Case Name: KRATZENSTEIN v. LEHMAN
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1897-06-18
Citations: 46 N.Y.S. 71
Docket Number: 
Parties: KRATZENSTEIN v. LEHMAN.
Judges: 
Reporter: West's New York Supplement
Volume: 46
Pages: 71–76

Head Matter:
(19 App. Div. 228.)
KRATZENSTEIN v. LEHMAN.
(Supreme Court, Appellate Division, First Department.
June 18, 1897.)
Attachment—Property Subject—Insurance Policy.
A life insurance policy which has not matured, arid on which premiums are still to be paid, but which has a surrender value, is not an instrument for the payment of money, within the meaning of subdivision 2 of section 649 of the Code of Civil Procedure, such that a levy must be made thereon under a warrant of attachment by taking the same into the sheriff’s achia! custody; but a levy may be made thereon by serving a copy of the warrant and a notice showing the property attached, as provided in subdivision 3.
Ingraham and Patterson, JJ., dissenting on the ground that there is no cause of action against the insurance company, and that a policy belonging to a nonresident is not a contract found within the county.
Appeal from appellate term.
Action by Herman Kratzenstein against Charles Lehman, impleaded, etc. From an order of the appellate term (44 N. Y. Supp. 369) reversing an order denying a.motion to enjoin a sale on execution, plaintiff appeals.
Affirmed.
Argued before RTJMSEY, PATTERSON, O’BRIEN, INGRAHAM, and PARKER, JJ.
Moses Weiman, for appellant.
Abraham Gruber, for respondent.

Opinion:
RTJMSEY, J.
The serious question presented in this case hi whether the levy made by the sheriff by virtue of the 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 Lehman in a policy of insurance upon his own life issued by the Manhattan Insurance Company, which was not yet matured, but upon which premiums were to be paid. As appears by the papers, the policy was an agreement on the part of the company to pay the sum of $5,000 in 10 years to Lehman, if he should then be alive,, or, if he should die before that time, to pay that sum to his personal representatives. It was the ordinary insurance policy, and, as may be inferred from the papers, premiums were still payable upon it. Section 88 of the insurance law gave a surrender value to it, and that value at the time of the levy, as appears by the affidavits, was $500. The levy was made by serving a copy of the warrant of attachment and notice showing the property attached upon the life insurance company in the manner provided by subdivision 3 of section 649 of the Code of Civil Procedure. It is claimed by the appellant that this levy was not sufficient, but that the sheriff, to complete the levy, should have taken the property into his actual custody as required by subdivision 2 of the section last referred to. The correctness of this contention depends upon the answer to the question whether an unmatured policy of life insurance is an instrument for the payment of money, within the meaning of this subdivision. The words of the law are that a levy under a warrant of attachment 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 sheriffs actual custody. The meaning of this term, "an instrument for the payment of money," is the thing to be determined. Some light is thrown upon that question by an examination of section 648 of the Code of Civil Procedure, which prescribes upon what property an attachment may be levied, and directs that it may be levied upon a cause of action arising upon a contract, "including a bond, promissory note or other instrument for the payment of money only, negotiable or otherwise, whether past due or yet to become due, executed by a foreign or domestic government, state, county, public officer, municipal or other corporation, or by a private person, either within or without the state, which belongs to the defendant and is found within the county." In this case, clearly, the words "instrument for the payment of money only" refer to the securities which are described thereafter. These securities are such as are made primarily for the payment of money, and they involve in every case a promise to pay a sum of money stated therein to the person who is entitled by the terms of the paper to receive it, or who is the owner of it. The payment of the sum of money is the primary object for which they are made. While they do not always pass by delivery, but sometimes require an indorsement to transfer a complete title, yet they are usually paid or payable only to the person who has them in his actual possession; and the possession itself is ordinarily required, as satisfactory evidence of the right to receive the money which is to be paid by their terms. While they are, in a technical sense, choses in action, yet practically the paper itself is property, is regarded as such, and is dealt with like other tangible personal property. These instruments are primarily those intended to be included within the term "instrument for the payment of money." It is not necessary to say, however, that other instruments which have for their primary object the payment of a sum of money by one person to another, upon a past consideration, may not be included within the meaning of the term "instrument for the payment of money," under subdivision 2 of section 649. Whenever it shall appear that the primary object of any instrument was to assure to any person the payment of a certain sum of money upon a consideration that is no longer executory as to him, and where the only thing to be done to complete the contract is to pay the money for which the paper was primarily made, that, we think, may be said to be an instrument for the- payment of money, under the provisions of this subdivision. In one sense, every contract upon a consideration to be paid may be an instrument for the payment of money, if the consideration is money to be paid by one party to another. Such is the case with a building contract by the terms of which the consideration is to be paid to the builder, or of a contract for the purchase of real estate, by which the purchase price is to be paid to the seller. The primary object of such a contract, however, is not the payment of money, but the transfer of property, or to procure the performance of a service; and therefore those contracts cannot be regarded as instruments for the payment of money within the meaning of the Code.
