Lester v. Webb

Hoar, J.

1. The ruling by the judge who presided at the trial, that the original answer filed in the case contained no legal defence to the action, if the notes declared on were given for policies of insurance, and were negotiated to the plaintiff, so that the title passed to him, was correct. The action is by ar* indorsee against the maker of three promissory notes. The answer avers that the notes were given to the payee, an insurance company, for certain policies of insurance; that the agent of the company who received the notes and issued the policies represented to the defendant that the company was in good standing, and a good and solvent company; but that the company was, at the time when the policies were issued, and ever since has been, utterly worthless and insolvent, and not in a condition to pay any loss that might arise ; and so the defendant having been induced to give his notes by false and fraudulent representations, the said notes are wholly void; and that the plaintiff took the notes with knowledge of these facts. The obvious defect in this pleading is, that there is no averment that either the agent or the company knew or suspected the insolvency when the representations were made, or that the opinion expressed by the agent was not his real opinion. In the absence of fraud, there can be no doubt that the executory contract of an insolvent person, who may have the power to perform it when the time of performance shall arrive, is a good consideration for a promise made to him. No question of failure of consideration can affect the rights of an indorsee before maturity of a negotiable note, who received it for a sufficient consideration between himself and the payee, if the note were valid in its inception.

2. The next ground of exception is to the ruling at the trial that the answer as amended, and the additional answer, in averring that the insurance company had not complied with the provisions of law relating to foreign insurance companies contained in Si. 1854, c. 453, § 31, and had not appointed a general agent under the provisions of the same chapter, §§ 32 and 36, did not state a defence to the action. This exception cannot be sustained. The requirements of § 31 only apply to cases where the insurance is effected by an agent of the foreign insurance company in this'commonwealth; and the answer does not allege that the insurance was so effected. The statute does not prohibit the making a lawful contract of insurance in any other state by an insurance company established there, with a citizen of this commonwealth, and upon property situated within its territory. But further, it is expressly provided by § 36, that “ if insurance is made by a foreign insurance company, without complying with the requisitions of this act, the contract shall be valid; but the agent making the insurance shall be liable to the penalty provided in the thirty-ninth [fortieth] section.” The contract is therefore valid; and being valid, the note given as the consideration must be also valid. The only exception is that created by the last clause in the section, that “ if any such company shall neglect, after notice by the treasurer of this commonwealth, to appoint a general agent, agreeably to the provisions of this act, they shall not recover any premium or assessment made by them on any contract of insurance with a citizen of this commonwealth, until the provisions of this act are complied with.” Clearly, until notice has been given by the treasurer of the Commonwealth to appoint an agent, this disability to sue on a premium note does not arise; and no such notice is averred in the defendant’s answer, nor is it contended that any such was in fact ever given.

3. The only remaining exception which was not waived at the argument relates to the instructions given by the court in relation to the cancelling of the policies, and the deduction of unearned premiums. The evidence showed that the defendant and other policy holders employed an agent to procure their policies to be cancelled; that this agent had an interview with the plaintiff, who acted as attorney for the payees of the premium notes. The instruction to which exception was taken was, that if the plaintiff agreed that, on the delivery of the policies to be cancelled, the premium notes should be delivered up on payment of the amount or proportion of premiums already earned, and the defendant sent his policies to be cancelled, the amount of unearned premiums should be deducted in this suit. But if his agreement was that such deduction should be made only in cases where the insurance company still held the notes ; and in those cases where they had parted with the possession of them, so that they could not be delivered up, a certificate of the amount of unearned premiums should be given, as evidence of a claim against the company; then the deduction should not be made in this suit. We can see no objection to the correctness of these rulings. Although the plaintiff then held the notes which are now in suit, there was nothing in his agreement which required him to disclose it. He made, in the alternative supposed, an express provision for the case of notes which the insurance company might have parted with; and it does not appear that he was asked which particular notes were embraced in that description, or that the defendants had any reason to suppose that the notes now sued might not be of the number.

Exceptions overruled