#### COLUMBIA BANK et al. v. EQUITABLE LIFE ASSUR. SOC. OF THE UNITED STATES.

(Supreme Court, Appellate Division, First Department.

February 13, 1903.)

1. Attachment — Tontine Insurance Policy — Maturity.

Where a tontine insurance policy provided that it should have no cash surrender value prior to the completion of the tontine dividend period, on October 8, 1888, and that prior thereto neither assured nor his beneficiary could derive any benefit from the policy, except the face value of the policy in the event of the insured’s death, the tontine period, after the expiration of which the insured was entitled to exercise certain options, among which was to surrender the policy for cash, included the 8th day of October, 1888; and hence no demand existed in favor of the insured, and against the company, on that date, which could be attached,as authorized by Code Oiv. Proc. § 649, subd. 3, by leaving and serving a copy of the warrant and the notice of the attachment with the insurance company.

2L Same — Right of Election — Nature and Scope.

Oode Oiv. Proc. § 648, authorizes an attachment to be levied on a cause of action arising on contract, belonging to the defendant, etc.; and section 649 provides that a levy may be made by leaving and serving a copy of the warrant and notice, showing the property attached, with the person against whom the demand exists. *Held,*that the right of the holder of a tontine insurance policy to elect whether he will take the cash surrender value, an annuity, or paid-up policy, in settlement of his tontine policy, was neither a cause of action, a demand, nor property on which a lien could be acquired by attachment.

Appeal from trial term, New York county.

Action by .the Columbia Bank and another against the Equitable Assurance Society of the United States. From a judgment in favor of plaintiffs, defendant appeals.

Reversed.

See 70 N. Y. Supp. 767.

Argued before VAN BRUNT, P. J., and HATCH, PATTERSON, INGRAHAM, and LAUGHLIN, JJ.

C. B. Alexander, for appellant.

Julius J. Frank, for respondents.

INGRAHAM, J.

The action was brought in aid of an attachment alleged to have been issued out of the superior court of the city of New York on the 31st day of May, 1887, in an action wherein the Columbia Bank, one of the plaintiffs in this action, was plaintiff, and Thomas J. Hurley was defendant. On the 9th day of October, 1873, the defendant had issued to Hurley a policy of life insurance known as a “tontine savings fund policy.” By it the defendant, in consideration of the sum of $204 to be paid in advance by the assured, and of the semiannual premium of $204 to be paid on or before the 8th day of October in each year during the continuance of the policy, did “assure the life of said Thomas J. Hurley, of Rochester, in the county of Monroe, state of New York, in the amount of ten thousand dollars, for the term of his natural life.” In 1882, by an amendment to the policy, it was agreed that the amount of the said assurance, should the said Thomas J. Hurley die before the 8th day of October, 1888, was to be paid to his surviving children, share and share alike. Thé *429policy provided that, if the premium should not be paid in cash on or before the days mentioned for the payment thereof, then the defendant should not be liable for the payment of the sum assured, or any part thereof, and that the policy should cease and determine, and that in case the policy should cease and determine, or become or be null and void, all payment made thereon should be forfeited to the defendant. It was further provided that the policy should be issued under the tontine savings fund plan; that the tontine dividend period for this policy should be completed on the 8th day of October, 1888; that no dividend should be allowed or paid on the policy unless the person whose life was assured should survive the completion of its tontine dividend period, and unless the policy should then be in force; that—

> “All surplus or profits derived from such policies on the tontine savings fund assurance plan as shall cease to be in force before the completion of their respective tontine dividend periods shall be apportioned equitably among such policies as shall complete their tontine dividend periods”; that “upon the completion of the tontine dividend period on October 8th, 1888, provided this policy shall not have been terminated previously by lapse or death, the legal holder or holders of this policy shall have the option either: First, to withdraw in cash this policy’s entire share of the assets (whether in the reserve fund proper, or in the accumulated surplus); secondly, to convert the same into a paid-up policy for an equivalent amount: provided, always, that if the amount of said paid-up policy shall exceed the original amount of the assurance a certificate of good health from one of the society’s medical examiners shall be required; thirdly, to continue the assurance for the original amount, and apply the entire tontine dividend to the purchase of an annuity to reduce the subsequent premiums falling due upon this policy: provided, that in any year in which the amount derived from such annuity, together with the annual dividend on this policy, shall exceed the amount of premium due thereon, the excess shall be paid in cash to said Thomas J. Hurley or assigns; or, fourthly, to withdraw in cash this policy’s share of the accumulated surplus, and continue the policy in force on the ordinary plan”; 'and that, “previous to the completion of its tontine dividend period, this policy shall have no surrender value in cash or in a paid-up policy.”

