O’Brien, J.:
At the time the policy was taken out the arrangement was that Thurber was to act as trustee for the corporation and pay to the latter the proceeds of the policy after his own debt had been paid. Under this arrangement the policy itself was delivered to the corporation, Thurber holding the legal title as collateral security for the payment of the amount due by Johnson to himself, and as trustee for the corporation that succeeded to the interest of Thurber, Whyland & Co. in the policy. - Johnson had parted with the policy and all interest therein. The agreement thus made determined the rights of the parties, which thereby became fixed. Thereafter Johnson and Thurber, by agreement between themselves, without the consent of the corporation, could not divest it of its right to the proceeds of the policy. If, therefore, we regard the canceling of the assignment to. Thurber as an assignment by Thurber to Johnson, and Johnson’s assignment to the plaintiff as a transfer of the legal title by Thurber or Johnson to the plaintiff, unless the corporation in some way assented'to such new arrangement, or is estopped from insisting upon its right to the proceeds of the policy, the transaction between Thurber and the plaintiff was clearly ineffectual to divest the corporation of its interest in the policy. Although the conditions under which H. II. Thurber took the legal title to the policy and assignment were not in writing, there can be no dpubt that, legally, the Thurber-Whyland Company obtained all rights to the policy, over and. above the payment to IT. K. Thurber of the $2,500, and that these rights accrued prior in point of time to the surrender of the assignment by F. B. Thurber as attorney for H. II. Thurber to the company and the reassignment by the latter to the plaintiff. The plaintiff, having as consideration for .the assignment, paid to Thurber the $2,500 and interest, and a premium due on the policy and some other expenses at the time he took the assign[561] ment, to that extent is entitled to be reimbursed ; but it is upon the right to the balance of the policy that the whole controversy turns. • In 15 American and English Encyclopaedia of Law, 861, the rule prevailing in this State is given as follows“ The rule is not simply that the assignee takes subject to the equities between the original parties, but that the purchaser of a chose in action must always abide the case of the person from whom he buys; the true test is to inquire what can the mortgagee do by way of enforcement of it against the property mortgaged; what he can do the assignee can do, and no more. The reason of the rule is, that the holder of a chose in action cannot alienate anything but the beneficial interest which he possesses. It is a question of power or capacity to transfer to another, and that capacity is to be exactly measured by the rights of the assignor. In that State (New York), therefore, it is well settled that the assignee of a mortgage is no less bound by equities existing between the mortgagee and third persons than by those existing against the mortgagee in favor of the mortgagor.”
The general rule is that the assignee of a chose in action takes only the interest of his assignor; and while many of the cases from which the rule as stated above has been deduced relate to mortgages, the principle applicable to a policy of insurance would be in no respect different. In Owen v. Evans (134 N. Y. 519) that rule is thus stated: “ Our courts recognize no distinction between equities existing in favor of the mortgagor and those existing in favor of a third person, but hold that, in the absence of an estoppel, an assignee of a mortgage takes only the interest of his assignor, and subject to any latent equity in favor of any person.” This is a reaffirmation of what was said in Schafer v. Reilly (50 N. Y. 61), that “ one who takes an assignment of a bond and mortgage * * * takes it subject not only to any latent equities that exist in favor of the mortgagor, but alse subject to the like equities in favor of third persons.” Judge Allen in tíiis case says: “ It is well settled that a seller or assignor of chattels or dioses in action can give no other or better title than he himself has, and that the purchaser or assignee must be content to stand in his place and to accept his title.”
.. The respondent thinks that such rule has no application to this, case, for the reason that here the plaintiff did not take an assignment. [562] from Thurber, but after Thurber had surrendered and canceled the assignment held by him Johnson made a direct assignment, with the consent of the -insurance association, to the plaintiff. It is not disputed, however, that this was all part of an arrangement made between Johnson, the plaintiff and Thurber, by which the title to the policy should be changed; so that, whether the. policy were assigned by Thurber directly to the plaintiff, or by an arrangement with the latter it was- surrendered to the association and a new assignment issued, we do not think the cases-can be differentiated in principle. The application of this rule would leave the plaintiff in such a position that he would acquire, as against the defendant, no greater rights in the policy than Thurber could transfer. And unless the principle of estoppel can be invoked as against the defendant, all that the plaintiff is entitled to is the $2,500, which was the extent of Thnrber’s interest in the policy.
