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Statement of case.
It is then averred as a defense, that about 20th March, 1851, one King, the then general agent for the company, made the following agreement with the defendant for the company, to wit: “The said company being about to commence business and issuing policies, and being desirous of obtaining premium notes for as large an amount as possible, proposed to insure the property of the defendant to the amount of $1,400 for three years, on the following terms: This defendant to give, for the time being, his note for the full sum of $1,400, with the express understanding and agreement that said note was not to be assessed or collected, or the defendant called upon or required to pay it or any part thereof, but that the said note, after the company became Organized, and within a few months after the giving of the same, was to be canceled and given up to the defendant, and the defendant to make and deliver in the place thereof, and substitute therefor another note for a smaller amount, and for such an amount or sum as was usually charged for insuring such property in mutual insurance companies. That the defendant gave his said note, and the company subsequently issued the said policy in pursuance of said agreement, which is the same note and policy mentioned in the complaint. That about the 20th July, 1852, in pursuance of such agreement, and in consideration of another note given by defendant for a smaller sum, the said company did cancel and give up said note of $1,400 and interest, and delivered the same to the defendant. That at the time said note was canceled and given up, as aforesaid, the same had not been assessed, nor had the defendant been required or become liable to pay the same, or any part thereof. That the said small note given and substituted for the original note of $1,400, has since, and soine time in the month of July, 1855, been paid, satisfied and given up to the defendant.”
It was alleged as a second defense, that during the time the defendant's policy had to run, the losses and expenses of the company were fully paid and satisfied by the cash premiums and receipts of said company in the mutual department thereof, in which department the defendant was
Statement of case.
insured. That if there were any losses or expenses unpaid, accruing during said term, the same were in the stock department (meaning a department where the policies were issued for a cash advance premium without a premium note), and not in the mutual department (meaning a department where the policies were issued for a premium note), and for which the deposit or premium note given by the defendant was not and is not liable to be assessed to pay the same or any part thereof.
The cause was tried at a Circuit Court held in the county of Otsego, in July, 1858, before Mr. Justice Mason and a jury.
The plaintiff gave in evidence: 1st. An exemplified copy of a judgment roll, filed February 29, 1856, declaring the coinpany insolvent and appointing the plaintiff receiver, &c. 2d. An exemplified copy of the receiver's bond approved by the referee June 18, 1856, and filed June 20th, 1856. 3d. Exemplified copy of declaration of intention to form the company. 4th. Charter of the company, with the certificate of the attorney-general under date of October 28th, 1850, that the charter and declaration were made in accordance with and in pursuance of the act of April 10th, 1849, and are not repugnant to any of the provisions of the Constitution and laws of the State. 5th. Appointment by comptroller, 22d March, 1851, of commissioners to make an examination of the capital, securities and affairs of the company. 6th. Verified certificate of the commissioners, dated April 3d, 1851, that they had made euch examination, and that the company has received and is in actual possession of preminm notes based on applications for insurance to the amount of $100,000. 7th. Certificate of comptroller that the company is possessed of an amount of capital to the amount specified in the fifth section of the act entitled “An act to provide for the incorporation of insurance companies,” passed April 10th, 1849.
William S. King was then called as a witness, and testified: I saw defendant sign the application (application No. 407 shown to him); there was a note signed by defendant attached
Statement of case.
to this application for $1,400; I tore off the note and gave it to the defendant; I think the note was given in February, 1851; I was the general agent of the New York Central Insurance Company at the time the note was taken to Cherry Valley and presented to the commissioners, and formed part of the capital stock of the company, and passed over to the secretary of the company for safe keeping; I can't tell exactly the time that I gave up and surrendered the note of $1,400 to the defendant; in 1851 or 1852, I surrendered the note in pursuance of an agreement made with the defendant at the time the note was given that the same should not be taxed or assessed; that when the company was organized the note should be returned, and a smaller note, one for the usual amount charged for insurance in such companies, substituted in its place. (It was here admitted by the defendant that a policy was issued on the application.) At the time the $1,400 note was surrendered and the smaller note given, the policy was not changed; the small note that was given when the large one was surrendered and the one now attached to the application, was for $700. (Plaintiff bere offered in evidence the application, which was received and read in evidence.) The note for $1,400 was dated in blank when taken; there was no money paid when the original note was given up and surrendered.