Prior to the completion of the tontine dividend period, this policy was an ordinary life policy, — if the assured should die before the 8th day of October, 1888, the amount to be paid to his surviving children, share and share alike. It was only upon the completion of the ton-tine dividend period that the options were to accrue to the legal holder or holders of the policy, and this tontine dividend period was completed on the 8th day of October, 1888.

The complaint alleges that the cash value of the said policy on the 8th day of October, 1888, was $2,835.30, which sum was on that' day due and payable to Hurley by the defendant, in accordance with the provisions of the policy; that on the said 8th day of October, 1888, the plaintiff Hugh J. Grant, as sheriff, acting under and in pursuance of said warrant, and in the execution of the same, “duly levied upon •said sum of money on that day due and payable under the provisions ■of said policy of insurance so issued as aforesaid by the defendant •herein upon the life of said Hurley, and demanded from the said defendant the said twenty-eight hundred thirty-five and 30/ioo dollars, the cash value of said policy on that day to said Hurley”; and that .prior to the 8th day of October, 1888, the plaintiff the Columbia Bank *430had given notice to the defendant of its election to receive the full cash value of said policy on the 8th day of October, 1888. The answer alleges, “If the said Hurley survived the said 8th day of October, 1888, and had exercised certain privileges secured to him by said policy, as will more fully appear from said policy itself, when produced, that the full cash value of said policy would have been $2)835-30, but it denies that said sum was on that day due and payable to the said Hurley by the defendant in accordance with the provisions of the said policy;" admits that on the 8th day of October, 1888, “a paper purporting to be a copy of a warrant of attachment against the property of said Hurley, and a copy of the affidavit upon which the same purported to have been based, was left with the defendant by a person purporting to represent the plaintiff Hugh J. Grant, as sheriff," and that a demand was made upon it by said person purporting to represent the said Hugh J. Grant, as sheriff, for " sum of $2,835.30, alleged to be due under the provisions of the said policy, and that it refused to pay the same, but denies that the said sum of $2,835.30, or any sum whatever, was due and payable by the said defendant to Hurley, or to the plaintiffs, or either of them, on the 8th day of October, 1888. The answer further alleges that the plaintiffs did not, by virtue of any of the proceedings or acts which are alleged to have been had or to have taken place, make a levy upon the said policy, or acquire any lien upon or interest therein or thereunder; that the said policy has never been in its possession or under its control since the time of its issuance, to wit, on or about the 8th day of October, 1873, and there was not in its possession or under its control at the time the levies, or either of them, were sought to be made, any property whatever belonging to said Hurley.

Upon the trial the court submitted to the jury the question as to whether, prior to the attempted levy by the sheriff, and in the year 1882, the said policy had been assigned by Hurley to his children, and refused to submit any other question to the jury. That question the jury answered in the negative, whereupon the court directed a verdict for the plaintiff for the sum of $2,835.30, with interest thereon from the 8th day of October, 1888, and from the judgment entered upon that verdict the defendant appeals.

