The Equitable Trust Company of New York, Respondent, v. Arthur N. Taylor, Appellant

The Equitable Trust Company of New York, Respondent, v. Arthur N. Taylor, Appellant. Second Department, October 6, 1911. Bills and notes — negotiability — consideration — balance of insurance premium — insurance — when policy enforcible — surplusage. An instrument executed and delivered to the general agent of a life insurance company which after acknowledging the receipt of a policy on the signer’s life authorizes and requests the agent to place the policy in force and promises to pay to “ you or your order ”, the first annual premium in stated installments, is a negotiable instrument. The mere fact that the consideration for the promise to pay the money was stated to be an indebtedness for a balance due on the" first annual premium of the insurance policy, which had been actually delivered to the promisor, does not make the instrument non-negotiable either under the customs and usages of merchants or under the Negotiable Instruments Law. • • Since the policy was delivered to the promisor with the authority of the insurance company’s general agent it became a binding contract qnforcible in favor of the assured even though the premium had not been actually received by the company. This being so, the clause in the instrument authorizing and requesting the general agent to place the policy in force is mere surplusage and does not make the promise to pay conditional; for there was nothing the agent could do under the circumstances which would prevent the policy from being enforced by the insured. Appeal by the defendant, Arthur N. Taylor, from a judgment of the Municipal Court of the city of New York, borough of Brooklyn, in favor of the plaintiff, rendered on the 26th day of May,' 1911. H. F. Lawrence, for the appellant. Robert E. McLear [Herbert G. McLear with him on the brief], for the respondent. [MAJORITY — Burr, J.:] Burr, J.: On April 9, 1905, defendant executed and delivered to ArchiC. Haynes, general agent of the Equitable Life Assurance , an instrument in the following form: “New York, April 19th, 1905. “Mr. Archibald C. Haynes, “ General Agent,- “The Equitable Life Assurance Society, “No. 25 Broad street, N. Y.: “Dear Sir.— I hereby acknowledge having received from Mr. W. E. Watts policy No. 1447474 being for $1,000.00 oñ my life in the Equitable Life Assurance Society. You are authorized -and requested to place the said policy in force from this date, and I promise to pay you or your order the first annual premium, amounting to $53.10, as follows: (‘ Cash paid W. E. Watts........'.......... $21.24 “ On July 10th, 1905......■................. "10.00 “On Sept. 10th, 1905 ...................... 10.00 . “On Nov. 10th, 1905 ...................... 11.86 $53.10 “Very truly yours, “ARTHUR N. TAYLOR.” . It appears from the agreed statement of facts that prior to that date defendant had signed a written application for a policy of insurance upon his life in the Equitable Life Assurance Society for the sum of one thousand dollars, the annual premium upon which was to be fifty-three dollars and ten cents; that he had been examined by a physician from said society and the risk accepted. It also appears that on or before the date of the instrument in suit the full amount of the first premium had been paid by Archibald C. Haynes to the Equitable Life Assurance Society, and that on that date-the policy of insurance was delivered to defendant, arid is still in his possession. W. E. Watts, at whose request defendant had signed the application for insurance, had agreed to allow to him a rebate of twenty-one dollars and twenty-four cents on the first premium. The item of twenty-one dollars and twenty-four cents mentioned in said instrument represents the rebate, and never was actually paid in cash to Watts by defendant. Said instrument was transferred and delivered to plaintiff for a valuable consideration prior to July 10, 1905, and without notice that the cash payment of twenty-one dollars and twenty-four cents mentioned therein had not actually been paid. . Such instrument was transferred and delivered to. plaintiff for its full value, and the plaintiff is now the owner and holder thereof. From a judgment in its favor for thirty-one dollars and eighty-six cents, being the amount of the installments which became due after the purchase of this instrument by plaintiff, defendant appeals. The first question. in the case is whether this instrument is