Court Opinion

ID: 5366097
Source: CourtListenerOpinion
Date Created: 2022-01-08 07:48:08.666907+00
Date Added: 2024-06-11T08:29:56.970366
License: Public Domain

Untermyer, J.
(dissenting). The decision of the court produces, it seems to me, a result which is not only inequitable but which defies the intention of" all the parties to the transaction. (Compare Moore v. Mutual Reserve Fund Life Assn., 121 App. Div. 335, 342.) The result is that the fraud of the insured will enrich his estate by the amount of the premiums and the beneficiary, innocent of any wrong, will receive nothing; whereas if the insured had per*262petrated no fraud against the company his estate would receive nothing under the policy and the beneficiary would receive the full proceeds. I find no controlling principle of law which justifies such a result.
On the death of the insured no interest in the policy passed to his estate (Hellenberg v. Dist. No. 1 of I. O. of R. R., 94 N. Y. 580; Taylor v. Hair, 112 Fed. 913; Rollins v. McHatton, 16 Col. 203; 27 P. 254; Pinneo v. Goodspeed, 120 Ill. 524; 12 N. E. 196; McFarland v. Creath, 35 Mo. App. 112; Manley v. Manley, 107 Tenn. 191; 64 S. W. 8), and all interest therein vested in the beneficiary (Schoenholz v. N. Y. Life Ins. Co., 234 N. Y. 24, 29; Strianese v. Metropolitan Life Ins. Co., 221 App. Div. 81, S3; McDonnell v. Mutual Life Ins. Co., 131 id. 643, 646). Accordingly, if the company had elected to institute an action to rescind the policy on account of fraud in its procurement, that action would have been required to be maintained against the beneficiary and not against the estate of the insured. (Equitable Life Assur. Society v. Kushman, 276 N. Y. 178; Prudential Ins. Co. v. Stone, 270 id. 154; Anderson v. Northwestern Mutual Life Ins. Co., 261 id. 450, 453; Jurgens v. N. F. Life Ins. Co., 114 Cal. 161; 45 P. 1054; Pingrey v. National Life Ins. Co., 144 Mass. 374; 11 N. E. 562.) It seems evident that the duty to make a tender of the premiums as a condition of rescission must likewise be performed to the party against whom the contract of insurance is to be rescinded and not to another party who has no legal interest in the enforcement of the policy.
It is said, however, that we must indulge the fiction that no contract of insurance ever came into existence on account of the fraud of the deceased and that the premiums should, accordingly, be restored to the party by whom they were paid or to his legal representatives. But even such a fiction is only accurate in part. It is true that in the insured’s relations to the company the contract of insurance may be regarded as if it had never been made. It is not true that in the insured’s relations to the beneficiary the contract may be so regarded, for the transaction whereby the insured divested himself of all interest in the policy in favor of the beneficiary was not affected by any fraud. Accordingly, whatever rights pertained to the policy became the property of the beneficiary (McLaughlin v. McLaughlin, 104 Cal. 171; 37 P. 865; Martin v. AEtna Ins. Co., 73 Me. 25; Fisher v. Donovan, 57 Neb. 361; 77 N. W. 778) to whom the company was required to tender the amount of the premiums as a condition of rescinding a policy which, if not rescinded, would be paid to him.
The determination of the Appellate Term and the judgment and the order of the Municipal Court granting plaintiff’s motion *263for summary judgment should be reversed, the plaintiff’s motion for summary judgment denied, and the order denying defendant’s motion for summary judgment dismissing the complaint should be reversed and said motion granted.
Glennon, J., concurs.
Determination affirmed, with costs and disbursements.