Hope Mutual Life Insurance Company vs. Nathaniel Weed

Hope Mutual Life Insurance Company vs. Nathaniel Weed. A mutual life insurance company, previous to issuing any policies, for tlie purpose of giving itself credit and to induce persons to take its policies, established a guaranty fund of §25,000, by means of a written agreement, subscribed by leading members of the company, by which the subscribers agreed to give their notes respectively, payable in one year,for the amounts by them subscribed—the fund thus constituted to be a fund for the security of persons insuring in the company, and the subscribers to receive a commission of six per cent, per annum on the amounts of their notes respectively so long as the company should hold the security. The subscribers gave notes accordingly, which were of the following tenor: “ Twelve months after date, or sooner if required, I promise to pay to the H. Ins. Co., or order, $2,500, or such assessments of the same as the trustees find it necessary to impose for the purpose of paying losses, agreeably to the terms of my subscription to the guaranty fund df said company, for value received.” The company issued numerous policies to persons who took them in reliance upon the security of this fund. The company soon after failed and a receiver of its effects was appointed. Ail its assets were exhausted and a large amount of losses upon policies issued by the companyfremained unpaid. The trustees thereupon made an assessment, in regular form, [ *52 ] of 75 per cent, on the guaranty notes. In a suit brought *by the receiver for the recovery of the amount assessed upon one of these notes, it was held, 1. That whether the company had express authority by its charter to establish such a guaranty fund or not, about which there was room for question, yet it clearly had the power as incidental to the general power to issue policies of insurance. 2. That the note in question was founded on a valid consideration, not only in the commission agreed to be paid, but especially in the object for which it was given, that object having been to induce persons to insure in the company, and the amount assessed being required to pay for losses upon policies taken under that inducement. 3. That no cause of action accrued upon the note until the assessment and demand, and that consequently the statute of limitations did not begin to run against it until then. ■ 4. That the defendant was not to be allowed a deduction of the amount of the unpaid commission from the amount of the assessment, but was bound to pay the whole amount assessed, and look to the general assets of the company’, like any other creditor, for the amount of the commission due to him. This was a case submitted to the superior court, under the statute with regard to amicable suits, upon an agreed statement of facts. The parties were the Hope Mutual Life Insurance Company, a corporation located in Stamford in this state, and at this time insolvent, and William T. Minor, Esq., receiver of the company, as plaintiffs, and Nathaniel Weed as defendant. The facts agreed were as follows:—the insurance company .was incorporated in May, 1846, as a mutual life insurance company. The 8th section of the charter contained the following provision : “ The company for the better security of its dealers, may receive, during the first two years after the passage of this act, notes or other securities, for premiums in advance, of persons intending to receive its policies, and may negotiate the same, for the purpose only of paying claims against it in the course of its dealings, upon such terms as may be provided for by the by-laws of said corporation.” The 13th section was as follows : “ Persons giving notes or other securities in advance, according to section 8th of this act, may be allowed therefor a sum not exceeding six per cent, in addition to any other profits they may be entitled to as members of the company.” The charter also provided that the business of the company should be managed by a board of trustees to be elected by the company, that the company might adopt by-laws, and that all persons insuring *'in the company should become, by [ *53 ] such insurance, members of the company during the continuance of the insurance. The company was immediately after organized and went into operation. A by-law was among others adopted, to the effect that persons giving securities under the 8th section of the charter should be allowed therefor six per cent, in addition to their other profits as members of the company. The defendant Weed was appointed one of the trustees of the company, and continued thereafter to be one. At a meeting of the trustees, held on the 26th of March, 1847, for the purpose of providing a sufficient fund for the payment of losses which might accrue upon policies thereafter issued, the following resolutions were passed : “ Resolved, That it is desirable to raise a guarantee fund of from $15,000’ to $50,000, upon such securities and on such terms and conditions as are not at variance with the charter and by-laws of this company, and that the executive officers in Stamford be authorized to receive subscriptions to the same, and with the advice of the supervisory committee to accept such as they approve of.” “ Whereas it is deemed expedient, before issuing any policies of insurance, that a guarantee fund should be first provided ; Resolved, That no policies be issued until subscriptions shall have been obtained to that fund, and the notes, mortgages or other securities offered, be approved and actually received, amounting, with the