Court Opinion

ID: 5460021
Source: CourtListenerOpinion
Date Created: 2022-01-09 19:32:44.242407+00
Date Added: 2024-06-11T08:32:50.364922
License: Public Domain

Allen, J.
(dissenting.) The note in suit was given as one of the original notes required by statute preliminary to the organization of the company and as a part of its capital stock. It was in the same form as that in White v. Haight, (16 N. Y. Rep. 310,) and for $>480, purporting to be for value received in policy Ho. 256, dated October 27, 1849, issued by the company. The defendants insist that the action is barred by the statute of limitations. The contract of the defendant’s testator was complete before the passage of the act of 1853, amending the law of 1849, under which the Hew York Protection Insurance Company became incorporated, and whatever right, by reservation in the original act or otherwise, the legislature had to alter or modify the law so far as it concerned the privileges and franchises of the corporations formed under it, it had no power by law to alter or modify the contracts or undertakings of third persons with the companies. The rights and liabilities of parties, under the contract in suit, must be determined by its terms read in connection with the act of 1849 so far as that act enters into and makes a part of it, and not in reference to the act of 1853, which became a law after the rights and liabilities of the parties had become fixed, and when by the death of the promissor he was not in a condition to assent to any change. The legislature could not alter or change the conditions of the contracts or vary the terms or time of payment of the sum stipulated. (Const. U. S. Blanchard v. Russell, 13 Mass. R. 16.) Full power and effect can be given to the act of 1853 by applying it solely to contracts made under and in reference to it, if indeed notes given under it are essentially different, or payable at different times or upon different terms or conditions from those under the act of 1849, which is not so certain. But it is not necessary to consider the effect or construction of the act. It is sufficient that it should be construed so as not to affect vested rights which had accrued before its passage. (Sedgwick on Stat. 134. Palmer v. Conly, 4 Denio, 374; *454S. C. 2 Comstock, 182. Dash v. Van Kleeck, 7 John. 477. Ogden v. Blackledge, 2 Cranch, 272.)
This note was given under and in pursuance of § 5 of the act of 1849, in advance for premiums on risks thereafter to be taken. Such notes were by the terms of the law to be payable at the end of, or within, twelve months from the date thereof, and were to be considered a part of the capital stock, and be deemed valid and negotiable and collectable for the purpose of paying any losses which might accrue, or otherwise. No restriction was imposed by the law upon the companies formed under the act in the collection of* the notes given in advance of premiums, forming a part of the capital "stock, but they were to be regarded as assets of the company. (Act, § 19.) Notes in this form have been held to be a substantial compliance with the act as to time of payment, and distinguishable from notes given for premiums upon policies issued which are not payable "absolutely, but only as required to meet the exigencies of the company and upon assessment made by the directors. Notes of this kind are held to be promissory notes payable absolutely, and negotiable and collectable at any time, while the other class of notes are treated as special contracts for the payment of money upon the happening of certain contingencies, by Judge Denio, in assigning the reasons for the judgment in White v. Haight, (16 N. Y. Rep. 310.) A note like this was regarded as equally absolute and as of the same effect as a note for premiums upon risks' actually taken under an open marine policy, as in Furniss v. Gilchrist, (1 Sandf. S. C. R. 53,) or a note given for the same purpose as this but payable at a time specified, as in Brouwer v. Hill, (Id. 629,) where such a note was held an available security and valid in the hands of the company; and in Brouwer v. Appleby, (Id. 158,) and Hone y. Folger, (Id. 177,) in which it was held that such notes had all the qualities of other promissory notes and were valid in the hands of a receiver. And Deraismes v. The Merchants’ Mutual Ins. Co. (1 Comst. 371;) Howland v. Myer, (3 Id. *455290;) Brown v. Crooke, (4 id. 51,) and Emmet v. Reed, (4 Selden, 312,) are to the same effect. These cases were all cited by the learned judge in White v. Haight, as authority for holding that notes in form like this were payable absolutely and might be collected without any allegation of losses, and without any assessment. The notes required by the 5th section of the act of 1849 were to be made payable unconditionally at the end of, or within, one year from their date, and the court of appeals, in deciding that notes payable “ in such portions and at such time or times as the directors of the company ” might “ agreeably to their act of incorporation require,” were within the statute, necessarily held that they were payable absolutely and on demand, and that no demand was necessary to a right of action. If they were payable conditionally, or upon any contingency, they were not payable within the year and were not within the statute. Judge Denio says, “ I am of the opinion that the note was absolute, and was payable at all events, without an assessment. They [notes given in advance of premiums] are to be valid, that is, operative of themselves, and not on account of the happening of another event, such as the occurrence of losses;” and they are to be collectable and may be sued for and recovered when they have matured. It was intended these notes should be or at least might be collected at maturity, and that the amount, if not immediately needed for expenditure, should be invested in more safe and permanent securities, according to the provisions of the 8th section of the act.” The act requiring the notes to be payable within, or at the end of, one year from their date, the company could not by its charter place any restrictions upon the rights of its managers to collect or use the notes after that time.
