Case Name: Mary Hanlon, Resp't, v. The Metropolitan Life Insurance Company, App'lt
Court: New York Court of Common Pleas
Jurisdiction: New York
Decision Date: 1894-06-04
Citations: 59 N.Y. St. Rep. 686
Docket Number: 
Parties: Mary Hanlon, Resp’t, v. The Metropolitan Life Insurance Company, App’lt.
Judges: 
Reporter: New York State Reporter
Volume: 59
Pages: 686–689

Head Matter:
Mary Hanlon, Resp’t, v. The Metropolitan Life Insurance Company, App’lt.
(New York Common Pleas, General Term,
Filed June 4, 1894.)
1. Pleadings—Counterclaim.
In an action upon a policy of insurance by the beneficiary, the company may counterclaim a judgment against such beneficiary, assigned to it prior to the commencement of the action.
2. Same.
The persons, against whom a personal indebtedness shall not be available to the defendant as a counterclaim, are such as may be properly classed as “trustees of express trusts.”
3. Same—District Court.
Section 502 of the Code, it seems, is not applicable to the district courts in the city of New York.
4. Parties—Trustees of express trust.
A valid promise by the beneficiary to pay the funeral expenses of the insured does not render either the representatives or the undertaker beneficially interested in the policy.
Appeal from a judgment of the district court in the city of New York, for the seventh judicial district, rendered by the justice, without a jury, in favor .of the plaintiff.
Action upon a policy of life insurance; the defense being a counterclaim upon a judgment against the plaintiff and assigned to the defendant.
C. N. Bovee, Jr,, and J. McG. Goodale, for app’lt; Thomas Gilleran, for resp’t.

Opinion:
Bischoff, J.
The plaintiff sued upon a policy of insurance upon the life of her brother and in which she was designated as the beneficiary. As a counterclaim defendant interposed a judgment obtained against the plaintiff and assigned to the former. By stipulation of the parties, made upon the trial and appearing in the return, it was admitted the plaintiff was entitled to recover the amount of the policy in suit, there being no defenses thereto, and upon the other hand, the plaintiff conceded that the judgment upon which claim w.as made by the defendant, had been duly assigned for sufficient consideration, and that the plaintiff was the person against whom such judgment had been obtained. Upon the trial it was conceded furthermore, on the part of the plaintiff, that, were she suing for her individual benefit, the amount of the counterclaim, in excess of the sum due upon the policy, should properly be allowed in judgment for the defendant. Wells v. Henshaw, 3 Bosw. 625; Clark v. Story, 29 Barb. 295; Code Civ. Pro., § 1909. Such being the attitude of the parties, evidence was given on behalf of the plaintiff, under objection, showing an oral agreement between the plaintiff and the insured which was to the effect that, in consideration of the policy and the payment of the premiums as they accrued from time to time, and the receipt of the proceeds of the policy upon the death of the insured, the plaintiff would defray the funeral expenses of the insured. It was also part of such oral agreement that one Finan, an undertaker, should be employed on the occasion of the insured's burial The justice below rendered judgment in favor of the plaintiff for the amount claimed, disregarding the counterclaim interposed by the defendant, the judgment resting apparently upon the provisions of § 502, .subdivision 3, of the Code of Civil Procedure, which are as follows: " If the plaintiff is a trustee for another, or if the action is in the name of a plaintiff who has no actual interest in the contract upon which it is founded, a demand against the plaintiff shall not be allowed as a counterclaim; but so much of a demand existing against the person whom he represents or for whose benefit the action is brought, as will satisfy the plaintiff's demand, must be allowed as a counterclaim, if it might have been so al "lowed in an action brought by a person beneficially interested." It is open to serious question whether jhe provisions of § 502 of .the Code of Civil Procedure are available to a plaintiff in an action brought in the district court in the city of New York, a plain summary of the law being that the section is applicable to actions in every court within the state except the district courts alluded to. Section 502 is a part of article third of chapter sixth of the Code, and by subdivision 4 of § 3347 the whole chapter .sixth is made exclusively applicable to actions in the supreme court, the superior city courts, the city court of New York, and the county courts. By § 2945, § 501 and 502 are extended to actions in the justices' courts, but neither the Code nor the Consolidation Act render § 502 applicable to the district courts in the city of New York. The sections of