While the primary object of a policy of life insurance is to secure the payment of a sum of money by the insurer to the person who is by the terms of the contract finally to be entitled to receive it, and to that extent the contract does not resemble those which have just been mentioned, yet in other respects it is not unlike them. The right to have the amount of the policy paid depends upon the payment of the premiums as required by the terms of the paper. The duty of the insurer to pay the face of the policy is purely contingent upon the performance by the insured of the conditions assumed by him. During the whole time, therefore, until the premiums are fully paid, and while the policy is unmatured, it is purely executory on both sides, and it differs substantially in that regard from contracts of the nature of those mentioned in section 648 of the Code, which, so far as the recipient of the money is concerned, are fully executed, and in which there is nothing to be done to complete the contract except to pay to the person entitled to receive it a fixed sum of money, specified in the contract itself. The distinction between the two kinds of contracts is obvious, and we think in that distinction lies the difference between an instrument for the payment of money, such as is included in the second subdivision of the section, and a demand constituting simply a chose in action, included in the third subdivision. Any contract, whatever may be its object, which requires on the part of the person who is to receive the money some act which he must do to entitle him to receive it, so that, so far as he is concerned, the contract is still executory, cannot be said to be an instrument for the payment of money, under this provision. In several sections of the Code the phrase or its equivalent is used, and some of these sections have been the subject of interpretation by the courts. For instance, section 1778 provides that in an action against a corporation to recover damages for the nonpayment of a promissory note, or other evidence of debt, for the absolute payment of money, the issues presented by the pleadings shall not be tried except by order of the court or a judge. In an action brought under that section, it has been held that a policy of life insurance, although it was then matured and become payable, was not an evidence of debt for the absolute payment of money upon demand. The courts say there is a distinction between an instrument which recognizes on its face the existence of debt, which it promises to pay absolutely and at a particular time, and one which acknowledges no existing debt, but agrees that in certain contingencies, and upon the fulfillment of certain conditions, one shall arise in the future. The distinction is taken between an instrument which upon its face, and by itself, is an evidence of debt absolutely payable, and one in which the payment of the debt depends upon conditions yet to be performed by the person who is to receive the money when it becomes due. The same thing was held in the case of McKee v. Insurance Co., 25 Hun, 583, in which it was said that a policy of insurance was not an evidence of debt, but it was a conditional contract. While these cases are not precisely in point, yet they show the distinction which is to be made between a contract where the payment of the money is the only thing yet to be performed, and one by which the person who is to receive the money is still bound to certain conditions, the performance of which must be had before his right to receive the money is complete. The connection in which these words stand in the section is also to be considered. The section, by its terms, applies to bonds, notes, and other instruments for the payment of money; and it should be construed as including within these other instruments that very large class of securities, many of which are mentioned in section 648; but all of which are alike in the respect that they provide for the absolute payment of a certain sum of money upon a past consideration, and are regarded themselves, substantially, as property. The case of Hankinson v. Page, 12 Civ. Proc. R. 279, 19 Abb. N. C. 274, holds that a policy of life insurance which has become mature and payable by the death of the assured, so that it is substantially a unilateral contract, providing simply for the payment absolutely of a certain sum of money, the consideration for which is entirely past, is within this subdivision. Between a contract of life insurance in that condition, and one situated as is this contract, there is a very considerable- difference; and, although that case may have been well decided, the principles laid down there do not conflict with the conclusions reached here, which are that the levy in this case was a sufficient one to give the court jurisdiction.
We have also considered the other questions raised by the appellant, and do not think that they are sufficient to warrant a reversal of the order. For these reasons the order appealed from must be affirmed, with costs.
PARKER and O'BRIEN, JJ., concur.