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CLARKE, J. Submission of a controversy upon an agreed statement of facts. On October 23, 1893, Henry McDonnell
, husband of the plaintiff, took out a policy of insurance in the defendant company by the terms of which the defendant agreed to pay to plaintiff the sum of $1,000 upon the death of the insured during the continuance of said policy upon the terms and conditions therein stated. Among other provisions of said policy was the following:
“Dividends. This policy is issued on the 15-year distribution plan. It will be credited with its distributive share of the surplus apportioned at the expiration of 15 years from the date of issue. Only 15-year distribution policies in force at the end of such term, and entitled thereto by year of issue, shall share in such distribution of the surplus; and no other distribution to such policies shall be made at any previous time. All surplus so apportioned may be applied at the end of such period to purchase an annuity, or any then be drawn in cash."
The application for the said policy, provided by the policy to constitute a part of the contract, contained the following provision signed by the insured:
And I further agree that in any distribution of surplus the principles and methods which may be adopted by the company for such distribution, and its determination of the amount apportioned to such policy, shall be and are hereby ratified and accepted by and for every person who shall have or claim any interest under the contract now proposed."
The policy provided for the payment of $22.34 quarterly premium on the 23d of January, April, July, and October in every year during the continuance of said contract. All of said premiums were duly paid to the defendant, including the quarterly premium due July 23, 1908, which was the quarterly premium in advance for the quarter ending on the 23d day of October, 1908. Henry McDonnell died on the 12th of October, 1908, 11 days before the expiration of said 15-year distribution period. After the death of McDonnell, and before October 23, 1908, the defendant presented a printed notice to the plaintiff as follows:
"The Mutual Life Insurance Company of New York. Dividend (15-year distribution) in 1908. 61-93, October 23. Policy No. 585,718. Dividend payable in cash, $472.70, or additional insurance, if approved by company, $367. The cash dividend will be credited on the anniversary in 1908, if the policy be then in force. To secure the additional insurance in lieu of the cash dividend, the approval of the company must be secured after full examination by the regular medical examiner if the extra insurance exceeds $1,000; otherwise, on a satisfactory certificate of health. E. & 0. E.”
When it presented the said printed notice the defendant had no knowledge of the death of the insured. After October 23d plaintiff presented satisfactory proofs of the death of the insured, and defendant paid to plaintiff the sum of $1,000, as provided in said policy to be paid upon the death of the insured, but refused to credit to the said policy the cash dividend in the sum of $472.70, or in any other sum on the anniversary, October 23, 1908, and refused to pay said sum, or any part thereof, to the plaintiff. Under the practice adopted and followed in the distribution of the surplus, no distributive share of the surplus is apportioned to any distribution policy,' or to the
living at the end of the period stated in the policy. Under such practice, adopted and followed by the defendant, no distributive share of the surplus has been or will be apportioned to any policy belonging to any policy holder holding a 15-year distribution policy issued in the year 1893, unless the person on whose life such policy was issued was living at the end of 15 years from the date of the issuing of the policy on his life. Upon this agreed statement of facts plaintiff demands judgment for $472.70, with interest from the 23d of October, 1908, while defendant demands judgment that the court find that said policy is not entitled thereto.
The determination of the question involved requires the interpretation of the contract, because the relation of a policy holder to an insurance company is purely contractual. The plaintiff invokes an equitable principle for the purpose of sustaining her claim, and that is that, as the insured had paid all the money which was required by the policy to be paid to entitle him to receive 'at the end of the 15year period the deferred dividend of $472.70, therefore she is entitled to a recovery, because it had been earned by the payment of all the required premiums. But this contention loses sight of the fact that this is a contract for life insurance, that it involves the risk, that after death there is no risk, and that the contract of life insurance, as such, then and there ceases to be in force. The obligation to pay in accordance with the terms of the contract is in force, but the policy of life insurance is no longer in force. It has been transformed into a liquidated debt by the happening of the contingent event theretofore provided for. The insured and the company made an agreement. If the insured lived 15 years, he was to receive that amount which represented the loading of the premiums upon the policy. If he did not live, the company was to retain it. The amount of that dividend was arrived at, not only by the interest accumulated upon the premiums paid by this insured, but by the extra amount of premiums from lapsed policies of the same class in that distributive period.
