109 N.Y.S. 179 | N.Y. App. Div. | 1908
Lead Opinion
On the 19th of June, 1906, the plaintiff applied for and obtained from the defendant a policy of life insurance for $20,000, and he then paid an annual premium of $1,397.27, and by the terms of the policy agreed to pay a similar amount on the nineteenth of June in each succeeding year until he had made in all iifteen payments and at the expiration of fifteen years from the date of the contract, or sooner in the case of death, the defendant agreed to pay the plaintiff, if living, or to his executors, administrators or assigns, if dead, the sum of $20,000. ■
Thereafter, and on or about the 12th of June, 1907, defendant canceled said policy and gave the plaintiff notice of that fact, and that it would not be liable thereunder and would'not perform the same. Thereupon he brought this action in equity to procure a judgment restoring said policy and declaring it an existing contract and liability of the defendant, and to compel it to issue a receipt showing the payment of the premium ■ due on the 19th of June, 1907, which the plaintiff tendered to the defendant and which it refused to accept. -
The answer was held bad upon the ground, as appears from the opinion of tlie learned justice at Special Term, that “ there is no allegation that' the defendant has returned, or offered to return, the premiums paid by the plaintiff; ” in other words, that the general rule applies as to the rescission of contracts. There is no doubt about the general rule,- which is that in order to rescind a contract, the one seeking to do so inust place or offer to place, the other party in the same position, so far as he has parted with value, in which he was prior to its execution. This rule h'as for its origin the equitable principle- that one who seeks to free himself from a contract can do so only by returning all benefits derived therefrom. (Cox v. Stokes, 156 N. Y. 491; Outcault v. Bonheur, 120 App. Div. 168.) Where restoration has not' been made prior to the commencement of the action, then willingness and ability to restore must be alleged and such allegation complied with at the trial. (Gould v. Cayuga County Nat. Bank, 99 N. Y. 333; Nelson v. Hatch, 56 App. Div. 149.) This rule, however, is not of universal application. (Kley v. Healy, 127 N. Y. 555.)- Where a party seeks to rescind on the ground of fraud, he has an election of remedies. He “ can rescind by tendering or restoring what he has received, and then commence his action. He may "keep what lie has received and sue to recover damages for the fraud ; or he may commence an action in equity to rescind and foi’ equitable relief, offering in his complaint to
The allegation that defendant “ duly cancelled ” the policy does not make the answer good. This is a conclusion of law and not the statement of'a fact.
The interlocutory judgment appealed from, therefore, should be affirmed, with leave to the defendant to serve an amended answer on payment of the costs in this court and in the court below.'
Patterson, P. J., Laughlin and Scott, JJ., concurred; Houghton, J., dissented.
Dissenting Opinion
I do not think defendant pleads a rescission of contract.
It is a breach of warranty only that is pleaded.
- It is true the plaintiff has brought the defendant into equity, but that does not prevent defendant from pleading a breach of warranty or setting up any legál defense it may have. It can stand on its legal rights if it has any. Termination of a continuing contract for breach of warranty which makes it void, is quite different from coming into court and asking to be relieved from a contract because fraud induced its execution. The defendant does not ask to be relieved. It simply alleges it terminated the policy because of. its discovery of a.breach of warranty which made it void and stands on its legal right so to do, and I see no- reason for saying it must plead tender of the premium which the plaintiff paid.
I think the demurrer was improperly sustained and vote to reverse the interlocutory judgment.
Judgment, affirmed, with costs, with leave to defendant to amend on payment with cost.