premiums on policies really to be issued, to the sum of $25,000.” At a subsequent meeting of the trustees, holden on the 12th of April, 1847, it was, in consequence of the applications of many persons to obtain insurance from the company, resolved that policies might be issued by the company whenever the guarantee fund so provided for should amount to the sum'of $15,000 ; and afterwards, at a meeting of the trustees holden on the 19th of April, 1847, the defendant and others, for the purpose of creating the guarantee fund and of enabling the company to issue policies, and for the security of such as should become insured, proposed to the company to subscribe [ *54 ] the agreement hereinafter set forth, *and to contribute to the guarantee fund in the manner therein provided ; which proposition was accepted by the trustees ; and thereupon the defendant and others, severally executed and delivered to the company the following agreement. “ Whereas it has been deemed advisable by the Hope Mutual Life Insurance Company of Stamford, Connecticut, to create a fund for the indemnity of persons insured by said company, as a security in addition to expected profits ; the subscribers hereto have agreed with the said company to contribute to the said fund the amounts respectively set opposite their names, by giving their promissory notes payable in one year, upon the condition that the same shall be held by the said company for the sole purpose of paying losses which shall accrue upon the policies issued by the said company, and shall not be used until the other funds in the hands of said company shall have been first applied; that for any deficiency after the application of the said funds, on account of such losses, the said notes shall be subject to assessment for the amount required; that the said indemnity fund shall in no event be liable for the expenses of said company, or claims against them other than those arising upon policies issued by them, and in the latter case only after all other funds of said company have been exhausted; that for the loan of the said notes the subscribers shall be entitled to an allowance at the rate of six per cent, per "annum, so long as the company shall hold the said security ; that whenever a surplus of capital shall have been acquired by the company out of the profits of business, to the amount of $25,000, the indemnity herein provided shall cease, and the notes or securities shall be returned to the subscribers respectively : it being, however, understood that the subscribers hereto may, in lieu of having such return, absorb the amount of their notes in premiums or policies on their own lives or lives of others procured through their agency. To which terms and conditions the said company assent, and agree to hold the said security in conformity thereunto. Stamford, 19th April, 1847. Nathaniel Weed, $2,500.” [Also signed by the others.] *The defendant soon afterwards, for the purpose of [ *55 ] carrying out the arrangement agreed on, executed and delivered to the company the following note—like notes being executed by the other subscribers to the guaranty fund for the several amounts by them subscribed. “$2,500. New York, 1st May, 1847. Twelve months after date, or sooner if required, I promise to pay to the Hope Mutual Life Insurance Company, of Stamford, Connecticut, or order, two thousand five hundred dollars, or such assessments on the same as the trustees find it necessary to impose for the purpose of paying losses, agreeably to the terms of my subscription to the guarantee fund of said company, dated 19th April, 1847, for value received. .Nath’l Weed.” The whole amount subscribed to the guaranty fund and for which the notes were given was more than $25,000. Immediately after the subscription was thus completed and the notes given, the company, in reliance on the guarantee fund, issued, and for a long time thereafter continued to issue, policies of life insurance to persons who received the same in reliance on the fund ; and, by the death of many of the persons so insured, losses -were sustained by the company, greater, by more that $20,000, than all their available assets of every kind (except such as consisted of the guaranty notes) were sufficient to pay, and many actions at law, for such losses, had been brought and were depending in court against them ; and the company by reason of the losses, became and ever since had been insolvent, and unable, without resort to said notes, to pay said losses or any of them. The said Minor was appointed by the superior court receiver of the effects of the company, in April, 1854. On the 22d day of May, 1854, at a meeting of the trustees of the company, the following resolution was passed : “ Whereas the indebtedness of this company from losses by death, and interest accrued on the same, exceeds the sum of 15,000, and whereas the cash receipts of the company are entirely exhausted, therefore: Resolved, That an assessement of [ *56 ] *seventy-five cents on the dollar be and is hereby levied upon the guaranty notes of the company, to raise a sum sufficient to pay said losses and interest, payable on demand.” Notice of this assessment was given to the defendant Weed, and demand made upon him by the receiver for seventy-five per cent, of the amount of his note; which notice and demand were in all respects according to the provisions of the charter of the company, but he had never paid the same. No assessment had ever before been made, and no demand had before been made for the payment of the note or any part of it. All the.other funds in