Holt v. United Security Life Insurance & Trust Co.

72 A. 301, 76 N.J.L. 585, 47 Vroom 585, 1909 N.J. LEXIS 140
CourtSupreme Court of New Jersey
DecidedMarch 1, 1909
StatusPublished
Cited by26 cases

This text of 72 A. 301 (Holt v. United Security Life Insurance & Trust Co.) is published on Counsel Stack Legal Research, covering Supreme Court of New Jersey primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Holt v. United Security Life Insurance & Trust Co., 72 A. 301, 76 N.J.L. 585, 47 Vroom 585, 1909 N.J. LEXIS 140 (N.J. 1909).

Opinion

The opinion of the court was delivered by

Pitney, Chancellor.

The first trial of this action resulted in a judgment of nonsuit, which, upon error, was reversed by this court. Holt v. United Security Life Insurance Co., 45 Vroom 795. The new trial thereupon granted resulted in a verdict in favor of the plaintiff for substantial damages, upon which judgment has been entered, and that judgment is now under review for alleged trial errors.

The following is the case presented by the record and bill of exceptions: In the fall of the year 1899 Chapman was in possession of a lot of land in Atlantic City, with a frame boarding-house thereon, under a written agreement of purchase made between him and one Price, the owner. Chapman [587]*587desired to complete his purchase, remove the old structure, and erect in its place a brick apartment-house. In order to enable him to do this he applied to the defendant for an advanee of money. The new structure was to cost about $35,000. The defendant company, as its. corporate name indicates, advances money upon the combined security of policies of life insurance and mortgages upon land. The company, with full knowledge of .Chapman’s plans, at first accepted his application for an advance to the extent of $30,000. After-wards the proposed advance was increased to $32,500, but the company refused to place so large a risk upon a single life. Eor this reason, and because of some difficulty or apprehended difficulty between Chapman and his -wife, it was arranged between him and the company that Chapman, upon completing his purchase from Price, should procure the legal title to be placed in the name of Holt, in trust for Chapman; that the application for the loan should be in Holt’s name, but for Chapman’s benefit; that the advance should be secured by separate bonds and warrants of attorney, each executed by both Holt and Chapman, by separate life insurance agreements and policies upon the lives of Holt and of Chapman, respectively, and by separate mortgages made by Holt to the defendant company. Hpon these terms the company, on or about December 1st, 1899, agreed to advance the money upon completion of the building. Hnless default were made in the payments of the premiums upon the insurance policies (which were twenty-year endowment contracts) payment of the principal sums was not to be exacted until the death of Holt or of Chapman, respectively, or until the expiration of the twenty years; that is to say, not until the maturity of the policies. All of the necessary papers wére executed, including the mortgages upon the land, and these latter were placed upon record on January 19th, Chapman having in the meantime procured his vendor, Price, to make a deed for the property to Holt as his nominee. Holt was the confidential bookkeeper of Chapman, and in the entire transaction was a mere figurehead for the latter.

In reliance upon the agreement thus made by the defendant [588]*588company, Chapman sold the frame building as it stood upon the land, with privilege of removal, and it was promptly removed. Pie also proceeded to make contracts with various parties for the furnishing of materials and doing the construction work of the new building. The work was in progress, and had reached a somewhat advanced stage, when the defendant, on April 18th, 1900, wrote to Mr. Chandler, who was acting as attorney and agent for Chapman in the matter, that it did not desire to make the proposed loan. After some time spent in vain protests, Chapman concluded to treat the refusal as final, and later brought this action to recover damages for the repudiation of the agreement.

The ease discloses that Chapman had obtained credit from his materialmen and contractors upon the strength of the defendant’s agreement to advance the $32,500 upon completion of the building. When that agreement was repudiated mechanics’ lien suits were brought and judgments obtained therein, including liens upon the building, and in order to prevent a sacrifice of the property by execution sale, he, in January, 1901, effected a private sale of the property to Messrs. Sheppard & Hackney, upon terms that reimbursed him for a considerable part of the expenditures that had been made and liabilities that had been incurred in and about the erection of the new building, not, however, including the value of the frame building removed, the rental value of the property while the construction of the new building was under way, nor certain disbursements to be referred to below.

The numerous assignments of error refer principally to the refusal by the trial judge of motions made for a nonsuit and for the direction of a verdict in favor of the defendant; to the refusal of the defendant’s sixth request to charge, which related to an asserted justification of defendant’s rescission of the agreement, and to the instructions given respecting the measure of damages.

The motions for nonsuit and for direction of a verdict were rested upon two points only.

First. That the action was improperly brought in the name of Holt to the use of Chapman. The argument is based upon [589]*589the ground that the injury, if any, flowed to Chapman alone. This fact, which is sufficiently obvious, is a good reason for bringing the action for the use of Chapman, but is no reason for not bringing it in the name of Holt. Whether it should be brought in the name of Holt is a purely technical question, and depends upon whether the contract was in form made with Holt. We think there was at least evidence that it was so made in form. It is insisted that defendant’s agreement is contained in its letter to Mr. Chandler dated November 22d, 1899, approving Chapman’s application for a loan of $30,000. But, as already mentioned, this arrangement was afterwards changed and the loan increased to $32,500, with security upon land the title to which was to be put in Holt; and in a letter of December 6th the company wrote to Chandler that, “As we have no connection with Chapman in this loan, we think his name should not appear in any of the papers relating to it.” From this and from certain other evidence in the case it was a reasonable inference that while both parties were consciously contracting in a matter of which the benefit on the one side was to flow to Chapman alone, they were at the same time consciously, and for reasons satisfactory to themselves, contracting in the name of Holt. Under strict common-law rules of practice and pleading it would be necessary in such a situation to bring the action in the name of Holt as the party with whom the contract was made, and it would be proper for him at the same time to declare a trust in favor of Chapman for the proceeds of the suit. Such a trust is properly declared by reciting in the proceedings that Holt sues for the use of Chapman.' Such was the familiar mode of pleading in actions upon an assigned chose in action. Sullivan v. Visconti, 39 Vroom 543, 548; affirmed, 40 Id. 452. As pointed out in that case, it required a statute to enable the assignee of a chose in action to sue in his own name.

The present is not an action by assignee, but is a suit by the nominal promisee in behalf of the party for whose benefit the promise was made, and from whom the consideration moved. In such cases, when arising upon simple contracts, [590]*590our courts have long recognized the right of the beneficiary to sue, even when the consideration did not move from him; otherwise in actions upon sealed contracts. Joslin v. N. J. Car Spring Co., 7 Vroom

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Bluebook (online)
72 A. 301, 76 N.J.L. 585, 47 Vroom 585, 1909 N.J. LEXIS 140, Counsel Stack Legal Research, https://law.counselstack.com/opinion/holt-v-united-security-life-insurance-trust-co-nj-1909.