LaRocca v. John Hancock Mutual Life Insurance

Callahan, J. Joseph LaRocca in his lifetime purchased an insurance policy from defendant company, naming Michael LaRocca as beneficiary. In a former action on the policy brought by the beneficiary after the insured’s death, the policy was declared void, and the company permitted to rescind same, because .of the fraudulent representations of the insured. In order to complete rescission the company pleaded an offer to return the premiums which were paid by the insured in his lifetime. In the former action by the beneficiary, the company received a judgment for costs. It claims [261] the right to offset that judgment against the amount of premiums which it offered to refund. The administrator of the estate of the insured claims the right in the present action to recover the premiums free of any offset. The Municipal Court held that the premiums belong to the estate of the deceased, and the administrator was entitled to recover them. It also held that the costs recovered against the beneficiary by the insurance company upon the trial of the prior action and upon the appeal, cannot be set up as a counterclaim or setoff against the estate, even though the beneficiary is the administrator of the estate of the deceased. The Municipal Court granted summary judgment to plaintiff in the sum of fifty-seven dollars. The Appellate Term affirmed the judgment in plaintiff’s favor. We think the determination was correct. The circumstance that here the administrator and the beneficiary are the same person is immaterial. The administrator is the representative of the estate of the insured. The estate of the insured is not being enriched by his fraud; it is merely recovering back what the company was required to repay on electing to rescind. The company would be unjustly enriched if it could retain premiums for which it gave nothing. No rights passed to the beneficiary under the policy, because the policy was not an enforc-ible contract. Plaintiff’s right to the premiums does not exist because of any rights flowing from the policy, but because defendant has money received from the decedent which it is required in law to return to him or his representative. While it may be true that in any action for rescission brought by the company after the death of the insured, the beneficiary would be a necessary party, that would be because the beneficiary would have all rights existing under any enforcible contract. It would not follow, however, that the beneficiary would have the right to the return of premiums if a tender was required in such an action for rescission. The determination of the Appellate Term should be affirmed, with costs. Martin, P. J., and Dore, J., concur; Glennon and Untermyer, JJ., dissent. . ;