The plaintiff's claim, that the full payment of the required premiums was all that was necessary to secure the additional amount claimed, entirely loses sight of the nature of the agreement of life insurance. In this particular instance the premiums were payable quarterly, and there were only 11 days more of the term to run, and under those circumstances it is a hard case. Ordinarily premiums are payable annually in advance, and therefore if on the second day of the year the insured had died, having paid that annual premium, if the plaintiff's contention is sound, the beneficiary would be entitled to the sum agreed to be paid at the end of the 15-year period. The 15-year period would thereby be transformed into a 14-year period. The rules, methods, and practices under which the deferred dividends have heretofore been calculated and distributed to other policy holders would be upset, although the insured had agreed to abide by the practices, methods, and procedure adopted by the company.
Furthermore, it is possible that a policy holder will commute, by the payment of a lump sum, future premiums on these tontine or semitontine policies, and in such case the beneficiary might with:hold
proof of death until the expiration of the period, and then claim the full amount of the deferred dividends, where during all that period there had been no risk, and therefore the contract had ceased to be a policy of life insurance. I think it quite impossible, reading this contract in its entirety, and keeping clearly in mind that it is a policy of life insurance, to hold that it is in force as such policy after the death of the insured. The words "in force,” used in the policy, can mean no other thing than this: That the required premiums shall have been fully paid and that the insured shall be still alive.
The judgment should be for the defendant, with costs. All concur. .
POLAK V. WILLIAM ROSENZWEIG REALTY OPERATING CO.
(Supreme Court, Appellate Division, First Department. April 8, 1909.) JUDGMENT (8 707*)-CONCLUSIVENESS-PERSONS CONCLUDED.
A judgment in favor of the purchaser against the vendor, rescinding the contract for fraud, is not res judicata as to the vendor's broker, so as to entitle him to plead it in a suit for his commission, and an allegation setting up the judgment should be stricken out as irrelevant.
| Ed. Note.-For other cases, see Judgment, Cent. Dig. § 1230; Dec. Dig. 8 707.*] Appeal from Special Term, New York County.
Action by Edward Polak against the William Rosenzweig Realty Operating Company. From an order striking out a paragraph of the complaint as irrelevant, plaintiff appeals. Affirmed.
Argued before INGRAHAM, LAUGHLIN, CLARKE, HOUGHTON, and SCOTT, JJ.
John Frankenheimer, for appellant.
INGRAHAM, J. The plaintiff, a real estate broker, was employed by the defendant to procure a purchaser for certain real property of which it was the owner. To procure such purchaser a contract was executed whereby the defendant agreed to convey to such purchaser the real estate described in the complaint and the purchaser agreed to purchase the same. The complaint alleges that before the execution of this contract the defendant procured the plaintiff to sign an agreement whereby he was not to be paid his commissions until the closing of the title, and that in case title did not pass to said premises the plaintiff waived his right to brokerage; but it is alleged that this was without consideration, and therefore not enforceable. It is further alleged that the defendant procured the said plaintiff to execute this contract by fraud, that the purchaser subsequently repudiated the contract, and that the carrying out of the contract was therefore prevented by the defendant's misrepresentations and wrongful acts, as alleged in the complaint. The complaint then alleges that the purchaser began an action against the defendant to rescind the contract, which resulted in a judgment against the defendant rescinding the
contract; and it is this latter allegation that the court below has stricken out as irrelevant.
I think the court below was clearly right. The action not being between the parties or their privies, it was not binding as an adjudication, and was therefore improperly pleaded. It is not necessary to determine on this appeal whether this judgment would be competent evidence to prove the fraud, if fraud 'should become a material inquiry upon the trial. It is sufficient to say that it was not res judicata, so as to entitle a party to plead it as an adjudication, and, therefore, not an allegation which the defendant should be compelled to answer.
It follows that the order appealed from must be affirmed, with $10 costs and disbursements. All concur.
(62 Misc. Rep. 435.) HEROY 1. GERMAN CATHOLIC CHURCH OF THE NATIVITY et al.
(Supreme Court, Special Term, Dutchess County. October, 1908.) 1. Wills ($ 732*)–CONSTRUCTION-PAYMENT OF LEGACIES.