the hands of the company had been duly applied and exhausted, before making the assessment, upon policies issued by the company. The six per cent, had been regularly allowed to the defendant and the other parties who had given guaranty notes, according to the provisions of the agreement of April 19th, 1847, either by endorsing the same on the notes or by crediting the same on the books of the compayiy. The company had never acquired a surplus of capital, out of the profits of business or otherwise, of any amount whatever ; and neither the defendant nor any of the other guarantors had ever absorbed the amount of their respective notes in premiums on policies taken on their own lives, or procured by them on the lives of other persons. Upon these facts, the case was reserved for the advice of this court. Hawley, (with whom was Minor,) for the plaintiffs, made a brief statement of the points claimed on the part of the plaintiffs, but discussed them more fully in his closing argument. Dutlon, (with whom was Ferris,) for the defendant. 1. The note was given without any consideration. It is not claimed that the defendant received any thing when it was given. It is only claimed that there was a promise on the part of the insurance company to pay the guarantors six per cent, while they held the note. This is all that can make a consideration. The mere desire to promote the interest pf the com- [ *57 ] pany *by giving it credit, can not constitute a consideration. But the company had no power to agree to allow six per cent, for such guaranties, and if they had not, then the consideration growing out of that stipulation falls to the ground. A corporation has no power that is not expressly or impliedly conferred by its charter, and the implied powers are those that are necessary to the prosecution of its business. Ang. & A. on Corp., § 111. New York Firemen's Ins. Co. v. Ely, 5 Conn., 560. New London v. Brainard, 22 id., 552. The company had no power to establish the guaranty fund. It is not enough that they might regard such a fund as desirable, the question is whether they had the power. The charter clearly does not confer the power in express terms, nor does it contain anything that would suggest the idea of such a fund, and it can not be regarded as necessary to the prosecution of the business of the company. But even if the company might, on reasonable terms, establish such a fund, they had no power to obligate themselves to pay such a sum for it. Such a payment, exhausting their funds, is a fraud on the public. [Ellsworth, J. Do you go so far as to say that if an insurance company is indebted for a loss and can not pay it conveniently, and the claimant is willing to wait a year if he can have security, the company could not pay a director one per cent, for guarantying the payment ?] I am not prepared fo say that an insurance company could legally do this, but the case supposed differs essentially from the present one. There the insurance company owed the debt, and it -was its duty to pay it, and it could not do so at once without loss. Here there is no duty on the company to issue policies. They undertake it for their profit, and, in paying for a guaranty of their credit, they do it, not to enable themselves to discharge a duty, but to make a profit. [ Storrs, C. J. Is not the guaranty for the benefit of the parties taking policies ? How can the guarantors set up that there was no consideration for their guaranty against persons who have been induced by it to insure ?J The question is here between the company itself and the guarantor, not between the persons insured and the guarantor. The persons insured are not *here claiming the money. [Air. Hawley. Mr. [ *58 ] Minor as receiver represents the creditors of the company, and is a party.] Mr. Minor, as receiver, can stand no better than the company itself. He represents the company. All the ground that there can be for claiming that policy-holders are parties here in any sense, is the statement, among the facts of the case, that a large amount is due to policy-holders which the company has no funds to pay; but it is still only the company that is making the claim. 2. The claim is barred' by the statute of limitations. The note is payable twelve months after date or sooner if required* It therefore fell due in 1848, and was consequently outlawed in six years from that time. But it is said that the note is not to he regarded as a negotiable one, and that it therefore would not be outlawed until it had run seventeen years. And it is claimed not to be negotiable because it is not absolute but conditional. Such' we admit to be the rule of law, but we deny that this note is to be regarded as conditional. It was by its terms in the power of the company to demand the whole amount whenever they considered it necessary, and this makes the' note an absolute one. 3. If the defendant is liable on the note, yet he is entitled to an allowance of the six per cent. (§150 pér year,) from the time the note was given down to the present time. The stipulation is, that the guarantors shall be entitled to six per cent, upon the amounts of their notes “ so long as the company shall hold the said security.” The notes are still held by them. [Ells-worth, J. Then, if the defendant can keep the case in court long enough, he will pay his debt.) At any rate the six per cent, should be allowed down to the time when payment was demanded, if it should not still be allowed. It should be treated just as if the company had paid the commission in cash and the guarantors had paid it back to the company