The notes must be held to have matured and become payable absolutely at the expiration of the year from their date, whatever restrictions the terms of the note or the charter of the company may have imposed upon the directors during the running of the year. The notes could properly have been *456made payable only as the money should be wanted for losses, • and at the call of the directors during the year ; but by the statute which makes a part of the contract, they must be payable absolutely at that time, and so the note in suit must be read. Any other construction would avoid the statute and place it out of the power of the company to call in capital represented only by the promissory notes of individuals, and invest in a more permanent -and secure manner, as is contemplated by the 8th section of the act. And see per Johnson, Ch. J. in Savage v. Medbury, (19 N. Y. Rep. 32.) He says, on notes given at the formation of the company, “ it has been decided in this court that the parties are liable to pay the fall amount at any time when payment is required by the company.” And see to same effect per Selden, J. in Mygatt v. New York Protection Ins. Co. (19 Howard, 71.) The notes were there payable in effect on demand. Certainly after the expiration of the year from their date, such must have been their legal effect to bring them within the statute. The purpose and object of the notes cannot so affect the contract, or the liability of the signers, as to work a repeal of the statute of limitations, or extend the liability of the parties beyond that which results from the terms of the contract and the general laws of the land. All securities taken by incorporated companies for parts of its capital stock loaned or invested take the place of and represent the capital, and are designed “ for the better security of the creditors and stockholders ;” but all such securities, unless protected by some special statute, are to be governed by the general laws of the land as applied to like securities held by individuals, and are within the statutes of repose which have been deemed wise and proper for the prevention of injustice. These notes were as so much money paid in for premiums and reinvested upon the notes of the parties giving them, and no other or greater effect can be given them than if the subscribers had paid in their money and it had been loaned to third persons upon notes precisely like this in form. If the notes at the end of *457one year had been transferred for value by the company, it would have been, within all the cases, a valid security, collectable immediately without any notice or demand by the holder; and yet it would only be valid in the hands of the transferee because it was a valid and collectable security in the hands of the payee. The transfer would not vary the terms of the note, or dispense with any conditions attaching to it in the hands of the payee. The note is not within the principle of the case cited by the learned counsel for the respondents upon a special contract which evidently imposed some duty upon the promisee or annexed some condition to the promise, for two reasons ; first, no condition is annexed to the promise or duty imposed upon the holder by the contract ; and second, any such terms or conditions which were to be obligatory or to affect the contract after one year, would have conflicted with the statute requiring them to be made payable within or at the end of one year from their date. A note payable “ when required,” is payable “ on demand.” A receipt for money borrowed, whereby the borrower agrees to pay “ whenever called upon to do so,” is due immediately, and no demand is necessary. (2 Pars. on Cont. 371.) So a promise to pay “ whenever my circumstances may enable me to do so, and I may be called upon for that purpose,” is to be performed when the promissor becomes able, without any notice to or request from the promissor, and the statute of limitations begins to run from that time. (Waters v. Earl of Thanet, 2 Q. B. Rep. 757.) The bringing of a suit is a sufficient demand, on such a promise. (Per Lord Denman, C. J. And see Little v. Blunt, 9 Pick. 488; Newman v. The Mohawk Ins. Co. 13 Wend. 267.) An action might have been commenced on this note in October, 1850, if not before, and from that time the statute of limitations ran. (Henep v. Garland, 4 Q. B. R. 419. Baker v. Atlas Bank, 9 Metc. 182.) The cause of action arose at the maturity of the note, when it became payable, and the court of appeals say it was always payable. The cause of action did not arise *458by reason of the insolvency of the company, or by the appointment of a receiver, or by any order or action of the receiver or the court. It follows that the statute of limitations had attached to the note, and the action was barred at the time of the commencement of this suit. The mistakes of receivers or their counsel, or of courts, cannot give or keep alive a cause of action.
[Onondaga General Term,
April 2, 1861.
Bacon, Allen, Mullin and Morgan, Justices.]
The judgment should be reversed and a new trial granted; costs to abide event.
Judgment affirmed.