Messersmith v. American Fidelity Co.

Hubbs, J.:

The opinion of Mr. Justice Foote herein fully sets forth the facts in this case.

It does not seem to me that the cases cited as authority *36for sustaining the order made by the Special Term have that effect.

The case of McMullen v. Hoffman (174 U. S. 639) was an action between partners for an accounting of the profits accruing from an illegal contract. The parties entered into a fraudulent and illegal agreement to put in fictitious bids for a contract for public improvements. The court said: In the case before us the cause of action grows directly out of the illegal contract, and if the court distributes the profits it enforces the contract which is illegal.” The same principle is involved in the case of Levy v. Kansas City, Kan. (168 Fed. Rep. 524).

In Riggs v. Palmer (115 N. Y. 506) it was held that one who murdered his ancestor in order to come into possession of his property should not be permitted to take the property. In that case there was fraud and the commission of a heinous crime for the purpose of personal gain.

I do not question the principle announced in those cases. Neither do I question the proposition that if the insurance policy in question undertook by its express terms to indemnify the plaintiff against damages resulting to him because of his violation of a criminal statute he-could not recover. In such a case the contract on its face would be illegal and void and to prove his cause of action the plaintiff would have to prove his contract and that, being void and illegal on its face, could not be enforced.

It seems to me, however, that there is a great difference between such a case and the case at bar.

Here the contract on its face is perfectly legal. It does not purport to indemnify the plaintiff against damages growing out of the performance of an illegal act. The insurance policy, as drawn, had been approved by the State and was issued for a valid consideration. The plaintiff in this case to make out his cause of action was not required to prove any unlawful act. In fact, all of the material allegations of the complaint are admitted, and the defendant seeks to escape the liability which the policy places upon it by an independent, affirmative defense to the effect that at the time of the accident the automobile was being driven by a boy under eighteen years of age in violation of law.

*37“ An obligation will be enforced, though indirectly connected with an illegal transaction, if it is supported by an independent consideration, so that the plaintiff does not require the aid of the illegal transaction to make out his case.” (Armstrong v. American Exchange Bank, 133 U. S. 433, 469.)

It seems to me that there is an attempt in this case to connect distinct and independent transactions and to inject into the insurance contract, which was fair and legal in itself, the illegal feature of the other independent transaction.

The independent legal contract of insurance founded upon a good and valid consideration was not made void by an incidental violation of the Highway Law. The violation of the statute was an entirely distinct and disconnected act. The issuing of the policy and the violation of the Highway Law were in no way connected. The issuing of the policy did not lead to the violation of the Highway Law in any way; it was not intended to aid or encourage such violation of the law, and it is not alleged in the answer to have had any such effect. The risks insured against are not the consequences of illegal acts, but of accidents.

In the case of Niagara Ins. Co. v. De Graff (12 Mich. 124) an action was brought to recover on a fire insurance policy which covered intoxicating liquors. The insurance company defended on the ground that the sale of such liquors was illegal. The court said: “It' was claimed on behalf of the plaintiffs in error, that if these liquors can be allowed to be included in a policy, the policy will be to all intents and purposes insuring an illegal traffic; and several cases were cited involving marine policies on unlawful voyages, and lottery insurances, which have been held void on that ground. These cases are not at all parallel, because they rest upon the fact, that in each instance, it is made a necessary condition of the policy that the illegal act shall be done. * * * If this policy were in express terms a policy insuring the party selling liquors against loss by fine or forfeiture, it would be quite analogous. But this insurance attaches only to property, and the risks insured against are not the consequences of illegal acts, but of accident. * * * By insuring his property the insurance company have no concern with the use he may make of it, and as it is susceptible of *38lawful uses, no one can be held to contract concerning it in an illegal manner unless the contract itself is for a directly illegal purpose. Collateral contracts, in which no illegal design enters, are not affected by an illegal transaction with which they may be remotely connected.” (See, also, Mechanics’ Ins. Co. v. C. A. Hoover Distilling Co., 182 Fed. Rep. 590.)

