Sauerbrunn v. Hartford Life Ins. Co.

• Citation: 220 N.Y. 363,115 N.E. 1001
• Parties: SAUERBRUNN v. HARTFORD LIFE INS. CO.
• Decision Date: 27 March 1917
• Court: New York Court of Appeals

220 N.Y. 363

115 N.E. 1001

SAUERBRUNN

v.HARTFORD LIFE INS. CO.

Court of Appeals of New York.

March 27, 1917.

Appeal from Supreme Court, Appellate Division, First Department.

Action by Henry Sauerbrunn, Jr., against the Hartford Life Insurance Company. Defendant appeals by permission from the Supreme Court, First Appellate Division (165 App. Div. 506,150 N. Y. Supp. 1039) modifying and affirming judgment of Special Term for plaintiff and to review an interlocutory judgment overruling demurrer to complaint. Reversed, and complaint dismissed.

The complaint contains five separate causes of action based upon five several certificates of membership held by the plaintiff in the defendant corporation. A consideration of the first cause of action, which is practically identical with each of the remaining four, will suffice. In substance, the complaint alleges that defendant (originally Hartford Life & Annuity Company) is a corporation organized and existing under the laws of the state of Connecticut; that on or about the 9th day of December, 1881, the plaintiff was a resident of the state of New York, upon which day a contract in writing designated as certificate of membership was entered into between the parties within this state, a copy whereof is attached to the complaint; that plaintiff duly performed all of the conditions of said contract upon his part to be performed.

The consideration to defendant for the certificate was an admission fee of $10 to be paid into a safety fund, which fund was to be deposited with Security Company of Hartford, Conn., as trustee, to be invested and held by the trustee, and the interest thereon as well as the principal applied under certain contingencies toward the payment of assessments of members contributing to the same. A further payment of $3 annually for expense account so long as the certificate should remain in force, together with an assessment in accordance with the table of graduated assessment rates printed upon the certificate, within 30 days from notice of such assessment. Upon the certificate was indorsed ‘Table of Graduated Assessment Rates for death losses for every $1,000 of a total indemnity of $1,000,000.’ Then followed a list of ages and rates from ages 15 to 60.

The plaintiff was 40 years of age at the date of the certificate. The rate of assessment at that age was $1.12, and from thenceforward the rate gradually increased until at 60 years of age it was $2.68 per assessment. In the event of death, all conditions having been complied with by the holder of the certificate, the amount payable thereunder was to be paid to the beneficiary named in the certificate within 90 days at the home office of defendant. The certificate provided:

‘This company has no agents authorized to receive money on assessments, dues, or safety fund. After an agent has delivered this certificate and collected the admission fee, no other payment connected with the indemnity under this certificate must be made to the agent without the production of a receipt signed by the company's secretary.’

The complaint alleges that plaintiff became 60 years of age January 15, 1900, since which date defendant has assessed plaintiff at a rate in excess of $2.68 on a total indemnity of $1,000,000, which plaintiff has been forced to pay under penalty of forfeiting the contract, but that plaintiff had no knowledge of such excess assessment until March 1, 1911; that plaintiff has no adequate remedy at law, and judgment is demanded that defendant be perpetually enjoined from assessing plaintiff upon its contract at a rate in excess of $2.68 for every $1,000 on a total indemnity of $1,000,000, and that defendant account for all sums received from plaintiff in excess of $2.68 per assessment since January 15, 1900, with interest thereon, that plaintiff have judgment for such sum and for such other and further relief as may seem just and equitable.

The defendant interposed a demurrer to the complaint, which was overruled. Upon the order so made an interlocutory judgment was entered allowing defendant 20 days to withdraw the demurrer and serve an answer, upon its failure to comply therewith plaintiff to have final judgment for the relief demanded in the complaint. Defendant took an appeal to the Appellate Division from the interlocutory judgment where the judgment was affirmed and defendant given leave to answer within 20 days, 159 App. Div. 121,143 N. Y. Supp. 1009. Defendant was denied permission to appeal to this court. 159 App. Div. 906,144 N. Y. Supp. 1143. Defendant did not answer. Counsel for plaintiff thereupon served upon counsel for defendant notice of application to the court for final judgment for the relief demanded in the complaint. Counsel for the defendant did not appear on the return of such notice. The court thereupon without the examination of witnesses considered affidavits presented by counsel for plaintiff, granted a judgment for a sum of money, and perpetually enjoined defendant from assessing the plaintiff at a rate in excess of $2.68 for every $1,000 of a total indemnity of $1,000,000 as provided in the contracts.

Upon appeal to the Appellate Division the judgment was modified so as to require defendant to file with the clerk of New York county an accout showing the amount, if any, which it had received from, or on behalf of plaintiff in excess of the rate provided in the certificate since January 15, 1900, the plaintiff to be permitted to file objections thereto, and thereupon a referee named should take and state the account, and upon confirmation of his report plaintiff should have final judgment for such amount as may be found due to him from defendant. The Appellate Division continured the injunctive relief as granted in the original final judgment allowed.

From the judgment entered an appeal was allowed to this court and the following questions certified:

‘(1) Does the complaint state facts sufficient to constitute a cause of action?

‘(2) Has the court jurisdiction of the subject of the action?’John T. McGovern, of New York City, for appellant.

Chas. H. Friedrich and Hooker I. Coggeshall, both of New York City, for respondent.

HOGAN, J. (after stating the facts as above).

[1] The decision of the Appellate Division was not unanimous. The presiding justice of that court was of opinion that the failure of defendant to appear on the return of the notice of application for final judgment operated as a default within the meaning of section 1295 of the Code of Civil Procedure, and, the judgment allowed at the Special Term being in violation of section 1207 of the Code, the remedy of defendant was to move to vacate or modify the judgment so as to make it conform to the relief demanded in the complaint. A majority of the justices concurred in an opinion written by Justice Scott, holding that the judgment entered was not one by default and in that conclusion we concur.

Upon the entry of final judgment at the Special Term defendant was authorized to appeal therefrom directly to this court and review the interlocutory judgment entered upon the order overruling the demurrer, the sole question presented on this appeal. Code of Civil Procedure, § 1316.

[2] Upon the appeal from the interlocutory judgment overruling the demurrer the Appellate Division determined that the complaint stated facts sufficient to constitute a cause of action, and that the court had jurisdiction of the action, but that court held that the question as to whether or not such jurisdiction would be exercised by the Supreme Court was dependent upon whether or not a judgment granted by it could be enforced. In support of the conclusion, the case of Harrison v. Hartford Life Insurance Co., 63 Misc. Rep. 93,118 N. Y. Supp. 401, affirmed without opinion, 137 App. Div. 918,122 N. Y. Supp. 1130, and 201 N. Y. 545, 95 N. E. 1130, was cited.

[3] An examination of the record in the case referred to discloses that, while that action was like unto the action at bar, the question of jurisdiction was not there presented either in the record, the courts below, or in this court. The decision is not controlling in this case. The question of jurisdiction is open for determination upon this appeal. Bearing upon that question, it is important to consider the relation existing between the plaintiff and the corporation defendant under the certificate. As a consideration for the issuance of the certificate in question, the plaintiff paid to the defendant in admission fee for membership in the defendant corporation, together with a stated sum toward the safety fund, and thereby became a beneficiary...