as so much paid on the guarantee notes. The funds of the company would have been reduced, and their ability to pay their debts, precisely as much if they had paid these commissions in cash, as if they were now taken out of the guaranty notes. The company [ *59 ] can not equitably require the *guarantors to pay their notes in full, while refusing to pay the very commission which was the consideration of the notes, and which the plaintiffs are relying on as constituting a valid consideration for them. Hawley, in reply. We claim that the company had power to establish the guaranty fund and to take the note in question for that purpose. The 8th section of the charter gives them power in certain cases to receive notes and other securities, “ for the better security of their dealers,” and, by a fair implication, such notes as the present one, which was given for that very purpose. The note is to be taken in connection with the guaranty subscription, which shows that the notes thus given might be applied as advance premium. But it is not necessary that the power should be expressly given. It is incidental to the power to issue policies. Such a fund tends to the security of the policy-holders, an object which the law would favor. The notes were given for an object that was proper in itself, and important to tbe lawful business of tbe •company, and not, as in tbe case of New York Firemen's Ins. Co. v. Ely, cited on tbe other side, for an unlawful object. There the insurance company was attempting the business of banking, which was not only entirely foreign to their powers as an insurance company, but was expressly forbidden by the statute of the state of New York, where the company was located. The object here was to enable the company to fulfill the very obligations which by its charter it was authorized to assume, to enable it the better to carry out the very purpose for which it was chartered. If the company had power to procure the guaranty it of course had power to pay for it. There is no rule of law that forbade the' company to pay any price for such a guaranty that it should think proper. The notes therefore were legally taken, so far as the power of the company is concerned, and there was ample consideration to sustain them, both in the commission agreed for, and in the object for which they were given, which was to induce persons to accept policies from the company, by the additional *security [ *60 J which the guaranty fund would furnish. And now that persons have insured in the company in reliance upon the security of these notes and are to lose their claims unless the notes are paid, can the guarantors be heal’d, to say that the company had no power to pay them the commissions which they were to receive as the consideration ? The inability of the company to pay these policy-holders is the precise contingency against which the guaranty notes were intended to provide, and the guarantors should not now be heard to say that they received nothing for their notes. Deraismes v. Merchants Mut. Ins. Co., 1 Comst., 371. These policy-holders are before the court by the receiver, who represents the creditors as well as the company. If it were not so, the company would be regarded as holding the notes in trust for the policy-holders. As to the statute of limitations—A note to be negotiable must contain a direct, absolute promise to pay. There must be no contingency. This is well settled law. Hill v. Halford, 2 Bos. & Pul., 413. 1 Swift Dig., 429, 30. But it is said that the company had the power to make it absolute. Even if they had, it would not make the note an absolute one. But the company had no power to require payment until the money was needed to pay losses, and it might never be needed. And when needed it might not all be required. Besides, the notes were to be paid only in installments called in by the directors, and no right of action accrued until the installment was demanded. The six cent, commission can not be in reduction of the note. The object in giving the guaranty notes was to provide a fund for policy-holders to rely on—a permanent fund. It is directly in the face of such an object, if the fund, from the time it is established, is liable to be reduced at the rate of six per cent. In seventeen years it would be completely eaten up. This can not be done. The guarantors were bound to get their commissions from the company like any other creditors. They should have taken their pay as it fell due from time to time. Such an application of the commissions [ *61 ] is no part of the agreement. The ^unpaid commissions are a mere ordinary debt, and wholly a matter between the guarantors and the company, while the guaranty notes are in equity a matter between the guarantors and the policyholders. [MAJORITY — Stores, C. J.] Stores, C. J. The first question made in this case respects the power of the plaintiffs to make the contract out of which the note of the defendant, on which the plaintiffs claim to recover, arose. The plaintiffs first claim to have derived such power from the express terms of their charter; and rely on the provisions of the 8th, 18th and 17th sections, which provide that the plaintiffs’ company, for the better security of its dealers, may receive, during the first two years, after the passage of their charter, notes or other securities, for. premiums in advance of persons intending to receive its policies, and may negotiate the same for the purpose only of paying claims against it in the course of its dealings, upon such terms and conditions as may be provided for by the by-laws of said