Taylor v. Charter Oak Life Insurance

Van Brunt, J. This is an appeal from a judgment in favor of the defendants, entered upon the trial of an issue of law raised by the demurrer of the defendants to the plaintiffs’ complaint. There were numerous grounds of demurrer set up, but it is only necessary to consider the eighth and last, which was as follows; “ That the complaint does not state facts sufficient to constitute a cause of action.” It is somewhat difficult to see upon what theory the plaintiffs, being simply the holders of a policy issued by the defendants, can intervene in the management of its- affairs. The plaintiffs by reason of such, policy hold simply a contract upon the part of the defendants, that upon the happening of a certain contingency, they will pay a certain amount, and in addition thereto, that after paying the dividends upon the stock of the company, the defendants will divide the surplus profits amongst the parties holding similar contracts to that held by the plaintiffs. In the year 1877, while the defendants were still continuing to do business as a life insurance company, the plaintiffs ceased to pay the annual premiums which became due upon the policy or contract held by them. In 1879 or 1880 this action was commenced claiming some breach of the plaintiffs’ contract with the defendants. It is somewhat difficult to determine precisely what relief the plaintiffs think themselves entitled to. From the nature of the [499] argument of the plaintiffs’ counsel upon the hearing of the appeal herein, we must infer that the plaintiffs suppose that they are at least entitled to recover damages. This right of action, however, lias been eliminated by the form of the complaint, which is brought, not only upon behalf of themselves, but upon behalf of “ all other policy-holders similarly situated, who may choose to come in according to the practice of this court in such cases, and have the benefit of the same,” which language makes the complaint one necessarily limited to equitable relief. But if this were not so, even at law the complaint shows no right of action. By the failure to pay the premiums which fell due upon the policy, the policy lapsed and the contract became null and void. Such are its provisions. The plaintiffs have endeavored by certain allegations in their complaint to excuse this forfeiture by stating that at the time of this failure they had become acquainted with certain wrongful acts of the managers and officers of the corporation, which are stated in detail in the complaint, and consist of alleged violations of the charter of the company in investments made, and in the manner in which the business of the company has been conducted; and that as a result of such violations of the charter the company had then become insolvent. In support of this position the plaintiffs cite as authorities the cases of The People v. The Security Life Insurance and Annuity Company (78 N. Y. 114); Fisher v. The Hope Mutual Life Insurance Company (69 N. Y. 161), and The Attorney General v. The Guardian Mutual Life Insurance Company (82 N. Y. 836). An examination of those cases shows that it was held that the refusal to receive the premiums upon the policy cither by a failure to do business, or by making such refusal while the company was in operation, was a breach of the contract between the parties, and gave the policy-holder a right of action for damages, and that upon this point nothing more is decided in those cases. It" nowhere intimates that while a corporation is doing business, ready to receive premiums, ready to conduct its ordinary business, in the ordinary way, that a policy-holder shall have the right to refuse to pay his premiums upon the ground that he thinks that the corporation is insolvent, and call [500] it into court to prove its solvency. Eo such rule could possibly obtain in respect to the contracts between individuals, and it is difficult to see upon what basis such a rule could be alleged in reference to corporations. It is alleged upon the part of the plaintiffs that this policy constituted some trust relation between the policy-holder and the corporation. Upon what principle that trust relation rests we are left entirely in doubt. It is not claimed that it rests upon the principle of a copartnership, but upon some undefined trust relation. It is urged that a trust exists in any case where there is a mutual participation in profits. That this assumption has no foundation in law is evidenced by the many cases of contracts for services repaid by participation in profits. There does not, therefore, seem to be any ground upon which this idea of a trust relation can be made to stand, and the rights of the plaintiffs are to be adjudicated precisely the same as would be those of any' other persons who had failed to comply with the terms of their contract. It, therefore, seems to be reasonably certain that the ground adopted by the learned justice in the court below, in sustaining the demurrer, was well taken, and that the judgment must be affirmed with costs. Charles P. Daly, Ch. J., and J. F. Daly, J., concurred. Judgment affirmed, with costs.