Iowa Life Insurance v. Eastern Mutual Life Insurance

Supreme Court of New Jersey

Iowa Life Insurance v. Eastern Mutual Life Insurance

43 A. 720, 63 N.J.L. 439, 1899 N.J. Sup. Ct. LEXIS 80

DecidedJune 12, 1899

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This text of 43 A. 720 (Iowa Life Insurance v. Eastern Mutual Life Insurance) 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.

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Iowa Life Insurance v. Eastern Mutual Life Insurance, 43 A. 720, 63 N.J.L. 439, 1899 N.J. Sup. Ct. LEXIS 80 (N.J. 1899).

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Opinion

The opinion of the court was delivered by

Collins, J.

The statute referred to in the resolution adopted by the plaintiff provides as follows {Gen. Stat., p. 1755, pi. 66):

“ That it shall not be lawful for any life insurance company, organized or to be organized under the laws of this state, to contract for the re-insurance of any of its outstanding risks or policy obligations of another company unless two-thirds in number of the holders of the policies proposed to be re-insured shall assent thereto in writing; and the contract for such re-insurance shall be utterly invalid and of no force until it shall have been submitted to the secretary of state of this state and by him approved, which he shall only do after due inquiry and upon satisfactory evidence that the interests of the policyholders are fully protected, and that the consent of two-thirds of them has been had in writing as aforesaid.”

[444]*444We are not called on to review the judgment on demurrer recited in the certified case. Both parties assume that because of non-compliance with the statute the policies issued by the defendant to the plaintiff were invalid; and whether so or not, the defendant’s repudiating resolution and the present suit work their rescission. If invalid, the defendant was clearly under a duty to return any consideration received for them. Smith v. Smith, 4 Dutoher 208. Rescission has the same effect. The adjudged cases on this subject are collected in an article by Crosby Johnson, Esq., in 18 Central Law Journal 482, continued in volume 19, page 7.

The defendant recognized its duty to restore the consideration that it had received for the policies, and accordingly returned to Mr. Harper the checks he had given; but it is árgued that the consideration moved really from the plaintiff to the knowledge of the defendant’s officers, and that payment should have been made to the plaintiff and not to Harper. As a matter of fact no money passed and the certified case does not show that Harper’s checks would have been honored if presented ; but, for ^present purposes, it may be assumed that they were good and that the defendant’s withholding them from deposit and turning them over to Harper were at its own risk, and it may be further assumed that the defendant was bound by the knowledge of its officers of the' relation of the plaintiff to the transaction. Nevertheless the plaintiff would not be entitled to recover the recited premiums as the consideration paid by it for the policies. It paid nothing for them. It was argued, however, that a detriment to the promisee is sufficient consideration for any promise, and that upon a rescission such a detriment should be made good. What detriment did the plaintiff sustain ? It merely gave up a right to exact from Harper as a fund of indemnity a deposit of thirty per cent, of the premiums due on its own policies. If the defendant had actually on hand in cash the premiums agreed to be paid by Harper, it would not, without his assent, be justified in paying them over to the plaintiff on a rescission of the policies of re-insurance. It is doubtful if [445]*445the equities of the parties can be settled in a 'legal forum; but it is clear that if the plaintiff has any cause of action at law against the defendant it is only for actual loss. Ex cequo et bono, it is entitled to no more. Each policy would have to be the subject of a separate action or count, and only to the extent of the premium received on that policy could the defendant be liable to make restoration. Within that limit, if the plaintiff should prove a loss, it is possible that it has, in some form as to that particular policy, a cause of action against the defendant. We will not prejudge that question. It is sufficient- for the purposes of this case to say that although the time to be covered by Harper’s indemnity had elapsed before the suit was brought, no loss to the plaintiff, on any policy that the defendant’s officers assumed to re-insure, was proved at the trial, and therefore no liability was established.

The Circuit Court is advised to give judgment for the defendant unless, in its discretion, it shall permit the plaintiff to submit to a nonsuit.

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The opinion of the court was delivered by

Collins, J.

The statute referred to in the resolution adopted by the plaintiff provides as follows {Gen. Stat., p. 1755, pi. 66):

“ That it shall not be lawful for any life insurance company, organized or to be organized under the laws of this state, to contract for the re-insurance of any of its outstanding risks or policy obligations of another company unless two-thirds in number of the holders of the policies proposed to be re-insured shall assent thereto in writing; and the contract for such re-insurance shall be utterly invalid and of no force until it shall have been submitted to the secretary of state of this state and by him approved, which he shall only do after due inquiry and upon satisfactory evidence that the interests of the policyholders are fully protected, and that the consent of two-thirds of them has been had in writing as aforesaid.”

[444]*444We are not called on to review the judgment on demurrer recited in the certified case. Both parties assume that because of non-compliance with the statute the policies issued by the defendant to the plaintiff were invalid; and whether so or not, the defendant’s repudiating resolution and the present suit work their rescission. If invalid, the defendant was clearly under a duty to return any consideration received for them. Smith v. Smith, 4 Dutoher 208. Rescission has the same effect. The adjudged cases on this subject are collected in an article by Crosby Johnson, Esq., in 18 Central Law Journal 482, continued in volume 19, page 7.

The defendant recognized its duty to restore the consideration that it had received for the policies, and accordingly returned to Mr. Harper the checks he had given; but it is árgued that the consideration moved really from the plaintiff to the knowledge of the defendant’s officers, and that payment should have been made to the plaintiff and not to Harper. As a matter of fact no money passed and the certified case does not show that Harper’s checks would have been honored if presented ; but, for ^present purposes, it may be assumed that they were good and that the defendant’s withholding them from deposit and turning them over to Harper were at its own risk, and it may be further assumed that the defendant was bound by the knowledge of its officers of the' relation of the plaintiff to the transaction. Nevertheless the plaintiff would not be entitled to recover the recited premiums as the consideration paid by it for the policies. It paid nothing for them. It was argued, however, that a detriment to the promisee is sufficient consideration for any promise, and that upon a rescission such a detriment should be made good. What detriment did the plaintiff sustain ? It merely gave up a right to exact from Harper as a fund of indemnity a deposit of thirty per cent, of the premiums due on its own policies. If the defendant had actually on hand in cash the premiums agreed to be paid by Harper, it would not, without his assent, be justified in paying them over to the plaintiff on a rescission of the policies of re-insurance. It is doubtful if [445]*445the equities of the parties can be settled in a 'legal forum; but it is clear that if the plaintiff has any cause of action at law against the defendant it is only for actual loss. Ex cequo et bono, it is entitled to no more. Each policy would have to be the subject of a separate action or count, and only to the extent of the premium received on that policy could the defendant be liable to make restoration. Within that limit, if the plaintiff should prove a loss, it is possible that it has, in some form as to that particular policy, a cause of action against the defendant. We will not prejudge that question. It is sufficient- for the purposes of this case to say that although the time to be covered by Harper’s indemnity had elapsed before the suit was brought, no loss to the plaintiff, on any policy that the defendant’s officers assumed to re-insure, was proved at the trial, and therefore no liability was established.

The Circuit Court is advised to give judgment for the defendant unless, in its discretion, it shall permit the plaintiff to submit to a nonsuit.

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43 A. 720, 63 N.J.L. 439, 1899 N.J. Sup. Ct. LEXIS 80, Counsel Stack Legal Research, https://law.counselstack.com/opinion/iowa-life-insurance-v-eastern-mutual-life-insurance-nj-1899.