corporation, and that persons giving such notes or securities may be allowed therefor a sum not exceeding six per cent., in addition to any other profits they may be entitled to as members of the company ; and prescribes how and to what extent the trustees of the company shall assess the makers of such notes or obligations upon them, when the funds of said corporation on hand should be insufficient to pay the claims on the company for losses on policies. On the facts stated in this case, and especially from the tenor of the votes and proceedings of the plaintiffs, in pursuance of which the agreement was entered into between the company on the one part, and the defendant and those united with him for the purpose of furnishing the guarantee fund on the other, of which' the note now in question was to be a part, and the nature of the arrangement and the subsequent conduct of the parties under it, there is no doubt that the parties supposed that it was strictly sanctioned by and conformable to the 8th section of the charter. But notwithstanding- this, it is at least very questionable whether that arrangement was, in its character and object, one which -was contemplated by that section, or to *which its language is applicable, and whether conse- [ *62 J quently it was expressly sanctioned by it. The only obligations which, by its tenor, the company are authorized to receive and negotiate for the purpose mentioned in it, are those which it may receive for premiums in advance, of persons intending to receive its policies. And the language of those sections, the first of which provides that those persons shall be entitled to their proportion of the profits of the business of the company, and the second of which provides that they may receive such allowance for giving their obligations for premiums in addition to any other profits they may be entitled to as members of the company, would seem conclusively to show that it is only to the obligations of such persons that those provisions were intended to be applicable, since such persons only can be members of the company and entitled to the profits of its business. But in regard to the' agreement between the company and the defendant and others, to effectuate which the note now in question and the notes of the other subscribers to that agreement were given, it does not appear that the parties contemplated the taking of those notes of the makers for any premiums, in advance or otherwise, on policies of insurance to be received by them of the company, although those makers might in fact be or become members of it; but the facts before us would rather show that those notes were designed to be given in order to constitute a fund, distinct fx’om and independent of that which might be cx’eated by the obligations received by the company for premiums on policies issued by them in pux’suing their ox’dinaxy and appropi’iate business, and wei*e intended and pi'ovided as a fund in aid of the fund to be x-eceived by the company from such premiums. The notes of the defendant and others, given under the arrangement of April 19, 1847, were to create a special “guaranty fund ” in addition to the ordinary funds of the company received in the coui’se of its business, and as an inducement to persons to take out policies from the company, *and a [ *63 ] security to them for the amount which might become due on those policies in case the ox’dinary funds of the company should prove insufficient for that purpose—a fund which it was deemed indispensable to cx'eatein order to inspire sufficient confidence in those who desired to receive policies from the company, and none of which policies were, by the terms of the resolution under which the fund was created, to be issued until that special fund should be created. And it appears that, after the passing of the original resolution px’oviding for the creation of that fund, and before the amount prescribed in it to be raised was obtained, and while the business of the company was at a stand for the want of the contemplated guaranty fund, in consequence of the applications of many persons to obtain immediate insurance from the company, but who were unwilling to receive policies until that fund should be raised, that resolution was so modified that the amount of which that fund should consist should be reduced, and that, in conformity with such modification, the note in question, with the others given at the same time, was executed under the agreement of the 19th of April, 1847. That it was not the intention of the plaintiffs or the other parties to that agreement that any of the notes to he given in pursuance of it were to be applied, when given, towards premiums for insurance, either in advance or otherwise, is clear from the terms of the agreement. The stipulation on that subject is merely that the subscribers to it might, at their option, in lieu of the return of their notes therein provided for, absorb their amount in premiums on policies upon their own lives or lives of others procured by their agency; and it does not appear that any such policies were ever taken out. But, without determining whgjher the charter of the plaintiffs expressly authorized the contract on which the note in question was given, we have no doubt that, without resorting to that source, the arrangement on which it was executed, and consequently the note itself, was valid as the exercise of a power which. was implied, and therefore incidental to tlie powers expressly conferred by the charter. While a corporation has [ *64 j *no powers except those which are conferred by its