Cross-examined : The amount of the small note was much larger than the usual notes given for insurance for that kind of property; the company did not wish to reduce the amount of their capital below $100,000; the new or small note was not strictly in conformity with the agreement inade at the time the large note was given ; I do not know whether $700 was the amount assessed by the company or not; I returned the note to the defendant by the general understanding of the officers and directors of the company; the small note was received and accepted by the company in the place of the large note for $1,400; I annexed the smaller note to the application myself; the small note was annexed to the application by the direction of the president and secretary of the company; I was present when the defendant paid
Statement of case.
money to the company, on the 4th July, 1855, before the company became insolvent; the defendant paid $230 in four or five cases, N. R. Brown, Rufus Brown, H. A. Brown and H. B. Tracy; the money was paid for the purpose of taking up the reduced notes of those persons, and in full satisfaction of said notes; the understanding was (so I understood it) between defendant and the secretary of the company, that it was a full satisfaction and settlement of the small notes, or the liability of the makers thereon; this was after the expiration of the policies; there was no formal action taken by the company in relation to those small notes, but the settlement of them was fully understood and authorized by the officers and directors of the company, and the money received by the company; I tore off the large notes and took smaller ones; when smaller notes were paid no estimate of loss was made.
It was proved that on the 25th October, 1851, the defendant, with others, entered into an agreement with the company, wherein they state that they “being desirous of promoting the permanent success and continued usefulness of the New York Central Insurance Company, do severally agree that the premium notes heretofore given to said company by them, shall continue to be held and liable,” &c. To this paper is affixed the name of the defendant, the number of his note, 407, and the amount, $1,400.
An exemplified copy of a judgment roll, in the suit of the Central Bank at Cherry Valley, against The New York Central Insurance Company, was then read in evidence; the judgment was for $9,434.39; was docketed December 8, 1855, and was the judgment on which the creditor's suit was founded.
After proving that the liabilities of the company amounted to over $30,000, and that after the receiver was appointed he made an assessment on the $1,400 note of $532, the plaintiff rested.
The counsel for the defendant moved the court to nonsuit the plaintiff, on the ground that the evidence is insufficient to sustain the action. Also, on the ground that the evidence shows the note on which the action is brought had been given
Opinion of the Court, per WRIGHT, J.
up, canceled and surrendered for a valuable consideration by the company before it became insolvent. The motion was denied and an exception taken.
The defendant then offered to show and prove the matter contained in defense No. 2, in his answer, and also that the company had mortgages to a large amount ($35,000), which had been given up and not assessed 'by the receiver, &c. Objected to by plaintiff, on the ground that it constituted no defense to the action. The objection was sustained, and the defendant excepted.
Defendant offered, under plaintiff's objection as immaterial, the small note given by defendant at the time the large note of $1,400 was surrendered ; amount of note $700.
It was admitted that the suit was commenced on the 18th August, 1856.
The evidence here closed and the judge directed the jury to find a verdict for the plaintiff for the amount of the note, viz., $1,400, with interest from the 18th August, 1856, the time the action was commenced. The defendant's counsel objected to the direction of the judge, and claimed that the defendant was entitled to the verdict of the jury. That no cause of action has been proved or shown. That the cause should be submitted to the jury. The judge overruled the objections, and the defendant excepted, and the jury, as directed, rendered a verdict for $1,583.13.
The judge ordered all proceedings on the verdict to be stayed, and the exceptions to be heard in the first instance at General Term.
The General Term denied a new trial, and ordered judgment on the verdict for the plaintiff. From this judgment the defendant appeals.
H. R. Mygatt, for the plaintiff.
L. J. Burditt, for the defendant.
Weigur, J. The note on which the action is brought was made by the defendant for the purpose of assisting to form the New York Central Insurance Company, under the gen