Where legacies are given generally, and the residue, real and personal, is afterwards given in one mass, the legacies are to be paid out of the personal estate, unless there was a deficiency when the will was executed so great as to make it obvious that the testator did not realize it, or did not intend to remove the difficulty before death.
(Ed. Note.-For other cases, see Wills, Cent. Dig. 88 1802, 1803; Dec.
Dig. $ 732.*] 2. WILLS ($ 732*)-CONSTRUCTION-PAYMENT OF LEGACIES FROM REALTY.
Testator made a will two months before his death, when he was 80 years old, and not engaged in any business which would likely change his financial situation. His personal property amounted to $1,938.61, and his debts exceeded $3,500. His executors sold his real estate for $13,031.44. By the first three clauses he gave certain pecuniary legacies, and by the fourth clause charged his real estate with the payment of the “foregoing bequests." By the fifth, sixth, and seventh clauses he gave other pe cuniary legacies, and by the ninth clause devised the residue of all his property to certain persons, and by the tenth clause empowered the executors to sell his real estate. Held, that the legacies given in the fifth, sixth, and seventh clauses were payable out of testator's estate generally, including the proceeds of the real estate.
(Ed. Note. For other cases, see Wills, Cent. Dig. $S 1802, 1803; Dec. Dig. $ 732.*] Action by Smith Heroy, as executor of the will of Elias Spross, deceased, against the German Catholic Church of the Nativity and others, to construe the will.
Morschauser & Hoysradt, for plaintiff.
John F. Ringwood, for defendant German Catholic Church of the Nativity.
George V. L. Spratt, for defendants Spross et al.
MILLS, J. This is an action to construe the will of Elias Spross, who died in the city of Poughkeepsie on the 20th of August, 1907, 'For other cases see same topic & S NUMBER in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes
leaving a will executed on the 3d day of June, 1907. The question presented for determination is whether or not three certain general legacies, given by the fifth, sixth, and seventh clauses of the will, are to be regarded as having been charged upon the real estate of the testator and may now be paid out of the proceeds of the sale of such real estate; the same having been sold by the executors and the personal property having proved to be insufficient to pay the testator's debts.
The will gave five general legacies, viz.: (1) In the second clause, $500 to a niece of the testator; (2) in the third clause, $1,000 to a person named therein; (3) in the fifth clause, $500 to the defendant Mary Spross; (4) in the sixth clause, $500 to "the Poughkeepsie Orphan House and Home for the Friendless of the City of Poughkeepsie"; and (5) in the seventh clause, $700 to "the German Catholic Church of the Nativity, located on Untion street in the city of Poughkeepsie, New York.” The ninth clause of the will provided as follows: "All the rest, residue and remainder of all my property, after paying the above bequests, I give, devise and bequeath" to certain named parties, being brothers and nieces and nephews of the decedent. The tenth clause empowered the executors to sell and convey any and all of the testator's real estate. The fourth clause was as follows:
"Fourth. I charge my real estate with the payment of the foregoing bequests."
The general rule is well established that where legacies are given generally, and the residue of the real and personal estate is afterwards given in one mass, the legacies are to be paid out of the personal estate, and not to be regarded as a charge upon the real estate. In other words:
"A residuary clause, blending in its form of disposition both real and personal estate,” will not produce a “charge upon the former for the payment of legacies wherever the personal estate proves insufficient."
In order to have such effect: "The deficiency must exist when the will is executed, and be so great and so obvious as to preclude any possible inference that the testator did not realize it, or that he may have expected and intended before his death to remove the difficulty.” Briggs v. Carroll, 117 N. Y. 288, 292, 22 N. E. 1034, 1055.
The question here is this: Does the case here fall within the general rule or within the exception just above noted?
There is no dispute whatever as to the material facts. The testator left at his death, and at the time of making the will had, no descendant or widow. The will was made only a few months before his death; i. e., in June, 1907, his death being in August of that year. At the time of making the will he was 80 years of age. He had lived in the city of Poughkeepsie for many years, had been engaged in business there, but at the time of making the will was wholly retired from business, and engaged in no enterprise which gave any promise or expectation that his financial situation could be changed. His personal property, at the time of the making of the will, consisted of the