charter, it is not requisite that those powers should be expressly granted, but it possesses impliedly and incidentally all such powers as are necessary for the purpose of carrying into effect those which are expressly granted. The creation of a corporation for a specified purpose implies a power to use the means necessary to effect that purpose ; and in respect to contracts, a corporation has power to make all such as are necessary in the course of the business which it is authorized to carry on, and which are not forbidden expressly or impliedly by its charter, as means to enable it to accomplish the object for which it was created. Ang. & A., on Corp., §§ ill, 256, et seq. We are clearly of the opinion that a just application of these familiar principles fully warranted the arrangement between the plaintiffs and the defendant and others, in pursuance of which the note now in question was given. The plaintiffs were incorporated, as a Mutual Life Insurance Company, with the usual powers incident to that business. No capital stock was required or expected to be originally created, as a basis upon which such business was to be commenced or conducted. Its ordinary means of meeting its liabilities on its policies consisted only of its receipts of premiums on them.. It is very apparent that when it commenced its business, and for at least a considerable time thereafter, those receipts might be insufficient to enable it to meet its liabilities upon its policies, and that therefore the successful prosecution of its business might require a better security for the indemnity of those who should take out policies than would be furnished by those receipts; and there would be no more obvious, convenient or proper mode of furnishing such security, than to provide a guaranty fund to pay losses accruing upon policies, by procuring responsible persons, for a reasonable compensation, to contribute, if the other funds of the company should be exhausted for that purpose, until the profits of the company should enable it to dispense with such extraordinary aid. Such an arrangement would, in our opinion, constitute the necessary, or, in words which perhaps express more precisely *the sense in which that term is understood £ *65 ] in relation to this subject, fit and appropriate means for carrying on the business for which the company was incorporated. It can not with any propriety be said, that it would be the pursuit of a new kind of business, or one for the prosecution of which the plaintiffs were not incorporated. It is obvious that it would not be entered into as of itself, and unconnected with the business for which they were chartered, a source of any profit or benefit to them. From its very nature it could not be. It was an arrangement which was made, not as an end, but only as a means or instrument for the successful prosecution of their main and appropriate business. And the facts before us conclusively show that such, in the present instance, was the only design or motive with which it was entered into, and that it was resorted to by the plaintiffs as a matter necessary to the prosecution of their proper business, and was shown by experience to be such. We can not therefore pronounce that arrangement to be an illegitimate exercise of the powers conferred by their charter. Indeed, if we were to declare it in-. valid on this ground, we do not see why the broad ground must not be taken that, in the case of any corporation created for the purpose of carrying on a particular kind of business requiring credit in its prosecution, it would be an excess of its power to engage or secure in support or aid of its own eredit, that of other persons in regard to the fulfillment of its contracts, even when the exigencies of its business required such aid for its prosecution; and the principle would even go so far as to prohibit the ordinary engagement of suretyship in behalf of such corporation. Nothing is more common than the exercise of such a power by our pecuniary corporations, and the power is one from the exercise of whiclrnot only no evil, but the greatest benefit to such corporations and to the public, has arisen. And it was never before suggested that it was beyond the scope of the powers granted to such bodies. Supposing'that the arrangement -which wé are now considering was not embraced by the provision of the 8th section of the plaintiffs’ charter, to which we have alluded, those allowed by that section, for the [ *66 ] ^security of their dealers, and which were undoubtedly supposed, although erroneously, to be sufficient to enable the plaintiffs to commence and prosecute their business successfully, sanctioned an arrangement of the same character as that now before us, and was only restricted to those particular persons who might obtain insurance from the plaintiffs. And we are unable to perceive any reason why, if the welfare of the plaintiffs and the safety of their dealers required it, a similar arrangement'should not be sanctioned with any other persons who might be induced to lend their credit to the plaintiffs. The note in ' question therefore is, notwithstanding this objection, valid. It is next objected that the note in question is wffthout consideration. The first ground on which this objection is urged, that the agreement on which it was given is unauthorized by the chartér, has been already answered. ' The other, that the note was gratuitous on the part of the defendant is equally untenable. This note, with those of other persons, was given in pursuance of and to carry out the agreement of the 19th of April, 1847. If therefore that was an obligatory agreement the notes were equally so. A consideration which would attach to the one, in the absence of the stipulation that the notes should be given as a security for’ its performance, would plainly attach to the notes if such a stipulation were inserted. Looking then to that agreement, and viewing it according to the most simple, familar and narrow principles which apply to the subject, the promise by the plaintiffs to pay the defendant the compensation agreed on for the furnishing a proportion of the guaranty fund which it was the object to create,: clearly consituted a sufficient consideration for the promise of the defendant.