he had paid years’ premium s ; or in default thereof, for the then cash value of such a paid-up policy, under the following clause in his policy: “And the said company do hereby further promise and agree, that if, after premiums upon this policy for not less than two complete years of assurance, have been duly received by this company, this policy should cease in consequence of default in payment of a subsequent premium, this company will, on due surrender of this policy and of the profits thereon, issue in lieu thereof, provided such surrender be made within three months of the date of such default, another policy, payable as herein provided, on which no further premium shall be required, for as many tenth parts of the original amount hereby assured as
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there shall have been complete annual premiums paid.”
II. The defendants, The Hope Mutual Life Insurance Company, is in no way obligated or bound to the general creditors of the Craftsmen’s Life Assurance Company, but only to policy holders, under a state of facts which bring them strictly under the agreement. The plaintiff, at best, is nothing more than a general creditor of the Craftsmen’s Life Assurance Company.
III. The assertion of the plaintiffs counsel, that one of the clauses of the defendants’ agreement of May 25, 1872, was intended for those policy holders who would not accept the re-insurance, provided for them in the defendants’ company in place of the Craftsmen’s Company, is without foundation, and is incorrect. Our answer to this assumption is two-fold: First.—The plaintiff is in no situation to take advantage of this position (the correctness of which we deny), for he has repudiated any relation of a policy holder to the Craftsmen’s Company. Second.—All that the plaintiff could get from the Craftsmen’s Company, in case he declined to continue to pay his premiums, was a paid-up policy for as many tenths of one thousand dollars as he had paid annual premiums, provided he surrendered his policy, and made a demand therefor within three months from such default. As the fact is, he made no such demand, and his policy lapsed, became void, and of no effect. The defendants received so much money from the Craftsmen’s Life Assurance Company for the re-insurance of its risks (if the policy holders chose to accept the provision thus made for them), and for assuming its liabilities to policy holders, which arose by force of any agreement, covenant, or promise contained in said policy. Such is the full extent of the defendants’ agreement, which can not be extended beyond its legitimate construction to suit the plaintiff’s fancied claim in this action. Provided the
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Craftsmen’s Life Assurance Company refused to carry out their part of the contract, all that the plaintiff could recover from the Craftsmen’s Life Assurance Company, in any event, had he brought his action for damages, would be the net reserve value of his policy', or what it would cost to place him in statu quo in another responsible life insurance company. This the plaintiff does not claim, nor can such a claim be considered in this action.
IY. The fact that the defendants received a gross sum for the re-insurance of the Craftsmen’s Life Assurance Company’s policies, places it under no obligation to assume or pay such a claim as the plaintiff makes in this action. The question is not what the defendants have received, but what they have promised agreed to do.
Y. A gross sum was received by the defendants from the Craftsmen’s Company for the re-insurance of its policies, and for assuming the risk of all the policy holders of said company, demanding such substitution of their policies. Even conceding (which we deny) that such consideration is an apportionable one, it can not be said that the defendants have received the sum at which plaintiff’s policy was rated in the schedule without giving any consideration therefor. The defendant in relation to the Craftsmen’s policy holders, has assumed the risk of their calling for its policies.
VI. The former action between these parties in this court is res adjudícala. Although it was an equity action, the plaintiff could there claim and prove (if he was able) the same relief that he claims here. It matters not whether an action is legal or equitable, a party is entitled to such relief as the facts proved, or such as he might prove, warrant—be that relief legal or equitable (Armitage v. Pulver, 37 N. Y. 494 ).
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D. S. Riddle, attorney, and of counsel for respondent, urged :
I. The agreement of May 35, 1873, went into operation on that day ; is good and valid ; and policy holders may enforce it (Glen et al v. Hope Mutual life Ins. Co., 56 N. Y. 379 ). The only question that can arise is, whether the plaintiff comes within any of its terms.