the Code which regulate the procedure in the last mentioned courts are 3207 to 3222, both inclusive, but nothing therein contained, either expressly or by pecessary implication, extends the operation of § 502 to actions in those courts. Section 2938, with reference to the justices' courts only, provides that the answer may set forth new matter constituting a defense or counterclaim, and by § 1347 of the Consolidation Act ch. 410, L. 1882, § 2938 of the Code is applied to the district courts in the city of New York. The sections of the Consolidation Atit which affect the district courts are 1279 to 1440, both inclusive, neither of which extend the provisions of § 502 of the Code. Section 1347 of the Consolidation Act which renders cer-_ tain sections of the Code applicable to the district courts does not include § 2945 of the Code by which § 501 and 502 of the Code are made operative in actions in the justices' courts. We do not decide the question since upon other grounds the judgment appealed from cannot be sustained. We merely point out for legislative action what is apparently an oversight. The district courts in the city of New York can exercise such jurisdiction only as has been specially conferred by statute. Schwartz v. Wechler, 49 St. Rep. 145; Ferree v. Elsworth, 47 St. Rep. 119; 19 N. Y. Supp. 659. That in consideration of the policy and the payment of the premiums by the insured the plaintiff may have rendered herself liable to the personal representatives of the insured, or to the undertaker, upon her promise to pay the funeral expenses of the insured does not render either the representatives or the undertaker beneficially interested in the policy issued by the defendant. If that were otherwise this action would not be maintainable since by express provisions of law, Code Civ. Pro. § 449, the action must be brought in the name of the real party in interest. 'The institution and prosecution of the action by the plaintiff as the beneficiary named in the policy is therefore in and of itself a refutation that another is the real party in interest. To hold that the counterclaim is not available-to the defendant because another than the plaintiff is the real party in interest respecting the demand sought to he enforced is to sáy that the plaintiff is not entitled to a recovery. The plaintiff's contention respecting her claim and the defendant's counterclaim are therefore plainly inconsistent.- She is either the party in interest and then the counter claim is available, or she is not the party in interest and then she cannot maintain the action. By bringing and prosecuting the action, and asserting her right to recover, she insists that she is the party in interest respecting the demand in suit, and so by her own admission the defendant's counterclaim is available against her. A judgment in her favor determines that it was. It is apparent that the provisions of subdivision 3 of § 502 of the Code of Civil Procedure must be read with the provisions of § 449 and that the person against whom a personal indebtedness shall not be available to the defendant as a counterclaim are such as may be properly classed as "trustees of express trusts," Hood v. Hayward, 124 N. Y. 1, 24; 35 St. Rep. 229 ; Sperb v. McCoun, 110 N. Y. 605, 610 ; 18 St. Rep. 616 ; Wetmore v. Porter, 92 N. Y. 76, 83; U. S. Trust Co. of N. Y. v. Stanton, 139 N. Y. 531, 534; 54 St. Rep. 816: Duncan v. The China Mut. Ins. Co., 129 N. Y. 237, 246 ; 41 St. Rep. 368. Mo express trust in favor of the legal representatives of the insured, or the undertaker, was created by the plaintiff's oral agreement to pay the funeral expenses. Pomeroy's Remedies and Remedial Rights, § 171-182; Considerant v. Brisbane, 22 N. Y. 389. As between the parties to the insurance contract the promise of the defendant to pay the amount named in the policy does not appear to have been made for the benefit of any person other than the plaintiff, the beneficiary designated in the policy. Defendant was no party to plaintiff's alleged. oral agreement. Hence it cannot be successfully urged that the contract which plaintiff sought to enforce in this action was made with her, or in her name, or with the insured, or in the name of the insured, for the'benefit of either the personal representative of the insured, or the undertaker. Plainly then the case is not within the operation of the provision of § 449 of the Code of Civil Pro•cedure that "a person with whom or in whose name, a contract is made for the benefit of another," shall be deemed to be the trustee of an express trust. The foregoing considerations lead to the conclusions that the justice erred in disallowing defendant's counterclaim, and that the judgment should be reversed.
Judgment reversed and a new trial is granted, with costs to the appellant to abide the event.
Bookstayer, P. J., concurs.