- No reasoning is necessary to show that -such latter promise is not gratuitous. A violation of it would therefore be actionable. It is unnecessary on this point to inquire what would- be the amount which the plaintiffs would recover in an action on an ■ unfulfilled promise,'made in consideration of a compensation paid to the promissor, to pay the former a certain sum-of-money, in which the element should he wanting, that other persons had such an interest in the amount to be so paid, that that circumstance would *furnish no guide as to the amount of [ *67 ] the recovery. That would be a question quite distinct from tbe inquiry whether the promise would be wholly invalid for want of consideration, although in such a case the amount of the consideration might, on the question of damages, enter into the amount of the recovery. But the case just supposed bears no resemblance to the present. And the difference in their circumstances is so great that, not merely in respect to the amount of the recovery, but as to the question now before us, of the existence of a valid consideration for the defendant’s promise, we wrould place our decision on broader and higher grounds than the mere promise of the plaintiffs to compensate the defendant for contributing to the fund which the former was about to create. Although from the premiums to be received from those persons w'ho should obtain insurance from the plaintiffs the latter would consequentially derive a benefit, the direct and express object of raising that fund was to induce those persons to obtain such insurance by providing for them a fund independent of the ordinary resources of the company, upon which in cases of loss they could safely rely for their indemnity. Unless that fund had been provided they would not have taken policies from the company, and it was upon it that they principally relied. And it was expressly understood between them and the company, that the fund was to be created and held by the latter for the exclusive benefit of such policy-holders. By receiving those policies they would become members of the company, and as such they would themselves bear their proportion of the allowance to be paid to the defendant and the others furnishing that fund. And it was one of the terms of the agreement between them and the company, that the notes given under it, and which should constitute the fund, should be “ held by the said company for the sole purpose of paying losses wrhich should accrue on the policies issued by the said company, and should not be used until the other funds in the hands of the company should have been first applied for that purpose.” Under these circumstances, that agreement should be deemed to have been made, and the notes given in pursuance of it to be held by the company, *in trust for the benefit of those persons who re- [ *68 ] ceived policies from the company ; and we think that the procuring of insurance from the company on the strength of them, by those for whose benefit this suit is prosecuted, constitutes a perfect legal consideration for those notes. There is therefore, no more objection to a recovery by the company on those notes, than there would be if the agreement had been made with those holders of policies, and the notes had been given to them directly ; and we can not doubt that a court of equity would, if necessary, compel the company to enforce those notes for the benefit of those holders, and would restrain it from diverting them to any other purpose than those for which they were thus given. Otherwise, the making of that agreement and the giving of those notes, instead of furnishing a fund for the security of those policy holders, might he the means of practising the grossest fraud upon them. On these grounds the objection of a want of consideration is groundless. The claim of the defendant that the note in question is barred by the statute of limitations is not well founded. By its terms, an action on it could not be sustained until an assessment had been made upon it, according to the provisions of the agreement in pursuance of which it was made. And that assessment in this case, of the regularity of which no question has been raised, was made at too recent a period to admit of the claim being barred by that statute. The result is, that the plaintiffs are entitled to judgment for the amount of the installment required by the trustees of the plaintiffs on the note in question, with interest thereon from the time of the demand by the receiver, without the deduction? claimed by the defendant, of the allowance which, by the agreement, was to be made by the plaintiffs to him for the loan of said note, as such deduction would be contrary to the terms and manifest intent of that agreement. And the superior court should he advised accordingly. In this opinion the other judges concurred ; except Butler, J., who was absent. Judgment for plaintiffs advised.