II. Every life policy has a value even in the lifetime of the assured (Ainsworth v. Backus, supreme court, general term, November, 1875, and reported in Register of November 15, 1875; also, Hawkins v. Coutherst, 5 Best & Smith, p. 343). And by turning over to the defendant its assets—especially its securities on deposit with the insurance department at Albany, and which the law requires - to be made as a prerequisite to carry on the insurance business (see Statute part 1, ch. 18, title 18, article 3, § 68; 3 R. S. 5th Ed.), the Craftsman’s Company disabled itself from carrying out its contract of insurance, and, by actually going out of business, and refusing to carry its policies any longer, it committed a breach of contract with its policy holders, and became liable to pay the damage of such breach, and the measure of such damages would naturally be the sum of premiums paid, with the interest, thereon. These liabilities of the Craftsman’s Company the Hope Company agreed to pay by the above provision.
III. Plaintiff, by his action in the common pleas, did not disaffirm his policy. If that action had gone on the hypothesis of a disaffirmance of the contract of insurance, then the plaintiff could only have recovered from the Craftsman’s Company, as money had and received, so much of his premiums as had not then been consumed by carrying the risk on his life—to wit, two hundred and forty-nine dollars and fifty cents, the value of his policy—for the contract being at an end by
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mutual consent, only that amount would have been in the hands of the company belonging to him.
IY. Even if the action in the common pleas had been a disaffirmance of the contract, the recovery in that court would be a liability against the Craftsmen’s Company arising by force of plaintiff’s policy ; for the policy would be the basis of the action.
Y. It is plain that the agreement in question merely substitutes the Hope Company in the place of the Craftsman’s Company, and obliges the former to do what the latter should have done, and as the latter, on breach of contract, was bound to pay the plaintiff his damages, assessed by the common pleas, the former as the substitute, is also bound to pay them
The liability of the defendants depends upon the effect of the agreement entered into by the defendants with the Craftsmen’s Company, in reference to reinsuring, and assuming outstanding risks and liabilities. In the case of Cflen against the defendants ( 56 N. Y. 379 ) this same agreement came before the court of appeals for construction. Their decision clearly established the right of a policy holder of the Craftsmen’s Company to recover for any liability the defendants assumed as to such policy holder, though he was not a party to such agreement.
The Craftsmen’s Company violated its agreement with the plaintiff by transferring its assets to the defendants, and by incapacitating itself to continue its business, and refusing to fulfill its contract of insurance. If the defendants assumed any liability of that company to the plaintiff, such assumption was not prejudiced by the fruitless efforts and suits of the plaintiff to get back the premiums he had paid, and for which it does not appear that he ever received any valuable consideration from the derelict company. If
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the plaintiff chose primarily to exhaust any remedy he might have by a judgment and execution against the Craftsmen’s Company, and by another suit in the nature of a creditor’s bill to reach its assets, and to which the defendants were a party, it may have added to his losses, but it does not show that he has waived his ultimate recourse against the defendants, if he has any, or that his claim has been passed upon already adversely, and is now res adjudicata.
The question to be here passed upon is narrowed to the inquiry whether the agreement of the defendants with the Craftsmen’s Company is broad enough to embrace the plaintiff’s demand. It is clear that the plaintiff is now remediless as one of that class of policy holders to whom, upon the surrender of their policies in the latter company, the defendants agreed to issue new policies of their own. If the plaintiff can now recover at all, it is under that provision of the agreement, where the defendants agree to pay the policyholders all such sums as the Craftsmen’s Company might by force of such policies become liable "to pay.
The words “by force” as used in that context, are synonymous with the words “by reason of” or “in consequence of.” Such was apparently the intention of the parties, and viewed in the light of the attending acts and circumstances, should justly be presumed to have been so used. The evidence in the case confirms this view of the meaning of the words.
The plaintiff’s claim upon the Craftsmen’s Company was purely in consequence of this policy; it arose from the obligations, express and implied, of that, and did not accrue to him as a general creditor, and his seeking to recover from them the premiums he bad paid when they violated their agreement to keep him insured, was not a disaffirmance of the policy. The violation of its terms in this respect, formed, as the
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referee properly found, one of the very liabilities referred to and embraced in the agreement, and which the defendants by its terms assumed.
The judgment appealed from should be affirmed with costs.
Monell, Ch. J., concurred.
Cases cited
- Glen v. Hope Mutual Life Insurance 56 N. Y. 379 p. 297, p. 298