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O’Brien, J.:
At the time the policy was taken out the arrangement was that Thurber was to act as trustee for the corporation and pay to the latter the proceeds of the policy after his own debt had been paid. Under this arrangement the policy itself was delivered to the corporation, Thurber holding the legal title as collateral security for the payment of the amount due by Johnson to himself, and as trustee for the corporation that succeeded to the interest of Thurber, Whyland & Co. in the policy. - Johnson had parted with the policy and all interest therein. The agreement thus made determined the rights of the parties, which thereby became fixed. Thereafter Johnson and Thurber, by agreement between themselves, without the consent of the corporation, could not divest it of its right to the proceeds of the policy. If, therefore, we regard the canceling of the assignment to. Thurber as an assignment by Thurber to Johnson, and Johnson’s assignment to the plaintiff as a transfer of the legal title by Thurber or Johnson to the plaintiff, unless the corporation in some way assented'to such new arrangement, or is estopped from insisting upon its right to the proceeds of the policy, the transaction between Thurber and the plaintiff was clearly ineffectual to divest the corporation of its interest in the policy. Although the conditions under which H. II. Thurber took the legal title to the policy and assignment were not in writing, there can be no dpubt that, legally, the Thurber-Whyland Company obtained all rights to the policy, over and. above the payment to IT. K. Thurber of the $2,500, and that these rights accrued prior in point of time to the surrender of the assignment by F. B. Thurber as attorney for H. II. Thurber to the company and the reassignment by the latter to the plaintiff. The plaintiff, having as consideration for .the assignment, paid to Thurber the $2,500 and interest, and a premium due on the policy and some other expenses at the time he took the assign[561] ment, to that extent is entitled to be reimbursed ; but it is upon the right to the balance of the policy that the whole controversy turns. • In 15 American and English Encyclopaedia of Law, 861, the rule prevailing in this State is given as follows“ The rule is not simply that the assignee takes subject to the equities between the original parties, but that the purchaser of a chose in action must always abide the case of the person from whom he buys; the true test is to inquire what can the mortgagee do by way of enforcement of it against the property mortgaged; what he can do the assignee can do, and no more. The reason of the rule is, that the holder of a chose in action cannot alienate anything but the beneficial interest which he possesses. It is a question of power or capacity to transfer to another, and that capacity is to be exactly measured by the rights of the assignor. In that State (New York), therefore, it is well settled that the assignee of a mortgage is no less bound by equities existing between the mortgagee and third persons than by those existing against the mortgagee in favor of the mortgagor.”
The general rule is that the assignee of a chose in action takes only the interest of his assignor; and while many of the cases from which the rule as stated above has been deduced relate to mortgages, the principle applicable to a policy of insurance would be in no respect different. In Owen v. Evans (134 N. Y. 519) that rule is thus stated: “ Our courts recognize no distinction between equities existing in favor of the mortgagor and those existing in favor of a third person, but hold that, in the absence of an estoppel, an assignee of a mortgage takes only the interest of his assignor, and subject to any latent equity in favor of any person.” This is a reaffirmation of what was said in Schafer v. Reilly (50 N. Y. 61), that “ one who takes an assignment of a bond and mortgage * * * takes it subject not only to any latent equities that exist in favor of the mortgagor, but alse subject to the like equities in favor of third persons.” Judge Allen in tíiis case says: “ It is well settled that a seller or assignor of chattels or dioses in action can give no other or better title than he himself has, and that the purchaser or assignee must be content to stand in his place and to accept his title.”
.. The respondent thinks that such rule has no application to this, case, for the reason that here the plaintiff did not take an assignment. [562] from Thurber, but after Thurber had surrendered and canceled the assignment held by him Johnson made a direct assignment, with the consent of the -insurance association, to the plaintiff. It is not disputed, however, that this was all part of an arrangement made between Johnson, the plaintiff and Thurber, by which the title to the policy should be changed; so that, whether the. policy were assigned by Thurber directly to the plaintiff, or by an arrangement with the latter it was- surrendered to the association and a new assignment issued, we do not think the cases-can be differentiated in principle. The application of this rule would leave the plaintiff in such a position that he would acquire, as against the defendant, no greater rights in the policy than Thurber could transfer. And unless the principle of estoppel can be invoked as against the defendant, all that the plaintiff is entitled to is the $2,500, which was the extent of Thnrber’s interest in the policy.
