Hope Mutual Life Insurance Co. v. . Perkins

| NY | Sep 5, 1868

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] It is insisted by the counsel for the appellant that the plaintiff had no power to receive the note in suit for the purpose of creating a fund to secure the payment of losses incurred upon policies issued by the company, and that the note is therefore void. The respondent cannot insist that this power is conferred by section eighth of the charter. This section authorizes the company to receive notes of parties for premiums on policies thereafter to be issued, and makes notes thus received available in the hands of the company for payment of its liabilities, although the policies have never been issued and no premiums been allowed thereon. This provision was necessary to prevent such notes being held without consideration. But the note in suit is not one of this class. It was not given as an advance payment of premiums upon policies thereafter to be issued. It is not, therefore, within the provisions of the eighth section of the charter, and must be held void unless it can otherwise be upheld. The note in suit was, with others, given by the makers and received by the company for the purpose of creating a guaranty fund to policy holders for the prompt payment of losses in the absence of other means of the company for that purpose, and thus giving the company credit with the public. The question is, whether this is within the general powers of the corporation. The counsel for the appellant refers to the Revised Statutes (vol. 2, p. 600, §§ 1, 3), for the purpose of showing that it is not. The plaintiff was not incorporated by the laws of this State, but by an act of the legislature of Connecticut. It is to the laws of the latter State to which we must look to determine whether there was any restriction of the general powers of corporations imposed upon the plaintiff, no such restriction is claimed. It is conceded that corporations, in the absence of restrictions imposed by statute, have the power necessary to enable them to transact the business authorized by their charter. The plaintiff, by its charter, was authorized to conduct the business of life insurance. It possessed little or no available capital. It became necessary for it to acquire credit with the public. The most feasible way of doing this was to procure persons of respectability to guaranty the performance of its contracts. This corporations may do whenever necessary. They may borrow money for the purposes of their business, and for the like purposes procure sureties, and the contracts of the latter are valid, the same as if made with individuals. The effect of the arrangement made by the plaintiff with the maker of of the note in suit, and other makers of like notes, was to make the latter sureties of the company to the policy holders for the payment of losses. This was within the general powers of the plaintiff. This precise question came before the Supreme Court of Connecticut in a case submitted by the present plaintiff and Weed (28 Conn. 51" court="Conn." date_filed="1859-02-15" href="https://app.midpage.ai/document/hope-mutual-life-insurance-v-weed-6577485?utm_source=webapp" opinion_id="6577485">28 Conn. 51), and the power of the corporation to take the note was sustained. I think the reasoning of the court in that case unanswerable. It is unnecessary to determine whether the Revised Statutes prohibit such a corporation from exercising similar power, and I shall not discuss that point. It is further insisted by the counsel for the appellant, that the act of 1849, of this State, prohibiting foreign corporations like the plaintiff from doing business in this State, discharged the makers of notes like the one in suit from further liability thereon. I cannot concurr in this position. The makers became sureties to policy holders in effect whenever and wherever policies were lawfully issued. Conceding that the act made it unlawful for the plaintiff to transact business in this State until it had acquired a capital of one hundred thousand dollars, as required by the act, yet this could not affect the liability of the makers upon policies lawfully issued elsewhere. Whether any policies were issued in this State in contravention of the statute does not appear. If there were, such policies were void, and the makers of the notes incurred no liability thereon.

It is further insisted that the notes were without consideration. By the contract the plaintiff was to pay each maker respectively, six per cent per annum upon the amount of his note while retained by the company. This was a sufficient consideration for their becoming surety.

Again, the notes were given to give the company credit with the public, and thus induce individuals to insure with it. The presumption is that they were thus induced to insure. This was a sufficient consideration to sustain the contract of the makers of the notes. The notes by the contract were not payable until the avails were required by the company for the payment of losses. This did not occur six years prior to the commencement of this action. The statute of limitations did not, therefore, constitute a defense. The securities furnished by Cazeneu and Edwards to the company to enable it to comply with the statute of this State, so as to authorize the transaction of busines by it, did not discharge the makers. These securities clearly were not profits earned by the company; at most, they constituted a loan to the company. What finally became of these securities does not distinctly appear, except that they got back to the possession of Cazeneu and Edwards. The case does not show that any portion of these securities was available for the payment of losses upon policies, but the reverse. There was no evidence that the profits of the company at any time amounted to the sum of twenty-five thousand dollars.

The judge did not err in refusing to submit this question to the jury. The defendant had no right to set off against the note the balance due him from the company on account of the six per cent per annum agreed to be paid to him by the company while the latter retained the note; such right would be in contravention of the contract of the parties. By that contract the entire principal of the note was to be available in the hands of the company for the payment of losses upon policies. If the makers had the right of set-off of demands owing them by the company, the object of giving the notes and the security of policy holders would be entirely defeated.

The judgment appealed from must be affirmed.

Judgment affirmed.