The principal question involved upon this appeal is whether the Columbia Bank acquired any lien upon this policy of insurance, or the obligation of the defendant to Hurley under the policy by virtue of the service of the warrant of attachment and the demand made by the sheriff upon the defendant, on the 8th of October, 1888. It is not pretended that the sheriff ever had actual possession of the policy of insurance, and the bank acquired a lien, if at all, by the service of a copy of the warrant of attachment upon the defendant, and the demand then made by the sheriff. The method by which such a levy can be obtained is regulated by section 649 of the Code of Civil Procedure. Subdivision 2 of that section provides that a levy must be made upon personal property capable of manual delivery, including a bond, a promissory note, or other instrument for the payment of money, by taking the same into the sheriff's actual custody; and subdivision 3 provides that a levy must be made upon other per*431sonal property by leaving a certified copy of the warrant, and a notice showing the property attached, with the person holding the same, or, if it consists of a demand, other than as specified in the last subdivision, with the person against whom it exists. To uphold this levy, therefore, it must appear that there was personal property of Hurley’s which consisted of a demand other than upon a bond, a'promr issory note, or other instrument for the payment of money, against the defendant, on the 8th day of October, 1888. The nature of the right of the holder of a policy of life insurance during the life of the assured has been much discussed, and the exceptional nature of such an instrument repeatedly recognized. Generally stated, such a policy of life insurance may be said to be an agreement by the obligor to pay to a certain person named a sum of money upon the death of the insured, subject to the condition that the premiums reserved are paid upon the day that they fall due, and subject, also, to other conditions as to the residence and occupation of the assured. Upon the death of the assured, the other conditions of the policy having been performed, there then exists a demand for the payment of a sum of money; but, until that contingency happens, the obligation of an insurer is not that of a debtor, and, unless the policy has a surrender value, no demand exists against the insurer, which, within the provisions of the section of the Code to which attention has been called, is subject to an attachment. In the development of the business of life insurance, other policies than a policy to insure the life of a person named have been issued; and it has been recognized that certain kinds of policies have a surrender value, which the holder, or the person to whom the insurance is payable, is entitled to receive upon the surrender of the policy before the obligation of the insurer has become fixed by the terms of the policy itself. By the express provisions of the policy in this action, it was agreed that, previous to the completion of the tontine dividend period, the policy should have no surrender value in cash or paid-up policy, and that neither the assured, nor those for whose benefit the policy was issued, could have any right to receive anything- from the insurer, but should forfeit all premiums that had been paid upon the policy. This policy, therefore, prior to the maturity of the tontine dividend period, had no surrender value, and the only right of any one to demand any sum of money from the defendant depended upon the continuance of the policy in force during the whole of that period, which was to be completed upon the 8th day of October, 1888, or the death of the assured prior to that time. If the assured had died on the 8th day of October, the defendant would have been liable for the amount payable upon his death, and not liable under, the option contained in the policy, to be exercised upon the completion of this period. There is no provision of the charter of the defendant, or of the insurance law of this state in force when this policy was issued, or which affected the policy, to which our attention has been called, which prevented the parties to a policy of insurance of this character from agreeing that, until the completion of a period fixed in the policy, there should be no surrender value, and no obligation of the insurance company to the assured, or those for whose benefit the policy is issued. All *432that the plaintiffs should acquire by virtue of a levy under this warrant of attachment was the right that the defendants in the action in which the attachment was issued had at the time of the service of the attachment upon the defendant; and that right must be determined by the agreement between the parties, as evidenced by the policy of insurance which the defendant had issued. If our- construction of this policy is correct, it would follow that upon the 8th day of October, 1888, when the attachment was served upon the defendant, there was no demand in favor of Hurley upon which the plaintiffs acquired a lien.

There is nothing in either of the cases relied upon by the plaintiffs which bears upon this question. In Kratzenstein v. Lehman, 19 App. Div. 228, 46 N. Y. Supp. 71, the question presented was whether the levy made by the sheriff by virtue of a warrant of attachment was sufficient to give him the custody of the property levied upon, and thereby give the court jurisdiction to enter judgment in the action. The property levied upon was the interest of the defendant in the action in a policy of insurance upon his own life, which had not yet matured, but upon which premiums were to be paid; and in the prevailing opinion the conclusion is expressly based upon the fact that, under section 88 of the insurance law (Laws 1892, c. 690), the policy which was attémpted to be levied upon had at the time of the levy a surrender value of $599; and it was assumed that as the policy had such a surrender value, which right the owner of the policy could enforce at any time, there was a demand, within section 649 of the Code of Civil Procedure, which was subject to attachment. The question was whether any property of the defendant was attached, so that the court would have jurisdiction to enter judgment, and the question discussed was whether a policy of insurance was within subdivision 1 or 2 of section 649 of the Code of Civil Procedure. It is clear that if there had been no surrender value to this policy when the attachment was served, so that the defendant in the action in which the attachment was issued had no right to demand from the insurance company any sum of money under its contract, the question presented would have been entirely different, and the reasoning upon which that decision was based would have no application.

In Trepagnier v. Rose, 18 App. Div. 393, 46 N. Y. Supp. 397, affirmed on opinion below in 155 N. Y. 637, 46 N. E. 1105, as stated in the opinion, “the only question presented was whether a fire insurance policy under which a loss has occurred is an instrument for the payment of money, within the meaning of subdivision 2 of section 649 of the Code of Civil Procedure. If it is, the sheriff has made no valid levy under his attachment, for he has failed to obtain the possession of the written policy”; and it was held that where a loss had been incurred, and the amount was payable by the insurance company to the assured, the 'policy of insurance was not an instrument for the payment of money, within the meaning of subdivision 2 of section 649 of the Code. In that case, when the warrant of attachment was served, it was conceded that the insurance company'was indebted to the defendant in the action in which the attachment was issued, and the only question discussed was whether the sheriff was required to take into his possession the policy of insurance before acquiring a valid *433lien upon the amount due by the insurance company. In this case, if our construction of this policy is correct, there was nothing due to Hurley when the warrant of attachment was served; no demand that Hurley could on that day enforce against the insurance company; and nothing, therefore, upon which a lien could be obtained.

