Court Opinion

ID: 5462698
Source: CourtListenerOpinion
Date Created: 2022-01-09 19:41:20.361387+00
Date Added: 2024-06-11T08:32:57.885650
License: Public Domain

By the Court, Fancher, . J.
The position of the plaintiffs is, that the notes are to be read in connection with the charter; and, therefore, they did not become due until January 1866, when the cash capital of the company was exhausted. In other words, that both the notes *390and the charter are to be read in order to ascertain what was the contract; and thereby the notes were not payable until the cash capital of the company was exhausted.
We think this position untenable. The charter of the company "authorized it to receive notes for premiums on policies thereafter to be issued, and made all notes thus received available for payment of the liabilities, and for any other purpose connected with the business of the company. Although no policies were issued to the defendants and no premiums earned by the company, still the notes were not, in the hands of the company, void, nor invalid for want of consideration. The statute gave them validity, and the notes were lawful obligations of the makers. (Howland, receiver, v. Edmonds, exr., 24 N. Y. 307.) The company, in a proper case, could negotiate* the notes; and had it done so, no doubt can exist that the holder could have been met with the defence of the statute of limitations in case the action upon them was not brought within six years after the maturity of the notes. By the 13th article of the charter of the company, these notes were capital notes, and denominated as “security notes and all security notes were required to be made payable within twelve months from date. These notes, it is conceded, were received by the company, under that section “as an additional security to its dealers.” The time of payment is made absolute according to the terms of the notes. They would be void, if the plaintiffs’ construction be adopted, for the time of payment would b e extended beyond the period allowed by the statute. Such notes are considered as part of the capital of the company; are valid and operative of themselves, and not on account of contingent events, such as the occurrence of losses, the exhaustion of capital, demand of payment, or the making of assessments. When they fall due, if they remain in the hands of the company, they are then payable, Howland v. Edmonds, (24 N. Y. 311;) and the charter expressly *391provides, that “at the maturity of any such note, the company shall protect and pay the same, upon receiving from the maker thereof, in cash, the amount due from such maker for premiums mitten upon such note up to that time, together with a new note for the difference between the amount so written, and the amount so maturing; interest at the rate of seven per cent being allowed for premiums not due.”
[First Department, General Term, at New York,
May 5 1873.
Ingraham and Handier, Justices.]
With this express provision of the charter before them, neither of the parties could say, at the maturity of the notes, “they are not payable—no losses have occurred, and no assessments have been made.” Hor could the makers say to the company, £ £ your cash capital is .not exhausted, and, therefore, our notes are not due.” The plain answer would be, the notes are due, by the absolute terms thereof, at the time they are made payable ; and the charter requires that the notes be then taken up and paid by a cash payment to the extent of any premiums earned, and by a new note for the residue. Had the defendants refused thus to pay the notes, they would have been collectable and could have been sued for and recovered, as they matured. (White v. Haight, 16 N. Y. 321. Howland v. Edmonds, 24 id. 307. Sands v. St. John: 36 Barb. 636.) The cases cited by the counsel for the plaintiff as sustaining a different view, are cases upon assessment notes, where, by the terms of the statute, no action can be brought, until after assessment, publication of notice, and demand of payment. Ho such feature exists in respect of the notes in question, and we think- the statute of limitations was well pleaded to the supposed cause of action upon them.
The verdict should be set aside, and a new trial ordered, with costs to abide the event.