The respondent insists, hoWever, that, assuming that the defendant had an interest in the cértificate in suit, and that the plaintiff derived his title through Thurber, it further appears that the defendant had allowed the assignment of the certificate to remain on the books of the insurance association in the name of Thurber, and surrendered possession of the assignment first, and that after the plaintiff had acquired rights the defendant delivered over the policy- also to Thurber, thus clothing him with all the muniments of title and indicia of ownership, and putting him in a condition to confer a clear and absolute title upon the plaintiff. Therefore, the respondent claims, the defendant is estopped from asserting its right to the policy to the prejudice of the plaintiff; and we are referred to a number of cases in which the principle has been followed that, “ where the owner of. property confers upon another an apparent title to or power of disposition over it, he is estopped -from asserting his title as against an innocent third party who has dealt with the aj>parent owner in reference thereto, without knowledge of the claims of the true oWner.” (McNeil v. Tenth Nat. Bank, 46 N. Y. 325; Crocker v. Crocker, 31 id. 507; Voorhis v. Olmstead, 66 id. 113; Weyh v. Boylan, 85 id. 394.) In the latter case, in which this doctrine of an estoppel was successfully set up against a mortgagor by an assignee of a mortgage, the court, in speaking of the interest of the latter, said: “ He is protected by the same principle [563] which a bona fide purchaser for value and without notice successfully invokes, although the title comes to him from a person in whose hands it is affected with notice * * * and through which one who buys a non-negotiable chose in action is protected against the claim of the true owner, where the latter has by his own affirmative act conferred the apparent title and absolute ownership upon another.” It is true that here Thurber, by reason of the assignment standing in his name, was in such position that he could surrender and have canceled the same upon the- books of the association, and thus, so far as it would appear to the rest of the world, destroy rights which any one would hare in or to the policy. At the same time, however, that he surrendered the policy for cancellation, the policy itself was in the possession of the defendant, and remained there for some weeks after -the new assignment to the plaintiff; but if we concede the application of the principle for which the plaintiff contends, the facts necessary to establish the estoppel are not present. By the latter statement, we mean to say that there is no evidence from which the conclusion can be drawn that the plaintiff took the assignment of the policy for anything but an antecedent indebtedness, except as to the $2,500 paid for the -assignment and the premium and some minor expenses. Thus, with respect to the consideration referred to in the note of' January 1, 1895, relating to the indorsement of three notes -in the Bank of Nassau for $5,000 each, the plaintiff himself testified that they were notes that had been renewed several times prior to the assignment of the policy. The next item in the note which the plaintiff claims as consideration is “ Cash paid in Baltimore to take up two notes, $5,000.00.” In regard to this, the plaintiff testifies that one was paid by him July 27, 1894, and the other September 17, 1894, and that he had been forced to take up these two notes as indorser before he received the assignment. The next item is for another note of - Johnson’s on which the plaintiff was indorser, but that note, bearing his indorsement, was in the bank at the time of the assignment. Thus we see, according to the plaintiff’s own testimony, that all these were past transactions. It is true that the plaintiff testified that he relied on the life insurance policy in renewing some of these notes; but it also appears that prior to the assignment to him he had to pay at least two notes in 1894, and as to Johnson’s ability he testifies: “I don’t think Mr. [564] Johnson could have paid them at that time. * * * I cannot say that he had means to pay these notes with at the time of the indorsement of the renewal bill. * * * I asked Mr. Johnson several times between the date of the payment of those notes by me and the making of this assignment to give me something to secure me for this money, and also for the other notes upon which I was indorser.” He does say that he relied for these renewals of the obligations in question upon the security he held at that time, which included stock of the J. S. Johnson Company and the assignment of the life insurance policy, although the original policy was in the possession of the defendant, who held it at the time of the renewal and for a month afterwards. But it cannot be concluded from the testimony that anything was advanced by the plaintiff, on the faith of the assignment to him, except the $2,500 then given.
It has been said in Crocker v. Crocker (supra) that the term “ purchaser ” included one who 'advances money or incurs responsibility upon credit of property. But we have another rule, supported by ample authority, that a pre-existing debt is not such a consideration as will support the plea of a bona fide purchaser for value, the leading case being that of Wood v. Robinson (22 N. Y. 564), in which Judge Dejxto said: “ The mortgage was taken ás collateral security for an antecedent debt, nothing being advanced at the time and no security given up.” (Cary v. White, 52 N. Y. 138; Weaver v. Barden, 49 id. 286.) Notwithstanding,, therefore, the plaintiff’s own statement that he relied upon the faith of the policy in incurring the obligations, there is no evidence even of the giving up of the prior notes by Mm to Johnson at the time of the renewal; and thus we are thrown back upon' the inference to be drawn from the only testimony appearing, that the consideration supporting the claim of a bona fide assignee for value was an executed one given long before the assignment and the renewal note to him.
.Upon this question of estoppel, it is true, the assignment stood in the name of Thurber absolutely and that he had possession ; but, as already pointed out, the policy itself was in the possession of the defendant, and there is nothing to show that the plaintiff, at the time of the assignment, made any inquiries in regard to the absence of the policy itself, he' having taken the assignment without even seeing the policy, which was not received by him for over a month. [565] It was held in Kellogg v. Smith (26 N. Y. 18) that the assignee of a bond and mortgage who failed to require the production of the .bond was chargeable with the prior equities, the court saying: “ The truth is, they saw fit to trust to Bedell’s word that he owned and possessed the bond (with its collateral security); and upon that trust they paid him for the bond and took a written assignment of it and of the pledge that secured it. In looking for the title to the security, they failed to look after the title to the principal; and they must abide the consequences of not taking the proper precaution of requiring the production and delivery of the bond. * * * The non-production of the bond and mortgage was such notice as to put the respondents on inquiry and deprive them of the protection given - by the recording acts to purchasers without notice.”
Upon the evidence, as it was produced at the trial, the plaintiff was only entitled to the $2,500 paid by him to H. K. Thurber, with interest, and the amount which he paid for the premium on the policy, $114.32, with interest thereon, together with $4 expended by him in furnishing proofs of death under the policy. The awarding to him, in addition, of the balance of the amount was error, for which the judgment must be reversed and a new trial ordered, with costs to appellant to abide event.
Van Brunt, P. J., Williams, Patterson and Ingraham, JJ., concurred.
Judgment reversed, new trial.ordered, costs to appellant to abide event..