Emmet v. . Reed

Gardiner, J., delivered the opinion of the court.—The note of the defendant was given under an agreement, that he should have the right of paying the whole amount in policies of insurance, which he might procure either in *316 his own name, or in the names of his personal friends, or other persons whom he should influence to insure in the company. This agreement was made with the secretary of the company, -and communicated to the president and approved by him, and directions were by him given that the note should be used upon the terms prescribed. This was done and the transaction was ratified and approved like other business transactions, but without any formal vote of the directors, or of any committee upon the subject. Thé arrangement was made and carried out, as the referees find, in good faith, and the note fully paid. And this action is brought to recover the' amount of premiums received from third persons effecting insurance at the solicitation and by the influence of the defendant. It will be perceived by the facts above stated, that the agreement under which the note was made was completely executed: that there is no pretence of mistake or fraud in the transaction 5 and I do not perceive how the company or its creditors can repudiate the arrangement after reaping its benefits, or equitably charge the ‘defendant with premiums which he procured to be paid, which were voluntarily applied upon his note. If there were doubts as to the authority of the company to make the agreement, still as they have availed themselves of his services in their behalf and canceled his notes they are disqualified to maintain this action. Suppose the agreement had been annexed to the note by way of defeasance, the defendant might not have been entitled to claim a performance while it was executory—but it is certain that the company could not disregard the defeasance and sue upon the note as an unconditional promise to pay the sum therein specified. Whatever difficulties might have attended the attempt to establish a parol defeasance, yet as it was made, acted upon and executed, neither the company nor its creditors can now avoid the condition and make the instrument absolute. This would be a palpable fraud. Without as *317 suming, therefore, to determine whether the 12th section of the act under which this company was organized does or does not authorize such an arrangement, so as to make it obligatory upon the parties while it was executory, still having been performed in good faith, it can not now be rescinded and a different agreement substituted in its place. The judgment of the superior court should I think be affirmed. Judgment affirmed.