Court Opinion

ID: 5469436
Source: CourtListenerOpinion
Date Created: 2022-01-09 20:24:11.053865+00
Date Added: 2024-06-11T08:33:14.899291
License: Public Domain

By the court,
Bacon, Justice.
It would, I think, be a reproach upon the law, if the defence in this case should be sustained by the courts. It would demonstrate that the machinery by which was originated the brood of mutual insurance companies that have overrun this state like the frogs that infested Egypt, was more of a sham than it has heretofore been supposed to be. An agent of certain persons who contemplate the organization of such a company, solicits a party to give his note for $1,000, which is to be used as a part of the $100,000 of capital notes which are to be exhibited to the commissioners, on which they are authorized to give their certificate, and this on the representation and agreement that he shall not be assessed upon the note, and that it shall be returned to him within a year. And after the company is organized, a committee first reduce it to $50, and then the board return the note, without any assessment having ever been made upon it, or any portion of it whatever having been paid. Such an agreement by the authorized agent of a company formally organized, would be totally void as a fraud upon the public and upon the law; and the act by which the company subsequently attempt to ratify and carry out this agreement, is equally invalid. The statement of such a case carries its own solution with it; and no authority carefully con*118sidered, and its facts understood, can be found which will maintain a defence such as the proof in this case exhibits.
It would be a waste of time to go over the argument, which shows the utter baselessness of the grounds on which the defendant seeks to avoid a recovery in this suit. That has already been done in the case of Tuckerman agt. Brown, decided at the general term in the sixth district, and reported in 11th Abb., 389. The facts of that case cannot be distinguished from the one before us ; and both because it is a general term decision directly upon the point, and because we concur in the reasoning upon which it is upheld, we follow its authority. That case expressly holds that the surrender of the note, in pursuance of the agreement under which it was obtained, did not release the liability of the party who gave it to the corporation, and that the receiver of the company can maintain an action to recover upon it as a valid security for the benefit of the creditors of the insolvent corporation.
Judgment must be rendered for the plaintiff on the verdict, and the motion for a new trial denied, with costs.