In England it has been held that mere knowledge on the part of the vendor of property that it was to be used for any illegal purpose constitutes a defense in an action for the purchase price. The English rule has been followed by the courts of some of our States, but the great majority of our States have held that mere knowledge on the part of a vendor of property that the vendee intends to make an illegal use of the property is no defense to an action for the price. (Lawson Cont. [2d ed.] § 338; 9 Cyc. 571; Tracy v. Talmage, 14 N. Y. 162.)

Tracy v. Talmage (supra) is the leading case in this State holding the above proposition, and has never been questioned.

There are two well-recognized exceptions to the above rule: First, where the contemplated illegal act is of a highly heinous character, as where a person sells poison knowing that the purchaser intends to poison a person with it; second, where the vendor himself does something, besides making the sale, in aid of the illegal design, that is, where he participates, in the illegal act.

It cannot be that the violation of the provisions of the Highway Law in question constituted a heinous crime or that the contract of insurance was in aid of an illegal act. There is no compelling public policy which requires that the courts should refuse their aid in enforcing the contract as written. It might be that if the contention of the defendant should be sustained in this court it would be hable on the same kind of policy in one State and not in another. The statutes in the different States might fix the age at which an infant could lawfully operate an automobile at different ages.

In the case at bar the contract is valid on its face. The defendant insurance company has received the premium, and the policy should be enforced as written. The policy is not connected with the unlawful use of the automobile and did not aid a-nd assist the assured in any illegal purpose.

*39In 19 Cyc. 722, under the title “ Fire Insurance,” it is said: “If the direct purpose of the contract is to effect, advance or encourage acts in violation of law, it is settled that the policy is void. But it is equally well settled that a mere illegal use made of the premises, there being no provision of the policy applicable, and no design, by means of insurance, to promote an unlawful enterprise, does not affect the right of insured to recover.” (See, also, 2 Clement Fire Ins. 610.)

Under a life or accident insurance policy, which by its terms provides that the company shall not be liable for accidental injuries or death while the insured is engaged in an unlawful or illegal act, if such act is a statutory offense, the answer setting up such defense must set out all the statutory elements thereof and it must allege a causative connection between the offense and the injury sustained. (1 C. J. 493, and cases cited.) In Bradley v. Mutual Benefit Life Ins. Co. (45 N. Y. 422), where the defense was that the assured came to his death in the violation of the law of the State, the court said: “ It cannot be the true meaning of the proviso that the policy is to be avoided by the mere fact that, at the time of the death, the assured was violating the law, if the death occurred from some cause other than such violation.”

For all that appears here, the accident may have been caused by something breaking on the plaintiff’s automobile for which the driver was in no way at fault. There is no allegation in the answer that the violation of the statute led to the injury, or was the proximate cause thereof. For all that appears here, the boy driving the car may have been a most skillful driver and the injury may have been entirely without fault on his part. The violation of the statute may not have had anything whatever to do with the accident. If the violation of the statute can, under any circumstances, be a good defense to the policy in question, it cannot be under the answer as drawn because it does not allege a causative connection between the violation of the statute and the accident.

In an action for damages caused by an automobile, it is not competent to show that the automobile was not registered as required by the Highway Law, although the operation of the automobile without having it registered makes the owner *40guilty of a misdemeanor. (Hyde v. McCreery, 145 App. Div. 729.)

Upon such a state of facts, could an insurance company,under a policy like the one in this case, escape liability upon the ground that the insured was operating his automobile in violation of law because he had not had it registered? It would seem to me that it could not, because there would be no causative connection between the failure to have the automobile registered and the happening of the accident. So in the case at bar, there is no connection alleged in the answer between the operation of the car by the boy under eighteen years of age driving and the happening of the accident.

I advise that the order of the Special Term be reversed and the motion for judgment on the pleadings be granted, with costs.

All concurred, except Kruse, P. J., and Foote, J., who dissented in an opinion by Foote, J.