The Mutual Benefit Life Insurance Co. against Davis

The Mutual Benefit Life Insurance Co. against Davis Prima facie, a foreign corporation is entitled to recover in the courts of this state upon a promissory note executed to it. And where, in an action by such a corporation upon a note, it only appears that it was created to effect insurance upon lives, and that the note was executed to it for the premium on á policy of insurance issued by it, it will be presumed that the insurance was such as the company was authorized to make, and that the note was legal, until the contrary appears. A mutual life insurance company, the charter of which declares that all persons insured shall be deemed members, and provides that its officers may take the notes of the members for premiums, in proportion to the amount insured, is not authorized to take the note of a person other than the party insured for the premium. The policy of the charter is, that the person obtaining the insurance shall be liable on the note executed for the premium. Action commenced in the supreme court in July, 1851. The complaint alleged that the plaintiff was incorporated in 1845, by an act of the legislature of the State of New Jersey, entitled “ An act to incorporate the Mutual Benefit Life Insurance Company,” and that in addition to the usual powers of succession and of suing and being sued, it was “ authorized to insure the respective lives of the corporators, and to make all and every insurance appertaining to, or connected with life risks of whatsoever kind or nature, and to issue policies, in pursuance of the act, upon such terms and conditions as by its directors should be deemed expedient.” The complaint further stated, that the defendant at the several times when they bear date, and for the consideration hereinafter stated, executed to the plaintiff five promissory notes, viz: (1.) A note dated the first of December, 1849, for $279.77, for a part of the premium of insurance then payable upon a policy of insurance issued by the. plaintiff to the defendant on the first of December, 1847 ; (2.) A note dated the 8th of December, 1849, for $549.71, for a part of the premium of insurance then payable upon a policy issued by the plaintiff to one Marsh on the 9th of December, 1849, and which, note was executed by the defendant to, and accepted by the plaintiff in payment of a part of the premium then payable on such policy ; (3.) A note dated the 16th of March, 1850, for 356.95, for a part of the premium of insurance then payable upon a policy issued by the plaintiff to the defendant on the 16th of March, 1846 ; (4.) A note dated the 26th of March, 1850, for $223.01, for a part of the premium of insurance then payable upon a policy issued by the plaintiff to one Lucy Lee on the 26th of March, 1847, and which note was executed by the defendant to, and accepted by the plaintiff in payment of a part of the premium then payable on such policy; (5.) A note dated the 1st of April, 1850, for $294.26, for a part of the premium of insurance then payable upon a policy issued by the plaintiff to one Mary Davis on the 1st of April, 1848, and which note was executed by the defendant to, and accepted by the plaintiff in payment of a part of the premium then payable on such policy. Each of the notes was payable to the plaintiff with interest at six per cent, “ twelve months after date, or sooner if required to meet assessments made by the plaintiff.” It was further alleged in the complaint, that the notes severally became payable before the commencement of the suit, and that no part of the same had been paid, and judgment for their amount was demanded. The defendant, by his answer, set up four separate defences. The first and second were to all the rotes. The third defence was to the second, fourth and fifth notes, being those for premiums on policies issued to other persons than the defendant. It stated that the plaintiff was a corporation created by the State of New Jersey, doing business in the State of New-York, and that it w'as incorporated for the purpose of carrying on the business of mutual life insurance and for no other purpose; that by the 2d section of the act of incorporation, it was “ declared and provided that all persons who should insure in or with the corporation should, while they continued so insured, be deemed to be and taken as members of the coiporationthat by the 6th section of the act, it was “ declared and provided that it should and might be lawful for the officers of the corporation to take the notes or obligations of the members for the amount either in part or in whole of the premium of insurance in proportion to the amount insured and that the act contained no other provision in relation to taking the notes or obligations of any person for any purpose whatever. This defence further alleged, that at the time the defendant executed the three notes therein mentioned, he was a citizen of this state and had not insured in or with the plaintiff or become a member thereof; and that such notes were not, nor was either of them executed by him as a member of the corporation for the amount either in whole or in part of any premium of insurance owing by him, but that the said three notes were executed by the defendant, without there being any consideration therefor to him, for the accommodation respectively of Marsh, Lee and Mary Davis, in the complaint named, which was known to the plaintiff; and that the same were received by the plaintiff for the respective premiums of insurance upon the policies issued by the plaintiff to said Marsh, Lee and Mary Davis respectively, whereby they respectively became insured in the company and members thereof; and that he, the defendant, was in no manner interested in said policies or in the insurance effected thereby, which the plaintiff well knew at ihe time. The fourth defence was to the note thirdly set forth in the complaint, and alleged that it was given for a part of the premium due upon a policy by which the plaintiff agreed to insure the life of Mary A. Davis for the sum of five thousand dollars, to be paid defendant on her decease; that said Mary A. Davis was the wife of the defendant, and that