negotiable'in character. We think that it is. “An instrument to be negotiable must conform to the following requirements: 1. It must be in writing and signed by the maker or drawer; 2.. Must contain an unconditional promise or order to pay a sum certain in money; 3. Must be payable on demand, or at a* fixed or determinable future time; 4. Must be payable .to order or to bearer; and, 5. Where the instrument is addressed to a.drawee, he must be named or otherwise indicated therein with reasonable certainty.” (Neg. Inst. Law [Gen. Laws, chap. 50; Laws of 1897, chap. 612], § 20.) Eliminating the'fifth requirement, which is not applicable, since this instrument is not addressed 'to a drawee, each of the other requirements appears therein. It is in writing, and signed by the defendant, who made the same. It is payable to Archibald 0. Haynes or'order. It is payable at a fixed or determinable future time. We think the fair meaning of the language used is, I promise. to pay you or your order fifty-three dollars and ten cents, being the annual premium on'policy of life insurance, less cash paid W. E. Watts on. account, twenty-one dollars and twenty-four cents, to wit, thirty-one dollars and eighty-six cents, in three separate amounts, to wit, ten dollars on July tenth, ten dollars on September tenth, and eleven dollars and eighty-six cents on November 10, 1905. We think also that it is an unconditional promise to pay this certain sum in money. The instrument contains no reference to any other method of payment, by credit or otherwise. The mere fact that it contains language from which it appears that the consideration for the promise was an indebtedness for a balance remaining unpaid of the first annual premium upon a policy of insurance upon defendant’s life, which had been actually delivered to him, would not make it nonnegotiable, either under the “custom and usages of merchants ” (Chicago Railway Co. v. Merchants’ Bank, 136 U, S. 268; Mott v. Havana Nat. Bank, 22 Hun, 354; Third Nat. Bank v. Bowman-Spring, 50 App. Div. 66; Hegeman v. Moon, 131 N. Y. 462), or under the statute, “ An unqualified order or promise to pay is unconditional within the meaning of this act, though coupled with: * * * 2. A statement of the transaction which gives rise to the instrument.” (Neg. Inst. Law, § 22.) It is urged, however, that the promise to pay was not an absolute one because the instrument contained the words with reference to the insurance policy, “You are authorized and requested to place the said policy in force from this date,” and that, therefore, the promise to pay was conditional upon some act to be performed by Haynes, the general agent of the insurance -company. This seems to have been the view adopted by the Appellate Term in the First Department, in a case arising upon an instrument similar in form. (Equitable Trust Co. v. Newman, 72 Misc. Rep. 52.) With great respect to that learned court, it seems to us that the words quoted so far from imposing a condition may be regarded as mere surplusage, The policy of insurance had been delivered to the defendant, as it appears, without condition' or qualification, and Haynes, the general agent of the Company, had paid the full amount of the premium thereon., Even if the premium had not been actually received by the company, if the policy had been delivered with the authority of its general agent, it immediately became a binding contract, enforcible in favor of the assured. (Boehen v. Williamsburgh Ins. Co., 35 N. Y. 131; Bodine v. Exchange Fire Ins. Co., 51 id. 117; Hastings v. Brooklyn Life Ins. Co., 138 id. 473; Wood v. American Fire Ins. Co., 149 id. 382,) ,Not only was there nothing which Haynes was required to do to “place the policy in force,” but there was nothing which he could do after the delivery of the policy under the circumstances here disclosed which would prevent it from being enforcible by the assured during the life thereof. If we are right in our views as to the character of this instrument, the plaintiff, being a holder in due course (Neg. Inst. Law, § 91), holds the same free from any defect of title of prior parties, and free from defenses available to prior parties among ■ themselves, and may enforce payment of the instrument for the "full amount thereof against all parties liable thereon. (Id. § 96.) The judgment of the Municipal Court should be affirmed, with costs. Thomas, Carr, Woodward and Rich, JJ., concurred. Judgment of the Municipal Court affirmed, with costs.