The further question which has been argued by counsel in this case is whether, assuming that the warrant of attachment had been served after the completion of this tontine dividend period, the attaching creditor would have acquired the right 'to exercise this option, which by the policy was given to the legal holder thereof upon the completion of this period. It is necessary to keep clearly in mind what right Hurley acquired under his contract with the defendant. Undoubtedly, upon the completion of this period, Hurley had the right to elect to surrender his policy and to withdraw its cash value. He also had the right to elect to accept a paid-up policy, payable upon his death, but this right was exclusively vested in the legal holder of the policy. As between an attaching creditor and an insurance company, the attaching creditor is not the legal holder of the policy. It had only acquired a lien upon whatever demand there was due from the defendant to Hurley; but, until the legal holder of the policy had exercised his option, there was nothing due, and no demand in favor of Hurley against the insurance company existed. It is proved in the case that subsequent to the 8th of October, 1888, Hurley, as the legal holder of the policy, elected to take a policy payable upon his death to his children, and that in pursuance of that election the defendant issued such a policy; but assuming that Hurley, as the legal holder of the polic)*-, had the right to exercise that option notwithstanding the service of the warrant of attachment, then this action cannot be maintained, which is to recover the amount that would have been due to Hurley had he exercised the option to withdraw the cash value of the property upon the completion of the tontine dividend period. No such election was ever made by Hurley, who, by the agreement between himself and the company, was entitled to make the election or exercise the option. Neither the plaintiff nor the sheriff was ever in a position in which, as between them and the insurance company, they could make the election; and, until that election was actually made, there was nothing due from the insurance company to Hurley.

By section 648 of the Code of Civil Procedure, the attachment may be levied upon a cause of action arising upon contract which belongs to the defendant, and is found within the county; and in such a case the levy of the attachment thereupon is deemed a levy upon, and a seizure and attachment of, the debt represented thereby. By section 649 of the Code the levy is to be made by leaving a certified copy of the warrant, and a notice showing the property attached, with the person against whom the demand exists. Now, what is the demand that existed in favor of Hurley upon the completion of this tontine dividend period ? It was the right to receive from the company either a sum of money or a policy of life insurance, as he should elect. When the election had been made, then a cause of action arose against the insurance company in favor of Hurley, which would, under Kratzenstein v. Lehman and Trepagnier v.Rose, supra, be subject to the *434attachment; but, as I read these sections of the Code, the right to elect is neither a cause of action existing in favor of Hurley, nor a demand against the insurance company, which can be' levied upon under a warrant of attachment. “Cause of action” is defined in Bouvier’s Daw Dictionary as “matter for which an action may be brought. * * * A cause of action does not accrue until the existence of such a state of things as will enable a person having the proper relations to the property of persons concerned to bring an action.” In the Encyclopaedia of Pleading & Practice, vol. i, p. 116, it is said, “A cause of action is generally held to be a union of the right of the plaintiff and its infringement by the defendant.” There could therefore be no cause of action until the insurance company was in default and had failed to comply with its contract, and there was certainly no failure of the defendant to comply with the contract until the legal holder of the policy had made the election provided for therein. The right to attach a cause of action would not give the right to attach this right to elect under section 648 of the Code. This right is to attach the property of the party against whom the attach-men is issued, and this is recognized by the 3d subdivision of section 649 of the Code, which provides that the levy may be made upon other personal property, if it consists of a demand other than as specified in the 2d subdivision of the section, by leaving a certified copy of the attachment and the notice with the person against whom it exists. It must therefore have been property which consists of a demand against this insurance company, and certainly a right to determine what particular form the obligation of the insurance company should be cannot be said to be property, under this subdivision. When the right to receive the money is in existence, the demand then exists, and that demand would be subject to attachment; but the right to" determine is not such a demand. The election preceded the existence of a cause of action against the defendant, as it could not have discharged its obligation until the legal holder of the policy had exercised the right to elect. A tender of the cash value of the policy on the completion of the tontine dividend period would not have discharged the defendant unless the legal holder of the policy had elected to accept that option.

I think, therefore, that there was no valid levy by the sheriff of the city and county of New York upon the interest of Hurley in this policy, that there was never a demand due by the defendant to Hurley or to the plaintiffs for the cash value of the policy, and that the motion of the defendant to dismiss the complaint should have been granted.

It follows that the judgment and order appealed from must be reversed, and a new trial ordered, with costs to the appellant to abide the event. All concur.