he had no insurable interest in her life. The plaintiff demurred to the first, second and third defences contained in the answer, and took issue upon the fourth by a reply, alleging that the defendant had an insurable interest in the life of Mary A. Davis therein named. The issues of law and fact were by consent referred to and tried by J. L. Talcott as a referee. He decided that the demurrers to the first and second defences set out in the answer were well taken, and that the demurrer to the third defence was not well taken; and as to the fourth defence, he found the defendant had an insurable interest in the life of Mary A. Davis, and that there was due upon the note therein mentioned its full amount with interest. The referee thereupon ordered judgment in favor of the plaintiff for the amount of the first and third notes set out in the complaint, being the notes for premiums on policies issued to the defendant and dismissed the complaint as to the causes of action upon the second, fourth and fifth notes, they being for premiums on policies issued to other persons. The plaintiff appealed to the general term from so much of the judgment as dismissed the complaint as to these three notes. The appeal was heard in the 8th district, and the judgment affirmed, with costs of the appeal to the defendant. The plaintiff appealed to this court, A. P. Nichols, for the appellant. John Hubbell, for the respondent. [MAJORITY — Hand, J.] Hand, J. It appears by the complaint that this is a foreign corporation; but prima facie, a foreign corporation may sue on a note here the same as a domestic corporation or' natural person. (Norris v. Staps, Hob., 211; Bk. Mich. v. Williams, 5 Wend., 482; Silver Lake v. North, 4 Johns. C. R., 370; Ang. & A. on Corp., 5689, and cases there cited; Ld. Ray., 1532; Stra., 612; 4 Barb., 130.) But it is said that the complaint does not show .that the company had authority to take these notes. . It is alleged that each note was given as a part of a premium of insurance then payable on certain specified policies issued to the defendant and other persons, and was payable twelve months after date, or sooner if required to meet assessments; and as it is further stated that the business of the corporation is to insure the lives of the corporators, the insurance must be presumed to have, been of that kind. Besides, it does not appear by the complaint that the policies were issued or the notes given in this state. If it had, we are not to presume that the plaintiff has not complied with the requirements of our statute in such cases. Four of them are also said to have been upon the lives of others; but we cannot know that the defendant had no interest in the life of the person insured, or that there was no other consideration; nor, without looking farther into the pleadings, can we know that such a note was not authorized by the charter. Prima fade, then, the notes are valid; and I see no objection on the face of the complaint to a recovery by the plaintiff. But the third answer or plea purporting to be a defence to three of the notes presents a very different case. The allegations in it, are, in brief, that the company, though incorporated in another, is doing business in this state where the defendant resides; and that these notes were given here; that the company was incorporated solely for the purpose of carrying on the business of mutual life insurance; that by the act of incorporation, persons while insured are members; that the company may take notes of the members for the whole or a part of the premiums ; and that, with this exception, the act contained no provision in relation to taking notes of any person; that these notes were given for premiums only, and were given, one for the premium upon a policy of insurance issued to one Marsh, by which Marsh became a member; and that it was given for the accommodation of Marsh, and without consideration as between Marsh and defendant, or plaintiff and defendant, or between defendant and other persons, and for the sole purpose as aforesaid; that defendant was not and did not become a member, nor was he in any way interested in said policy; and it does not appear that the insured was a party to the note. The facts are the same substantially as to the other two notes mentioned in this plea; and the question arising upon these facts, as I understand them, is simply whether the company on issuing a policy can take the note of a third person for the premium, instead of that of the person becoming insured. A note to the.corporation for a valuable consideration, and not obtained in violation of its charter, but in "the way of its business, would be good. Instead of requiring payment of the premiums, the act, in this case, provides that it shall be lawful to take the notes of the members. The mode of doing this part of the business is pointed out; and. that mode I think should be substantially followed. If not necessary to membership, the other members of the company have, a right to require that every person insured, should pay or give his own note, and not that of a stranger who has no interest in the company. I do not say no one but the person insured should sign the note in any case, nor but that one may be so far beneficially interested as to authorize his giving the note, though not himself nominally insured; 'but this is, theoretically at least, a system of mutual indemnity and liability; and the plan evidently indicated by the charter should, be followed. Perhaps cases may arise authorizing a departure; but. if so, this is not one of them. It does not appear that the defendant had any interest in these lives, which, he could have insured. It is not shown that he was a. member, or assignee of the policies, or had any interest therein. The referee was right, therefore, in holding that on these pleadings, the plaintiff could not recover upon the notes given by the defendant for premiums upon the policies of insurance issued to Marsh, Lee and Mary Davis. The judgment should be affirmed. Gardiner, Ch. J., Marvin, Crippen and Dean, Js., were also for affirmance. Denio, J., dissented. Ruggles and Johnson, Js., took no part in the decision. Judgment affirmed.